Opinion
No. CV 03-0080455
December 19, 2003
Introduction
The complaint in this case is in two counts. In the First Count the Plaintiff claims enforcement of a foreign judgment, and, in the Second Count, a fraudulent conveyance. The complaint alleges that on March 14, 2000, the Plaintiff recovered a judgment against the Defendant, Sabir H. Moghul, in Massachusetts, in the amount of $172,727.47 and that the judgment is unsatisfied. The complaint also alleges that the Plaintiff originally obtained judgment against the Defendant, Sabir H. Moghul, in 1998. That judgment was appealed and affirmed but remanded for a hearing on damages at which time the March 14, 2000 judgment was entered. That judgment was also appealed and affirmed. The Plaintiff alleges that on January 25, 1999 during the pendency of the appeal, the Defendant, Sabir H. Moghul, transferred to the Defendant, Khalida S. Moghul, certain property at 110 Longhill Drive in Somers, Connecticut, without consideration and with the intent of defrauding the Plaintiff.
The Plaintiff has moved for summary judgment on both counts of the complaint claiming that there is no genuine issue of material fact in the complaint. The Defendants oppose the motion and the Defendant, Khalida S. Moghul, has moved for summary judgment as to the Second Count alleging that it is barred by the applicable statute of limitations.
Discussion Standards for Summary Judgment
The standards for granting summary judgment are well settled. "`Pursuant to Practice Book § 17-49, summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Such questions of law are subject to plenary appellate review.' (Internal quotation marks omitted.) Mytych v. May Dept. Stores Co., 260 Conn. 152, 158-59, 793 A.2d 1068 (2002). In deciding whether the trial court properly determined that there was no genuine issue of material fact, we review the evidence in the light most favorable to the nonmoving party. B D Associates, Inc. v. Russell, 73 Conn. App. 66, 69, 807 A.2d 1001 (2002); Yancey v. Connecticut Life Casualty Ins. Co., 68 Conn. App. 556, 558, 791 A.2d 719 (2002)." Faigel v. Fairfield University, 75 Conn. App. 37, 39-40, 815 A.2d 140 (2003).
"`In seeking summary judgment, it is the movant who has the burden of showing the nonexistence of any issue of fact . . . Although the party seeking summary judgment has the burden of showing the nonexistence of any material fact . . . a party opposing summary judgment must substantiate its adverse claim by showing that there is a genuine issue of material fact together with the evidence disclosing the existence of such an issue.' (Internal quotation marks omitted.) Golden v. Johnson Memorial Hospital, Inc., 66 Conn. App. 518, 522-23, 785 A.2d 234, cert. denied, 259 Conn. 902, 789 A.2d 990 (2001). In ruling on a motion for summary judgment, it is customary for the court to review documentary proof submitted by the parties to demonstrate the existence or nonexistence of issues of material fact. Practice Book § 17-45." Drew v. William W. Backus Hospital, 77 Conn. App. 645, 650 (2003).
Undisputed Facts
The Defendants' answer admits the following allegations of the Plaintiff's complaint. The Defendant, Sabir H. Moghul, is an individual residing at 110 Longhill Drive, Somers, Connecticut 06071. The Defendant, Khalida S. Moghul, is an individual residing at 110 Longhill Drive, Somers, Connecticut 06071. At all times relevant hereto, Sabir H. Moghul and Khalida S. Moghul have been married to each other. On March 14, 2000, the Plaintiff recovered a judgment against the Defendant, Sabir H. Moghul, in the Springfield District Court of Massachusetts, to recover $172,588.79 and $138.68 of costs, for a total due of $172,727.47. A certified copy of the judgment is attached as Exhibit "A" to the complaint. The judgment remains wholly unsatisfied. On January 25, 1999, during the pendency of the appeal of the judgment rendered against the Defendant in 1998, Sabir H. Moghul transferred to the Defendant, Khalida S. Moghul, certain property located at 110 Longhill Drive, Somers, Connecticut, without consideration.
From the other documents submitted, including the Defendants' responses to the Plaintiff's interrogatories, the following additional facts are undisputed. In February 1995 the Plaintiff instituted suit against the Defendant, Sabir H. Moghul, in Springfield District Court. On May 19, 1998 judgment was entered against him on Count I on the amount of $157,025.54 plus interest and costs and on Count II in the amount of $9,887.43 plus interest. That decision was appealed. As of January 24, 1999, the Defendant, Sabir H. Moghul's, only assets other than his interest in the real property which was transferred, was a bank account worth about $11,000, jewelry worth less than $1,000, and life insurance policies with a value of about $5,000. On December 13, 1999 the Appellate Division remanded the matter for a hearing in damages. That decision was appealed to the Appeals Court. Subsequently a stipulation by the parties was filed in lieu of the hearing in damages. Judgment was entered against the Defendant on March 14, 2000 in the amount of $146,508.40. That decision was appealed and subsequently affirmed. The real property involved was jointly owned by the Defendants and purchased by them in 1989 for $525,000. The Defendant, Sabir H. Moghul, claims that the transfer of his interest in the property to his spouse was a gift. He admits that he transferred his interest in the property while the lawsuit by the Plaintiff was pending against him in Massachusetts. The Somers's Assessor's office, in 1994, assessed the property at $1,117,070. In 2001, there was a ten-year mortgage on the property of approximately $287,846.12 that was incurred in 1994.
