DEUTSCHE BANK AG v. SEBASTIAN HOLDINGS, INC., ET AL.
AC 47591
Appellate Court of Connecticut
November 11, 2025
Moll, Clark and Wilson, Js.
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The defendants, the prevailing parties in the underlying action seeking to enforce a foreign judgment against them, appealed from the trial court‘s judgment denying their motions for attorney‘s fees. The defendants claimed that the court improperly determined that the issue of whether they were entitled to attorney‘s fees was a procedural issue governed by Connecticut law, which follows the American rule, pursuant to which each party is responsible for its own attorney‘s fees unless a statute or contract provides otherwise, rather than a substantive issue governed by the law of the foreign jurisdiction, which follows the English rule, pursuant to which a prevailing party generally is entitled to its litigation expenses, including attorney‘s fees. Held:
The trial court properly denied the defendants’ motions for attorney‘s fees on the ground that their request for attorney‘s fees was a procedural matter governed by Connecticut law, as the defendants did not dispute that the rule of the foreign jurisdiction allowing for the recovery of attorney‘s fees by a prevailing party was not specific to the cause of action at issue in this case but applied generally to all civil actions.
Argued September 17—officially released November 11, 2025
Procedural History
Action seeking, inter alia, enforcement of a foreign judgment, brought to the Superior Court in the judicial district of Stamford-Norwalk and transferred to the Complex Litigation Docket, where the case was tried to the court, Hon. Charles T. Lee, judge trial referee; judgment for the defendants, from which the plaintiff appealed; thereafter, the defendants filed a motion for attorney‘s fees; subsequently, the Supreme Court affirmed the trial court‘s judgment, and the defendants filed a second motion for attorney‘s fees; thereafter, the court, Hon. Charles T. Lee, judge trial referee, denied the defendants’ motions for attorney‘s fees, and the defendants appealed to this court. Affirmed.
David G. Januszewski, with whom were Thomas D. Goldberg and, on the brief, Sheila C. Ramesh, pro hac vice, Sesi V. Garimella, pro hac vice, and John W. Cerreta, for the appellee (plaintiff).
Opinion
CLARK, J. The plaintiff, Deutsche Bank AG, brought this action against the defendants, Sebastian Holdings, Inc. (SHI), and Alexander Vik, seeking to enforce an approximately $243 million foreign judgment (English judgment) rendered against SHI by an English court and to pierce the corporate veil of SHI in order to hold Vik personally liable for that judgment. The trial court, applying the substantive law of Turks and Caicos Islands (TCI), rendered judgment in favor of the defendants, and our Supreme Court affirmed that judgment. See Deutsche Bank AG v. Sebastian Holdings, Inc., 346 Conn. 564, 604, 294 A.3d 1 (2023). Thereafter, the trial court denied the defendants’ postjudgment motions seeking approximately $11.5 million in prevailing party attorney‘s fees incurred in defense of this action, concluding that the issue of attorney‘s fees was a procedural matter governed by Connecticut law, which does not permit the recovery of such fees in this case. On appeal, the defendants claim that the court erred in denying their motions because the issue of whether they are entitled to attorney‘s fees is governed by TCI law. We disagree and, accordingly, affirm the judgment of the trial court.
The following facts and procedural history are relevant to this appeal.1 SHI is a corporation organized under the laws of TCI, and Vik is its sole shareholder
On October 7, 2021, while the plaintiff‘s appeal was pending, the defendants filed a motion seeking approximately $10.5 million in attorney‘s fees and costs. The defendants argued that their entitlement to attorney‘s fees was governed by TCI law and that TCI law follows the so-called “English rule,” pursuant to which a prevailing party generally is entitled to its litigation expenses, including attorney‘s fees. See Fleming v. Garnett, 231 Conn. 77, 93 n.12, 646 A.2d 1308 (1994). The plaintiff filed a memorandum in opposition to the defendants’ motion, arguing, inter alia, that, under Connecticut choice of law rules, the issue of attorney‘s fees was a procedural matter governed by Connecticut law.3 The plaintiff further argued that, because Connecticut follows the “American rule,” pursuant to which each party is responsible for its own attorney‘s fees unless a statute or contract provides otherwise; see id., 93–94; the defendants were not entitled to attorney‘s fees as prevailing parties. On February 9, 2022, the parties entered into a stipulation, which was subsequently entered as a court
On May 30, 2023, our Supreme Court issued an opinion affirming the trial court‘s judgment in favor of the defendants. See Deutsche Bank AG v. Sebastian Holdings, Inc., supra, 346 Conn. 567, 604. The court declined to resolve the issue of whether the trial court had properly concluded that TCI law governed the plaintiff‘s veil piercing claim. The court concluded, rather, that “the trial court‘s factual findings foreclose [the plaintiff‘s] claim under New York, Connecticut, and TCI law, and, therefore, any error in the trial court‘s choice of law analysis or application of TCI law was harmless.”4 Id., 592.
