2011 Ct. Sup. 7488
No. FST CV 09-5012939 SConnecticut Superior Court Judicial District of Stamford-Norwalk at Stamford
March 21, 2011
MEMORANDUM OF DECISION ON PLAINTIFF’S MOTION FOR DISCLOSURE OF ASSETS DATED MARCH 3, 2011 (#231.00)
HON. KEVIN TIERNEY, Judge Trial Referee.
This Motion is the third request made by the plaintiff, Access International Advisors, LTD (Access), for disclosure of assets from the defendant, Argent Management Co., LLC (Argent), pursuant to Gen. Stat. §52-278n. Both parties appeared on March 21, 2011 and offered oral argument on their respective positions on Motion #231.00. After multiple days of hearings this court issued a June 1, 2010 Memorandum of Decision (#167.00) on Access’s October 20, 2009 prejudgment remedy application (#100.31) and ordered a prejudgment remedy in favor of Access as against Argent in the amount of $1,317,188. Simultaneous with the PJR application Access filed on October 16, 2009 a Motion for Prejudgment Disclosure of Property and Assets (#100.35). The court’s Memorandum of Decision (#167.00) permitted the attachment of Argent’s interest in real property located in Connecticut. The court further stated: “In the event that this real property attachment is insufficient, then the plaintiff may reclaim the Motion for Prejudgment Disclosure of Property and Assets (#100.35). The court may then consider ordering the defendant to disclose additional assets either in affidavit, documentary and/or testimonial form. Gen. Stat. § 52-278n.”
Instead of reclaiming the previously filed Motion for Prejudgment Disclosure of Property and Assets, (#100.35), Access filed a Motion for Prejudgment Disclosure of Property and Assets dated June 24, 2010 (#171.00). The proposed order attached to motion #171.00 states: “That on or before _______, 2010, defendant Argent Management Co. LLC, shall submit to the Court and to plaintiff’s counsel a sworn statement setting forth the following: (a) the existence, location, and extent of any and all property, real and/or personal, in which it has an interest, and (b) the nature and extent of any debts owing to Argent Management Co. LLC.” This proposed order tracked the language of the prejudgment discovery statute, Gen. Stat. § 52-278n. After a hearing in which both parties were present, the court entered an order dated July 12, 2010 conforming to the plaintiffs request and requiring the sworn statement to be submitted on or CT Page 7489 before July 21, 2010 (#171.86). Argent complied with that order by furnishing Access with an affidavit of Patricia Ransom dated July 21, 2010, (#178.00). As to the assets of Argent Management Co, Inc., she stated in the July 21, 2010 affidavit: “There is no entity in existence named Argent Management Co. LLC and no such entity has existed since July 16, 2009. I am informed this was long before the instant January 20, 2010 proceeding for a Pre-Judgment Remedy was filed. Accordingly, the defendant Argent Management Co. LLC owns no property, real or personal, and is not owed any debts.” Ms. Ransom described herself in that affidavit as “the former Executive Vice-President of defendant Argent Management Co. LLC.”
Patricia Ransom filed a previous affidavit with this court dated March 1, 2010 (#136.00). In that affidavit she described herself as “the Executive Vice-President of Centaur Management Co., LLC, formerly Argent Management Co., LLC (“Argent”), the defendant in the above matter.” She stated that: “I have personal knowledge of the facts and documents described below except where indicated. I submit this affidavit in support of Argent’s motion to dismiss or stay this proceeding.” The affidavit was filed by Argent through its counsel of record in support of Argent’s defense to the PJR proceedings then pending before this court. The March 1, 2010 affidavit confirmed that Patricia Ransom had knowledge of the nature of Argent’s business, Argent’s conducting of that business in Connecticut, the Sourcing Agreement entered into by Argent and Access, the billing and payment records between Access and Argent from December 31, 2001 through September 7, 2007, correspondence between representatives of Access and Argent in 2008 and 2009 concerning the claims underlying this lawsuit and wiring information for various bank accounts. Patricia Ransom’s affidavit stated that Access was a foreign corporation transacting business in Connecticut without a certificate of authority in violation of Gen. Stat. § 33-921(c) and that Access failed to register with the Securities and Exchange Commission as a broker/dealer as required under the Securities and Exchange Act of 1934. In addition the Patricia Ransom March 1, 2010 affidavit stated in paragraph 3: “First, there is a prior action presently pending in Federal Court between the same parties involving the same issues.” In paragraph 17 of her affidavit she describes that Federal Court lawsuit as follows: “To resolve this dispute, and on November 20, 2009, Argent filed an action against AIA captioned Centaur Management Co. LLC, formerly known as Argent Management Co. LLC v. Access International Advisors Limited, Docket No. 3:09cv1885 (SRU), in the United States District Court for the District of Connecticut (the Federal Action).” A copy of that lawsuit was attached to the Ransom affidavit as Exhibit K. Thus Patricia Ransom knew that the defendant in this case, Argent, identified itself in pleadings filed in this PJR proceeding that Argent Management Co. LLC is now known as Centaur Management Co. LLC. Despite her detailed knowledge of the CT Page 7490 business of Argent, Patricia Ransom executed and submitted her July 21, 2010 affidavit stating: “Accordingly, defendant Argent Management Co. LLC owns no property, real or personal, and is not owed any debts.”
