Opinion
No. X05 CV 00 0180933 S
December 14, 2004
MEMORANDUM OF DECISION RE MOTION TO DISSOLVE GARNISHMENT
On December 11, 2003, World Wrestling Entertainment, Inc. ("WWE") and Stanley Shenker Associates, Inc. ("SSAI") appeared before this Court for the purpose of entering, as orders of the Court, a stipulation and a prejudgment remedy order (the "PJR Order"). Margaret Chapman, wife of SSAI President, Stanley Shenker ("Shenker"), also appeared at the December 11, 2003 hearing as she was a named plaintiff for purposes of the stipulation and PJR Order.
The PJR Order, entered in the amount of $5,000,000, authorized WWE to: (i) attach sufficient property or assets of SSAI to secure such sum; and (ii) garnish any debts due and owing to SSAI.
In January 2002, WWE began the process of garnishing SSAI property. More specifically, WWE served the following writs of garnishment: (1) January 22, 2004, authorizing the garnishment of SSAI property held by Charles Schwab Company ("Schwab") and (2) January 27, 2004, authorizing the garnishment of the following SSAI property: (i) a platinum and diamond necklace; (ii) a curly white lamb coat; (iii) a mink coat; and (iv) funds totaling $146,250 maintained in a Schwab account in the name of Margaret Chapman ("Chapman"), wife of Stanley Shenker.
On February 25, 2004, Chapman filed a motion to dissolve WWE's prejudgment garnishment. In response, on May 14, 2004, WWE filed its opposition and cross motion to compel Chapman to relinquish the SSAI property in her possession to the custody of the marshal. On July 27, 2004, the Court conducted a hearing with respect to the January 27, 2004 garnishments.
The process of a foreign attachment, or garnishment, is appropriate when the property of a party against whom a judgment or decree may be rendered is concealed in the hands of a third party. Conn. Gen. Stat. § 52-329. Conn. Gen. Stat. § 52-329 states in relevant part: "[w]hen the effects of the defendant in any proposed or pending civil action in which a judgment or decree for the payment of money may be rendered are concealed in the hands of his agent or trustee so that they cannot be found or attached . . . the plaintiff may insert in his writ . . . a direction to the officer to leave a true and attested copy thereof . . . with such agent, trustee or debtor of the defendant . . . and from the time of leaving such copy all the effects of the defendant . . . shall be secured in the hands of the garnishee to pay such judgment as the plaintiff may recover."
The intent behind Connecticut's garnishment statute is the prevention of fraud. Treadway v. Andrews, 20 Conn. 384, 1850 WL 690*7 (1850). "It was passed, at an early period . . . and in the preamble, it was stated to be an act `for the better preventing fraud and deceit, sometimes designed and practiced by ill-minded debtors, who betrust their goods, estate, or effects, in the hands of others, with the intent to reserve and receive the same to their own use, and thereby defeat their creditors of their just dues.'" Id.
The legal effect of WWE's writs of garnishment was to place the garnishees, including Chapman, on notice to retain any property belonging to, or due to, SSAI. "The service of a writ of garnishment does not `operate as a physical attachment of any property belonging to the defendant described in the writ, but as notice to the garnishee to retain in its hands any effects belonging to or any indebtedness due the defendant.'" Century Indemnity Co. v. Kofsky, 115 Conn. 193, 194 (1932).
The foreign attachment procedure is an appropriate method for providing such notice to a garnishee, even though the garnishee may dispute whether or not property in its possession actually belongs to the debtor.
Because a garnishment does not act as a physical attachment of the debtor's property, in order to obtain physical custody of the garnished property, Connecticut provides for specific post-judgment procedures, at which time the garnishee can dispute the garnishment and contest ownership over the property. Prior to the enactment of the Postjudgment Remedies Act in 1983, Conn. Gen. Stat. Section 52-350a et. seq., "the customary procedure for adjudication of a disputed garnishment was either a writ of scire facias under General Statutes Section 52-381 . . . or an action for a declaratory judgment under General Statutes Section 52-235a." Buritt Interfinancial Bancorporation v. Genvest, 10 Conn. L. Rptr. 522, 1993 WL 540153, *1 (Conn. Super).
Conn. Gen. Stat. § 52-356c(a) provides that "[w]here a dispute exists between the judgment debtor or judgment creditor and a third person concerning an interest in personal property sought to be levied on, or where a third person claims that the execution will prejudice his superior interest therein, the judgment creditor or third person may, within twenty days of service of the execution or upon application by the judgment creditor for a turnover order, make a claim for determination of interests pursuant to this section."
Conn. Gen Stat. § 52-381 provides: "[a] scire facias may be taken out from the clerk of court where the judgment was rendered, to be served upon such garnishee, requiring him to appear before such court and show cause, if any, to the contrary; . . . and the defendant shall have the right, to disclose on oath whether he has any of the effects of the debtor in his hands."
