Opinion
No. HHD CV-06-4020422S
August 15, 2006
MEMORANDUM OF DECISION
The plaintiff, John P. Burke, Banking Commissioner, has brought the present action seeking to enforce a final administrative decision issued pursuant to General Statutes § 36b-27(d)(2), after a hearing in which he found that the defendant, Eddie Papic, had violated certain provisions of General Statutes §§ 36b-2 et seq. (Connecticut's Uniform Securities Act) and ordered that Papic pay a civil fine of $40,000 not later than ninety (90) days after September 8, 2005. Additionally, pursuant to General Statutes § 36b-27(e)(2), he also sought the imposition of a fine for violation of the Commissioner's order. He now seeks a prejudgment remedy pursuant to General Statutes § 52-278d.
The defendant filed an appeal, Papic v. Burke, Commissioner, Superior Court, judicial district of New Britain, Docket No. CV 05 40008511, which is now pending.
The prejudgment remedy is granted for the following reasons:
1) The plaintiff has met his burden of establishing probable cause that judgment will be rendered in his favor by virtue of the fact that the court, Levine, J., denied Papic's motion for stay in the administrative appeal on January 6, 2006. Said decision in determining the motion to stay pursuant to General Statutes § 4-183(f) involves, for all practical purposes, the same judicial determination as whether probable cause has been established pursuant to General Statutes § 52-278d(a); see Griffin Hospital v. Commission on Hospitals Health Care, 196 Conn. 451, 458-59, 493 A.2d 229 (1985) (addressing determination of whether to grant stay); see also J.K. Scanlan Co. v. Construction Group, Inc., 80 Conn.App. 345, 349-50, 835 A.2d 79 (2003) (addressing probable cause determination); and hence the matter has been determined. Albahary v. City of Bristol, 276 Conn. 426, 444, 886 A.2d 802 (2005).
"While we . . . approve the `balancing of the equities' test [which weighs the equities and balances the harm that may be suffered by the Appellant as the result of the enforcement of the Agency order or the decision, pending the appeal, against the public harm that may result from delaying the effectiveness of the Order or Decision] . . . we do not in its application eschew such factors as the likely outcome of the appeal, the irreparability of the prospective harm to the applicant, or the effect of delay in implementation of the order upon other parties as well as upon the public interest." (Emphasis added.) Griffin Hospital v. Commission on Hospitals Health Care, 196 Conn. 451, 458-59, 493 A.2d 229 (1985).
"The hearing in probable cause for the issuance of a prejudgment remedy is not contemplated to be a full scale trial on the merits of the plaintiff's claim. The plaintiff does not have to establish that he will prevail, only that there is probable cause to sustain the validity of the claim . . . The court's role in such a hearing is to determine probable success by weighing probabilities . . . The legal idea of probable cause is a bona fide belief in the existence of the facts essential under the law for the action and such as would warrant a man of ordinary caution, prudence and judgment, under the circumstances, in entertaining it . . . Probable cause is a flexible common sense standard. It does not demand that a belief be correct or more likely true than false." (Citation omitted; internal quotation marks omitted.) J.K. Scanlan Co. v. Construction. Group, Inc., 80 Conn.App. 345, 349-50, 835 A.2d 79 (2003).
2) In determining whether a prejudgment remedy may issue, this court was required to and did receive evidence on any defenses, counterclaims or set-offs. See General Statutes § 52-278d(a). The court heard testimony from several witness on the alleged defenses and potential counterclaims, which included but were not limited to: due process claims of lack of notice involving General Statutes § 4-182 and §§ 36b-15 and 27; ex parte communication by those involved in the decision-making process, in violation of General Statutes § 4-181(c); selective enforcement and bias; claims concerning the decision-maker's mental processes implicating United States v. Morgan, 313 U.S. 409, 61 S.Ct. 999, 85 L.Ed. 1429 (1941); and, finally, the preemption interplay between SEC Regulation D, Rule 506, 17 C.F.R. § 203.506 and § 18(a)(1) of NSMIA, 15 U.S.C. § 77r, and General Statutes § 36-4. This court finds, after taking into account both the factual and legal issues of these defenses, claims, and counterclaims, that the prejudgment remedy should issue.
3) This court was concerned about whether the matter was justiciable. In light of the fact that General Statutes § 4-183(f) states, in part, "[t]he filing of an appeal shall not, of itself, stay enforcement of an agency decision"; see also Bittle v. Commissioner of Social Services, 249 Conn. 503, 521, 734 A.2d 551 (1999); and that prejudgment remedies are applicable to civil matters on appeal; Gagne v. Vaccaro, 80 Conn.App. 436, 452-54, 835 A.2d 491 (2003), cert. denied, 268 Conn. 920, 846 A.2d 881 (2004); and that the prejudgment remedy process lies to seek the protection of assets in connection with a judgment; see Cahaly v. Benistar Property Exchange Trust Co., 268 Conn. 264, 842 A.2d 1113 (2004); and that this is a separate action claiming, as noted, both enforcement of the Commissioner's order and an imposition of a fine, this court finds no issues of justiciability.
Accordingly, a prejudgment remedy in the amount of $40,000 may enter. CT Page 14420