This court presided over the PJR hearing. The hearing took four days; April 22, 2010, April 23, 2010, April 28, 2010 and April 29, 2010. Counsel of record for Argent throughout those four days argued that if the court ordered a PJR attachment of Argent’s assets that would put Argent out of business. Thus Argent argued for Access to post a bond pursuant to Gen. Stat. § 52-278d(d). The court, mindful of this request, and accepting counsel for Argent’s representation that Argent was an ongoing viable business, limited its PJR attachment order to real property in Connecticut, which this court customarily grants without a bond. In its Memorandum of Decision (#167.00) the court noted that the attachment of any other assets, may require Access to post a bond. “Thereafter, the court may permit further prejudgment remedies subject to the consideration, if any, of an appropriate bond. Gen. Stat. § 52-278d(a)(4)” (#167.00, page 16). By entering such an order, this court acceded to Argent’s admissions that it is an ongoing business that may be put out of business if a PJR attachment was granted. Argent was requesting that a substantial plaintiff’s bond be posted pursuant to Gen. Stat. §52-278d(c)(4). No one informed this court at the April 2010 PJR hearings that in fact Argent was no longer in business, had not been in business as of July 2009 and that Argent had no assets. In fact, the opposite was represented to this court by Argent.
In response to the July 21, 2010 Patricia Ransom affidavit, Access filed this instant motion entitled Plaintiff’s Motion for Order of Compliance with Disclosure Order and for Sanctions dated August 19, 2010 (#183.00). In the motion Access claimed three forms of relief: (1) “directing Defendant to disclose assets sufficient to satisfy Plaintiff’s prejudgment remedy pursuant to Gen. Stat. § 52-278n;” (2) “an Order sanctioning Defendant for its contumacious, conduct pursuant to Practice Book § 4-2 and the Court’s inherent power”; and (3) “an Order requiring Defendant to reimburse Plaintiff for the reasonable costs and attorneys fees incurred in pursuing its Motion for Disclosure of Assets (#171.00).” That motion was placed on the civil short calendar and was referred to this court. This court entered a September 22, 2010 order assigning motion #183.00 for a hearing before the undersigned since the undersigned was the judge issuing the prejudgment remedy (#183.86). A hearing on motion #183.00 occurred on December 7, 2010 and both parties were represented by counsel of record, the same counsel that represented the respective parties in the prejudgment remedy hearings before this court. On December 7, 2010 the court entered the following order: “In accordance with CGS § 52-278n, the court orders further discovery in the form of a CT Page 7491 deposition to be taken by the plaintiff of Ronald Fertig including the existence, location and extent of any assets now or formerly owned by the Defendant, Argent Management Co., LLC. Motion #183.00 and all related motions will be assigned for a hearing before the undersigned after the Fertig deposition.” (#183.87.) Access took the deposition of Ronald Fertig on January 7, 2011. Upon information and belief no assets of Argent were disclosed at the Ronald Fertig deposition. Access then requested this court by a January 20, 2011 letter (#220.00) to reassign the continued hearing on motion #183.00 in accordance with the December 7, 2010 order (#183.87). Argent objected to the continued hearing in a January 20, 2011 letter (#221.00).