First Count
The Defendants do not oppose the Plaintiff's request for summary judgment as to the First Count of the complaint. Therefore the Plaintiff's motion for summary judgment as to that count is granted.
Second Count
As to the Second Count, the Defendant makes two claims. First, the Defendant, Khalida S. Moghul, claims in her motion for summary judgment that the Second Count is barred by the statute of limitations and second, in the Defendants' opposition to the Plaintiff's motion for summary judgment, they claim that there was no intent to defraud their creditors when Sabir H. Moghul transferred his one-half interest in their home to his wife.
Statute of Limitations
As to the statute of limitations argument, the Defendant claims that a fraudulent conveyance is a tort and, as such, is governed by the three year statute of limitations set forth in General Statutes § 52-577. Here the alleged fraudulent conveyance took place on January 25, 1999 and this action was not instituted until January 2003. In Travelers Indemnity Co. v. Rubin, 209 Conn. 437, 441 (1988) the Court stated that it would not exclude the common law tort action to set aside a fraudulent conveyance from the three year limitation period of § 52-577. The common law action may be utilized where the plaintiff has a claim for damages in tort which has not yet been liquidated by a judgment. Id.
However the Plaintiff here cites the provisions of the Uniform Fraudulent Transfer Act as the basis for his cause of action and claims that the four year statute of limitations set forth in General Statutes § 52-552j applies. The Defendants argue that the court cannot consider that Act in determining the motions for summary judgment since it is not cited in the Plaintiff's complaint. The Plaintiff claims that he can still rely upon General Statutes § 52-552j since the Practice Book requirement that a statute relied on be cited in a complaint is directory and not mandatory.
"[O]ur courts have held that the requirement that the pleader specifically identify the statute on which he relies is directory rather than mandatory. Steele v. Stonington, 225 Conn. 217, 221 n. 7, 622 A.2d 551 (1993); Goodrich v. Diodato, 48 Conn. App. 436, 443, 710 A.2d 818 (1998); Peerless Ins. Co. v. Tucciarone, 48 Conn. App. 160, 163 n. 3, 708 A.2d 611 (1998); Rowe v. Godou, 12 Conn. App. 538, 542, 532 A.2d 978 (1987), rev'd on other grounds, 209 Conn. 273, 520 A.2d 1073 (1988)." Criscuolo v. Mauro Motors, Inc., 58 Conn. App. 537, 545 (2000).
In Spears v. Garcia, 66 Conn. App. 669, 676 (2001) the court was faced with a situation analogous to that presented here and stated: "We therefore hold that . . . although a plaintiff should plead a statute in a complaint that abrogates governmental immunity, failing to do so will not necessarily bar recovery as long as the defendants are sufficiently apprised of the applicable statute during the course of the proceedings . . . Here, the plaintiffs did fail to plead § 52-557n in their complaint . . . however, the plaintiffs in the present case relied on the statute in their memorandum of law in opposition to the motion for summary judgment and in oral argument before the trial court. That sufficiently apprised the defendants that the plaintiffs were relying on § 52-557n to abrogate governmental immunity. Under the circumstances of this case, the defendants cannot complain of unfair surprise. We conclude, therefore, that the trial court improperly granted the defendants' motion for summary judgment on the basis of governmental immunity and the plaintiffs' failure to plead the statute abrogating that immunity."
Here, in his May 15, 2003, reply to the Defendant' Special Defenses and in his August 4, 2003, Motion for Summary Judgment, the Plaintiff has cited the four year statute of limitations period set forth in § 52-552j. The Plaintiff has also moved to amend his complaint to include citation to it. The Defendants oppose the motion to amend arguing that the granting of it prior to consideration of the Defendant, Khalida S. Moghul's, motion for summary judgment is prejudicial to her. Based on the decisions cited above, even absent the amendment, the court can consider the Plaintiff's reliance on the provisions of § 52-552j in determining the motions for summary judgment. In any event, the Defendants have been aware for some time of the Plaintiff's reliance on the statute and are not prejudiced by the amendment to include it in the complaint. Therefore the court grants the motion to amend.