Conn. Gen. Stat. § 52-235a provides that "[I]n any action in which order of priorities could be determined under scire facias proceedings, such orders of priorities may be determined by declaratory judgment proceedings."
These Connecticut procedures, which normally follow a garnishment after a judgment is obtained in the underlying action, provide the garnishee with the first opportunity to dispute whether or not the garnishee actually has in its possession the effects or property of the debtor, i.e., whether the garnishment or attachment is appropriate. "The whole purpose of a scire facias action is to give the garnishee an opportunity to defend." Vidal Realtors of Westport, Inc. v. Harry Bennett Associates, Inc., 1 Conn.App. 291, 295 (1984).
Connecticut courts have routinely used scire facias actions to determine, through evidentiary hearings, whether or not the property in the possession of a third party belongs to the debtor. See Treadway v. Andrews, 20 Conn. 384, 1850 WL 690, *2 (1950). In Treadway, during the scire facias action, which followed a foreign attachment, the garnishee asserted that the property in question was not property of the defendant in the underlying action, but rather belonged to the garnishee. Id. at 2. The plaintiff, however, introduced evidence to prove that the defendant in the underlying action had fraudulently transferred property to the garnishee. Id. The jury returned a verdict for the plaintiff and on appeal, the Court denied the garnishee's motion for a new trial and upheld the verdict for the plaintiff. Id. at 9. See also Seigel v. Heimovitch, 128 Conn. 543, 544-45 (1942) (plaintiff brought a scire facias action against the garnishees, where garnishees disputed that funds in their possession belonged to the defendant in the underlying action); and Franklin v. Larabee, 1 Root 488, 1793 WL 102 (Conn.Super. 1793) ( scire facias action brought to determine ownership of cargo in garnishee's possession).
WWE followed proper procedure by placing the garnishees, including Chapman, on notice to retain any property or effects of SSAI by serving writs of garnishment. Based on the foregoing statutes and case law, the proper forum to dispute the ownership of garnished property is a scire facias action, a declaratory judgment action, or an action in response to an application for a turnover order, brought after a judgment on the underlying action, to execute on the garnishment. These procedures provide the garnishee with the ability to defend against execution on the garnished property and to assert any rights to the same.
Rather than follow Connecticut procedure and contest the garnishment at the appropriate time, Chapman filed her motion to dissolve WWE's prejudgment garnishment and prematurely and improperly, prior to a judgment on the underlying cause of action and execution on the garnishment, raised the dispute over title and ownership on the garnished property. "Prior to a judgment in the underlying action, a debtor or a garnishee is not entitled to a hearing on the merits of whether the prejudgment garnishment was proper or whether the garnishee holds the attached property as a trustee." Buritt Interfinancial Bancorporation v. Genvest, 10 Conn. L. Rptr. 522, 1993 WL 540153, *2 (Conn.Super.) (emphasis added).
This court lacks statutory authority to dissolve the attachment. Id., at *2-3.
"The right to attach visible or invisible property is created by statute. No judge or court has the power to order the release of property from the lien of an attachment unless its release is authorized by statute. An attachment may be dissolved upon the substitution of a bond; Cum.Sup. 1955, § 3169d; and so much of an attachment as is excessive may be released. § 3198d. No statute in this state provides for the release of a garnishment for any other reason . . ." Clime v. Gregor, 145 Conn. 74, 76 (1958) (internal citations omitted); see also Csakany v. Takacs, 143 Conn. 485, 487 (1956) (no statutory authorization to release attachment on grounds that attachment is an abuse of process or that attachment was not made in accordance with law); and Potter v. Appleby, 136 Conn. 641, 644 (1950) ("There is no statutory authority for any ancillary proceeding by application or motion for the dissolution of an attachment on the ground that the property is exempt.")
Thus, pursuant to Connecticut law, Chapman's motion to dissolve the prejudgment garnishment is improper, as this court has no statutory authority to dissolve the same. "If a garnishee is not liable under the garnishment, that fact can be determined by proper judicial process under [Conn. Gen. Stat. § 52-381], which provides for a writ of scire facias." Clime v. Gregor, 145 Conn. at 77. The motion is therefore denied.
The decision in Vidal Realtors of Westport, Inc. v. Harry Bennett Associates, Inc., 1 Conn.App. 291, 294 (1984) is readily distinguishable. In that case, the parties had already settled the action and the court found that "it would be exalting form over substance in the unusual factual setting of this case to require the court to defer action until a scire facias proceeding with its inevitable delay and expense, was instituted after judgment against Bennett." In this case there is no settlement among the parties and the action is ongoing and a judgment has not been obtained.
CHASE T. ROGERS SUPERIOR COURT JUDGE