Corsair Special Situations Fund, L.P. v. Pesiri

863 F.3d 176, 2017 WL 2979324, 2017 U.S. App. LEXIS 12512

Opinions

Judge LEVAL concurs in a separate opinion.

' SACK, Circuit Judge:

Section 52-261 of the Connecticut General Statutes governs “[flees and expenses of officers' and persons serving process or performing other duties.” Conn. Gen. Stat. § 52-261 (2011). It provides that an officer is entitled “for the levy of an execution, when the money is actually collected and paid over, or the debt ... is secured by the officer, [to] 'fifteen per cent [sic] on the amount of execution,..,” Id, §52-261(a)(F) (emphases added). The question on appeal is whether the actions of the intervenor, Mark Pesiri, a Connecticut State Marshal who did no more than serve a writ of execution on behalf of Corsair Special Situations Fund, L.P, (“Corsair”), qualified for the fifteen percent commission provided by § 52-261(a)(F). The United States District Court for the District of Connecticut (Janet C. Hall, Judge) ruled in favor of Pesiri, concluding that he was entitled to fifteen percent of the $2,308,504 that Corsair obtained via turnover order from National Resources, a third party that transacted., with one of Corsair’s judgment debtors, EFS Structures-Inc., one of four defendants—together with Engineered Framing Systems, Inc., John J. Hildreth, and Marie N. Hildreth—against which Corsair obtained judgment. Corsair appeals from the district court’s fee award, contending that Corsair alone secured the debt and that the “levy of an execution” entails more than serving a writ of execution. Because Connecticut case law does not resolve this important and dispositive question of statutory interpretation, we CERTIFY the question to the Connecticut Supreme Court. See id. § 51-199b(d).

BACKGROUND

In June 2010, plaintiff-appellant Corsair Special Situations Fund, L.P. (“Corsair”) obtained a judgment of $5,443,171.33 from the United States District Court for the District of Maryland jointly and severally against defendants Engineered Framing Systems, Inc., John J. Hildreth, Marie N. Hildreth, and EFS Structures, Inc. While attempting to enforce its judgment, Corsair learned that one of the judgment debtors signed a contract with a Connecticut-based third party, National Resources,¹ entitling that judgment debtor to a payment from National Resources of more than $3,000,000. So apprised, Corsair caused its judgment to be certified for registration in another district and, on September 29, 2011, enrolled its judgment in the United States District Court for the District of Connecticut, which issued a writ of execution.

Seeking to levy on the money National Resources owed to Corsair’s judgment debtor,² Corsair engaged Connecticut State Marshal Mark Pesiri, who, on September 30, 2011, successfully served on National Resources a writ of execution, which stated in relevant part:

Pursuant to Conn. Gen. Stat. § 52-356a, you are required to deliver to the mar-shall ] property in your possession owned by the judgment debtor or pay to the marshal the amount of a debt owed by you to the judgment debtor, provided, if the debt owed by you is not yet payable, payment shall be made to the marshal when the debt becomes due within four months after the date of issuance of this execution.

Joint App’x at 26.

It is undisputed that National Resources ignored the writ. In fact, between October 3, 2011, and November 25, 2012, National Resources paid Corsair’s judgment debtor and another of its creditors $2,308,504. Following protracted post-judgment discovery, Corsair obtained an order from the district court commanding National Resources to turn over $2,308,504 to Corsair pursuant to the writ of execution. National Resources appealed the turnover order to this Court, which affirmed the district court’s order. Corsair Special Situations Fund, L.P. v. Nat’l Res., 595 Fed.Appx. 40, 45-46 (2d Cir. 2014) (summary order). We noted in our decision that Corsair, through Pesiri, successfully effected “personal service of its writ on .., National Resources” before National Resources transferred $2,308,504 to Corsair’s judgment debtor and another of National Resource’s creditors. Id. at 46.

As the dispute between Corsair and National Resources drew to a close, this litigation was just beginning. On May 1, 2015, Pesiri filed a motion to intervene, seeking “statutory fees owed him pursuant to Conn. Gen. Stat. § 52-261(a).” Mot. to Intervene at 1, Corsair Special Situations Fund, L.P. v. Engineered Framing Sys. Inc., No. 11-cv-01980-JCH (D. Conn. May 1, 2015), ECF No. 98. Section 52-261(a), which governs “[flees and expenses of officers and persons serving process or performing other duties,” provides in relevant part:

The following fees shall be allowed and paid: ...

