TRIKONA ADVISERS LIMITED v. HAIDA INVESTMENTS LIMITED ET AL.
(SC 19439)
Supreme Court of Connecticut
September 1, 2015
Rogers, C. J., and Palmer, Zarella, Eveleigh, Espinosa and Vertefeuille, Js.
Argued April 21—officially released September 1, 2015
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Michael C. Gilleran, pro hac vice, with whom, on the brief, was Christopher L. Ayers, for the appellees (named plaintiff et al.).
Robert D. Laurie, with whom, on the brief, was Shrina B. Faldu, for the appellee (plaintiff Vera Financial Corporation).
EVELEIGH, J. This action arises out of a dispute over the control and ownership of 500 shares of stock (shares) in the named plaintiff, Trikona Advisers Limited (Trikona), an investment advisory corporation specializing in Indian real estate, which is incorporated in the Cayman Islands. The plaintiffs Asia Pacific Ventures Limited (Asia Pacific) and Vera Financial Corporation (Vera Financial) brought an interpleader action, pursuant to
The record reveals the following facts and procedural history, which provide the necessary background for the resolution of this appeal. The present interpleader action stems from a dispute between two families over the ownership and control of Trikona.5 In 2006, Aashish Kalra6 and Rakshitt Chugh formed Trikona. Asia Pacific allegedly owns 50 percent of Trikona stock, representing Kalra‘s interest. Haida and ARC Capital, LLC (ARC Capital), collectively own the remaining 50 percent of Trikona stock, representing Chugh‘s interest. Kalra and Chugh initially were comanaging directors of Trikona, sharing equal operational control over the corporation, and they both served on Trikona‘s board of directors since its inception.7 On February 24, 2012, Trikona filed a complaint alleging, inter alia, that Chugh, acting in his capacity as the agent of Haida, had breached his fiduciary duties owed to Trikona (underlying complaint).8 In the underlying complaint, Trikona sought the imposition of a constructive trust on the stock held by Haida and ARC Capital.
Between 2010 and 2012, Vera Financial made a series of unsecured loans to Asia Pacific. In April, 2013, Vera Financial and Asia Pacific entered into an agreement, which consolidated the unsecured loans into one secured loan and granted Vera Financial a security interest, not to exceed $500,000, in all of the assets of Asia Pacific, including Asia Pacific‘s shares in Trikona. The agreement also included a special power of attorney, by which Asia Pacific granted Vera Financial the right
In February, 2012, Haida and ARC Capital, as shareholders of Trikona, filed a petition to wind-up and dissolve Trikona in the Grand Court of the Cayman Islands and named Asia Pacific as the principal respondent in the action. Haida and ARC Capital also sought the immediate appointment of provisional liquidators, otherwise known in the United States as trustees. The Grand Court of the Cayman Islands granted this request in January, 2013, and awarded Haida and ARC Capital approximately $760,000 in attorney‘s fees against Asia Pacific. Haida and ARC Capital moved to attach the shares and the Grand Court of the Cayman Islands subsequently granted an ex parte provisional charging order against the shares in the amount of the judgment that had been previously awarded. In its appellate brief before this court, Haida represents that, once the charging order was made absolute, Haida and ARC Capital issued a summons for the sale of the shares by public auction.
