Canty v. Otto

• Decision Date: 01 May 2012
• Docket Number: No. 18610.,18610.
• Citation: 304 Conn. 546,41 A.3d 280
• Court: Connecticut Supreme Court
• Parties: Regina CANTY, Administratrix (Estate of Shamaia Smith) v. Kathleen J. OTTO.

304 Conn. 546

41 A.3d 280

Regina CANTY, Administratrix (Estate of Shamaia Smith)

v.Kathleen J. OTTO.

No. 18610.

Supreme Court of Connecticut.

Argued Jan. 13, 2012.Decided May 1, 2012.

Proloy K. Das, with whom was Glenn E. Coe, Hartford, for the appellant(defendant).

Stephen F. McEleney, Hartford, for the appellee(plaintiff).

Campbell D. Barrett, Arnold H. Rutkin, Westport, and Jon T. Kukucka, Hartford, filed a brief for the American Academy of Matrimonial Lawyers, Connecticut Chapter, as amicus curiae.

ROGERS, C.J., and NORCOTT, PALMER, McLACHLAN, EVELEIGH and HARPER, Js.

EVELEIGH, J.

The defendant, Kathleen J. Otto, appeals ¹ from the judgment of the trial court granting the application of the plaintiff, Regina Canty, administratrix of the estate of Shamaia Smith, for a prejudgment remedy.On appeal, the defendant contends that the plaintiff, who is a creditor of her debtor spouse, Kenneth Otto, Sr.(Otto), cannot collect the debt from the defendant, a nondebtor spouse, by bringing a claim under the Uniform Fraudulent Transfer Act (act),General Statutes § 52–552a et seq.Specifically, the defendant claims that: (1)the plaintiff lacks standing to bring a claim under the act because the distribution of marital assets in a dissolution decree is not a transfer under the act; (2)the trial court's determination that the plaintiff had standing under the act because the dissolution was undertaken with actual intent to hinder, delay or defraud the estate of Smith was clearly erroneous; and (3)the trial court lacked subject matter jurisdiction over the plaintiff's claim under the act because it could not disturb the property distribution in the dissolution decree.The plaintiff responds that she does have standing to bring a claim under the act, that the trial court's determination that the dissolution action was undertaken with actual intent to hinder, delay or defraud Smith's estate was proper, and that the trial court did have jurisdiction over her claim because it could grant practical relief under the act.²We agree with the plaintiff and, accordingly, affirm the judgment of the trial court.

The following facts, found by the trial court,³ and procedural history, are relevant to our resolution of the issues on appeal.In early 2007, the East Hartford police department and state police began to investigate Otto in connection with the disappearance of Smith.The defendant, who was the wife of Otto, first learned of the police investigation “several weeks prior to April 7, 2007.”At that time, the defendant learned from the police that Smith was an exotic dancer and a prostitute with whom Otto had been sexually involved.On April 13, 2007, the defendant transferred $8000 from a bank account held jointly with Otto to an account in her name alone, because she feared that the money might be “attached by someone.”Subsequently, on April 16, 2007, pursuant to a search warrant, the police commenced searching a property located in Stafford (Stafford property), which was co-owned by Otto and his son, for evidence in connection with Smith's disappearance.Otto was present when the search commenced.Within one or two days of that search, Smith's remains were found buried on the Stafford property.Thereafter, on April 17, 2007, Otto and the defendant traveled together to the department of motor vehicles to transfer title in a jointly owned vehicle to the defendant.The couple then continued to Tewksbury, Massachusetts, where Otto transferred his title to certain residential property to the defendant.No consideration was paid by the defendant to Otto for these transfers.On either April 20 or April 23, the defendant telephoned a local attorney concerning the filing of a dissolution action.Thereafter, she contacted attorney Bruce S. Beck for an appointment on that day.Otto drove the defendant to Beck's office.A dissolution proceeding was then initiated on that day by service upon Otto as he waited in the reception area of Beck's office.Pursuant to the dissolution action, the next day a notice of lis pendens was filed against Otto's interest in property he owned in Ellington, as well as the Stafford property.The dissolution action was formally filed on April 27, 2007(dissolution action).On May 9, 2007, the estate of Smith commenced a civil action against Otto, alleging that he had caused Smith's death (wrongful death action).On May 14, 2007, the state arrested Otto and charged him with one count of murder in violation of General Statutes § 53a–54a, and two counts of tampering with physical evidence in violation of General Statutes § 53a–155(criminal case).The defendant continued living with Otto until he was incarcerated.

