Opinion
FSTCV165015982S
11-28-2017
Patricia SPICER v. John MONTAGNESE et al.
UNPUBLISHED OPINION
OPINION
Hon. Kevin Tierney, J.T.R.
After five days of hearings, twenty-four exhibits, and post-hearing briefs filed by all parties, the plaintiff has submitted her claim for a prejudgment remedy on all three counts of the operative complaint, the First Amended Complaint dated March 21, 2017 (# 118.00). The First Count alleges contempt against John Montagnese, only, for willful failure to pay a $45,000 monetary judgment entered in the Superior Court, Housing Session, at Norwalk on March 18, 2008 between Patricia Spicer as the then defendant and John Montagnese as the then plaintiff. The Second Count seeks fraudulent conveyance relief as to a certain real property on West Hill Road, Stamford, Connecticut. The Third Count claims unjust enrichment. Both defendants are named in the Second Count and Third Count.
The action in chief has been commenced. Both defendants together filed an Answer, Special Defenses, and Counterclaims on January 31, 2017 (# 108.00). The Answer does not accurately track each paragraph of the later filed First Amended Complaint. The defendants’ two Special Defenses claim " payment in full accord and satisfaction of judgment" and " laches." A two-count Counterclaim claims unjust enrichment and vexatious litigation by both defendants. The plaintiff filed an Answer to the two-count Defendants’ Counterclaims on February 21, 2017 (# 111.00). The plaintiff appears to be claiming same sort of affirmative relief in that February 21, 2017 Answer (# 111.00, page 2 " Wherefore, The Plaintiff Claims:"). The plaintiff has yet to reply to the two Special Defenses. The pleadings are not closed. No party has filed a Certificate of Closed Pleadings.
The first issue for consideration by this court is the status of the underlying Housing Session proceeding. On January 30, 2008 as plaintiff, John Montagnese, filed a summary process action against Patricia Spicer, as defendant, seeking a possession of the real property occupied by Patricia Spicer at West Hill Road, Stamford, Connecticut. This summary process action was returnable to the Superior Court, judicial district of Stamford/Norwalk, Housing Session at Norwalk and was assigned docket number SNSP-034683. Ex. 8. The parties actively litigated that summary process action from 2008 through and including 2011. Both parties appeared by counsel.
On March 18, 2008 both parties appeared in the Housing Court and entered into a one-page " Stipulated Agreement of the Parties." The parties used the preprinted form commonly used in Housing Session Summary Process judgments. Half of the language was the preprinted form. It was signed by both parties, both attorneys and the court on March 18, 2008. This " Stipulated Agreement of the Party" became a March 18, 2008 judgment of the Superior Court. Ex. 2, Ex. 8. The March 18, 2008 court order stated: " Judgment for Possession may enter in favor of the plaintiff(s) with a FINAL stay of execution through May 31, 2008." Paragraph 3 of the Stipulated Agreement of the Parties was handwritten and states: " Plaintiff agrees to pay defendant $75,000.00 as follows: $15,000.00 on or before March 31, 2008, $15,000.00 on or before April 11, 2008, $45,000.00 on or before December 31, 2008." Ex. 2. Heather McKaye-Montagnese was not a party in the summary process litigation nor did she execute the " Stipulated Agreement of the Parties."
Although parties may not seek money damages in a summary process statutory proceeding, it is common for stipulations in summary process actions to contain orders of payments from one party to another. Atlantic Refining Co. v. O ’Keefe, 131 Conn. 528, 531 (1945); Webb v. Ambler, 125 Conn. 543, 551-52 (1939); Housing Authority of Norwalk v. Whitaker, Superior Court, judicial district of Stamford/Norwalk, Housing Session of Norwalk, Docket Number SPNO 9410-16560 (September 7, 1995, Tierney, J.) It is this March 18, 2008 Housing Session judgment that forms the basis of the First Count alleging contempt and the predicate for the fraudulent conveyance Second Count. It may also be the predicate for the Third Count alleging unjust enrichment.
