179 Conn. App. 631
Conn. App. Ct.2018Background
- Plaintiff ASPIC, LLC acquired promissory notes (Court Hill notes and 2009 advance notes) after borrower Muni defaulted and seeks to collect from defendant Brack G. Poitier, a general partner with unlimited liability in four Court Hill limited partnerships.
- Harp, the managing partner (now deceased), executed multiple promissory notes and a $1.5 million loan from Muni that was secured by Court Hill notes; that loan defaulted.
- Defendant pleaded several special defenses, including that Harp breached fiduciary duties to the partnerships and to defendant, and thus the plaintiff (standing in Harp’s shoes) is subject to those personal defenses.
- At the prejudgment remedy hearing the trial court found probable cause that the notes were valid and denied most defenses, but concluded it lacked sufficient information to predict the ultimate strength of the fiduciary‑duty defense.
- The trial court nonetheless granted a prejudgment remedy for $1 million (reduced from $3 million requested) without expressly finding probable cause that the plaintiff could overcome the fiduciary‑duty defense by proving fair dealing.
- Defendant appealed, arguing the court erred by failing to require the plaintiff to establish probable cause that it could prove fairness (the element shifted to plaintiff) before awarding the prejudgment remedy.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiff had to meet a heightened burden at prejudgment remedy hearing to overcome defendant's breach‑of‑fiduciary‑duty defense | Plaintiff argued trial court properly considered defenses and the award reflected those concerns; no clear error | Poitier argued that because a fiduciary duty existed, plaintiff bore the burden to prove fair dealing and the court failed to require probable cause that plaintiff could meet that burden | Court held plaintiff must present evidence establishing probable cause that it can prove fair dealing; trial court erred by not making that finding |
| Proper standard of proof at prejudgment remedy when trial burden is clear and convincing | Plaintiff implied prejudgment standard is lower and trial court’s finding sufficed | Defendant argued plaintiff was required at prejudgment remedy stage to show probable cause it could meet the trial standard (clear and convincing) | Court held prejudgment remedy uses probable cause standard, not trial burden; but court must evaluate whether plaintiff presented evidence sufficient to conclude it could meet the higher trial burden at trial |
| Whether trial court’s factual findings supported awarding $1 million prejudgment remedy | Plaintiff pointed to testimony and argued trial court reduced award to account for fiduciary concerns, so no reversible error | Defendant argued court explicitly said it could not predict outcome of fiduciary defense and therefore did not find probable cause regarding fairness | Court found record shows no finding that plaintiff met its burden re: fairness; awarding remedy absent that finding was clear error |
| Effect of defendant raising fiduciary defense on allocation of proof at prejudgment remedy stage | Plaintiff argued consideration of the defense justified the reduced attachment | Defendant argued the defense shifted burden to plaintiff to produce probable‑cause evidence of fairness before any attachment | Court held the fiduciary defense shifts the burden to plaintiff to establish probable cause it can prove fair dealing; failure to make that finding defeats the prejudgment remedy |
Key Cases Cited
- Landmark Investment Group, LLC v. Chung Family Realty Partnership, LLC, 137 Conn. App. 359 (Conn. App. 2012) (prejudgment remedy standard is probable cause; trial court has discretion)
- TES Franchising, LLC v. Feldman, 286 Conn. 132 (Conn. 2008) (trial court must take defenses into account when determining probable cause for prejudgment remedy)
- J.E. Robert Co. v. Signature Properties, LLC, 309 Conn. 307 (Conn. 2013) (appellate review of prejudgment remedy is limited; view evidence in light most favorable to plaintiff absent clear error)
- Three S. Development Co. v. Santore, 193 Conn. 174 (Conn. 1984) (probable cause defined as bona fide belief in facts essential under law)
- Konover Development Corp. v. Zeller, 228 Conn. 206 (Conn. 1993) (when fiduciary relationship exists, burden shifts to fiduciary to prove fair dealing at trial by clear and convincing evidence)
- Augeri v. C. F. Wooding Co., 173 Conn. 426 (Conn. 1977) (a good defense at prejudgment remedy hearing can defeat probable cause)