Opinion
No. HHD CV 08 5022977S
June 3, 2010
CORRECTED MEMORANDUM OF DECISION ON MOTION TO PRECLUDE TRANSFER OF ASSETS
This Corrected Memorandum of Decision is changed only as to its heading, which now properly lists Michael Pitter as the defendant.
I. FACTUAL AND PROCEDURAL BACKGROUND
This case arises out of a tragic motor vehicle accident witnessed by the minor plaintiff, Daysha Santana, in which a motor vehicle operated by defendant Michael Pitter collided with the motor vehicle then occupied by the plaintiff's mother, Juana Iris Bocachica, ultimately causing the death of her mother as well as serious physical injuries to both her brother, Luis Alvarez, Jr., and her mother's fiancé, Gilberto Deleon. The plaintiff claims that, as a result of the defendant's negligence on that occasion, she too suffered physical injuries and resulting emotional distress.
Since Santana is a minor, she brought this action through her guardian and next friend, Zoraida Pagan. On June 9, 2009, the plaintiff moved to substitute Zoraida Bocachica as guardian and next friend. The motion was granted on June 22, 2009 by the court, Graham, J.
In Count Two of the Plaintiff's "Second Amended Fourth Revised Complaint," the plaintiff alleges that the defendant's negligence resulted in her being thrown to the ground and incurring "physical injury, lacerations, bruising, and a severe shock to her entire nervous system."
The procedural history of this case is rather convoluted. Originally, both the plaintiff and the fiduciary of the Estate of Juana Bocachica Pagan were plaintiffs in this action. On September 16, 2008, they filed an application for a prejudgment remedy seeking to attach property owned by the defendant known as 227 Park Avenue in Bloomfield in the amount of $500,000. On that same date, the clerk set a date of October 6, 2008 for a hearing on the matter. The parties, however, stipulated to an attachment in the amount of $250,000 in lieu of a hearing on the prejudgment remedy. On December 18, 2008, the parties' stipulation was approved by the court, Elgo, J, and the attachment was recorded in the land records of the town of Bloomfield on January 2, 2009. Thereafter, the fiduciary of the Estate of Juana Bocachica Pagan settled with the defendant for $50,000 and withdrew from the suit. All funds for settlement came from the defendant's motor vehicle insurance policy, which provided maximum coverage in the amount of $50,000 per person and $100,000 per occurrence. After payment of the $50,000 settlement, the remaining proceeds from the defendant's insurance policy total $50,000.
The fiduciary of the Estate of Juana Bocachica Pagan, Iris Bocachica, brought the action on behalf of the estate.
As far as the record shows, the attachment on the property known as 227 Park Avenue in Bloomfield in the amount of $250,000 remains to date.
On October 7, 2009, the plaintiff offered to settle her claims against the defendant for $16,666.66, and to that end filed an offer of compromise with the court pursuant to Section 17-14 of the Practice Book. Thereafter, on November 2, 2009, the plaintiff filed a "Motion to Preclude Transfer of Assets," in which she requested that this court "preclude the defendant from transferring his sole asset available to satisfy the plaintiff's claim [i.e., the proceeds of the insurance policy] during the pendency of this lawsuit." In her motion, the plaintiff stated that, in addition to her present claim for damages, the potential claims against the defendant by Deleon and Alvarez remained pending. She further alleged that "[u]pon information and belief, defense counsel is going to recommend that defendant Pitter divide the $50,000 remaining in his automobile insurance policy, the sole asset available to satisfy the plaintiff's claim, among Deleon and Alvarez," which would leave the defendant without the resources to satisfy the plaintiff's pending claim despite the plaintiff's offer of compromise filed on October 7, 2009. In support of the motion, the plaintiff attached the defendant's affidavit wherein he states, in effect, that he has no assets available to satisfy a judgment.
The defendant did not file a written acceptance of the offer of compromise with the court within thirty days pursuant to Section 17-15 of the Practice Book. Accordingly, the plaintiffs offer is considered rejected. See Practice Book § 17-16.