The court finds the following facts and legal conclusions:
The plaintiff therein, John Montagnese, paid $15,000.00 to the defendant, therein, Patricia Spicer, on or before March 31, 2008 as per the March 18, 2008 judgment. The plaintiff therein paid the second $15,000.00 to the defendant therein on or before April 11, 2008 as per the March 18, 2008 judgment. Patricia Spicer vacated the real property pursuant to the March 18, 2008 judgment. The plaintiff herein, Patricia Spicer, is claiming that the $45,000.00 due on or before December 31, 2008 has only been partially paid. She claims that all partial payments on the $45,000.00 have been paid through the Housing Session and noted on its docket sheet that was marked in evidence. Ex. 8.
In effect the plaintiff herein, Patricia Spicer, is filing a lawsuit against the defendant herein, John Montagnese, for the unpaid $45,000.00 due on or before December 31, 2008 when the plaintiff already possesses a Superior Court judgment for that same sum. The Housing Session is a regular session of the Superior Court. Judgments of the Housing Session are recognized as judgments of the Superior Court. The Superior Court including its Housing Session is a court of general jurisdiction. Gen. Stat. § 47a-70(a); Connecticut Sonesta Corporation v. Columbus Enterprises, Inc., Superior Court, Judicial District of Hartford/New Britain at Hartford, Housing Session, Docket Number 8102443 (June 11, 1981, Satter, J.).
An application for prejudgment remedy is a statutory procedure. It is the plaintiff’s obligation to show: " ... that there is probable cause that a judgment in the amount of the prejudgment remedy sought, or in an amount greater than the amount of the prejudgment remedy sought, taking into account any known defenses, counterclaims or set-offs, will be rendered in the matter in favor of the plaintiff." Gen. Stat. § 52-278c(a)(2). The standard of proof for the plaintiff is probable cause. The statute is silent concerning the defendant’s standard of proof as to any defenses. The defendants in this case are claiming that the plaintiff waited too long and that a third party, Ian Callanan, has made payment to the plaintiff in full on account of the $45,000.00. There is no Appellate Court nor Supreme Court decision on defendant’s standard of proof. This court has found that the standard of proof of a defendant in a prejudgment remedy action is to prove its defense by a fair preponderance of the evidence, the ordinary standard of proof. Fusaro v. Malik, Superior Court, Judicial District of Stamford/Norwalk at Stamford, Docket Number FST CV08-5008479 S (September 16, 2011, Tierney, J.T.R.) ; Intrigue Shipping, Inc. v. Shipping Associates, Inc., Superior Court, Judicial District of Stamford/Norwalk at Stamford, FST CV-13-5014113-S (December 13, 2013, Adams, J.T.R.) ; Sil/Carr Corporation v. Bartlett Brainard Eacott, Inc., Superior Court, Judicial District of Hartford, Docket Number HHD CV-12-5036086-S (June 26, 2012, Woods, J.) .
Judgments of the Superior Court are subject to a statute of limitations. General Statutes § 52-598(a) permits a party twenty years to execute on a judgment of the Superior Court and twenty-five years to enforce it by a separate action. Investment Associates v. Summit Associates, Inc., 309 Conn. 840, 849 (2013). This March 18, 2008 judgment of the Superior Court, Housing Session for $45,000.00 is subject to the above time limitations of General Statutes § 52-598(a) and as of the current date is well within both the twenty- and the twenty-five-year limitation periods. " A party obtaining a judgment for money damages in Connecticut has two means to enforce that judgment; it may seek an execution of the judgment or it may initiate an independent action." The Cadle Company v. Ogalin, 175 Conn.App. 1, 3, fn. 1 cert. denied 327 Conn. 930 (2017); General Statutes § 52-598(a). For some reason not explained to this court, the plaintiff, Patricia Spicer, has not sought to enforce the judgment in the Housing Session by way of an order of weekly payments, a wage execution, a property execution, examination of judgment debtor, prejudgment remedy, and/or garnishment of assets and monies due to the defendant, John Montagnese. In this court’s opinion the March 18, 2008 judgment is still in effect and fully enforceable in accordance with the above postjudgment Connecticut procedures.
