Opinion
FSTCV155015033S
01-19-2017
Daniel Traisman et al. v. Gaetano Barresi et al
UNPUBLISHED OPINION
MEMORANDUM OF DECISION RE PREJUDGMENT REMEDY APPLICATION
Hon. Charles T. Lee, Superior Court Judge.
On or about October 5, 2015, Daniel Traisman and YT Holdings, LLC (" YT") commenced litigation against Gaetano Barresi, Loretta Barresi, Joseph Barresi, Louis Barresi, Thomas Pescuma, Doppio, LLC (" Doppio"), Timeless Hospitality LLC (" Timeless"), and 26 Clinton Management, LLC alleging, inter alia, fraud in the inducement, fraud, intentional and negligent misrepresentation, withholding of wages in violation of Gen. Stat. § 31-71a, breach of employment contract, breach of promissory note (count seven), breach of guaranty (count 8, against Pescuma and Louis Barresi), breach of the Connecticut Unfair Trade Practices Act (CUTPA), Gen. Stat. § § 42-110a et seq., and Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1962(c), and piercing the corporate veil as to the Barresi defendants and as to Doppio, in connection with an investment by YT, secured by a note and guaranties, and a promise to employ Traisman in the defendants' restaurant business in Greenwich, Connecticut and New York. The complaint alleges, among other things, that Traisman caused his LLC, YT, to invest $120,000 in the Doppio restaurant business on or about April 22, 2015, which was secured by a promissory note from Timeless, with personal guaranties from Pescuma and Louis Barresi, which is in default.
Defendants filed a motion to strike on or about January 15, 2016, on behalf of the five individual and three corporate defendants, attacking the legal sufficiency of most of the twelve counts. On July 11, 2016, the court (Povodator, J.) granted much of the motion and, in particular, struck the seventh count, based on the promissory note, as to all defendants except Timeless. On August 6, 2016, defendants filed their answer with affirmative defenses, in which, inter alia, they admit that " Timeless Hospitality Group, LLC gave a promissory note to YT Holdings in the amount of $120,000 on or about April 22, 2015" and that " Defendants Pescuma and Louis Barresi executed a Guaranty in favor of YT Holdings."
Plaintiffs filed an application for a prejudgment remedy of attachment (PJR) against defendants' property to secure a sum of $500,000. A hearing on the application took place over two days on December 14, 2015 and August 11, 2016, in which plaintiffs advised that they were seeking the PJR only as to counts seven (the note) and eight (the guaranties). Subsequently, defendants submitted a proffer of set-offs and defenses on September 6, 2016, and plaintiffs submitted a reply to defendants' proffer on October 5, 2016.
For the reasons set forth below, the court grants plaintiff YT a prejudgment remedy of attachment in the amount of $124,255.80 against Timeless, Pescuma and Louis Barresi.
Applicable Law
Connecticut General Statutes Section 52-278d provides the standard for the consideration of an application for a prejudgment remedy of attachment:
(a) The defendant shall have the right to appear and be heard at the hearing. The hearing shall be limited to a determination of (1) whether or not there is probable cause that a judgment in the amount of the prejudgment remedy sought, or in an amount greater than the amount of the prejudgment remedy sought, taking into account any defenses, counterclaims or set-offs, will be rendered in the matter in favor of the plaintiff . . .
Probable cause has been defined as a bona fide belief in facts essential under the law for the action and such as would lead a reasonable, prudent person to entertain such belief. Dufraine v. CHRO, 236 Conn. 250, 261, 673 A.2d 101 (1996).
The probable cause hearing is not to become a full hearing on the merits, but defenses, counterclaims and setoffs must be considered. See Rafferty v. Noto Bros. Construction, LLC, 68 Conn.App. 685, 693, 795 A.2d 1274 (2002) (court improperly refused to consider counterclaim raised orally at probable cause hearing). " 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 cause by weighing the probabilities." Canty v. Otto, 304 Conn. 546, 565, 41 A.3d 280 (2012). Probable cause must exist as to both the merits and damages. Kosiorek v. Smigelski, 112 Conn.App. 315, 322-23, 962 A.2d 880, cert. denied, 291 Conn. 903, 967 A.2d 113 (2009).