In his affidavit, the defendant states that his sole asset is his ownership interest in the property known as 227 Park Avenue in Bloomfield, which he co-owns with his wife. Nevertheless, he stated that he believed he did not have any equity in the property at the present time due to an encumbrance in an amount of $147,000.
On November 5, 2009, the defendant filed a memorandum in opposition to the plaintiff's motion. In his memorandum, the defendant argues that the plaintiff's motion lacks a legal basis. He explains that he is also facing a personal injury action filed by Deleon and similar claims by Alvarez. As a result of his settlement with the fiduciary of the Estate of Juana Bocachica Pagan, he is left with $50,000 of remaining insurance proceeds to attempt to satisfy the claims of the plaintiff, Deleon, and Alvarez. Compared to those of Deleon and Alvarez, the defendant opines that the plaintiff's physical injuries are relatively minor. He provides details of the extensive injuries suffered by Deleon and has reason to believe that the medical bills of Alvarez alone exceed the remaining proceeds of the insurance policy.
The defendant further states, in his memorandum in opposition, that both Deleon and Alvarez have indicated an objection to settlement of the plaintiff's claims for the amount demanded (i.e., $16,666.66), which represents approximately one-third of the remaining insurance policy proceeds. Additionally, the defendant explains that both Deleon and Alvarez "have expressed a willingness to engage in binding arbitration for the purpose of determining how [the defendant's] policy limits will be divided. Counsel for [the plaintiff] was also provided with the opportunity to engage in binding arbitration in order to have an arbitrator decide the manner in which the policy limits of [$50,000] would be divided amongst the remaining three plaintiffs. Counsel for the plaintiff has declined to engage in a binding arbitration."
II. LEGAL ANALYSIS
Against the foregoing factual and procedural background, the question presented is whether the plaintiff has any legal basis for pursuing the relief herein requested on his motion to preclude transfer of assets. In determining whether such a legal basis exists, it is useful to examine the requirements necessary to maintain an application for a prejudgment remedy, a claim for injunctive relief, a motion for an order pendente lite, and an action in the nature of interpleader.
A. Prejudgment Remedy
The first legal theory under which the plaintiff may be entitled to prohibit the defendant from transferring the remaining proceeds available to him under his insurance policy to other claimants before obtaining a judgment in her favor is by applying for a prejudgment remedy. Under Section 52-278a(d) of the General Statutes, a prejudgment remedy is defined as "any remedy or combination of remedies that enables a person by way of attachment, foreign attachment, garnishment or replevin to deprive the defendant in a civil action of, or affect the use, possession or enjoyment by such defendant of, his property prior to final judgment but shall not include a temporary restraining order." Once a loss has occurred, a person can deprive the defendant in a civil action of the proceeds of a casualty insurance policy prior to final judgment by way of garnishment. See 2 R. Bevacqua Bollier S. Busby, Stephenson's Connecticut Civil Procedure (3d Ed. 1997) § 109, p. 52; see also Parker, Peebles Knox v. El Saieh, 107 Conn. 545, 554-55, 141 A. 884 (1928). Once the loss has occurred, the proceeds are considered a "debt" that is "due" under Section 52-329 of the General Statutes. See 2 R. Bevacqua Bollier S. Busby, supra, p. 52. Thus, the proceeds of a casualty insurance policy are a proper subject of a prejudgment remedy because such proceeds may be garnished.
Nevertheless, there are at least three reasons why the court must deny the plaintiff's motion if it is construed as an application for a prejudgment remedy. First, the plaintiff does not have an application for a prejudgment remedy pending before the court at this time. Second, even if her earlier application for a prejudgment remedy filed on September 16, 2008 had not been withdrawn, that application did not comply with the statutory requirements for garnishment. Third, even if the plaintiff were to file a subsequent application for a prejudgment remedy, the court would have to hold a hearing to determine whether the plaintiff is adequately secured.