In an issue of first impression our Appellate Court on July 25, 2017 determined that the plaintiff had the right to institute a separate suit even though the judgment was dated in 1994 and the statute of limitations of twenty years and twenty-five years had not yet run. The Cadle Company v. Ogalin, supra, 175 Conn.App. 9. Therefore this court finds that the plaintiff is within her rights to file a separate lawsuit on the underlying debt and the underlying March 18, 2008 judgment despite the fact that the current judgment in the Housing Session, Superior Court is in full force and effect and can be enforced in accordance with the well-known financial enforcement provisions of Connecticut postjudgment procedure.
A plaintiff’s complaint as amended claims attorneys fees in all three counts. " ... when it comes to attorneys fees, Connecticut follows the American Rule ... Pursuant to that rule, attorneys fees and ordinary expenses and burdens of litigation are not allowed to the successful party absent a contractual or statutory exception." Ferri v. Powell -Ferri, 326 Conn. 438, 451 (2017). The plaintiff has furnished inadequate information for this court to consider any award of attorneys fees at this prejudgment remedy stage. The claim for attorneys fees still remains a part of the plaintiff’s operative complaint. The plaintiff has withdrawn her claim for attorneys fees in connection with this prejudgment remedy application by a Caseflow Request dated September 15, 2017 (# 124.00).
The plaintiff’s operative First Count is for contempt. " Contempt is a disobedience to the rules and orders of a court which has power to punish for such an offense ... A contempt judgment cannot stand when, inter alia, the order a contemnor is held to have violated is vague and indefinite, or when the contemnor, through no fault of his own, was unable to obey the court’s order." Powell-Ferri v. Ferri, 326 Conn. 457, 468 (2017). The underlying court order must be " sufficiently clear and unambiguous to support a judgment of contempt" and " the violation was willful or excused by a good faith dispute or misunderstanding." Powell-Ferri v. Ferri, supra, 326 Conn. 468. In this case the plaintiff is seeking a finding of contempt by a separate lawsuit. It is not clear at this PJR stage of the proceedings whether the plaintiff is actually commencing a second lawsuit on that March 18, 2008 judgment in order to obtain a new Superior Court judgment. The issue before this court is whether this court has the power to find a defendant, who has failed to pay a monetary civil judgment, in contempt of the orders of the court and impose an obligation of attorneys fees and/or incarceration.
This issue was first discussed in a dissenting opinion in 1985 by our Supreme Court. Fox v. First Bank, 198 Conn. 34, 42-43 (1985) (Shea, Associate Justice, dissenting). " Indeed, the court had no authority to direct the plaintiff to make the payments to her creditor under the sanction of contempt for failure to do so. The practice of imprisonment for ordinary debts was abandoned long ago and it defies credulity to assume that the court ... in entering the order that is the basis for the finding of contempt intended that the plaintiff’s noncompliance might result in her incarceration or other punishment for contempt." Id., 42-43. Indeed in the Housing Session the trial judge did find the defendant herein, John Montagnese, in contempt, ordered him to pay attorneys fees, ordered him incarcerated and required the posting of a purge amount to release him from custody. The court accepted the posting of the purge amount which physically released the defendant, John Montagnese, from custody. Apparently the plaintiff herein seeks an order from this court in this trial of a similar nature. Such a result was offensive to Justice Shea in 1985.
In 2017 our Supreme Court visited that subject and stated: " Accordingly, we see no reason why Connecticut should diverge from the majority rule that, outside of the marital dissolution and child support context, ordinary monetary judgments and taxations of costs are not subject to enforcement by civil contempt absent extraordinary circumstances." Pease v. The Charlotte Hungerford Hospital, 325 Conn. 363, 377-78 (2017) (citing Montagnese v. Spicer, 130 Conn.App. 301 (2011), as being not persuasive). Treatises state that a motion for civil contempt is not the appropriate means of enforcing an award of costs or other monetary judgments. " Rather the prevailing party should pursue the various postjudgment remedies authorized by chapter 906 of the General Statutes. Contempt should be considered an important and drastic power of the court. Relying on contempt for the collection of routine debts runs the risk of trivializing this power." 2017 Connecticut Judicial institute, Summary of Civil Cases, page 6. " An installment payment order shall not be enforced by contempt proceedings ..." Gen. Stat. § 52-356d(d).