On October 4, 2013, Asia Pacific filed a motion in the Superior Court seeking permission to tender the shares to that court or, in the alternative, the appointment of a temporary receiver to hold the shares. By a complaint dated October 23, 2013 (interpleader complaint), Asia Pacific and Vera Financial commenced the present interpleader action, seeking, among other relief, a final judicial determination as to the proper owner of the shares.9 Haida and ARC Capital did not file an answer to the interpleader complaint denying the factual allegations contained therein.10
Following oral argument on the motion, the trial court rendered an interlocutory judgment of interpleader, ordering that the shares be deposited with the clerk of the court on the same day that the order was entered. In its brief, Haida represents that, following the trial court‘s judgment of interpleader, Haida and ARC Capital asked for an adjournment of the proceeding before the Grand Court of the Cayman Islands, which was granted, and that, therefore, the public auction never took place. Haida subsequently moved for reconsideration of the trial court‘s interlocutory judgment of interpleader. Following oral argument, the trial court denied that motion. Haida subsequently appealed from the judgment of the trial court to the Appellate Court, and we transferred the appeal to this court pursuant to
Pursuant to Practice Book §§ 60-2 (1) and 61-10 (b), this court ordered the trial court to articulate the factual basis for its judgment of interpleader. Specifically, this
Before we address the claims on appeal, we begin by setting forth the general legal principles governing interpleader actions pursuant to § 52-484. “Although interpleader originally derived from common law and equity, in [1893], the legislature adopted ‘a broad statutory bill in the nature of interpleader that did not incorporate the traditional equitable restriction[s] [on interpleader]. Except for the addition of a provision for costs and fees and for a few trivial language modifications, this statute remains as Connecticut‘s interpleader rule.‘” Vincent Metro, LLC v. YAH Realty, LLC, 297 Conn. 489, 495–96, 1 A.3d 1026 (2010), quoting 2 E. Stephenson, Connecticut Civil Procedure (3d Ed. 2002) § 225 (b). Section 52-484 provides in relevant part: “Whenever any person has, or is alleged to have, any money or other property in his possession which is claimed by two or more persons, either he, or any of the persons claiming the same, may bring a complaint in equity, in the nature of a bill of interpleader, to any court which by law has equitable jurisdiction of the parties and amount in controversy, making all persons parties who claim to be entitled to or interested in such money or other property. Such court shall hear and determine all questions which may arise in the case . . . .”
“‘[I]nterpleader is a broad joinder device to facilitate consolidation of related claims so as to avoid multiple litigation as well as protection against multiple liability . . . .‘” Vincent Metro, LLC v. YAH Realty, LLC, supra, 297 Conn. 496, quoting 2 E. Stephenson, supra, § 225 (a). “The classic interpleader action existing in equity, prior to the enactment of the statute, was brought by a disinterested stakeholder to establish the undivided ownership of money or property claimed by two or more entities or individuals. . . . After the passage of the forerunner to § 52-484 in 1893, the rule that an interpleader action be maintained only by a stakeholder with no interest in the disposition of the fund was relaxed.” (Citations omitted.) Millman v. Paige, 55 Conn. App. 238, 242, 738 A.2d 737 (1999). “Section 52-484 does not preclude an action . . . in which all claimants, including an interested possessor, as defendants, seek all or a portion of the amount being held by one
“Actions pursuant § 52-484 involve two distinct parts . . . .” (Internal quotation marks omitted.) Vincent Metro, LLC v. YAH Realty, LLC, supra, 297 Conn. 497; see also Gold v. Rowland, 296 Conn. 186, 216 n.24, 994 A.2d 106 (2010). In the first part, the court must determine whether the interpleader plaintiff has alleged facts sufficient to establish that “there are adverse claims to the fund or property” at issue. Practice Book § 23-43. If the court considers interpleader to be proper under the circumstances, then the court may render an interlocutory judgment of interpleader. See Yankee Millwork Sash & Door Co. v. Bienkowski, 43 Conn. App. 471, 473, 683 A.2d 743 (1996) (“[t]he interlocutory judgment of interpleader determines the propriety of the interpleader procedure“). Only once an interlocutory judgment of interpleader has been rendered may the court hold a trial on the merits, compelling the parties to litigate their respective claims to the disputed property. Practice Book § 23-44.11
I
As a preliminary matter, we first address the issue of whether Haida has standing to bring the present appeal. Asia Pacific contends that Haida lacks standing to appeal the trial court‘s interlocutory judgment of interpleader. Specifically, Asia Pacific asserts that, because Haida disclaims all rights to the shares, Haida was not aggrieved by the trial court‘s interlocutory judgment of interpleader and, therefore, Haida does not have sufficient interest in the matter to pursue this appeal. Haida contends that it has standing to bring this appeal because it was named as a defendant to the interpleader action. We agree with Haida.
