General Electric Capital Corp. v. Metz Family Enterprises, LLC
General Electric Capital Corp. v. Metz Family Enterprises, LLC
Opinion of the Court
Opinion
The defendants, Metz Family Enterprises, LLC (Metz Family), Alicia Metz and Lauren H. Simons, appeal from the judgment of the trial court granting an application for a prejudgment remedy made by the plaintiff, General Electric Capital Corporation,
The following facts as found by the court are relevant to our resolution of this appeal. The plaintiff is a Delaware corporation with its principal place of business in Connecticut. Metz Family is a limited liability corporation organized under the laws of New York and has its chief executive offices in Connecticut. The individual defendants, Metz and Simons, reside in Connecticut. Metz Family owns real property and/or has transacted business in Connecticut.
The court found that “[t]hrough a promissory note dated July 27, 2006, Metz Family, as maker, promised to pay the plaintiff the principal sum of $1.6 million
“Counts two and three of the complaint allege breach of guaranty against [Metz and Simons], respectively. The complaint alleges that Metz and Simons signed individual guaranty agreements as a necessary condition for the plaintiff to enter into the promissory note with Metz Family. Upon the default by Metz Family, the plaintiff informed Metz and Simons that Metz Family had failed to make the installment payments) due and demanded that Metz and/or Simons satisfy the past due payment(s). Neither Metz nor Simons made payment on the amount due to the plaintiff. Thereafter, the plaintiff informed Metz and Simons that it was exercising its right to accelerate Metz Family’s obligations and demanded that Metz and/or Simons, as guarantors, make payment in full. Neither Metz nor Simons satisfied the obligation under the respective individual guaranty agreements to pay the accelerated obligations of Metz Family.” The complaint alleged that $1,078,211.96 plus interest, default interest and late charges, in excess of $87,182.05 was due and owing at the time the complaint was filed.
On May 31, 2011, fourteen days after filing its complaint, the plaintiff filed an application for prejudgment remedy against the defendants, seeking attachment of the defendants’ real and personal property in the amount of $1.5 million. Beginning in August, 2011, a hearing on the plaintiffs motion for a prejudgment remedy took place over several days. The hearing focused on jurisdiction, choice of law and the value of a West-wind aircraft in the plaintiffs possession at that time.
In its December 29, 2011 memorandum of decision on the plaintiffs application for a prejudgment remedy, the court found “[t]he defendants [to be] jointly hable on a promissory note which is now in default and on which there [was] a balance of $1,165,394.01 as of the time of acceleration on April 13, 2011. There [was] additional interest of $168,966 between [April 13, 2011] and February 1, 2012, the estimated time for sale of the collateral securing the loan at an estimated sale price of $330,000. The balance due after sale of the plane will, therefore, be approximately $1,004,360.17. Interest due on this balance from February 1, 2012, until an estimated trial date of June 1, 2012, [was] $59,436.10.” The court also concluded that there was probable cause that the plaintiff would recover attorney’s fees of approximately $200,000. Based on these findings, the court concluded that there was probable cause to find that the plaintiff would secure a judgment against the defendants. The court concluded that a prejudgment remedy of $1.5 million was a reasonable amount and granted the plaintiff permission to attach the assets of the defendants valued at that same amount. The defendants now appeal from the judgment granting the
I
Metz Family claims that the court lacked personal jurisdiction over it because Metz Family did not have sufficient contacts with Connecticut necessary for the court to exercise personal jurisdiction over it.
The following additional undisputed facts are relevant to our resolution of this claim. In their motion to dismiss, the defendants stated that the court lacked jurisdiction over them and that “there is also a tenuous relationship to the state of Connecticut, separate and apart from the parties’ specific choice of New York as jurisdiction for any disputes.” Referring to this statement, in its September 8, 2011 articulation, the corut found that the defendants failed to brief adequately any implicit argument that they lacked sufficient minimum contacts with Connecticut to satisfy the due process requirements needed to establish personal jurisdiction. The court stated that it “considers the defendants’ jurisdictional argument to be based solely on the existence of a forum selection clause.” On October 7, 2011, Metz Family filed an answer and special defenses to the plaintiffs complaint.