Although the defendant, John Montagnese, has not attacked the First Count on either the basis of commencing a second lawsuit on the same underlying claim when a monetary judgment for the same debt is already in existence nor the invocation of the punitive contempt powers of the Superior Court to collect a monetary debt by sentencing, John Montagnese, to a debtor’s prison, no doubt that issue will arise later on in this litigation. At this time this matter is at the prejudgment remedy stage. Patricia Spicer and John Montagnese were never married. The $45,000.00 debt was not a child support or marital obligation. It was a simple civil payment due. The plaintiff has failed to sustain its burden of probable cause that any finding of contempt will be entered for the defendant, John Montagnese’s, failure to pay any portion of the $45,000.00 due pursuant to the March 18, 2008 judgment entered by the Superior Court, Housing Session as alleged in the First Count.
The Second Count alleges that the transfer of the title to the real property at West Hill Road, Stamford, CT from the defendant, John Montagnese, to the defendant, Heather McKay-Montagnese, on January 20, 2010 is a fraudulent conveyance. The plaintiff seeks a court order that the fraudulent conveyance should be set aside as well as an order transferring title of the real property back to the title of John Montagnese. (# 118.00, par. 20); Ex. 6. The January 20, 2010 Quit Claim Deed runs from John R. Montagnese to Heather Rae McKay. All parties have agreed that these names identify the two defendants in this litigation. The evidence before this court indicate that as of the date of the hearing on the prejudgment remedy, title remains in the name of the defendant, Heather McKay-Montagnese. Ex. 6. The court has no authority to impose an attachment of real property that this court knows is not owned by a party defendant. (# 126.00, paragraph 1.) The court therefore declines to enter a prejudgment remedy on fraudulent conveyance grounds attaching the real property in the name of the defendant, John Montagnese, when he has no current record title interest in and to the real property on West Hill Road, Stamford, Connecticut.
The plaintiff also seeks to attach the real property at West Hill Road in the name of the defendant, Heather McKay-Montagnese, on the basis that a fraudulent conveyance occurred. John Montagnese and Heather McKay-Montagnese both testified that they are husband and wife and have been married for a number of years. The Second Count allegations of fraudulent conveyance do not cite the Connecticut Uniform Fraudulent Transfer Act Gen. Stat. § 52-552a et seq. No mention of this statute occurred at any time in the five-day PJR hearing. " When any claim made in a complaint, cross complaint, special defense, or other pleading is grounded on a statute, the statute shall be specifically identified by its number." P.B. § 10-3(a). The court will not rely on Gen. Stat. § 52-552a et seq. in this PJR application even though the plaintiff has so argued for the first time in Plaintiff’s Post-Trial Brief dated October 6, 2017. (# 130.00).
Based on the pleadings, the court finds that the plaintiff is pursuing fraudulent conveyance as a common-law remedy. The common-law rule on fraudulent conveyance is as follows: " A party who seeks to set aside a conveyance as fraudulent bears the burden of proving that the conveyance was made without substantial consideration and that, as a result, the transferor was unable to meet his obligations (constructive fraud) or that the conveyance was made with fraudulent intent in which the transferee participated (actual fraud)." Crepeau v. Gronager, 41 Conn.App. 302, 309 (1996). The plaintiff has the burden of proof by clear and convincing evidence to show all of the elements of common-law fraudulent conveyance. Jacobowitz v. Jacobowitz, 102 Conn.App. 332, 342 (2007). Proof sufficient to obtain a prejudgment remedy requires only the standard of proof for the plaintiff of probable cause, as compared to the ordinary civil standard of fair preponderance of the evidence. A step down in the standard of proof is provided by statute for plaintiffs in prejudgment remedy matters. Therefore, it would be appropriate that a step down from clear and convincing evidence would be the proper standard of proof in the court’s consideration of a fraudulent conveyance. Fusaro v. Malik, supra . The court finds that the standard of proof for the plaintiff of the elements of fraudulent conveyance in this prejudgment remedy context is not clear and convincing evidence but the fair preponderance of the evidence. The court cannot cite any Connecticut case for this proposition.
