CFM of Connecticut, Inc. v. Chowdhury

• Decision Date: 03 December 1996
• Docket Number: No. 15334,15334
• Court: Connecticut Supreme Court
• Parties: CFM OF CONNECTICUT, INC. v. Taufiqul CHOWDHURY et al.

Page 1108

685 A.2d 1108

239 Conn. 375

CFM OF CONNECTICUT, INC. v. Taufiqul CHOWDHURY et al.

No. 15334.

Supreme Court of Connecticut.

Argued Oct. 1, 1996.

Decided Dec. 3, 1996.

John Timbers, for appellant (plaintiff).

Karen Keefe Clark, Hartford, with whom, on the brief, were Frank G. Usseglio and Irene E. Magish, Sturbridge, MA, for appellee (named defendant).

Before BORDEN, NORCOTT, KATZ, PALMER and PETERS, JJ.

BORDEN, Justice.

The dispositive issue of this certified appeal is whether a definite, unappealed sanctions order by a trial judge, addressed to an attorney and based on the attorney's bad faith pleading, is a final judgment for purposes of res judicata and, therefore, precludes a subsequent trial judge in the same case from vacating that order. Following our grant of certification to appeal, the sanctioned attorney, John Timbers, appealed ¹ from the judgment of the Appellate Court. The Appellate Court reversed the judgment of the trial court, Holzberg, J., vacating the sanctions order that the court, Susco, J., had imposed earlier in the course of the trial proceedings. ² CFM of Connecticut, Inc. v. Chowdhury, 38 Conn.App. 745, 662 A.2d 1340 (1995). We conclude that Judge Susco's sanctions order was a final judgment for purposes of res judicata and, therefore, that Judge Holzberg improperly vacated it. Accordingly, we affirm the judgment of the Appellate Court.

Judge Holzberg aptly described the case as a "legal quagmire" out of which has grown "a tangled thicket of motions, claims and counter-claims." The following are the pertinent facts and procedural history, gleaned from a record that includes seven thick manila trial court folders.

The plaintiff is CFM of Connecticut, Inc. (CFM). The defendants are Taufiqul Chowdhury, 5 C's Corporation (5 C's), a partnership known as 294 Farmington Realty (294 Farmington) whose trade name is Sielev Associates (Sielev), and Barry L. Siegal. Chowdhury owns the stock of 5 C's, and Siegal is a partner in 294 Farmington. CFM is in the business of franchising mini-marts under the name of Express Marts. In November, 1988, CFM entered into a franchise agreement with Chowdhury and 5 C's for the operation of an Express Mart at 302 Farmington Avenue, Hartford, which was owned by 294 Farmington. 294 Farmington had leased the property to CFM, which made it available to Chowdhury and 5 C's under the franchise agreement.

In April, 1989, 294 Farmington brought a summary process action against CFM for nonpayment of rent. CFM was defaulted for failure to appear for trial in that action, and that judgment was sustained on appeal.

In August, 1989, CFM, represented by Timbers, brought this action in the Hartford judicial district claiming that Chowdhury had breached the franchise agreement, and that Chowdhury, 294 Farmington and Siegal had unlawfully conspired to evict CFM. In connection with this action, CFM filed a motion for a preliminary injunction and a motion for a prejudgment remedy, which were heard before Judge Susco on February 28, March 1 and 2, May 10, 11 and 29, 1990, with additional hearing dates scheduled for August 9, 16 and 17, 1990. After the fourth hearing day, CFM filed a motion to add two other parties as plaintiffs, namely, TM of Connecticut, Inc. (TM), and Total Food Mart Corporation, and also filed a request to amend its complaint by adding six additional counts. This motion and request were heard before Judge Susco on July 17, and a decision on them was pending when, on August 3, CFM filed a motion for recusal or disqualification of Judge Susco for alleged bias, and for a mistrial on CFM's pending motions for a preliminary injunction and a prejudgment remedy.

The filing of this motion necessitated the postponement of the scheduled August 9 hearing before Judge Susco. ³ On August 13, however, CFM, TM and Total Food Mart Corporation served Chowdhury and 5 C's with a complaint, which was signed by Timbers, and was returnable to the Windham judicial district, which alleged the same claims that were pending before Judge Susco as well as additional claims that CFM was seeking to add by its request to revise. Thereafter, on the morning of August 16, the last day scheduled for hearings before Judge Susco, CFM withdrew its motions for a preliminary injunction and for a prejudgment remedy, its request to revise, and its motion to join additional plaintiffs. In response, Chowdhury and 5 C's filed the motion that resulted in the ruling of Judge Susco that is involved in this appeal. On August 17, 1990 Chowdhury and 5 C's objected to the withdrawal by CFM of its motions for a preliminary injunction and for a prejudgment remedy. They also moved for an assessment against Timbers of attorney's fees incurred by them in connection with all of CFM's withdrawn motions and requests.