On June 28, 2023, the defendants filed a second motion for an award of attorney‘s fees, seeking an additional award of approximately $1 million for fees incurred in postjudgment proceedings, bringing the total amount sought to approximately $11.5 million. The court, Hon. Charles T. Lee, judge trial referee, heard oral argument on the defendants’ motions for attorney‘s fees on December 19, 2023.
On April 4, 2024, the court issued a memorandum of decision in which it concluded that the defendants were not entitled to attorney‘s fees. The court first explained that “[t]he ordinary rule is that where a cause of action arising in another state is asserted in our courts, we look to the laws of that state to determine all matters of substance involved in it, but that matters of procedure are governed by our own law . . . .” (Internal quotation marks omitted.) In addressing whether the defendants’ claim for attorney‘s fees was a matter of
On appeal, the defendants claim that the court erred in denying their motions for attorney‘s fees. The defendants do not dispute that, under a choice of law analysis, our courts apply Connecticut law to procedural issues even when the substantive law of another jurisdiction applies to the cause of action. The defendants argue, however, that their request for attorney‘s fees is a substantive matter that is governed by the law of TCI. The plaintiff contends that the court properly concluded that a request for attorney‘s fees is a procedural matter governed by Connecticut law. We agree with the plaintiff.
“The distinction between procedural and substantive laws is well settled. Procedural statutes have been traditionally viewed as affecting remedies, not substantive rights, and therefore leave the preexisting scheme intact. . . . While there is no precise definition of either [substantive or procedural law], it is generally agreed that a substantive law creates, defines and regulates rights while a procedural law prescribes the methods of enforcing such rights or obtaining redress.” (Internal quotation marks omitted.) Weber v. U.S. Sterling Securities, Inc., 282 Conn. 722, 738–39, 924 A.2d 816 (2007). “Where the [law at issue] is not substantive, i.e., not directed to the right itself, but rather to the remedy, it is generally considered a distinctly procedural matter.” (Internal quotation marks omitted.) Gershon v. Back, supra, 201 Conn. App. 250.
The issue before us—namely, whether the availability of attorney‘s fees is a procedural or substantive issue for choice of law purposes—is an issue of first impression in this state, and the parties agree that this court‘s decision in Paine Webber provides the proper framework for deciding that issue.5 We therefore begin our analysis with a discussion of that case.
On appeal, this court reversed the judgment of the trial court, concluding that § 52-192a is a procedural rule that applies even though New York law governed the plaintiff‘s cause of action because the determination of whether to award offer of compromise interest has no connection with the substantive law governing the underlying claims. See id., 655–56. As we explained, the ultimate question in assessing whether § 52-192a was procedural or substantive for choice of law purposes was “whether an award of interest following a rejected offer of judgment requires a determination of the substantive issues of a case.” Id., 653. Analyzing that question, we concluded that § 52-192a is not substantive because its application “does not depend on an analysis of the underlying circumstances of the case or a determination of the facts” but, instead, is based only on whether the prevailing party recovered more than the amount included in the offer of compromise. Id. We explained that “[a]n award of interest pursuant to § 52-192a is independent of the judgment, can be calculated only after judgment has been rendered . . . is awarded upon a posttrial motion . . . [and] is unrelated to the underlying debt.” Id., 653–54.
We contrasted § 52-192a with our prejudgment interest statute,
In the present case, the issue of prevailing party attorney‘s fees is similar to offer of compromise interest pursuant to § 52-192a in that a determination of the defendants’ entitlement to such fees is unrelated to the substantive law governing the plaintiff‘s veil piercing
The defendants argue that, because “[a] party cannot receive prevailing party attorney‘s fees unless and until they have prevailed upon the merits of the underlying claims,” an award of such fees is not independent of the judgment but “is clearly wholly dependent on the merits of the underlying claim.” (Emphasis in original.) This argument misconstrues our analysis in Paine Webber. In that case, our conclusion that offer of compromise interest under § 52-192a was “independent of the judgment“; Paine Webber Jackson & Curtis, Inc. v. Winters, supra, 22 Conn. App. 653; did not mean that the outcome of the case on the merits was irrelevant to such an award. Indeed, as we recognized, § 52-192a expressly requires the court to “examine the record after trial” to determine whether “the plaintiff‘s recovery exceeds the rejected offer of judgment found in the record . . . .” Id. Rather, we concluded that an award of offer of compromise interest was independent of the judgment because, unlike with prejudgment interest under § 37-3a, an award under § 52-192a does not require an examination of the substantive legal and factual issues in the case and is unrelated to the underlying debt, instead only requiring the court to review the judgment to determine whether the prevailing party recovered more than its offer of compromise. Thus, the fact that an award of attorney‘s fees under TCI law is available only after a party prevails on the merits of a
As indicated in footnote 5 of this opinion, in their principal appellate brief, the defendants relied on, inter alia, our Supreme Court‘s decision in Gershon v. Back, supra, 346 Conn. 181, which applied the test set forth in the commentary to § 122 of the Restatement (Second) of Conflict of Laws for “rules that ‘fall into a gray area between issues relating primarily to judicial administration and those concerned primarily with the rights and liabilities of the parties .’ . . .” Id., 196, quoting 1 Restatement (Second), supra, § 122, comment (a), p. 351. During oral argument, however, the defendants agreed that Paine Webber sets forth the proper framework for deciding this case. Nevertheless, although we do not believe that generally applicable rules governing the availability of attorney‘s fees fall in the ” ‘gray area’ ” identified in Gershon; Gershon v. Back, supra, 346 Conn. 196; because this is an issue of first impression and both parties addressed the analysis in Gershon in their briefs, we likewise apply that analysis to the defendants’ claim. We conclude that the analysis in Gershon provides further support for our conclusion that the availability of attorney‘s fees is a procedural matter governed by Connecticut law.