In the Second Count alleging fraudulent conveyance, the plaintiff did not plead either constructive fraud or actual fraud nor any language that would notify the court as to which of these two common-law claims are being made. The general allegations in the First Amended Complaint allege: Paragraph 20. " After the Judgment on March 18, 2008, on or about January 20, 2010, the Defendant fraudulently conveyed his interest in the West Hill Property to Defendant McKay-Montagnese"; Paragraph 21. " Defendant conveyed such property in order to avoid his obligation to the Plaintiff for less than adequate consideration"; Paragraph 22: " Defendant McKay-Montagnese was aware of Defendant’s financial obligations to the Plaintiff, had assisted the Defendant in meeting those obligations, and participated in the fraudulent conveyance of the West Hill Property to assist the Defendant in trying to avoid his financial obligations." (# 118.00.) Those allegations, as a part of the fraudulent conveyance Second Count, do not specifically state whether constructive fraud is being claimed or whether actual fraud is being claimed or whether a combination of both are being claimed.
Constructive fraud requires that the conveyance be made without substantial consideration. John Montagnese testified that because he runs his own independent business he was concerned about business liability for his ownership of the West Hill Road property. He wished to shield the property from possible future claims by creditors. He also wished to engage in estate planning. For these two reasons, according to John Montagnese’s testimony, he conveyed the property almost two years after the judgment. The conveyance was to his wife, the natural bounty of his affection. Salvatore v. Hayden, 144 Conn. 437, 441 (1957). There was no evidence that there was any monetary consideration that passed between Heather McKay-Montagnese and John Montagnese for the January 20, 2010 transfer. It has been held that as between the husband and wife love and affection is valid consideration. Middlebury v. Steinmann, 189 Conn. 710, 716, fn. 3 (1983); Varley v. Varley, 170 Conn. 455, 460 (1976); Candee v. Connecticut Savings Bank, 81 Conn. 372, 378 (1908).
" A conveyance by an insolvent of all, or substantially all, his property, in consideration of love and affection only is constructively fraudulent against subsequent as well as existing creditors." Redfield v. Buck, 35 Conn. 328, 329 (1868). In this PJR hearing there was no evidence of any assets of John Montagnese, the fair market value of these assets and any current encumbrances or liens on those assets.
Conveyance of real property for liability purposes and the estate planning purposes are common. The plaintiff did not offer evidence that John Montagnese was unable to meet his other financial obligations. There is no evidence of his financial situation. No evidence was produced to this court of his earnings, his debts, his inability to meet his debts, and the amount of assets that he had besides the property on West Hill Road, Stamford, Connecticut. The record was totally silent concerning his financial circumstances including the fair market value of West Hill Road and the mortgages, liens and encumbrances on the West Hill Road property. The court therefore finds that the plaintiff has failed to meet her burden of proof by a fair preponderance of the evidence of the two elements of constructive fraud.
Actual fraud requires proof that the conveyance was made with a fraudulent intent in which the transferee participated. There was adequate proof that the defendant, Heather McKay-Montagnese, knew of the $45,000.00 obligation, most likely in 2008 but surely before January 20, 2010. She was the primary wage earner during this period of time. The conveyance was not made at the time of the incurring of the debt but was made almost two years later. If the sole intent of the transfer was to avoid the payment of the debt, that transfer would have taken place shortly after March 18, 2008. A plaintiff has failed to sustain her burden of proof by a fair preponderance of the evidence of the elements of actual fraud.
The evidence before this court established that the real property that is the subject of the fraudulent conveyance is " under water, " that its mortgage debt exceeds its fair market value. The fair market value of the real property of West Hill Road as determined by the Stamford Tax Assessor was $893,630. Ex. 7. No other opinion of fair market value was furnished to this court other than testimony that the property was " under water." Two mortgage bills were placed in evidence. The April 1, 2017 bill stated that the outstanding principal on the mortgage on West Hill Road was $977,489.32. Ex. 10. The April 1, 2017 bill stated that the outstanding principal of the mortgage was $974,390.44. Both amounts exceed the current fair market value on file with the Stamford Tax Assessor.
The Connecticut Fraudulent Transfer Act defines " assets." " Asset means property of a debtor, but the term does not include: (A) Property to the extent that it is encumbered by a valid lien, ..." Gen. Stat. § 52-552b(2)(A).