“A threshold inquiry of this court upon every appeal presented to it is the question of appellate jurisdiction.” (Internal quotation marks omitted.) King v. Sultar, 253 Conn. 429, 434, 754 A.2d 782 (2000). “The right to appeal is purely statutory, and only an aggrieved party may appeal.” (Internal quotation marks omitted.) Perry v. Perry, 312 Conn. 600, 610, 95 A.3d 500 (2014); see also Practice Book § 61-1.
“It is axiomatic that aggrievement is a basic requirement of standing, just as standing is a fundamental requirement of jurisdiction. . . . There are two general types of aggrievement, namely, classical and statutory; either type will establish standing, and each has its own unique features.” (Internal quotation marks omitted.) Perry v. Perry, supra, 312 Conn. 620. “Classical aggrievement requires a two part showing. First, a party must demonstrate a specific, personal and legal interest in the subject matter of the [controversy], as opposed to a general interest that all members of the community share. . . . Second, the party must also show that the [alleged conduct] has specially and injuriously affected that specific personal or legal interest.” (Internal quotation marks omitted.) Id. “Statutory aggrievement exists by legislative fiat, not by judicial analysis of the particular facts of the case. In other words, in cases of statutory aggrievement, particular legislation grants standing to those who claim injury to an interest protected by that legislation.” (Internal quotation marks omitted.) Soracco v. Williams Scotsman, Inc., 292 Conn. 86, 92, 971 A.2d 1 (2009). “Aggrievement is established if there is a possibility, as distinguished from a certainty, that some legally protected interest . . . has been adversely affected.” (Emphasis added; internal quotation marks omitted.) Smith v. Snyder, 267 Conn. 456, 461, 839 A.2d 589 (2004).
In the present case, Haida does not claim statutory aggrievement; therefore, we consider whether Haida has been classically aggrieved by the trial court‘s interlocutory judgment of interpleader. Asia Pacific claims that, by contending on appeal that it does not presently have any claim to the shares, Haida has failed to satisfy the test for classical aggrievement because it has no specific personal and legal interest that has been adversely affected.
For purposes of resolving the issue of whether Haida has been aggrieved by the trial court‘s interlocutory judgment of interpleader, it is not necessary that this court determine the exact nature of Haida‘s interest in the subject matter. Haida need only have a “personal and legal interest in the subject matter . . . .” (Internal quotation marks omitted.) Perry v. Perry, supra, 312 Conn. 620. Asia Pacific and Vera Financial allege that Haida and ARC Capital are seeking to use the final charging order from the Grand Court of the Cayman Islands to gain full control and ownership over the shares, thereby obtaining full control and ownership of Trikona and gaining the authority to withdraw the underlying complaint. Although, in its appellate brief, Haida disclaims “any possessory interest” in the shares and asserts that “no lien exists,” Haida does not dispute
Moreover, it is sufficient that Asia Pacific and Vera Financial‘s allegations establish that there is a “possibility” that some legally recognizable interest of Haida‘s ” ‘has been adversely affected’ ” by the interlocutory judgment of interpleader. Smith v. Snyder, supra, 267 Conn. 461. Because the trial court‘s interlocutory judgment of interpleader has effectively deprived any party of the use of the shares and the ability to exercise any rights over the shares until there is a judicial determination as to each party‘s rights to the shares, the present case satisfies the standard for classical aggrievement.
We conclude, therefore, that Haida has standing to bring this appeal because the allegations in Asia Pacific and Vera Financial‘s interpleader complaint, if true, demonstrate that there is a possibility that Haida‘s alleged security interest in the shares will be adversely affected.