In Gershon, the Supreme Court addressed whether New York‘s plenary action rule, pursuant to which a separation agreement generally survives a later judgment of divorce and cannot be opened, modified, or vacated by way of a motion to modify the divorce decree but, instead, must be challenged in a separate plenary action, was procedural or substantive for choice of law purposes. See id., 196–98. The plaintiff in that case sought to open and set aside a judgment of divorce that had been entered in New York and that “incorporated [a] separation agreement by reference but provided that
Applying those factors, the court concluded that “New York‘s plenary action rule is so interwoven with the plaintiff‘s cause of action as to be deemed substantive.” Gershon v. Back, supra, 346 Conn. 200. The court found especially convincing the fact that the separation agreement in that case “adopted in plain and forceful terms the very essence of New York‘s plenary action rule“; id.; which was “a weighty reason for applying that law rather than the local law of the forum . . . .” (Internal quotation marks omitted.) Id., 201. The court further observed that application of the plenary action rule would “affect the ultimate substantive outcome of [the] case because . . . the parties [had] contractual rights that . . . [could not] be undone by modifying the judgment of dissolution.” (Internal quotation marks omitted.) Id. Lastly, the court noted that there was “no
The Supreme Court‘s reasoning in Gershon supports our conclusion that the availability of attorney‘s fees is a procedural matter governed by Connecticut law. First, unlike in Gershon, there is nothing in the record indicating that, when the plaintiff and SHI entered into the prime brokerage agreement, the parties considered the issue of which jurisdiction‘s laws regarding recovery of attorney‘s fees would govern in the event that the plaintiff sought to pierce SHI‘s corporate veil to hold Vik liable for SHI‘s debts.9 Second, and also unlike in Gershon, a decision regarding the defendants’ motions for attorney‘s fees is unrelated to, and has no impact on, the merits of the plaintiff‘s veil piercing claims.10
For the foregoing reasons, we conclude that the trial court properly determined that the adjudication of the
The judgment is affirmed.
In this opinion the other judges concurred.
Notes
“(b) After trial the court shall examine the record to determine whether the plaintiff made an ‘offer of judgment’ which the defendant failed to accept. If the court ascertains from the record that the plaintiff has recovered an amount equal to or greater than the sum certain stated in his ‘offer of judgment,’ the court shall add to the amount so recovered twelve per cent annual interest on said amount, computed from the date . . . the complaint in the civil action was filed with the court if the ‘offer of judgment’ was filed not later than eighteen months from the filing of such complaint. . . . The court may award reasonable attorney‘s fees in an amount not to exceed three hundred fifty dollars, and shall render judgment accordingly. This section shall not be interpreted to abrogate the contractual rights of any party concerning the recovery of attorney‘s fees in accordance with the provisions of any written contract between the parties to the action.”
The statute has been amended several times since Paine Webber was decided, including to refer to an offer made under the statute as an “offer of compromise” as opposed to an “offer of judgment.” See Public Acts 2005, No. 05-275, § 4. Although the current revision of the statute outlines the same basic procedures, due to the extent of the revisions in the statutory text, we refer to the revision of the statute in effect at the time the case was decided. Accordingly, hereinafter, all references to § 52-192a in this opinion are to the 1989 revision of the statute.
We acknowledge the possibility that, where a statutory provision allows for the recovery of attorney‘s fees for a specific statutory cause of action, that provision may be “so inseparable from the cause of action that it must be enforced to preserve the integrity and character of the cause [of action] . . . .” (Internal quotation marks omitted.) Thomas Iron Co. v. Ensign-Bickford Co., 131 Conn. 665, 669, 42 A.2d 145 (1945); see, e.g., Reclaimant Corp. v. Deutsch, supra, 332 Conn. 605 (where right did not exist at common law but is created by statute, limitation period “is properly characterized as substantive because the period of repose is so integral a part of the cause of action as to warrant saying that it qualifie[s] the right” (internal quotation marks omitted)). As the defendants acknowledge, however, the TCI fee shifting rule at issue is one of general applicability that applies irrespective of the nature of the cause of action asserted in the litigation. For the reasons explained previously in this opinion, such rules of general applicability are procedural because they are not closely related to the underlying right but, rather, concern “the methods of enforcing such rights or obtaining redress.” (Internal quotation marks omitted.) Weber v. U.S. Sterling Securities, Inc., supra, 282 Conn. 739.