Braffman v. Bank Of Am. Corp.

• Citation: 998 A.2d 1169,294 Conn. 501
• Decision Date: 20 July 2010
• Docket Number: No. 18342.,18342.
• Court: Supreme Court of Connecticut
• Parties: Elaine Albom BRAFFMAN et al.v.BANK OF AMERICA CORPORATION.

294 Conn. 501

998 A.2d 1169

Elaine Albom BRAFFMAN et al.v.BANK OF AMERICA CORPORATION.

No. 18342.

Supreme Court of Connecticut.

Argued May 26, 2010.

Decided July 20, 2010.

COPYRIGHT MATERIAL OMITTED

William F. Gallagher, with whom, on the brief, was David McCarry, New Haven, for the appellants (plaintiffs).

Thomas J. Sansone, with whom were Anne D. Peterson and, on the brief, Lee F. Lizotte, New Haven, for the appellee (defendant).

ROGERS, C.J., and NORCOTT, KATZ, PALMER, VERTEFEUILLE, ZARELLA and McLACHLAN, Js.^*

KATZ, J.

The plaintiffs, Elaine Albom Braffman (Elaine), as custodian for David S. Braffman, Gerald H. Braffman (Gerald), as custodian for Susannah Joy Braffman, David S. Braffman (David) and Susannah Joy Braffman-Amen (Susannah), appeal from the trial court's judgment in favor of the defendant, Bank of America Corporation, on the plaintiffs' claims that the defendant, upon demand, wrongfully had withheld the funds contained in two certificate of deposit passbook accounts, originally opened with one of the defendant's predecessors, Society for Savings Bank (Society).¹ The plaintiffs contend that the trial court improperly disregarded Practice Book § 10-50 ² and improperly allocated the burden of proof by requiring them to disprove the defendant's special defense that it previously had made payment to them. In a related claim, the plaintiffs contend that the trial court improperly failed to require the defendant to produce evidence of payment once the plaintiffs had presented a prima facie case of nonpayment by virtue of having introduced the uncancelled passbooks into evidence. Finally, they claim that the trial court's reliance on statutory and regulatory provisions that allow bank records to be destroyed seven years after an account is closed improperly created a judicially imposed statute of limitations against nonpayment actions brought after that period, which, in turn served to immunize the defendant. We affirm the trial court's judgment.

The following facts, as found by the trial court, and procedural history are relevant to our resolution of the issues on appeal. In November, 1987, Gerald created the first of the two certificate of deposit accounts at issue by making a deposit in the amount of $33,079.37 for the benefit of his then minor daughter, Susannah. In November, 1988, Elaine opened the second account by making a deposit in the amount of $100,000 for the benefit of her then minor son, David. The accounts were funded by Mildred Spiers, Gerald's mother, who intended that the money be held for the benefit of Susannah and David and not be used until a “ ‘major life cycle event,’ ” such as the birth of a child or the purchase of a home, had occurred. The passbooks reflected that interest would accumulate, with an effective annual yield of 9.110 and 9.381 percent, respectively, and contained the following notation: “Interest will not be paid after maturity date unless renewed or redeposited.” The maturity dates for the accounts were one year for Susannah's account, and three years for David's account.

On January 5, 2004, Gerald presented the passbooks at Fleet Bank (Fleet), Society's successor and the defendant's predecessor, and made demand for payment of the sums allegedly contained in the two accounts. In response to the demand, Fleet informed Gerald that it had no record of the existence of either account and, therefore, the accounts must have either been closed or escheated to the state. See footnotes 8 and 9 of this opinion.

After determining that the state was not holding escheated funds from the accounts, the plaintiffs commenced the present action against the defendant. In their substitute two count complaint, the plaintiffs claimed, inter alia, that the defendant wrongfully had withheld the funds.³ The defendant denied the allegations and asserted as special defenses, inter alia: (1) that the defendant or Fleet had paid the amounts in full owed to the plaintiffs; and (2) laches.⁴