We first set forth our standard of review and the relevant legal principles governing the defendants’ claim. “Because a challenge to the personal jurisdiction of the trial court is a question of law, our review is plenary.” Myrtle Mews Assn., Inc. v. Bordes, 125 Conn. App. 12, 15, 6 A.3d 163 (2010). “[A] party waives the
Because we agree with the court’s conclusion that the defendants’ jurisdictional argument in their motion to dismiss was based solely on the existence of a forum selection clause, and, thus was based on their claim of improper venue, we conclude that Metz Family failed to timely move to dismiss the action for lack of personal jurisdiction. Accordingly, having filed an answer and special defenses to the plaintiffs complaint without timely moving to dismiss the action for lack of personal jurisdiction, Metz Family waived its right later to attack the court’s judgment on personal jurisdiction grounds. Schaghticoke Indian Tribe v. Rost, supra, 138 Conn. App. 211-12.
II
The defendants next claim that the court erred by granting the plaintiffs prejudgment remedy application because it was invalid under § 52-278c. The defendants argue that the forum selection clause in the note between the plaintiff and Metz Family designates New York as the exclusive forum for the resolution of a dispute arising out of the note in which only legal relief is sought. The defendants argue that the forum selection clause would make it unreasonable for a Connecticut court to exercise its jurisdiction over Metz Family in a
The following additional facts as found by the trial court are relevant to our resolution of this claim. In its September 8, 2011 articulation of its memorandum of decision denying the defendants’ motion to dismiss the plaintiffs complaint, the court evaluated the forum selection clause contained in the note. The court found that the clause was reasonably communicated to Metz Family and the plaintiff and that both parties are subject to the clause. The court found that “the promissory note does contain exclusive jurisdiction language which would appear to create a mandatory forum selection clause requiring that an action on the promissory note be brought in New York. That exclusive language, however, is later qualified by the exception that permits both parties to ‘apply to a court of competent jurisdiction in the United States of America or abroad for equitable relief as is necessary to preserve, protect and enforce its respective rights under this [n]ote . . . .’ Accordingly, under certain circumstances the forum selection
The court found that “[t]he terms of the promissory note permit the plaintiff to seek an order of attachment in Connecticut to maintain the status quo pending litigation. In Connecticut, an application for prejudgment remedy must be based on an action that the plaintiff will bring in Connecticut to be adjudicated by Connecticut courts. In other words, an application for a prejudgment remedy cannot be brought where there is no independent cause of action to be litigated in Connecticut. The procedure for a prejudgment remedy, therefore, includes litigation of the merits of the case to judgment. The forum selection clause carves out an exception from New York jurisdiction for actions intended to attach property, as is the case here.”
A
We first address the defendants’ claim that, under the terms of the forum selection clause, it would be unreasonable for a Connecticut court to exercise its
We begin by setting forth our standard of review and relevant legal principles governing the first part of the defendants’ second claim. “The [defendants’] claim implicates the . . . court’s construction of the pleadings. [T]he interpretation of pleadings is always a question of law for the court .... Our review of the trial court’s interpretation of the pleadings therefore is plenary.” (Internal quotation marks omitted.) 98 Lords Highway, LLC v. One Hundred Lords Highway, LLC, 138 Conn. App. 776, 796, 64 A.3d 232 (2012).
“[P]arties to a contract may agree in advance to submit to the jurisdiction of a given court .... Absent a showing of fraud or overreaching, such forum clauses will be enforced by the courts.” (Citation omitted; internal quotation marks omitted.) United States Trust Co. v. Bohart, 197 Conn. 34, 42, 495 A.2d 1034 (1985). “The
Our Supreme Court has concluded that “a prejudgment remedy is not a civil action under Connecticut law.” Bernhard-Thomas Building Systems, LLC v. Dunican, 286 Conn. 548, 559, 944 A.2d 329 (2008). “The process of obtaining a prejudgment remedy is different from the process of commencing a civil action. Individuals seeking a prejudgment remedy must attach an unsigned writ, summons and complaint to the following documents: (1) a prejudgment remedy application; (2) an affidavit stating facts sufficient to show that probable cause exists that a judgment will be rendered in the action in favor of the plaintiff; (3) a form of order that a hearing be held; and (4) a form of summons for the prejudgment remedy hearing. See General Statutes § 52-278c (a).” (Emphasis in original.) Id., 558. “[U]nder the clear language and structure of § 52-278c, a plaintiffs application for a prejudgment remedy is not a stand alone pleading; rather, it is entirely dependent on the ‘action’ set forth in the attached writ, summons and complaint. . . . [T]he ‘action’ referred to in § 52-278c (a) (1) must be an action . . . upon which a Connecticut court will render judgment.” (Citation omitted.) Cahaly v. Benistar Property Exchange Trust Co., 268 Conn. 264, 273-74, 842 A.2d 1113 (2004).
