Cahaly v. Benistar Property Exchange Trust Co.

842 A.2d 1113, 268 Conn. 264, 2004 Conn. LEXIS 76
CourtSupreme Court of Connecticut
DecidedMarch 23, 2004
DocketSC 16892
StatusPublished
Cited by15 cases

This text of 842 A.2d 1113 (Cahaly v. Benistar Property Exchange Trust Co.) is published on Counsel Stack Legal Research, covering Supreme Court of Connecticut primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cahaly v. Benistar Property Exchange Trust Co., 842 A.2d 1113, 268 Conn. 264, 2004 Conn. LEXIS 76 (Colo. 2004).

Opinion

Opinion

NORCOTT, J.

The defendants, Benistar Property Exchange Trust Company, Inc. (Benistar Property), Benistar, Ltd., and Daniel E. Carpenter, appeal, upon our grant of certification, from the judgment of the Appellate Court affirming the trial court’s decision granting the application filed by the plaintiff, Gail A. Cahaly, for a prejudgment remedy against the defendants. Cahaly v. Benistar Property Exchange Trust Co., 73 Conn. App. 267, 269, 812 A.2d 1 (2002). The defendants claim that the Appellate Court improperly [266]*266affirmed the trial court’s decision because: (1) the prejudgment remedy statutes, General Statutes § 52-278a et seq., do not provide the Superior Court with the authority to grant a prejudgment remedy based on an action pending in the courts of another state; (2) as a matter of law, the plaintiff failed to establish probable cause to support her application for a prejudgment remedy; and (3) as a matter of law, the plaintiffs complaint does not support the granting of a prejudgment remedy against Carpenter in his individual capacity. In response, the plaintiff claims that nothing in the statutory scheme governing prejudgment remedies prohibits a plaintiff in an out-of-state matter from securing the Connecticut assets of a defendant when the plaintiff anticipates filing her out-of-state judgment in Connecticut. We agree with the defendants’ first claim.1 Accordingly, we reverse the judgment of the Appellate Court.

The Appellate Court opinion sets forth the following relevant facts and procedural history. “Benistar Property is a wholly owned subsidiary of Benistar, Ltd. Benistar, Ltd., maintains Connecticut offices in Stamford and Simsbury. Carpenter is the chairman and secretary of Benistar Property and the chairman and secretary of Benistar, Ltd. Carpenter is a Connecticut resident. Benistar Property was in the sole business of serving as an intermediary for like-kind exchanges of property pursuant to 26 U.S.C. § 1031 of the Internal Revenue Code.2 Carpenter’s role in Benistar Property was to manage clients’ proceeds from the sales of properties until further directed by the clients to return the [267]*267proceeds or to apply the proceeds to the purchase of new property.

“In October, 2000, Carpenter opened two accounts, a money market account and a trading account, with PaineWebber, Inc. (PaineWebber), under the name of Benistar Property Exchange. Carpenter instructed PaineWebber that Benistar Property would wire funds into the money mar ket account, some of which would later be transferred to the trading account. In December, 2000, the balance in the trading account fell into a negative balance, and PaineWebber seized the money market funds to pay for the positions it covered in the trading account.

“The plaintiff, in an exchange fee agreement dated November 8, 2000, had entered into a written contract with Benistar Property that provided that the plaintiffs funds would be held and invested in either a 3 percent per annum or a 6 percent per annum PaineWebber account. The 3 percent account allowed for liquidation by seventy-two hours written notice, and the 6 percent account allowed for liquidation by thirty days written notice. The plaintiff signed over a check in the amount of $2,412,230 to Benistar Property for investment. Since November 8, 2000, $1,420,000 of the plaintiffs money has been returned to her, leaving a balance of $992,230, plus interest. Benistar Property failed to return these funds to the plaintiff.

“In a complaint dated January 21, 2001, the plaintiff filed suit against Benistar Property, Benistar, Ltd., Carpenter, Martin L. Paley and PaineWebber in Massachusetts Superior Court. In addition to the plaintiff, there are several other plaintiffs in the Massachusetts action who claim losses totaling nearly $9 million. ... On February 2, 2001, the Massachusetts Superior Court granted the plaintiffs’ motion for prejudgment security. As of . . . July 18, 2001 . . . the assets secured by the [268]*268Massachusetts attachment totaled only about $500,000 in value for the $9 million in claims of all plaintiffs. Additionally, they had attached a Travelers Insurance Company bond in the amount of $5 million. However, Travelers disputes its liability claiming mismanagement on the part of the insured defendants.

“On January 30, 2001, the plaintiff filed an application for prejudgment remedy in the Hartford Superior Court, seeking an attachment of $1.1 million against the defendants.3 The defendants filed a motion to dismiss or to stay the plaintiffs application, arguing that a prejudgment attachment was improper because of the prior pending action doctrine and because there was no suit pending or contemplated in Connecticut. Following the denial of the defendants’ motion to dismiss or stay the proceedings, the court held a probable cause hearing and [on May 29,2001] granted the application for attachment in the amount of $500,000, with a maximum attachment against Carpenter in the amount of $250,000.” Id., 269-71.

On August 13, 2001, however, the plaintiff filed a motion to stay the Connecticut proceedings “until a complete determination by the Massachusetts Superior Court of the litigation pending there” between the plaintiff and the defendants. On October 9, 2001, this motion was granted by the trial court.

On appeal to the Appellate Court, the defendants claimed that “the trial court improperly (1) granted the application because the prejudgment remedy statutes ... do not contemplate a plaintiff, in an out-of-state action, attaching a defendant’s Connecticut assets prior to the entry of judgment in the out-of-state case, (2) [269]*269denied the defendants’ motion for a stay prior to the granting of the application for a prejudgment remedy, (3) granted a prejudgment remedy against Carpenter that is inconsistent with the prior orders of a Massachusetts court, and (4) granted a prejudgment remedy against Benistar, Ltd., and Carpenter without a demonstration by the plaintiff that she will have the ability to pierce the corporate veil.” Id., 268-69. The Appellate Court rejected all of the defendants’ claims and affirmed the decision of the trial court. Id., 285. Thereafter, we granted the defendants’ petition for certification for appeal, limited to the following question: “Did the Appellate Court properly affirm the trial court’s granting of a prejudgment remedy against the defendants . . . ?” Cahaly v. Benistar Property Exchange Trust Co., 262 Conn. 925, 814 A.2d 378 (2002).

We begin by setting forth the appropriate standard of review. In the present case, the defendants are challenging the trial court’s interpretation of the prejudgment remedy statutes, General Statutes § 52-278aetseq. Issues of statutory construction raise questions of law, over which we exercise plenary review.4 Commissioner of Transportation v. Kahn, 262 Conn. 257, 272, 811 A.2d 693 (2003). “The process of statutory interpretation involves a reasoned search for the intention of the legislature. ...

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Cite This Page — Counsel Stack

Bluebook (online)
842 A.2d 1113, 268 Conn. 264, 2004 Conn. LEXIS 76, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cahaly-v-benistar-property-exchange-trust-co-conn-2004.