(F) for the levy of an execution, when the money is actually collected and paid over, or the debt or a portion of the debt is secured by the officer, fifteen per cent [sic] on the amount of the execution, provided the minimum fee for such execution shall be thirty dollars....

Conn. Gen. Stat. § 52-261(a)(F) (2011). Pesiri complained that Corsair intended to pay him $30, rather than fifteen percent of the $2,308,504 that was “actually collected and paid over,” id., which amounts to $346,275.60.

On January 11, 2016, the district court ruled in Pesiri’s favor. Observing that Connecticut case law defines “levy” as “an actual or constructive seizure,” Corsair Special Situations Fund, L.P. v. Engineered Framing Sys. Inc., 2016 WL 128089, at *4, 2016 U.S. Dist. LEXIS 3322, at *14 (quoting Nemeth v. Gun Rack, Ltd., 659 A.2d 722, 726, 38 Conn. App. 44, 52-53 (Conn. App. Ct. 1995)), the district court explained in part that, although Pesiri did not “actually seize the money that National Resources owed the judgment debtor, he did constructively seize it by putting National Resources on notice of its legal obligation to deliver the money it owed the judgment debtor to Pesiri,” id. at *4, 2016 U.S. Dist. LEXIS 3322, at *15. Corsair now appeals the order granting Pesiri $346,275.60 in fees.

STANDARD OF REVIEW

We review the district court’s interpretation of a state statute de novo. KLC, Inc. v. Trayner, 426 F.3d 172, 174 (2d Cir. 2005).

DISCUSSION

The question on appeal is whether service of a writ of execution qualifies for the fifteen percent fee provided by § 52-261, where the writ is ignored and the judgment creditor, not the serving officer, pursues further enforcement proceedings to obtain the monies that were the subject of the writ. Because we think the-Connecticut Supreme Court is the appropriate court to answer that question in the first instance, we certify the question to that court for review.

I. Section 52-261(a)(F)

Section 52-261 of the Connecticut General Statutes concerns the “[f]ees and expenses of officers and persons serving process or performing other duties.” Conn. Gen. Stat. § 52-261. Subsection (a) establishes minimum and maximum fees for an individual who effects “service of [] process.” Id. § 52-261(a). It also enumerates certain circumstances in which additional “fees shall be allowed and paid.” Id. Of relevance here, the statute provides that an individual is entitled to “fifteen per cent [sic] on the amount of the execution” “for the levy of an execution, when the money is actually collected and paid over, or the debt ... is secured by the officer.” Id. § 52-261(a)(F).

The statute does not define “levy of an execution.” Legislative history is similarly silent. A comparable term, “levy of execution,” is defined by Black’s Law Dictionary as “[t]he legally sanctioned seizure and sale of property” or “the money obtained from such a sale,” but that entry does not define “seizure.” Black’s Law Dictionary 1047 (10th ed. 2014).

One might glean meaning from related statutory provisions. For example, § 52-356a provides that where, as here, the property of a judgment debtor is held by a third party, “the levying officer shall serve that person with a copy of the execution and that person shall forthwith deliver the property or pay the amount of the debt due or. payable to the levying.officer.” Conn. Gen. Stat. § 52-356a(a)(4)(B). Where the judgment debtor is in possession of the property to be levied, by contrast, the “levying officer shall ... make [a] demand for payment” before “levy[ing] on nonexempt personal property of the judgment debtor.” Id. § 52-356(a)(4). These provisions might be understood to suggest, as the district court thought, that because the debtor’s property in this case was held by a third party, “there was nothing more that Pesiri could have done under the circumstances” beyond serving the' writ of execution, so he is therefore “entitled to the 15%” fee. Corsair, 2016 WL 128089, at *5, 2016 U.S. Dist. LEXIS 3322, at *16.

The same provisions, however, might also be understood to suggest that “serving] ... a' copy of the execution,” “demanding] [] payment,” and “levying] on ... property” are not one and the same. Conn. Gen, Stat. § 52-356a(a); see also id. § 52-356a(a)(4)(B) (outlining “service]” as a part of the process of levying). Moreover, as previously noted, § 52-356a, which outlines the “[p]rocedure” a “levying officer” is to follow where “personal property ... is in the possession of a third person,” provides that the “levying officer” shall “levy on nonexempt personal property of the judgment debtor” in “the possession of a third person” by “serving] that person with a copy of the execution, and that person shall forthwith deliver the property or pay the amount of the debt due or payable to the levying officer.” Id. (emphasis added). Although there is no doubt that Pesiri “serve[d] [National Resources] with a copy of the execution,” § 52-356a(a)(4)(B) is plainly conjunctive and appears to contemplate more, viz., “that [National Resources] shall forthwith deliver the property ... to the levying officer,” which did not take place here. Id. (emphasis added).