At trial, although the parties agreed that they had entered into a debtor-creditor relationship in 1987 and 1988, as evidenced by the two passbook accounts, they obviously disagreed as to the continued existence of either account. The plaintiffs claimed that their uncancelled passbooks constituted prima facie evidence that the bank accounts had not been closed, that the defendant had lost the records of the accounts, perhaps because of subsequent bank mergers, and that, upon production of the uncancelled passbooks, the defendant was required to produce evidence that it had paid the principal and interest on the accounts. The defendant's position was that, at some point in time between the opening of the accounts and January 1997, more than seven years before Gerald demanded payment, the plaintiffs had filed an affidavit claiming lost or misplaced passbooks and had received the principal and accrued interest, thereby closing out the accounts. The trial court concluded that, under Schiavone v. Bank of America, N.A., 102 Conn.App. 301, 925 A.2d 438 (2007), Connecticut does not shift the burden to the defendant upon a plaintiff's production of an uncancelled passbook and, instead, requires a court to weigh all of the evidence, including the plaintiff's conduct and the defendant's banking procedures, in evaluating a claim of nonpayment.

In engaging in that endeavor, the trial court had before it the following evidence in support of the plaintiffs' claim. The plaintiffs introduced each of the passbooks into evidence, over the defendant's hearsay objections, neither of which reflected that any withdrawals had been made from the accounts, or that the accounts had been closed or otherwise deactivated. Gerald testified that he had placed both passbooks in his safe deposit box, where they had remained until 2004. He contended that his decision to liquidate the funds in the two certificate of deposit accounts, after sixteen and seventeen years, respectively, was precipitated by news in late 2003, by which time David and Susannah were adults, that David was considering the purchase of an apartment in New York, and that Susannah was attempting to become pregnant. Elaine and Gerald stated that they had not actively looked for the passbooks before that time because of the understanding they had with Spiers that the money would be held until such “ ‘major life cycle events' ” had occurred with respect to David and Susannah. Elaine and Gerald denied closing the accounts or filing any affidavit of lost or misplaced passbooks that would have allowed them to close the accounts without presenting the original passbooks. The plaintiffs further contended that David and Susannah had not known of the existence of Spiers' gift until Gerald had informed them of the defendant's refusal to pay upon demand. Although each passbook stated that interest would not be paid after the maturity date “unless renewed or redeposited,” Gerald testified that he had understood that the certificates of deposit would continue to roll over and earn interest and, therefore, did not require frequent monitoring.

The trial court noted, however, the following evidence, or lack thereof, that it found either did not support, contradicted or was inconsistent with the plaintiffs' claim. With respect to documentary evidence, in response to a request for production by the defendant, the plaintiffs were unable to produce income tax returns for either David or Susannah from 1988, through 1997, to demonstrate when, if ever, the defendant had paid interest on the accounts and when such payments had stopped, because they claimed that those records had been destroyed in a flood in the family home. The tax returns available for David for 2000, 2002, 2003, and for Susannah from 1998, through 2003, reflected a significant amount of interest or dividend income, but either no or nominal interest from the defendant's predecessors, Society and Fleet.⁵

The evidence also established that, during the time period in question, Gerald and Elaine had run a busy and successful law practice, and, accordingly, the plaintiffs had left the preparation of the annual tax returns for themselves, their law practice and their children to their accountant John Salvatore. Each year, Gerald had provided all the tax records he had received to Salvatore, including many 1099 tax forms for reporting interest received from the various investments that Gerald or Spiers had funded for Gerald's children. Gerald had no specific memory of the documents and had relied on Salvatore's professionalism to prepare accurate filings. With respect to Salvatore's handling of the accounts, the trial court remarked: “It is significant to the court that [Salvatore] reviewed the [plaintiffs'] tax information against the prior year's reported income to make certain that he had received appropriate documentation from all expected sources. The accounts in question would have generated $9000 annually of reportable interest for David during the first three years the original certificate was in force. Susannah would have received approximately $3000 annually of interest income during the term of her certificate. It is difficult to believe that the plaintiffs and [Salvatore] would fail to notice and question early on either the defendant's failure to pay and report interest, or the stopping of such interest payments after they had started in 1989 or 1990.⁶ In addition, the court finds it unlikely that the plaintiffs, who have resided at the same address from 1982 to the present, did not receive any of the [maturity of account and earned interest] notices from the defendant.” ⁷

The trial court also concluded that the defendant had provided credible testimony regarding federal and state banking regulations and procedures governing the merger of banks that “make it unlikely that these accounts were lost in such a transaction. Each of these corporate transactions requires that the merged bank and the acquiring bank...