Thereafter, on June 4, 2007, after a full hearing in the wrongful death action, the plaintiff obtained a prejudgment remedy order against Otto in the amount of $4.5 million.The plaintiff then moved to intervene in the dissolution action.This motion was denied on November 27, 2007.The plaintiff appealed from the denial of her motion to intervene to the Appellate Court, which dismissed her appeal.

Subsequently, on June 3, 2008, after a trial, the court in the dissolution action, Schumann, J., rendered a judgment of dissolution, which included a division of the marital property.In the dissolution decree, the defendant received all of the real property, and Otto received an automobile, some shares of stock and a relatively small remaining balance of his retirement funds.The plaintiff again appealed to the Appellate Court from the decision of the trial court denying her motion to intervene.The Appellate Court again dismissed her appeal for lack of a final judgment.On November 5, 2008, Otto was convicted of Smith's murder.

During the hearing in the wrongful death action, the trial court found probable cause to believe that the defendant did not truly want the dissolution from Otto that she was seeking.The defendant had testified that she wanted Otto released from jail so that he could come home and live with her.She admitted at the probable cause hearing that she still loved Otto and that she visited him in jail before and after he was convicted of murdering Smith.The court further found that the defendant did not truly intend to divorce Otto, but rather to conspire with him to obtain a judgment of dissolution in order to shield Otto's assets from Smith's estate.The court also found that Smith's estate is a creditor of the debtor, Otto, as defined under the act, and that Otto transferred assets shortly before commencement of the dissolution action with the specific intent to defraud his creditors, including the estate.The court further found that, knowing he would likely be arrested and prosecuted for Smith's murder, Otto made transfers in a hurried fashion.Additionally, the court found that there was not a “scintilla” of evidence suggesting that Otto's intent in transferring assets to his wife was nonfraudulent.The court also found that Otto had encouraged and facilitated the defendant's institution of a dissolution action against him and did not seriously contest those proceedings in order to ensure that most or all of his assets could not be reached by the plaintiff in the wrongful death action.

Thereafter, the plaintiff filed the present action against the defendant pursuant to the act,⁴ along with an application for a prejudgment remedy.⁵On May 8, 2009, the defendant filed a motion to dismiss the action on the ground that a dissolution judgment could not be collaterally attacked through a claim under the act.Thereafter, on August 28, 2009, the trial court, Domnarski, J., denied that motion.Subsequently, on September 3 and September 16, the trial court, Prescott, J., heard evidence on the plaintiff's application for a prejudgment remedy.On February 2, 2010, that court concluded that there was probable cause to show that the assets transferred from Otto to the defendant through the dissolution action were fraudulent transfers.In doing so, that court adopted the prior decision of Judge Domnarski, concluded that a dissolution judgment could be subject to a claim under the act, and awarded a prejudgment remedy in the amount of $670,000.Thereafter, the defendant appealed.

On February 11, 2010, the defendant filed a motion for reconsideration in which she claimed, inter alia, that the amount of the prejudgment remedy was higher than the amount alleged to have been transferred.On February 22, 2010, the plaintiff filed a motion for reconsideration seeking a higher prejudgment remedy award.On April 9, 2010, after previously denying most of the other claims, the trial court issued a memorandum of decision in which it agreed with the defendant that her one-half interest in the marital property could not be the subject of a fraudulent transfer and, accordingly, reduced the amount of the prejudgment remedy to $552,000.On April 16, 2010, the defendant filed an amended appeal.Additional facts will be set forth as necessary.

I

As a preliminary matter, we first address the plaintiff's claim that this court lacks jurisdiction to consider the defendant's claim that the trial court improperly denied her motion to dismiss.Specifically, the plaintiff asserts that this court cannot consider issues related to the denial of the defendant's motion to dismiss because it is not a final judgment, and this court only has jurisdiction under General Statutes § 52–278l ⁶ to consider the decision of the trial court granting a prejudgment remedy.The defendant responds that, because the granting of a prejudgment remedy is a final judgment under § 52–278l,the court on appeal may also review the denial of her motion to dismiss because this subsidiary decision is necessarily encompassed by review of the appeal.The defendant supports this argument with case law holding that, in an appeal from a final judgment, any adverse interlocutory ruling may be challenged.⁷We agree with ...