The Concurrence suggests that this ambiguity is resolved, in part, by. § 52-356a(a)(5), see Concurrence at 186, which provides that “[l]evy under [§ 52-356a] on property held by ... a third person shall bar an action for such property against the third person provided the person acted in compliance with the execution,” Conn. Gen. Stat. § 52-356a(a)(5). Judge Leval reasons that this provision “treats the officer’s service of the writ as a ‘levy’ (‘levy under this section’) and as an ‘execution’ (‘acted in compliance with the execution’) regardless of whether the third person delivered the property to the officer” because “[i]f it were correct that ‘levy’ has not occurred until the third person ‘deliverfe]’ the property to the levying officer, then this provision would make no sense.” Concurrence at 187.

That may well be. It might also be, however, that § 52-356a(a)(5)’s immunization of third parties that “act[ ] in compliance with the execution,” i.e., those that “forthwith deliver the property or pay the amount of the debt due or payable to the levying officer,” Conn. Gen. Stat. § 52-356a(a)(4)(B), establishes that the “|l]evy” and “execution” are distinct, id. § 52-356a(a)(5). And, .as previously noted, the former might be completed only where the property at issue has been “deliver[ed] ... to the levying officer.” Id. § 52-356a(a)(4)(B).

This interpretation appears reasonable inasmuch as § 52-356a(a)(5) applies not only to physical property, but also to fungible property. See id. § 52-356a(a)(5) (referring to “property held by, or a debt due from, a third person” (emphasis added)). It might be that in some circumstances the completed “[l]evy ... on ... a debt due from [] a third person,” who “acted in compliance with the execution” by “pay[ing] the amount of the debt due or payable to the levying officer,” immunizes the third person from a subsequent “action” for the equivalent amount, even if the debt due was not ultimately transferred to the creditor. In other words, under this interpretation, § 52-356a(a)(5) provides, inter alia, that the accomplishment of a levy does not turn on whether the levying officer delivers the property -or debt that has been “collected and paid over.” Id. § 52-261(a)(F). Therefore, in light of this possible interpretation, Section 52-356a(a)(5) does not necessarily establish, as Judge Leval suggests, that a levy is accomplished regardless of whether a third party complies with the writ of "execution.

Moreover, as Judge Leval notes, see Concurrence at 188-89, how one interprets “levy” as used in § 52-356a provides at most an incomplete picture as to how one interprets § 52-261(a)(F), which awards a fifteen percent commission for “the levy of an execution, when the money is actually collected and paid over, or the debt or a portion of the debt is secured by the officer,” Conn. Gen. Stat. § 52-261(a)(F). Although in this case the “money [was] actually collected and paid over,” Pesiri himself did little to achieve that outcome, which was accomplished pursuant to a court order against National Resources. See Corsair Special Situations Fund, L.P., 595 Fed.Appx. at 45-46. Section 52-261(a)(F) does not make clear whether the requirement for action “by the officer” applies generally, however “the money is actually collected and paid over,” or only where a “debt or a portion of the debt is secured by the officer.” Id.3

While Connecticut case law is generally unavailing in the effort to determine the meaning of the statute, several state courts have opined on' the meaning of phrases similar to “levy of an execution.” In Preston v. Bacon, 4 Conn. 471 (1823), Connecticut’s highest court was faced with an analogous dispute over how to interpret a nineteenth-century precursor to § 52-261(a) that entitled an officer to a two percent commission “for levying and collecting every execution, where the money is actually collected and paid over,” or “where the debt is secured and satisfied, by the officer, to the acceptance of the creditor,” id. at 473. The court determined that the plaintiff, a sheriff who arrested the debtor but did not himself secure any of the debt, which was paid, directly to the creditor, was not entitled to a two percent commission. Id. at 475. The court explained that “[t]he language of the statute plainly requires [ ] that the officer shall do something. The officer is to . procure the satisfaction; [and] to offer it for the acceptance of the. creditor[,]” Id. at 476 (emphasis in original). The court observed that this interpretation “ma[d]e[] the statute intelligible” .because “the statute contemplated [the officer] as the pñmary agent, in effecting the security eventually obtained.” Id. (emphasis in original).