1. The September 2008 Application for Prejudgment Remedy Must Be Considered as Having Been Withdrawn
Section 52-278j(b) of the General Statutes provides in relevant part: "[I]f a date for a hearing upon a prejudgment remedy is scheduled by the clerk and such hearing is not commenced within thirty days thereof, except as provided in Section 52-278e, the court shall order the application to be considered as having been withdrawn." In the present case, the clerk scheduled a hearing date of October 6, 2008 for the September 2008 application. A hearing was not commenced within thirty days, however, because the parties stipulated to an attachment in the amount of $250,000 in lieu of proceeding with a hearing. Accordingly, since no hearing was commenced within thirty days of the date, the court must consider the application as having been withdrawn under § 52-278j(b).
2. The September 2008 Application was Defective
Our statutory scheme governing prejudgment remedies makes it clear that a prejudgment remedy is only available if the plaintiff complies with Sections 52-278a to 52-278g inclusive. See General Statutes § 52-278b. In particular, subsection (f) of Section 52-278c requires a plaintiff seeking a garnishment to include, in the notice and claim form accompanying the application, "the name and address of any third person holding property of the defendant who is to be made a garnishee by process preventing the dissipation of such property."
The plaintiff does not specify who has the proceeds, and thus who is the garnishee.
In the present case, even assuming that the plaintiff's application for a prejudgment remedy filed in September 2008 could provide a legal basis for the granting of the plaintiff's motion, that application would be deficient for failure to identify a garnishee, as required under General Statutes § 52-278c(f).
3. The Court Must Hold a Hearing to Determine Whether the Plaintiff is Adequately Secured
Furthermore, even if the plaintiff filed new and proper application for a prejudgment remedy in conformance with the requirements of General Statutes §§ 52-278a to 52-278g, inclusive, the court could not order an immediate garnishment of the remaining in $50,000 insurance proceeds. Before it may issue a prejudgment remedy, the court must determine not only if there is probable cause that the plaintiff will prevail on her claim or cause of action on the merits, but whether there is probable cause that she will obtain judgment in the particular amount sought to be attached. See Cendent Corp. v. Shelton, 473 F.Sup.2d 307, 312 (D.Conn. 2007), citing Kinsale, LLC v. Tombari, 95 Conn.App. 472, 481, 482, 897 A.2d 646 (2006) (Flynn, C.J., dissenting). Here, where the plaintiff's offer of compromise is only $16,666.66, it is most unlikely that the court would grant a prejudgment remedy in the full amount of $50,000. See, e.g., Connecticut Light Power Co. v. Gilmore, 89 Conn.App. 164, 176, 875 A.2d 546 (issuing a prejudgment remedy order authorizing an attachment for less than the amount requested by the applicant), cert. denied, 275 Conn. 906, 882 A.2d 681 (2005).
Additionally, our Appellate Court has explained that the court may deny an application for a prejudgment remedy where a plaintiff is adequately secured. See Blakeslee Arpaia Chapman, Inc. v. EI Constructors, Inc., 32 Conn.App. 118, 131, 628 A.2d 601 (1993). "Thus, a plaintiff may be entitled to a prejudgment remedy because it has demonstrated the requisite probable cause, but it may still be denied the remedy if its interest is already adequately secured." Id. Accordingly, if the plaintiff's interest in the judgment is already adequately secured by either the attachment on the defendant's property in the amount of $250,000 or the insurance policy, then the court would deny the plaintiff's application to garnish the insurance proceeds.
For example, Section 52-278d(a)(2) of the General Statutes specifically includes, among the issues properly considered in the hearing on probable cause, "whether payment of any judgment that may be rendered against the defendant is adequately secured by insurance . . ." Even if the adequacy of the security is in question, the statute contemplates that the issue will be decided after a hearing whereby the defendant may put forth evidence on the issue of adequacy. Cf. Palasky v. Glemacy Builders, LLC. Superior Court, judicial district of New London, Docket No. CV 06 5001528S (August 13, 2008, Abrams, J) (court was not "satisfied of the existence of insurance sufficient to satisfy awards that may ultimately be rendered" where defendants declined to divulge the specific conditions of the insurance company's reservation of rights defense at the hearing even though evidence of coverage was put forth).