II
Having concluded that we have appellate jurisdiction, we next consider the merits of Haida‘s claim on appeal. On appeal, Haida claims that the only entity with an interest in the shares legally recognized under the law of the Cayman Islands is Asia Pacific and that, as a result, the statutory requirement that the property at issue in an interpleader action be “claimed by two or more persons” has not been satisfied.
Neither this court nor the Appellate Court has established the standard of review for a claim challenging the trial court‘s interlocutory judgment of interpleader pursuant to § 52-484.14 Therefore, in determining the appropriate standard of review, we turn to a procedurally similar action—a motion to intervene as a matter of right. See, e.g., Kerrigan v. Commissioner of Public Health, 279 Conn. 447, 456–57, 904 A.2d 137 (2006). “For purposes of judging the satisfaction of [the] conditions [for intervention] we look to the pleadings, that is, to the motion for leave to intervene and to the proposed complaint or defense in intervention, and . . . we accept the allegations in those pleadings as true. The question on a petition to intervene is whether a well-pleaded defense or claim is asserted. Its merits are not to be determined. . . . Thus, neither testimony nor other evidence is required to justify intervention, and [a] proposed intervenor must allege sufficient facts, through the submitted motion and pleadings, if any, in order to make a showing of his or her right to intervene. The inquiry is whether the claims contained in the motion, if true, establish that the proposed intervenor has a direct and immediate interest that will be affected by the judgment.” (Citation omitted; emphasis added; internal quotation marks omitted.) Id., 457. Similarly, the question presented at the first stage of an interpleader action is whether there are “conflicting claims to property in the hands of a stakeholder” so as to make interpleader appropriate. Commercial Discount Co. v. Plainfield, 120 Conn. 274, 278–79, 180 A. 311 (1935), citing Grand Lodge v. Burns, 84 Conn. 356, 363, 80 A. 157 (1911). “A complaint in an interpleader action should allege only such facts as show that there are adverse claims to the fund or property and need not, in fact, should not, allege the basis upon which any claimant relies to justify his claim; the latter allegations are to be made in the statement of claim following the interlocutory judgment of interpleader.” (Emphasis added; internal quotation marks omitted.) Yankee Millwork Sash & Door Co. v. Bienkowski, supra, 43 Conn. App. 473, citing Practice Book (1978–97) § 538 (now § 23-43).
This court has held that “the less restrictive de novo standard of review is more consistent with the nature of the relevant inquiry taken to evaluate [whether a movant seeking to intervene as a matter of right has demonstrated a sufficient interest in the subject matter of the litigation], which is confined to a review of the relevant pleadings, with all allegations therein taken as true” than the abuse of discretion standard of review. Kerrigan v. Commissioner of Public Health, supra, 279 Conn. 455. In light of the similarities to granting a
Section 52-484 is “remedial . . . and to be favorably construed. It requires the court to which any complaint founded upon it may be brought, to ‘hear and dispose of all questions which may arise in such case,’ and by the provision for making not only all who claim to be ‘entitled to,’ but all who claim to be ‘interested in,’ the property in question, parties defendant, shows that its purpose is to secure a determination of every right, title or interest that can by possibility be set up.”16 (Emphasis added.) Union Trust Co. v. Stamford Trust Co., 72 Conn. 86, 93, 43 A. 555 (1899); see also United States v. Federative Republic of Brazil, 748 F.3d 86, 95 (2d Cir. 2014) (“[a]n interpleader suit, by its very nature, identifies various possible claimants to the funds at issue, but leaves it to the court to decide which, if any, have a valid claim” [emphasis in original]); 44B Am. Jur. 2d 609, Interpleader § 3 (2007) (“Interpleader statutes are to be liberally construed. Every reasonable doubt should be resolved in favor of a putative stakeholder‘s right to interplead.” [Footnote omitted.]). “It is the express purpose of interpleader actions to avoid duplicative litigation by resolving all possible questions of liability between all possible parties in one proceeding. As such, interpleader actions are especially designed to advance the interests of wise judicial administration and should be furthered whenever possible.” Zellen v. Second New Haven Bank, 454 F. Supp. 1359, 1365 (D. Conn. 1978); see also John Hancock Mutual Life Ins. Co. v. Advance Realty Co., 9 Conn. Supp. 367, 368 (1941) (“[t]he instances will be extremely rare where an interlocutory judgment will be denied when the plaintiff alleges the possession of funds to which two or more claim to be entitled“).