General Statutes § 52-552j provides that: "A cause of action with respect to a fraudulent transfer or obligation under sections 52-552a to 52-552l, inclusive, is extinguished unless action is brought: (1) Under subdivision (1) of subsection (a) of section 52-552e, within four years after the transfer was made or the obligation was incurred or, if later, within one year after the transfer or obligation was or could reasonably have been discovered by the claimant; (2) under subdivision (2) of subsection (a) of section 52-552e or subsection (a) of section 52-552f, within four years after the transfer was made or the obligation was incurred; or (3) under subsection (b) of section 52-552f, within one year after the transfer was made or the obligation was incurred." "`The UFTA sets forth three limitation periods in [General Statutes] § 52-552j. The first limitation of action of four years applies to transfers made with actual intent under § 52-552e(a)(1). The second statute of limitations of four years contained in § 52-552j(2) applies to transfers made with constructive fraudulent intent under § 52-552e(a)(2). Section 52-552j(3) contains the third and final limitation and provides for a one year statute of limitations for constructive fraudulent conveyances to an insider for an antecedent debt.' Connecticut National Bank v. D'Onofrio, 46 Conn. App. 199, 209, 699 A.2d 237, cert. denied, 243 Conn. 926, 701 A.2d 657 (1997)." National Loan Investors v. World Properties, 79 Conn. App. 725, 735 (2003).
General Statutes § 52-552e provides: "(a) A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, if the creditor's claim arose before the transfer was made or the obligation was incurred and if the debtor made the transfer or incurred the obligation: (1) With actual intent to hinder, delay or defraud any creditor of the debtor; or (2) without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor (A) was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction, or (B) intended to incur, or believed or reasonably should have believed that he would incur, debts beyond his ability to pay as they became due. (b) In determining actual intent under subdivision (1) of subsection (a) of this section, consideration maybe given, among other factors, to whether: (1) The transfer or obligation was to an insider, (2) the debtor retained possession or control of the property transferred after the transfer, (3) the transfer or obligation was disclosed or concealed, (4) before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit, (5) the transfer was of substantially all the debtor's assets, (6) the debtor absconded, (7) the debtor removed or concealed assets, (8) the value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred, (9) the debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred, (10) the transfer occurred shortly before or shortly after a substantial debt was incurred, and (11) the debtor transferred the essential assets of the business to a lienor who transferred the assets to an insider of the debtor."
Since the action here falls within the provisions of § 52-552e(a)(1) or (2) and this action was brought within the four year period set forth in the statute, it is not barred by the statute of limitations.
Fraudulent Conveyance
The Plaintiff argues that he is entitled to summary judgment on the fraudulent conveyance count because there is no material facts in dispute as to the three prong test required to demonstrate a fraudulent conveyance as set forth in the act. The Plaintiff claims that the elements of such a claim are: 1) the creditors' claim must have arose before the transfer was made; 2) the transfer was made with the actual intent to hinder, delay or defraud a creditor or the debtor made the transfer without receiving a reasonably equivalent value in exchange for the transfer; and 3) the debtor was engaged or about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction, or intended to incur, or believed or reasonably should have believed that he would incur, debts beyond his ability to pay as they became due.
"General Statutes § 52-552 . . . has been held to be a statutory adoption of the common law of fraudulent conveyances and the common law remedy continues to exist. White v. Amenta, 110 Conn. 314, 318-19, 148 A. 345 (1930). `A conveyance is fraudulent if made with actual intent to avoid any debt or duty or if made without any substantial consideration by a person who is or will be thereby rendered insolvent . . . A person is insolvent for these purposes when he is unable to pay his then-existing debts.' (Citations omitted.) Molitor v. Molitor, 184 Conn. 530, 536, 440 A.2d 215 (1981); Tessitore v. Tessitore, supra, 42 . . . The plaintiff needed to establish only one of the alternatives, i.e., that the conveyance was made without any substantial consideration or that it was made with a fraudulent intent in which the grantee participated, not both. Watson v. Watson, 221 Conn. 698, 707, 607 A.2d 383 (1992); Tyers v. Coma, 214 Conn. 8, 11, 570 A.2d 186 (1990); Rocklen, Inc. v. Radulesco, 10 Conn. App. 271, 277, 522 A.2d 846 (1987). `The determination of the question of fraudulent intent is clearly an issue of fact which must often be inferred from surrounding circumstances . . . Such a fact is, then, not ordinarily proven by direct evidence, but rather, by inference from other facts proven — the indicia or badges of fraud.' (Citations omitted; internal quotation marks omitted.) Zapolsky v. Sacks, supra, 200; Tyers v. Coma, supra." Cook v. Bieluch, 32 Conn. App. 537, 551-52 (1993).