This court assigned a continued hearing on Motion #183.00 for March 2, 2011. Both counsel were present; the same counsel who represented the parties at the prejudgment remedy hearings. After hearing oral argument from both counsel the court on March 2, 2011 denied without prejudice the portion of motion #183.00 that sought additional discovery. The court then marked those portions of motion #183.00 that requested sanctions and attorneys fees “off” to be reclaimed and heard at a future date. At the conclusion of the March 2, 2011 hearing it was the understanding of this court that Access would file a further motion for disclosure pursuant to Gen. Stat. § 52-278n, which is in fact the motion that is now before this court. In the interim period of time no further disclosure of assets of Argent have been furnished to Access other than the Patricia Ransom affidavit and the Ronald Fertig deposition, neither of which disclosed of any assets of Argent.
During the prejudgment remedy hearings the court noted that a number of the pleadings had been filed referencing an entity known as Centaur Management Co., LLC. The court made inquiry of Access’s counsel during the PJR hearings as to whether Access intended to join Centaur Management Co., LLC as an additional party defendant and seek a prejudgment remedy against Centaur Management Co., LLC. Access chose not to join Centaur Management Co., LLC as a party defendant in this case either during the prejudgment remedy proceedings or at any other time to date. Access filed Plaintiff’s Motion to Amend Pursuant to Conn. Gen. Stat. § 52-123 dated April 27, 2010 (#153.00) “to amend the caption of these proceedings nunc pro tune to change the name of the defendant from `Argent Management Co. LLC’ to `Argent Management Co. LLC now known as Centaur Management Co. LLC.'” This motion was filed on April 27, 2010, the day before this court’s third day of the PJR hearing. The motion stated: “Accordingly, AIA Limited should be permitted to secure its prejudgment remedy by attaching or garnishing any available assets of the defendant, regardless of whether those assets are held in the name of Argent Management Co. LLC or Centaur Management Co. LLC.” Motion #153.00 was not argued before the CT Page 7492 undersigned and according to the court’s computer system was never acted on by any judge.
Argent, in defending the prejudgment remedy claim, filed a number of pleadings that are currently in the file in which the defendant has identified in the body of the pleadings as “Centaur Management Co., LLC formerly Argent Management Co., LLC.” or in counsel’s signature line as “The Defendant, Argent Management Co. LLC n/k/a Centaur Management Co., LLC.” Argent’s counsel signed these pleadings. P.B. § 4.2. These pleadings are #131.00, #135.00, #137.00, #138,000, #139,000, #140,000, #144.00, #147.00, #148.00, #150.00, #151.00, #156.00, #159.00, #160.00, and #162.00 and they were filed between December 16, 2009 and May 20, 2010. Without any written explanation, Argent’s counsel of record started to sign its pleadings as “The Defendant, Argent Management Co. LLC” commencing on July 9, 2010 (#172.00). Prior to December 16, 2009 Argent’s counsel of record signed its pleading as “Defendant Argent Management Co., LLC,” #127.00, #128.00. Then on November 23, 2009 Argent’s counsel of record signed the Amended Notice of Removal as “Defendant Argent Management Co. LLC now known as Centaur Management Co. LLC” (#117.00). Certain pleadings in the United District Court case were filed in this court file. On November 23, 2009 Argent’s counsel of record signed the Supplemental Statement Pursuant to Standing Order in Removed Cases as “Defendant Argent Management Co. LLC n/k/a Centaur Management Co. LLC” (#116.00) and its November 23, 2009 appearance in the District Court action as “Defendant Centaur Management Co LLC f/k/a Argent Management Co. LLC” (#115.00). Prior counsel of record, Day Pitney LLP, also filed pleadings in this case signing them as “Defendant, Argent Management Co. LLC n/k/a Centaur Management Co. LLC” (#102.01, #110.00, #111.10, #112.00, #113.00, #114.00). Day Pitney LLP without written explanation signed the January 14, 2010 Motion to Withdraw Appearance as “The Defendant Argent Management Co. LLC (#103.00).
Argent’s counsel of record in the PJR proceedings is counsel of record in the underlying litigation that was commenced after the June 1, 2010 PJR Memorandum of Decision, is the same counsel that appeared for Argent and on behalf of Argent objected to further discovery of assets and is the same counsel that executed the above pleadings captioned and identified in counsel’s signature line on these motions on behalf of Argent Management Co. LLC n/k/a Centaur Management Co. LLC.