The parties on appeal draw our attention to two additional state court decisions. First, in Nemeth, a state appellate court determined that “levy,” as used in a different provision of the Connecticut General Statutes, means “a seizure, either áctual or constructive, of [ ] property.” Nemeth, 659 A.2d at 726, 38 Conn. App. at 53 (internal quotation marks omitted) (interpreting Conn. Gen. Stat. § 42a-6-110, which addresses the time in which an “action ... shall be brought [or] levy -made” following transfer of a judgment debtor’s property to a transferee).

Second, in Masayda v. Pedroncelli, No. CV94-0120878S, 1998 WL 420779, 1998 Conn. Super. LEXIS 2048 (Conn. Super. Ct. July 20, 1998), the court addressed an officer’s claim that an earlier version of § 52-261 entitled him to ten percent of a debt that was “forwarded” directly from the debtor to the creditor after the officer served a bank execution on the debtor, id. at *1, 1998 Conn. Super. LEXIS 2048, at *1. At that time, § 52-261 provided in relevant part:

The following fees shall be allowed and paid [to an officer or person] ... (6) for levying an execution, when the money is actually collected and paid over, or the debt secured by the officer to the acceptance of the creditor, ten percent on the amount of the execution....

Conn. Gen. Stat. § 52-261(a) (1998) (emphases added). The court decided, without explanation, that the officer “levied an execution and the money was actually collected and paid over,” entitling him to a ten percent commission. Masayda, 1998 WL 420779, at *1-2, 1998 Conn. Super. LEXIS 2048, at *3-4 (“[A]fter levying the execution, payment by the debtor directly to the creditor should not deprive the sheriff of his fee.”).

These decisions do not, however, define the “levy of an execution” as it is used in § 52-261 or address whether service of a writ of execution qualifies as such, particularly where the writ is ignored and the judgment creditor pursues further enforcement proceedings to secure the monies that were the subject of the writ. Moreover, of the cases above, only Preston was decided by Connecticut’s highest court, and that case concerned a different statute. See Preston, 4 Conn. at 473. Specifically, it turned on the court’s understanding of the phrase, “where the debt is secured and satisfied [ ] by the officer,” not the more closely related phrase, “for levying and collecting every execution.” Id. at 474 (“This point turns on the question whether this execution was secured and satisfied, by the officer....”). Similarly, Nemeth, decided by an intermediate appeals court, did not concern the meaning of “levy of an execution,” let alone whether service of a writ of execution is the “levy of an execution” as that phrase is used in § 52-261. Nemeth, 659 A.2d at 725, 38 Conn. App. at 51 (interpreting “levy made” as used in Conn. Gen. Stat. § 42a-6-110). Finally, Masayda, an unpublished memorandum of decision issued by the Superior Court of Connecticut, also addressed a distinct, if related, statutory phrase. Masayda, 1998 WL 4207709, at *1, 1998 Conn. Super. LEXIS 2048, at *1 (interpreting “levying an execution”).

The. resultant ambiguity is compounded by legitimate doubts as to whether Connecticut state law would sanction such a large fee award for merely serving a writ of execution on a third party. The district court’s conclusion that “Pesiri did levy the execution on National Resources when he served National Resources with the Writ, made demand upon National Resources, and constructively seized the money that National Resources owed the judgment debtor,” entitling him to a fifteen percent commission, Corsair, 2016 WL 128089, at *6, 2016 U.S. Dist. LEXIS 3322, at *20, is not without risks. It might, for example, encourage a levying officer to do no more than serve a writ of execution with the hope that this will be credited as the “levy of an execution” and rewarded accordingly. In light of these ambiguities, we deem certification to be advisable.