In support of this motion, Chowdhury and 5 C's alleged that the withdrawal was a "blatant, last ditch attempt [by CFM] to forum shop in order to relitigate [in the Windham judicial district] its motion for a preliminary injunction." They also alleged that Timbers had conceded at the hearing on the motion for recusal before Judge Miano that CFM would probably lose the motion for a preliminary injunction, that Timbers first had attempted to forestall that result by moving to recuse Judge Susco, and that after the recusal effort had failed he had instituted the second action in the Windham judicial district and had withdrawn the motions in the Hartford judicial district in order to avoid an adverse ruling on the merits that might have had res judicata effect. Chowdhury and 5 C's alleged further that Timbers had withdrawn the motions to join additional parties and to revise the complaint in order to avoid the dismissal of the action in the Windham judicial district on the ground of the prior pending action doctrine. They also alleged that it was an abuse of the legal system to "tie up the judicial system for six days of hearings but when it appears that an adverse ruling is likely, withdraw the motion and institute an identical action in another court before another judge in an effort to obtain a better result." They further alleged that they had spent tens of thousands of dollars in attorney's fees defending against the motions, that they should not be required now to spend even more money to defend against substantially identical motions before a different judge, and that they were entitled to a determination on the merits of the motions. ⁴

In response to this motion, CFM filed, on August 24, a "cross motion for sanctions and other relief," and on August 30, an amended version of the same motion. In the amended motion, CFM moved for sanctions against Chowdhury and 5 C's on the ground that their motion for sanctions had been made in bad faith, without color, and for reasons of harassment. CFM also represented that, if the court sustained any of the objections to the withdrawal of the motions for a preliminary injunction and a prejudgment remedy, CFM planned to resubmit its motions to add additional parties and to amend its complaint. CFM then moved for an order postponing any hearing on those motions until after those resubmitted motions had been heard and decided. ⁵

Thereafter, Judge Susco ruled on these motions and cross motions. She granted Chowdhury's motion for sanctions and assessed $10,000 in attorney's fees against both CFM and Timbers. ⁶ In addition, Judge Susco overruled the objection to the withdrawal of CFM's motions and denied CFM's cross motion for sanctions. On September 11, 1990, the clerk sent to all counsel a notice of Judge Susco's rulings. On December 18, 1990, Chowdhury requested that Judge Susco articulate her earlier ruling by specifying the date on which the $10,000 was to be paid and, on December 31, 1990, Judge Susco ordered the fees to be paid by February 28, 1991. Neither CFM nor Timbers took any action to challenge the propriety of these rulings, either by way of appeal or by way of a motion to reconsider or to vacate. ⁷ Meanwhile, further legal maneuvering was taking place. In February, 1990, James F. Schmidt and Janice Schmidt, who owned all of the 1000 outstanding shares of stock of CFM, declared bankruptcy, and in October, 1990, CFM was dissolved as a corporation by the secretary of the state for failure to file a biennial report. As a result, CFM was prohibited from engaging in any corporate affairs beyond those necessary to its windup. At a bankruptcy auction on July 24, 1991, the trustee in bankruptcy sold the Schmidts' 1000 shares of stock in CFM to 294 Farmington, which thereupon appointed Siegal as the sole director of CFM. On July 25, 1991, CFM instructed Timbers to withdraw all pending litigation, including this action. When Timbers refused to do so, CFM retained the law firm of Tarlow, Levy & Droney (Tarlow), which, on July 29, 1991, filed an appearance in this action in lieu of the appearance of Timbers, as well as a withdrawal of the case.

Although the Schmidts had owned all of the issued shares of CFM, they had not owned all of the authorized shares. In fact, there were 4000 additional authorized shares. On July 23, 1991, one day before the bankruptcy auction ⁸ and pursuant to a strategy devised by Timbers, CFM had issued the additional 4000 shares to Donald Feigenbaum and Roger Cote, who were also the majority shareholders of TM. ⁹

Thus, there was a dispute over the ownership and control of CFM between, on the one hand, 294 Farmington and Siegal, who were represented by Tarlow, and, on the other hand, Feigenbaum, Cote, and TM, who were represented by Timbers. Consequently, on August 2, 1991, Timbers filed a motion to strike both the appearance of Tarlow and its withdrawal of this action. Among the reasons Timbers advanced for this motion were that Feigenbaum and Cote, rather than 294 Farmington, owned the controlling interest in CFM, and that CFM was not authorized to withdraw the case because it already had assigned the...