In the present case, although Vera Financial alleges that it is the “legal and/or equitable owner” of the shares, Asia Pacific asserts that it continues to own the shares.17 Furthermore, Asia Pacific and Vera Financial allege that the Grand Court of the Cayman Islands awarded Haida and ARC Capital a judgment against Asia Pacific at the winding-up proceeding and subsequently granted an ex parte provisional charging order against the shares in the amount of the judgment. Asia Pacific alleges that the Grand Court of the Cayman Islands disregarded the fact that Asia Pacific had existing creditors, including a secured creditor, namely, Vera Financial, when it made the charging order absolute. Haida and ARC Capital did not deny Asia Pacific and Vera Financial‘s allegations regarding the alleged charging order at oral argument before the trial court. Having reviewed the facts set forth in the interpleader complaint, we conclude that Asia Pacific and Vera Financial‘s allegations are legally sufficient to support the trial court‘s interlocutory judgment of interpleader.
To the extent that Haida asserts that this court should consider the merits of the claims alleged in the interpleader complaint to determine their viability under Cayman Islands law, we decline to entertain such an assertion.19 It was not the role of the trial court, nor is it the function of this court on appeal, to consider the merits of the purportedly competing claims at this preliminary stage of the present interpleader action. See Vincent Metro, LLC v. YAH Realty, LLC, supra, 297 Conn. 497. Applying the interpleader standard set forth previously in this opinion, and considering the liberal construction of § 52-484, we accept the allegations in the interpleader complaint as true and conclude that Asia Pacific and Vera Financial have alleged facts sufficient to establish that Asia Pacific, Vera Financial, Haida, and ARC Capital all have facially competing claims to the shares. See 44B Am. Jur. 2d, supra, § 3, p. 609 (“[i]nterpleader statutes are to be liberally construed“). As the Appellate Court has previously explained, Asia Pacific and Vera Financial have no duty to “allege the basis upon which any claimant relies to justify his claim” before the trial court‘s interlocutory judgment of interpleader, as the parties will have an opportunity to present such allegations at the second procedural stage of this action in which the merits of
We further rely upon the trial court‘s articulation in which it stated that interpleader was proper under the circumstances because all parties to the interpleader action are “at least potentially entitled to some interest in the stock . . . .”20 Moreover, insofar as Haida claims that the charging order granted by the Grand Court of the Cayman Islands against the shares does not qualify as a sufficient interest in the Trikona shares for purposes of maintaining an interpleader action, we disagree. As this court explained in Union Trust Co., § 52-484 is broad enough to encompass any “interest that can by possibility be set up.” (Emphasis added.) Union Trust Co. v. Stamford Trust Co., supra, 72 Conn. 93.
In consideration of the fact that these parties have been involved in multiple proceedings in several jurisdictions; see footnote 5 of this opinion; and that the underlying dispute between the parties is likely to continue until the ownership of the shares and, thus, the ultimate control of Trikona, are determined, it is in the interest of wise judicial administration to resolve all questions concerning the shares in a single proceeding with all interested parties present. See Zellen v. Second New Haven Bank, supra, 454 F. Supp. 1365 (noting that “interpleader actions are especially designed to advance the interests of wise judicial administration“).
We conclude that Asia Pacific and Vera Financial have sufficiently stated a cause of action for interpleader, satisfying the pleading requirements as set forth in Practice Book § 23-43. Accordingly, we affirm the trial court‘s interlocutory judgment of interpleader.
The judgment is affirmed.
In this opinion the other justices concurred.