Argent’s counsel of record admitted that “Argent changed its name to Centaur” (#226.00, page 3). During the PJR hearings Argent’s counsel of record argued that Access’s attachment of some of Argent’s assets “may affect our business” (#226.00, page 20). As of today Argent’s counsel is claiming that those representations made to this court in the PJR hearing CT Page 7493 were inaccurate and that Argent’s counsel of record made an error (#226.00, page 21).
It appears that a strong argument can be made that defendant’s counsel, by submitting those pleadings, has judicially admitted that Argent Management Co., LLC and Centaur Management Co., LLC are one and the same. Surely Access is relying on these representations in prosecuting this matter. This court was not presented with any evidence of the underlying facts of the so called July 2009 name change. The change of the name could be either a simple name change, a sale of assets, a purchase of assets, a take over of a subsidiary corporation by a parent corporation, a corporation reorganization or some other corporate transaction. The court would be engaging in speculation to make the determination that Argent is one and the same as Centaur Management Co. LLC on the facts presented at the PJR hearings. Access, on the other hand, no doubt has more definitive information and documentation on that subject. The court therefore has considered and shall consider that the only defendant in this case is Argent Management Co., LLC. Argent, on the other hand, by submitting the above mentioned representations in court, and by filing filed documents and statements to this court, cannot object to Argent being treated for PJR discovery purposes as “the Defendant Argent Management Co. LLC n/k/a Centaur Management Co. LLC.”
Neither party has appealed the June 1, 2010 PJR decision. That decision is a final judgment. This court has entered two separate orders regarding disclosure of assets in motions #171.00 and #183.00. “We have recognized that it is within the equitable powers of the trial court to fashion whatever orders are required to protect the integrity of its original judgment.” Commissioner of Health Services v. Youth Challenge of Greater Hartford, Inc., 229 Conn. 657, 670, 594 A.2d 958 (1991), quotin Connecticut Pharmaceutical Association, Inc. v. Milano, 191 Conn. 555, 563-64, 468 A.2d 1230 (1983); see also Niles v. Niles, 9 Conn.App. 240, 246 (1986).” Roberts v. Roberts, 32 Conn.App. 465, 471 (1993). At the March 2, 2011 hearing the court pointed out the rule of Roberts v. Roberts to both counsel. The court initially was inclined to find that it was necessary to protect the integrity of both its June 1, 2010 prejudgment remedy order (#167.00) and its two discovery orders (#171.86, #183.89) by entering further discovery orders on motion #183.00. Ultimately because of notice issues, the court felt that it would be more prudent to deny without prejudice the discovery portion of motion #183.00 and give Access the opportunity to file a new motion for discovery of assets. There is no limitation set by statute as to the number of motions for discovery of assets that may be filed in support of a prejudgment remedy. “The court may order disclosure at any time prior to final judgment after it has determined that the party filing the motion for CT Page 7494 disclosure has pursuant to section 52-278d, 52-278e or 52-278i, probable cause sufficient for granting of a prejudgment remedy.” Gen. Stat. §52-278n(c). No final judgment has entered in the case in chief. The court found probable cause in its June 1, 2010 Memorandum of Decision (#167.00).
The court finds that further discovery by the only defendant in this case, Argent Management Co. LLC, is appropriate under the circumstances of this case. The court enters the following discovery orders:
(1) Access will take the deposition of Patricia Ransom at the offices at Zeldes, Needle Cooper, P.C., 1000 Lafayette Boulevard, Bridgeport, Connecticut.
(2) Argent may inform the court and Access that at her deposition, Patricia Ransom, intends to invoke her Fifth Amendment privilege and will not submit any substantive information concerning the assets of Argent. Counsel is not permitted to assert the Fifth Amendment privilege on behalf of a client. Patricia Ransom has appeared in this matter by Argent’s counsel on December 6, 2010. Patricia Ransom must assert the Fifth Amendment privilege personally. The court will accept an affidavit executed by Patricia Ransom individually that she intends to assert her Fifth Amendment privilege at any deposition taken pursuant to this order. Upon such an affidavit being furnished and filed with the clerk’s office, the deposition of Patricia Ransom will be postponed until further order of this court. For example, it may be that Access has certain questions to ask of Patricia Ransom which she will not claim her Fifth Amendment privilege or the court may order Patricia Ransom’s answering of certain questions after she has exercised her Fifth Amendment privilege State v. Williams, 200 Conn. 310, 319 (1986).