In its original memorandum of decision denying the defendants’ motion to dismiss and in its articulation of that decision, the court specifically acknowledged that the action initiated by the plaintiffs complaint was a breach of contract action alleging that Metz Family breached the promissory note in which it agreed to pay $1.6 million with interest. In its articulation, the court
In ruling on the defendants’ motion to dismiss, had the court properly evaluated the cause of action presented in the plaintiffs complaint independently from its prejudgment remedy application,
Under the plain language of the forum selection clause, the parties agreed to submit to “the exclusive jurisdiction of the state and federal courts located in the state of New York to hear and determine any suit, action or proceeding and to settle any disputes, which may arise out of or in connection herewith and with the [note].” The contract contains one exception to this exclusive jurisdictional agreement, which permits the parties to “apply to a court of competent jurisdiction
B
Having concluded that the forum selection clause would make it unreasonable for a Connecticut court to exercise its jurisdiction over Metz Family in an action by the plaintiff seeking only legal relief, we now consider whether the court erred in granting the plaintiffs application for a prejudgment remedy with respect to Metz Family. We first set forth the law and the well established standard of review governing prejudgment remedies. “A prejudgment remedy is available upon a finding by the court that 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 setoffs, will be rendered in the matter in favor of the plaintiff. . . . General Statutes § 52-278d (a) (1). . . . Under this standard, the trial court’s function is to determine whether there is probable cause to believe that a judgment will be rendered in favor of the plaintiff in a trial on the merits. . . .
We conclude that, without a viable complaint on which to base its evaluation of the plaintiffs prejudgment remedy application, the court could not, as a matter of law, have determined that there was probable cause to believe that a judgment will be rendered in favor of the plaintiff in a trial on the merits of the allegation in its complaint. As explained in part IIA of this opinion, the forum selection clause would make it unreasonable for a Connecticut court to exercise its jurisdiction over Metz Family in an action like the one presented by the plaintiff’s complaint because the complaint sought only legal relief for Metz Family’s alleged breach of contract, not equitable relief. Because the plaintiffs application for a prejudgment remedy was
Ill
Finally, the defendants claim that the court erred by granting an excessively large prejudgment remedy.
The resolution of the defendants’ third claim requires us to evaluate the basis for the court’s finding of probable cause to support the amount of the prejudgment remedy awarded to the plaintiff. We are unable to review the merits of the defendants’ claim because they have deemed transcripts unnecessary for this appeal and, thus, have not provided any transcripts from the prejudgment remedy hearing in which the court heard
The judgment is reversed only with respect to Metz Family and the case is remanded with direction to deny the plaintiffs application for a prejudgment remedy as to Metz Family. The judgment is affirmed in all other respects.
In this opinion the other judges concurred.
General Statutes § 52-278c (a) provides in relevant part: “[A]ny person desiring to secure a prejudgment remedy shall attach his proposed unsigned writ, summons and complaint to the following documents: (1) An application, directed to the Superior Court to which the action is made returnable, for the prejudgment remedy requested; (2) An affidavit sworn to by the plaintiff or any competent affiant setting forth a statement of facts sufficient to show that there is probable cause that a judgment in the amount of the prejudgment remedy sought . . . will be rendered in the matter in favor of the plaintiff ... (4) A form of summons directed to a proper officer commanding him to serve upon the defendant at least four days prior to the date of the hearing, pursuant to the law pertaining to the manner of service of civil process, the application, a true and attested copy of the writ, summons and complaint, such affidavit and the order and notice of hearing . . .
