191 Conn. App. 1
Conn. App. Ct.2019Background
- Smith owned two fitness centers (SHF-Clinton and SHF-Old Saybrook) and sold them to Rothschild, who purchased them through two LLCs (SHF entities) financed by an SBA-backed Wells Fargo loan secured by the entities’ assets.
- Smith retained subordinate promissory notes secured by a security interest in the SHF entities’ assets; Rothschild defaulted and Smith sued (Rothschild action) but also negotiated to repurchase the assets and later pursued other remedies.
- Marshview Fitness (landlord) agreed to buy certain assets (equipment, furniture, fixtures, inventory, computers) from the SHF entities so Rothschild would vacate; Wells Fargo agreed to release its >$800,000 lien in exchange for $100,000.
- Smith released his subordinate lien for $59,806.13; Marshview then sold the purchased assets to a new tenant for $159,806.13.
- Smith sued Marshview under the UFTA, common-law fraudulent transfer, and CUTPA alleging the sale stripped assets that could have satisfied his claims. The trial court granted Marshview summary judgment; Smith’s motion to reargue was denied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the transferred property qualified as "assets" for fraudulent-transfer purposes | Smith: transfer included business goodwill/customer lists so value exceeded Wells Fargo lien; therefore transfer was of assets and could be fraudulent | Marshview: it purchased only listed personal property, which was encumbered by a Wells Fargo lien exceeding its value, so not "assets" under UFTA | Court: Property was only personal property (equipment) and was encumbered by a valid lien > value, so not an "asset"; summary judgment affirmed |
| Whether Smith created a genuine dispute about amount of Wells Fargo lien | Smith: lien amount contested | Marshview: record (Smith’s deposition + Pozefsky affidavit) showed lien > $800,000 and Smith submitted no contrary evidence | Court: No evidence disputed lien amount; no genuine issue of material fact |
| Whether CUTPA claim was broader than fraudulent-transfer allegations | Smith: CUTPA claim alleged broader/unfair/deceptive conduct (secret conspiracy) distinct from fraudulent-transfer counts | Marshview: CUTPA count merely incorporated the fraudulent-transfer facts and alleged loss; no distinct CUTPA theory | Court: CUTPA claim was not factually or legally distinct from fraudulent-transfer counts; summary judgment on CUTPA proper |
| Whether trial court abused discretion by denying motion to reargue | Smith: court overlooked controlling law/facts; reargument warranted | Marshview: motion rehashed prior arguments and submitted new exhibits improperly | Court: Denial not an abuse of discretion; motion simply rehashed prior arguments |
Key Cases Cited
- Lucenti v. Laviero, 327 Conn. 764 (discussion of summary judgment standard)
- Certain Underwriters at Lloyd’s, London v. Cooperman, 289 Conn. 383 (UFTA largely adopts common-law fraudulent-conveyance principles)
- National Loan Investors, L.P. v. World Properties, LLC, 79 Conn. App. 725 (definition of "asset" under UFTA applies in related analyses)
- Dietter v. Dietter, 54 Conn. App. 481 (property encumbered by valid liens exceeding value is not an "asset" for fraudulent-transfer claims)
- Artie’s Auto Body, Inc. v. Hartford Fire Ins. Co., 317 Conn. 602 (scope and remedies available under CUTPA)