(3) Access will take three duces tecum depositions of Argent. The identity of the particular employee, officer, director, managing agent or agent of Argent is unknown. Therefore the duces tecum deposition notice issued by Access to Argent will contain a general description sufficient to identify the person or particular class to which that person belongs and describe with reasonable particularity the matters on which examination is requested including but not limited to providing the documents set forth in this order. Argent will then designate those of its officers, directors, managing agents, employees or agents who are most qualified to testify on its behalf as to these matters to the extent of any information known or reasonably available to the deponent. P.B. § 13-27(h).
(4) Within 30 days of entry of this Order, designate in writing to CT Page 7495 Argent’s counsel of record three officers, employees, directors or managing agents, or other persons who will testify on Argent’s behalf, and produce those three persons and documents at the office of Zeldes, Needle Cooper, P.C., 1000 Lafayette Boulevard, Bridgeport, Connecticut for three duces tecum depositions to testify as to matters known or reasonably available to Argent, on the subjects, which subjects are generally described as follows:
(a) The financial institution, location, account number, and monthly balances of all bank or trading accounts ever held by, in the name of, or for the benefit of “Argent Management Co., LLC now known as Centaur Management Co., LLC,” from the period March 27, 2009 through the date of the deposition, including, with respect to each deposit, withdrawal, or transfer from each account, the date, amount, and reason for the deposit, withdrawal, or transaction and the name and address of the recipient of any funds withdrawn or transferred; and all relevant information as to the closing of each account.
(b) All accounts receivable that have ever been reflected on the books and records of “Argent Management Co., LLC now known as Centaur Management Co., LLC” during the period March 27, 2009 through the date of the deposition, including for each such receivable, the amount of the receivable, the name of the debtor, the reason for the receivable, and, if paid, the date or dates of any payments;
(c) All investment management or advisory fees received by “Argent Management Co., LLC now known as Centaur Management Co., LLC” during the period March 27, 2009 through the date of the deposition, including, the amount of such fees, the dates on which the fees were received, the account or accounts into which the fees were received and the disposition of such fee revenue;
(d) All transfers of assets, including cash or its equivalents, between and among “Argent Management Co. LLC now known as Centaur Management Co. LLC,” on the one hand, and McMahan Securities L.P., and/or David Bruce McMahan or any entity affiliated with McMahan Securities L.P., and/or David Bruce McMahan on the other including but not limited to any expense sharing agreements; and
(e) The existence, location and extent of Argent’s interest in any property, real or personal, including any debts owed to it from March 27, 2009 through and including the date of the deposition.
(f) The existence, location, and extent of any assets, property and debts now or formerly owned by “Argent Management Co., LLC now CT Page 7496 known as Centaur Management Co., LLC,” to the extent not included in items (a) through (e) above.
(g) All documents reviewed by the deponent for the preparation of the deposition.
(5) The three duces tecum depositions will be taken immediately and neither party will delay the taking of the three depositions. The other deponents shall not attend the other depositions, nor review nor be informed of the other depositions, either directly or indirectly. To the extent possible the three duces tecum depositions will be taken on the same day and if not then completed, on the succeeding day or days.
(6) Access shall furnish a separate notice for each of the three duces tecum depositions, which shall include a request for the production of documents supporting the knowledge of the deponents to be produced at the depositions.
(7) The three duces tecum depositions will be taken at the office of Zeldes, Needle Cooper, P.C., 1000 Lafayette Boulevard, Bridgeport, Connecticut. The cost of transportation of the deponents to and from the depositions will be borne by Argent. The cost of taking of the depositions will be borne by Access. Each party will pay for their own copies of the transcripts of the depositions.
(8) The court enters this order pursuant with P.B. § 13-27(h), Gen. Stat. § 52-278n and the inherent power of the Superior Court.
(9) The deposition transcripts will not be filed with the court.
(10) The sanctions and attorney fees requested pursuant to the last two claims for relief under motion #183.00 are not included in this order. Access has the right to reclaim those two portions of motion #183.00 for further hearings at any time, either before during or after the three duces tecum depositions.
(11) In the event that either party requests a clarification of the language of this court order, that party may file a motion to clarify this court order together with suggested language. The court will assign a hearing and issue appropriate orders on the motion and/or motions to clarify. The motions to clarify must be filed no later than 14 days from the date of this decision.
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