II. Certification to the Connecticut Supreme Court

“Although the parties did not request certification, we are empowered to seek certification nostra sponte.” Kuhne v. Cohen & Slamowitz, LLP, 579 F.3d 189, 198 (2d Cir. 2009). We have long recognized the appropriateness of according to state courts the opportunity to decide significant issues of state law through the certification process. Munn v. Hotchkiss Sch., 795 F.3d 324, 334 (2d Cir. 2015). When faced with a “question of statutory interpretation” in particular, “principles of comity and federalism strongly support certification.” Sealed v. Sealed, 332 F.3d 51, 59 (2d Cir. 2003). “Connecticut law allows for the federal certification of questions of state law directly to the Connecticut Supreme Court.” Parrot v. Guardian Life Ins. Co. of Am., 338 F.3d 140, 144 (2d Cir. 2003) (citing Conn. Gen. Stat. § 51-199b(d)).

When assessing whether to certify a question for review, we have traditionally considered whether a state court decision “has ever provided an authoritative answer,” Caruso v. Siemens Bus. Commc’ns Sys., Inc., 392 F.3d 66, 71 (2d Cir. 2004), the extent to which the question “implicates the weighing of policy concerns” of particular importance, Sealed, 332 F.3d at 59, and if the Connecticut Supreme Court’s “answer may be determinative” of the appeal, Munn, 795 F.3d at 334.

Because we lack authoritative guidance from the Connecticut Supreme Court on this important question of state policy that is determinative of the appeal, we deem the question whether service of a writ of execution is the “levy of an execution” that qualifies, without more, for the fifteen percent commission provided by § 52-261(a)(F) appropriate for certification. The sole issue on appeal is whether service of a writ of execution entitled Pesiri to the fifteen percent fee when the writ was ignored and the judgment creditor, not the marshal, obtained the monies that were the subject of the writ. The Connecticut Supreme Court’s interpretation of § 52-261(a)(F) will enable us to determine whether the district court erred by awarding Pesiri a fifteen percent commission on the amount Corsair obtained via turnover order from National Resources.

* * *

In light of the foregoing, we certify the following questions to the Connecticut Supreme Court:

(1) Was Marshal Pesiri entitled to a fifteen percent fee under the terms of Conn. Gen. Stat. § 52-261(a)(F)?

(2) In answering the first question, does it matter that the writ was ignored and that the monies that were the subject of the writ were procured only after the judgment creditor, not the marshal, pursued further enforcement proceedings in the courts?

We welcome the guidance of the Connecticut Supreme Court on any related state law issues that would aid in the resolution of this matter. Accordingly, the certified questions may be expanded to cover any related question of Connecticut law that the Supreme Court deems appropriate to resolve in relation to this appeal.

CONCLUSION

It is hereby ORDERED that the Clerk of this Court transmit to the Clerk of the Connecticut Supreme Court this opinion as our certificate, together with a complete set of briefs, the appendix, and the record filed in this Court by the parties. The parties shall bear equally any fees and costs that may be imposed by the Connecticut Supreme Court in connection with this certification. This panel retains jurisdiction and will resume its consideration of this appeal after the disposition of this certification by the Connecticut Supreme Court.

CERTIFICATE

Th'e foregoing is hereby certified to the Connecticut Supreme Court pursuant to Second Circuit Local Rule 27.2 and 'Conn, Gen. Stat, § 59-199b(d), as ordered by the United States Court of Appeals for the Second Circuit,

1 . According to the later decision issued by the United States District Court for the District of Connecticut (Janet C Hall, Judge) in favor of Corsair and against National Resources, "National Resources is not itself a legal entity.... National Resources functions, in effect, as the trade name of a cluster of companies, including the three LLCs listed in the marshal's Execution on Property.” Corsair Special Situations Fund, L.P. v. Engineered Framing Sys. Inc., 2013 WL 5423677, at *2, 2013 U.S. Dist. LEXIS 138204, at *5-6 (D. Conn. Sept. 26, 2013) (internal quotation marks omitted), aff'd, 595 Fed.Appx. 40 (2d Cir. 2014).

2 . Corsair sought to enforce its federal judgment pursuant to state law. See Fed. R. Civ. P. 69(a)(1) (“A money judgment is enforced by a writ of execution, unless the court directs otherwise. The procedure on execution—and in proceedings supplementary to and in aid of judgment of execution—must accord with the procedure of the state where the court is located....”).

3 . As Judge Leval observes, whether the rule of the last antecedent applies is a contextual question. See Concurrence at 189; see also Lockhart v. United States, — U.S. —, 136 S.Ct. 958, 965, 194 L.Ed.2d 48 (2016) (noting that the "Court has long acknowledged that structural or contextual evidence may rebut the last antecedent inference” (internal quotation marks omitted)).