The forum selection clause in the note states in relevant part: “[Metz Family] irrevocably submits to the exclusive jurisdiction of the state and federal courts located in the state of New York to hear and determine any suit, action or proceeding and to settle any disputes, which may arise out of or in connection herewith and with the debt documents (coEectively, the ‘proceedings’), and [Metz FamEy] further irrevocably waives any right it may have to remove any such proceedings from any such court (even if removal is sought to another of the above-named courts). [Metz FamEy] irrevocably waives any objection which it might now or hereafter have to the above-named courts being nominated as the exclusive forum to hear and determine any such proceedings and agrees not to claim that it is not personaEy subject to the jurisdiction of the above-named courts for any reason whatsoever, that it or its property is immune from legal process for any reason whatsoever, that any such court is not a convenient or appropriate forum in each case whether on the grounds of venue or forum non-conveni-ens or otherwise. [Metz FamEy] acknowledges that bringing any such suit, action or proceeding in any court other than the courts set forth above wEl cause irreparable harm to [the plaintiff] which could not adequately be compensated by monetary damages, and, as such, [Metz FamEy] agrees that, in addition to any of the remedies to which [the plaintiff] may be entitled at law or in equity, [the plaintiff] wEl be entitled to an injunction or injunctions (without the posting of any bond and without proof of actual damages) to enjoin the prosecution of any such proceedings in any other court. Notwithstanding the foregoing, each of [Metz FamEy] and [the plaintiff] shaH have the right to apply to a court of competent jurisdiction in the United States of America or abroad for equitable rehef as is necessary to preserve, protect and enforce its respective rights under this [n]ote and any other [d]ebt [d]ocument, including, but not limited to orders of attachment or injunction necessary to maintain the status quo pending Etigation or to enforce judgments against [Metz FamEy], any [o]bHgor or the coEateral pledged to [the plaintiff] pursuant to any [d] ebt [djocument or to gain possession of such collateral.”
In their motion to dismiss, the defendants also argued that, although the individual guaranty agreements between the individual defendants, Metz and Simons, and the plaintiff did not contain a forum selection clause Eke the one in the promissory note, the plaintiffs complaint should be dismissed as to the individual defendants to promote judicial economy because the individual guaranty agreements flowed from the promissory note and specified that they were governed by New York law. The defendants do not maintain this argument on appeal.
On appeal, the individual defendants, Metz and Simons, do not challenge the court’s personal jurisdiction over them. As such, our analysis and conclusions regarding the personal jurisdiction issue apply only to Metz Family.
In their second claim, the defendants argue that the forum selection clause would make it unreasonable for a Connecticut court to exercise its jurisdiction over Metz Family only. They analyze only the note between Metz Family and the plaintiff, which contains the clause at issue in this appeal. In this claim, the defendants do not appear to make any argument regarding the individual defendants or their separate guaranty agreements with the plaintiff. Further, the individual guaranty agreements between the individual defendants and the plaintiff do not contain a forum selection clause like the clause contained in the note between Metz Family and the plaintiff. Accordingly, our analysis and conclusions regarding the defendants’ second claim apply only to Metz Family.
In its prayer for relief, the plaintiff demanded (1) money damages; (2) “[i]nterest including, but not limited to, prejudgment interest”; (3) “[ajttor-neys’ fees”; (4) “[c]osts of litigation”; and (5) “[s]uch other and further relief as the [cjourt deems just and equitable.”
Neither Metz Family nor the plaintiff appear to challenge the court’s conclusion that they are subject to the forum selection clause in the promissory note. Instead, the dispositive issue in this part of the defendants’ second claim is whether, in light of the plaintiffs complaint in this case, the clause would make it unreasonable for a Connecticut court to exercise its jurisdiction over Metz Family.
The parties do not appear to dispute that the defendants’ motion to dismiss was directed at the plaintiffs complaint and not the application for prejudgment remedy.
We note that, in its prayer for relief, the plaintiff also demanded “[s]uch other and further relief as the [cjourt deems just and equitable.” This court has held that a demand for “ ‘[sjuch other and further relief as the [cjourt deems just and proper,’ is not a specific demand for equitable relief, but rather merely permits the court to fashion a remedy as is just and equitable if no remedy at law is available.” Florian v. Lenge, 91 Conn. App. 268, 282, 880 A.2d 985 (2006). Accordingly, this general demand by the plaintiff was
The plaintiff also argues that, because § 52-278c requires prejudgment remedy applications to be linked to an independent action that will be litigated to the merits in Connecticut, the plaintiff must have been permitted to bring a breach of contract action in Connecticut in order to give meaning to the exception contained in the forum selection clause. There is no support for such an interpretation of the contract provision. The plaintiff cannot use the requirements of Connecticut prejudgment remedy law as a way to circumvent the valid forum selection clause in the note. Accordingly, we reject the plaintiffs argument.
Because, based on our analysis of the defendants’ second claim, we reverse the court’s order with respect to Metz Family, we do not reach the claim that the prejudgment remedy was excessively large insofar as it relates to Metz Family. Accordingly, our analysis and conclusions regarding the defendants’ third claim apply only to the individual defendants, Metz and Simons.
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