Here the undisputed facts indicate that the conveyance was fraudulent under the criteria set forth in the constructive fraud statute, § 52-552e(a)(2). At the time of the transfer, January 25, 1999, the lawsuit by the Plaintiff was pending against the Defendant, Sabir H. Moghul, in Massachusetts. In fact, a judgment had already been rendered in that action against him. At that time his only other assets were a bank account worth about $11,000, jewelry worth less than $1,000, and life insurance policies with a value of about $5,000. The real property involved was jointly owned by the Defendants and represented the Defendant Sabir H. Moghul's, most significant asset. No consideration was paid for the property and the Defendant, Sabir H. Moghul, claims that the transfer to his spouse was a gift.
In opposition to the Plaintiff's motion, the Defendants submit their own affidavits in which they state simply that at the time of the transfer, the Defendant, Sabir H. Moghul, was in deteriorating health and the transfer was made for estate settlement purposes. Such statements alone, in light of the other evidence before the court, are insufficient to raise an issue of material fact. "`It is especially appropriate to hold an affidavit by a moving party to a stringent standard.' Evans Products Co. CT v. Clinton Building Supply, Inc., 174 Conn. 512, 516, 391 A.2d 157 (1978). Affidavits containing self-serving and unsubstantiated allegations need not be viewed as persuasive by the court. See 2830 Whitney Avenue Corp. v. Heritage Canal Development Assoc., Inc., 33 Conn. App. 563, 568, 636 A.2d 1377 (1994)." Rodriguez v. Massalski, Judicial District of New Britain at New Britain, Docket No. CV 00 0504550, (July 2, 2001, Shapiro, J.).
In any event, the court need not consider the actual intent of the Defendants because the undisputed facts bring this case squarely within the bounds of constructive fraud outlined in the statute and actual intent need not be proven. "In the area of fraudulent conveyances, we have held that `[t]he party seeking to set aside a conveyance as fraudulent bears the burden of proving either: (1) that the conveyance was made without substantial consideration and rendered the transferor unable to meet his obligations; or (2) that the conveyance was made with a fraudulent intent in which the grantee participated. Bizzoco v. Chinitz, 193 Conn. 304, 312, 476 A.2d 572 (1984); Zapolsky v. Sacks, 191 Conn. 194, 200, 464 A.2d 30 (1983). The party seeking to set aside the conveyance need not satisfy both alternatives. Bizzoco v. Chinitz, [ supra, 312].' . . . Tyers v. Coma, 214 Conn. 8, 11, 570 A.2d 186 (1990); see also Virginia Corp. v. Galanis, 223 Conn. 436, 443-44 n. 10, 613 A.2d 274 (1992).' Wendell Corp. Trustee v. Thurston, 239 Conn. 109, 115, 680 A.2d 1314 (1996)." Connecticut National Bank v. D'Onofrio, 46 Conn. App. 199, 204-05 (1997). The constructive fraud statute, § 52-552e(a)(2), requires that the creditor prove that the creditor's claim arose before the transfer was made or the obligation was incurred, the debtor made the transfer or incurred the obligation without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor intended to incur, or believed or reasonably should have believed that he would incur, debts beyond his ability to pay as they became due. "Under subsection (a)(2) of § 52-552e a creditor may prove a fraudulent transfer by establishing that it was an existing creditor of the debtor at the time of the transfer, that the transfer was not made for reasonably equivalent value in exchange for the transfer and that the debtor intended to incur, or reasonably should have believed that he would incur, debts beyond his ability to pay as they became due. `An action pursuant to this section deems any transfer fraudulent without regard to intent if the transfer was made without fair consideration and it rendered the transferor unable to pay its obligations or otherwise leaves the transferor under-capitalized. The plaintiff need not demonstrate that the transaction was to an insider nor that the debtor was insolvent at the time of the transfer.' Mullen Mahon, Inc. v. Mobilmed Support Services, LLC, 1999 WL 376489 at *5." National Loan Investors v. Lan Assoc., Superior Court, Complex Litigation Docket at New Britain, Docket No. X03-CV-99-0495407S (June 28, 2002, Aurigemma, J.), reversed on other grounds, 79 Conn. App. 725 (2003).
Here the transfer was made while the lawsuit against the Defendant, Sabir H. Moghul, by the Plaintiff, was pending and a judgment had been rendered against him. He received no consideration in exchange for the transfer of his interest in the property. Lastly, at the time of the transfer he had insufficient other assets to satisfy the Plaintiff's claim.
Therefore, the Plaintiff's Motion for Summary Judgment as to the Second Count is granted.
Conclusion
The Plaintiff's Motion for Summary Judgment (#116) is granted and the Defendant's Objection (#119) is overruled. The Defendant's Motion for Summary Judgment (#118) is denied and the Plaintiff's Objection (#122) is sustained. The Plaintiff's Request to Amend Complaint (#120) is granted and the Defendant's Objection (#124) is overruled.
The matter will be set for a hearing as to the amount of damages to be awarded on the First Count and as to the remedy on the Second Count.
JANE S. SCHOLL, JUDGE.