Discussion
At the hearings, Daniel Traisman testified without contradiction that he was impressed with the operation of a Greenwich restaurant called Doppio, which was owned and operated by the Baresi family. In March 2015, he and his brother Mark met with Louis and Joseph Baresi to discuss involvement with the family's group of restaurants in Greenwich, New York City, Huntington and Sag Harbor, Long Island. These discussions ripened into a collection of agreements, and, after review by both sides' counsel, various documents were executed in April 2015. As a result, YT paid $120,000 to Timeless in April 2015, for the purpose of purported investments into the Doppio businesses.
Plaintiffs introduced copies of the promissory note dated April 22, 2015 between Timeless Holdings, LLC and YT Holdings, LLC pursuant to which Timeless was to repay YT $120,000 with an interest payment of $1,200 on May 15, 2015 and thirteen monthly payments thereafter of $9,988.68, constituting principal and interest of twelve percent. The note had a maturity date of June 15, 2016. The interest rate increased to fourteen percent after notice and failure to cure an event of default. Notice of default was to be given to Timeless at an address in Huntington, New York, attention of Thomas Pescuma, Jr. with a copy to Stephen Melore, Esq. which, the note said, " shall not constitute notice." The note provided for the payment of collection costs including reasonable attorneys fees in the event of legal proceedings. The note is governed by New York law.
The note also contained the following provision, " Payor acknowledges that this Note is subject to the mandatory repayment of Nine Thousand Six Hundred Dollars ($9,600) in the event that City of Roses Equity Group, LLC exercises its Pre-Emptive rights as described in the Subscription Agreement dated April 23, 2015 by and between the Payor and the Payee." (City of Roses was a member of Timeless.)
Also on or about April 23, 2015, several other documents were signed by various combinations of the parties to the lawsuit: Pescuma and Louis Barresi signed unconditional guaranties of collection; YT Holdings signed subscription agreements with Timeless and 26 Clinton Management, LLC giving it an eight percent interest in each LLC in consideration of the $120,000 loan; Amendment No. 2 to the operating agreement of Timeless acknowledged YT as an eight percent Class B member of the LLC; and Daniel Traisman signed an employment agreement with Timeless as a server and a marketer for an initial two-year term subject to renewal, and terminable for cause as defined therein. Traisman was to earn a minimum of fifty thousand dollars annually, exclusive of cash tips, but inclusive of credit card tips. Traisman's brother Mark also received a similar offer of employment, but his contract was not submitted into evidence.
Timeless made the initial payment under the note, and Daniel and Mark went to work at the Doppio Hudson restaurant in New York City. The brothers worked there until Daniel's discharge on July 30, 2015, following Mark's earlier discharge. While defendants claim the Traisman brothers were discharged for cause, Daniel disputes the validity of the claim, and the court does not find resolution of the disagreement to be necessary at this stage of the proceedings.
Timeless made three additional payments under the note, with the final default occurring on September 15, 2015. YT gave notice of the default to Timeless's attorney, Stephen Melore, Esq., who represented that he was authorized to accept service of the notice. Plaintiffs claim that YT is owed (1) $92,029.71 in principal; (2) $13,625.44 in interest as of October 5, 2016, with a per diem of $35.30; and (3) attorneys fees stipulated at $15,000. Defendants do not dispute these calculations.
However, defendants have asserted a variety of defenses and a purported offset, which are contained in twelve proffers, which the court determines as follows:
Proffers 1 & 11: No Liability is Proper for Defendants Other Than Timeless, Pescuma and Louis Barresi
Plaintiffs do not seek a PJR against any defendants except against Timeless for nonpayment of the note and against Messrs. Pescuma and Louis Barresi under their guaranties.
Proffers 2 and 7: The Note, Guaranties, Subscription Agreements and Employment Agreement are all Part of One Transaction and so Breach of the Employment Agreement Excuses Performance Under the Note and the Guaranties
Defendants contend that, because Daniel Traisman did not fulfill his obligation to work for the Doppio Hudson restaurant, having been terminated for cause, the obligations under the other agreements, including the note and therefore the guaranties, became void.
The court does not agree with this contention. First, defendants ignore the fact that they were supposed to pay Daniel $50,000 a year for his services, an obligation they have avoided by terminating the contract. Second, there is no language in the note or guaranties suggesting that they are in any way contingent upon Daniel's working for Doppio Hudson, which apparently closed shortly after his termination, along with all other Doppio restaurants except for the one in Greenwich. Third, the note and guaranties are integrated documents, and proof of defendants' contention would require improper resort to parol evidence. Fourth, even if they could overcome that hurdle, defendants have not submitted any evidence showing the interdependence of these agreements. Finally, Daniel entered into the employment agreement so that he might become familiar with the American restaurant business. The loss of his services as a trainee could hardly be considered such a loss that repayment of the $120,000 loan could be considered a reasonable forfeiture under these agreements.