B. Injunctive Relief
The plaintiff could likewise have sought to temporarily enjoin the defendant from transferring the remaining proceeds of his insurance policy to Deleon and Alvarez prior to a determination of the plaintiff's claim. The purpose of a temporary injunction is to preserve the status quo until final determination of the parties' rights after a hearing on the merits. See Clinton v. Middlesex Mutual Assurance Co., 37 Conn.App. 269, 270, 655 A.2d 814 (1995). "[A] party seeking injunctive relief has the burden of alleging and proving irreparable harm and lack of an adequate remedy at law." (Internal quotation marks omitted.) Branch v. Occhionero, 239 Conn. 199, 207, 681 A.2d 306 (1996). Generally, irreparable harm requires a showing that the plaintiff cannot be adequately redressed by final relief on the merits and for which money damages are inadequate. Pirtek USA, LLC v. Zaetz, 408 F.Sup.2d 81, 84 (D.Conn. 2005). Because the plaintiff is seeking monetary damages in this action, a court would likely deny the plaintiff's request for injunctive relief due to a lack of irreparable harm and the existence of an adequate remedy at law.
C. Order Pendente Lite
If the plaintiff chose to participate in an arbitration proceeding, as has previously been suggested by the defendant, the plaintiff could request that the court secure the insurance proceeds during the pendency of that arbitration proceeding by issuing an order pendente lite. See General Statutes § 52-422. This remedy, however, is only available once arbitration has begun. See id. It therefore is not available at this time in this case.
General Statutes § 52-422 provides: "At any time before an award is rendered pursuant to an arbitration under this chapter, the superior court for the judicial district in which one of the parties resides or, in a controversy concerning land, for the judicial district in which the land is situated or, when said court is not in session, any judge thereof, upon application of any party to the arbitration, may make forthwith such order or decree, issue such process and direct such proceedings as may be necessary to protect the rights of the parties pending the rendering of the award and to secure the satisfaction thereof when rendered and confirmed."
D. Interpleader
If the plaintiff decides not to participate in arbitration, the plaintiff can pursue a separate action in the nature of interpleader under Section 52-484 of the General Statutes. An action in the nature of interpleader is designed to resolve a controversy when a person has money or property claimed by two or more persons. See Guilford v. Cristini, 45 Conn.Sup. 235, 236, 708 A.2d 979 (1997). Such an action has, under appropriate circumstances, been used to determine whether claimants are entitled to share in the proceeds of an insurance policy, and, if so, the share to which each claimant is entitled. See Century Indemnity Co. v. Kofsky, 115 Conn. 193, 200, 161 A. 101 (1932).
General Statutes § 52-484 provides: "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, may tax costs at its discretion and, under the rules applicable to an action of interpleader, may allow to one or more of the parties a reasonable sum or sums for counsel fees and disbursements, payable out of such fund or property; but no such allowance shall be made unless it has been claimed by the party in his complaint or answer."
The motion before the court, however, cannot be maintained as an action in the nature of interpleader because the plaintiff's action does not meet the statutory requirements for such a claim. In particular, Section 52-484 expressly requires that the action be brought "making all persons parties who claim to be entitled to or interested in such money or other property." In the present case, Deleon and Alvarez are not parties. Accordingly, although an action in the nature of interpleader may be appropriate given the plaintiff's circumstances, it does not provide a legal basis for the motion now before the court.
III. CONCLUSION AND ORDER
For the foregoing reasons, the court must DENY the plaintiff's "Motion to Preclude Transfer of Assets." IT IS SO ORDERED this 1st day of June 2010.