Thus, a transfer cannot be considered fraudulent if, at the time of the transfer, the transferred property is encumbered by valid liens exceeding the property’s value because the property would no longer be considered an asset under § 52-552(b)(2), and only assets may be transferred fraudulently. See generally Dietter v. Dietter, 54 Conn.App. 481, 494, 737 A.2d 926, cert. denied, 252 Conn. 906, 743 A.2d 617 (1999).National Loan Investors, L.P. v. World Properties, LLC, 79 Conn.App. 725, 732 (2003).
The court finds that the evidence failed to establish that as of the January 20, 2010 transfer or as of the current time, the fair market value exceeded the mortgages, liens, unpaid real estate taxes, and encumbrances on the West Hill Road property. The evidence before this court is that the fair market value at the relevant times was less than the first mortgage on West Hill Road. The plaintiff’s October 6, 2017 Post-Trial Brief argues: " Upon information and belief the property at issue has significant equity." The plaintiff offered no evidence at the PJR hearing to support that claim. The plaintiff has failed to establish by probable cause standards that West Hill Road was an " asset" as defined by General Statutes § 52-552b(2)(A) and that its fair market value on January 20, 2010 included the liens, mortgages and encumbrances.
The court hereby denies the prejudgment remedy application by way of attachment of the real. property on West Hill Road by reason of the Second Count of fraudulent conveyance, in regards to the claimed attachment to be placed in the name of the defendant, Heather McKay-Montagnese.
The Third Count seeks unjust enrichment.
Unjust enrichment applies wherever justice requires compensation to be given for property or services rendered under a contract, and no remedy is available by an action on the contract ... A right of recovery under the doctrine of unjust enrichment is essentially equitable, its basis being that in a given situation it is contrary to equity and good conscience for one to retain a benefit which has come to him at the expense of another ... With no other test than what, under a given set of circumstances, is just or unjust, equitable or inequitable, conscionable or unconscionable, it becomes necessary in any case where the benefit of the doctrine is claimed, to examine the circumstances and the conduct of the parties and apply this standard ... Unjust enrichment is, consistent with the principles of equity, a broad and flexible remedy ... Plaintiffs seeking recovery for unjust enrichment must prove (1) that the defendants were benefited, (2) that the defendants unjustly did not pay the plaintiffs for the benefits, and (3) that the failure of payment was to the plaintiffs’ detriment. (Citations omitted; internal quotation marks omitted.)Hartford Whalers Hockey Club v. Uniroyal Goodrich Tire Co., 231 Conn. 276, 282-83 (1994).
Commonly, unjust enrichment, which is an equitable action, is brought in collection cases along with a count of breach of contract in the event that the breach of contract count is not successful. The fallback position is making a claim for unjust enrichment. Cases have held that where the breach of contract count is successful, there is no additional remedy for unjust enrichment. Under these circumstances the unjust enrichment count must be rejected since the breach of contract count was successful. Vertex, Inc. v. City of Waterbury, 278 Conn. 557, 573 (2006). " ... and no remedy is available by an action on the contract ... Indeed, lack of a remedy, under the contract is a precondition for recovery based upon unjust enrichment." Gagne v. Vaccaro, 255 Conn. 390, 424 (2001).
In this action although there is no breach of contract count, there is a breach of a promise to pay pursuant to a March 18, 2008 court judgment. The defendant, John Montagnese, promised to pay on or before December 31, 2008 the sum of $45,000.00. He has failed to make that payment. A judgment has entered as against him in the Housing Session. No doubt a judgment can reenter in this case as against John Montagnese for failure to pay that indebtedness. The court finds that the plaintiff is not likely to be successful in this unjust enrichment Third Count since she not only has a judgment based on a broken promise but is likely to obtain a new judgment on that basis, if the pleadings are amended. Hartford Whalers Hockey Club v. Uniroyal Goodrich Tire Company., 231 Conn. 276, 282 (1994). A prejudgment remedy as to the Third Count sounding in unjust enrichment is denied.
For the reasons stated, the prejudgment remedy relief claimed by the plaintiff, Patricia Spicer, as against the two defendants, John Montagnese and Heather McKay-Montagnese, must fail. The court denies the Plaintiff, Patricia Spicer’s, Application for Prejudgment Remedy dated September 15, 2016. (# 100.31.)