Proffer 3: No Proper Notice of Default Was Given
Defendants note that notice of default was sent to Timeless to the attention of Attorney Melore, not to the attention of Thomas Pescuma as provided in the note. However, plaintiffs submitted email correspondence with Attorney Melore showing that they inquired if he was authorized to, and would, accept service of the default notices, and he agreed to receiving such notices and discussed them with plaintiffs' counsel. Accordingly, inadequate notice is not a valid defense.
Proffer 4: Because Notice Was Not Proper, No Event of Default Has Occurred and Acceleration is Improper
Because the court rejects the contention that notice was improper, it also finds that an event of default, i.e., non-payment, occurred and that acceleration was properly invoked.
Proffer 5: There is No Consideration For the Note Because Daniel Received an Eight Percent Membership Interest in Timeless and 26 Clinton Hospitality Group, LLC
The court rejects this contention because the subscription agreements conveying the eight percent interest state that it is in consideration of the loan being made. Defendants are correct in asserting that there is a relationship between the loan and the membership interest, but they have it backwards. Also, the defendants' receipt and use of the $120,000 constitutes adequate consideration for the note.
Proffer 6: There Can be no Obligation Under the Guaranties Because No Event of Default Has Been Established
Because plaintiffs established proper notice and default by Timeless, the personal guaranties of collection signed by Messrs. Pescuma and Louis Barresi are in effect, and these gentlemen are liable for any debt under the note, which is in default.
Proffer 8: The Failure of YT to Properly Exercise its Rights Against Timeless and to Prevent it From Selling the Restaurants in New York, Which Collateralized the Note, Extinguish its Remedies Under the Note and the Guaranties
Defendants have not adduced any evidence that the restaurants were collateral for the note, and the court has found that plaintiffs properly exercised their rights against Timeless in default. Accordingly, this contention is rejected.
Proffer 9: Because the Employment Contract Was Breached, There is no Consideration to Support the Note and the Guaranty
As in Proffer No. 5, the defendants have these elements reversed. It is quite clear that the employment contract was offered in consideration for the loan. The transmission of $120,000 in itself would constitute adequate consideration for the note and the guaranties.
Proffer 10: YT as a Sophisticated Investor Assumed the Risk of Loss in Investing in an Equity Stake in Timeless
Assumption of the risk is not a defense to an action enforcing a promissory note. It is more likely that they obtained a note securing the $120,000, precisely because Daniel and/or his father are knowledgeable businessmen.
Proffer No. 12: The Improper Activities of the Traisman Brothers Caused Losses of $30,000 as a Result of Fraudulent Credit Card Billing and a Loss of $225,000 in the " Fire Sale" of the Doppio Hudson Restaurant
The defendants have submitted no proof is support of either contention, presumably advanced as potential offsets or counterclaims. Further, actions by Mark Traisman cannot be attributable to YT, even if Daniel's might be with proof sufficient to pierce the corporate veil. Finally, the court does not credit this contention in light of the fact that all of the New York enterprises failed at approximately the same time, including those in which the Traismans had no involvement.
Conclusion
For the foregoing reasons, the court finds that plaintiffs have demonstrated probable cause that YT Holdings, LLC will recover against Timeless Holdings, LLC, Thomas Pescuma and Louis Baresi, net of any defenses, offset or counterclaims, the sum of (1) $92,029.71 in principal: (2) $13,625.44 in interest as of October 5, 2016, with a per diem of $35.30; and (3) attorneys fees stipulated at $15,000. Accordingly, the court awards an attachment in favor of YT Holdings, LLC against the assets of Timeless Holdings, LLC, Thomas Pescuma and Louis Baresi in the amount of one hundred twenty-four thousand, two hundred fifty-five dollars and eighty cents ($124,255.80), calculated as follows:
Principal owed
$92,029.71
Interest at 14%, 9/15/15-8/11/16
$11,683.99
Interest at 14%, 8/12/16-1/19/17
(157 days x $35.30)
$5,542.10
Attorneys fees
$15,000
Total
$124,255.80