Chapman Lumber, Inc. v. Tager

• Decision Date: 22 July 2008
• Docket Number: No. 18026.,No. 18021.,No. 18022.,No. 18023.,18021.,18023.,18026.,18022.
• Citation: 952 A.2d 1,288 Conn. 69
• Parties: CHAPMAN LUMBER, INC. v. Clifford L. TAGER.
• Court: Connecticut Supreme Court

952 A.2d 1

288 Conn. 69

CHAPMAN LUMBER, INC. v. Clifford L. TAGER.

No. 18021.

No. 18023.

No. 18026.

No. 18022.

Supreme Court of Connecticut.

Argued January 9, 2008.

Decided July 22, 2008.

Jeffrey J. Tinley, with whom, on the brief, was Matthew J. Corcoran, Waterbury, for the appellant in Docket Nos. SC 18021, 18023 and 18026, appellee in Docket No. SC 18022 (defendant).

Charles F. Brower, with whom was Marcus G. Organschi, Torrington, for the appellee in Docket Nos. SC 18021, 18023 and 18026, appellant in Docket No. SC 18022 (plaintiff).

ROGERS, C.J., and NORCOTT, KATZ, ZARELLA and SCHALLER, Js.

SCHALLER, J.

These appeals arise out of litigation brought against an attorney for the allegedly improper actions he undertook in connection with his representation of a financially troubled client. Both the defendant, Attorney Clifford L. Tager, and the plaintiff, Chapman Lumber, Inc., have appealed from the judgment rendered in accordance with a jury verdict, as it subsequently was modified by the trial court, and the defendant has filed two additional appeals challenging certain postjudgment rulings of the court. The defendant claims that the trial court: (1) lacked subject matter jurisdiction over this action because the plaintiff's claims were not ripe for adjudication;¹ (2) improperly declined to open the judgment and set aside the jury's verdict, in whole or in part, because (a) the verdict violates public policy by imposing on an attorney a duty to a nonclient, (b) the verdict is contrary to applicable law governing the causes of action at issue and (c) the defendant's conduct, even if improper, did not cause the plaintiff's damages; (3) improperly awarded prejudgment interest pursuant to General Statutes § 37-3a;² and (4) improperly refused to conduct an evidentiary hearing in connection with the defendant's motions to open the judgment. The plaintiff claims that the trial court improperly: (1) reduced the jury's award of compensatory damages by an amount the plaintiff ultimately recovered from the bankruptcy estate of the defendant's client; and (2) effected that reduction without affording the plaintiff proper notice and the opportunity to argue that modification of the damages award was unwarranted. We disagree with all of the defendant's claims. We agree with the plaintiff that the court improperly reduced the jury's award of compensatory damages and, therefore, need not reach its second claim. Accordingly, we reverse the judgment of the trial court as subsequently modified.

The jury reasonably could have found the following facts. The defendant is a licensed attorney engaged as a solo practitioner of law. Prior to and during the year 2000, he performed various legal services for Ronald Scalzo, a self-employed remodeling contractor. In early 2000, Scalzo was experiencing difficulties meeting his financial obligations, including one to the plaintiff, who previously had supplied building materials to Scalzo on credit. Scalzo, on the defendant's advice, began to contemplate declaring bankruptcy. As to real property in which Scalzo held an ownership interest, the defendant advised him to "get off of the deeds."³

As of February 17, 2000, Scalzo owed the plaintiff $43,935.44 and was delinquent on his account. In exchange for the plaintiff's agreement to refrain from pursuing collection of this debt and to waive accruing interest,⁴ Scalzo promised to give the plaintiff a mortgage on property that he owned, jointly with Steven Martino, at 37 Padanaram Road in Danbury (Padanaram Road property). Scalzo told the plaintiff that there was sufficient equity in the Padanaram Road property to secure his debt, that there was a buyer for the property and that the plaintiff would be paid in full at the closing.⁵ Also on February 17, 2000, Scalzo signed a letter reciting this agreement.⁶ On March 7, 2000, however, prior to executing any note or mortgage and unbeknownst to the plaintiff, Scalzo quitclaimed his interest in the Padanaram Road property to Martino.⁷ Around the same time, Scalzo also quitclaimed his interest in his personal residence to his wife.

In April, 2000, the plaintiff's attorney, Marcus G. Organschi, prepared a note and mortgage on the Padanaram Road property and sent them to the defendant to review on Scalzo's behalf. The two attorneys corresponded over a period of several weeks and negotiated certain revisions to the documents, which ultimately required Scalzo to satisfy his indebtedness to the plaintiff by September 1, 2000. During the course of these negotiations, the defendant told Organschi that there was more than $100,000 of equity in the property, that there was a buyer for the property and that a sale was forthcoming. The defendant further told Organschi that, although Scalzo previously "had been playing fast and loose with his finances," he had been receiving help with his accounting, was collecting on his receivables and was in "pretty good shape financially...." On June 8, 2000, the defendant directed Scalzo to execute the note and mortgage, and on the same day, the defendant forwarded those documents to Organschi.⁸

In August, 2000, the defendant referred Barry Miller, another of his clients, to Martino because Miller was interested in renting or purchasing a property similar to the Padanaram Road property. On August 30, 2000, Miller offered to purchase the Padanaram Road property for $300,000, and Martino accepted that offer. Martino and Miller then entered a sale-purchase agreement with a closing date of April 2, 2001, and Miller commenced substantial renovations to the property. Meanwhile, the due date on the note from Scalzo to the plaintiff passed without Scalzo making any payment on that note.

On October 11, 2000, the defendant called Organschi and notified him that he had "good news and bad news." The good news was that the Padanaram Road property was about to be sold, but the bad news was that a title search had revealed that Scalzo did not own the property, and further, that he had not owned it at the time he executed the mortgage and note to the plaintiff. The defendant told Organschi that Scalzo was deeply indebted to the Internal Revenue Service and "basically had no intention of paying [the plaintiff]."

On November 8, 2000, the plaintiff sent Scalzo a letter, notifying him of his default and demanding repayment. Scalzo did not respond. Accordingly, on December 18, 2000, the plaintiff filed in the Superior Court an application for an ex parte temporary restraining order barring a closing on the Padanaram Road property and for a prejudgment remedy, preliminary to bringing an action against Scalzo and Martino alleging fraud, fraudulent transfer and unfair trade practices. The court issued the requested temporary restraining order, and it scheduled a hearing on the plaintiff's request for a prejudgment remedy. On February 2, 2001, before that hearing was held, Scalzo filed for bankruptcy, resulting in a stay of the Superior Court action. On February 26, 2001, Miller filed in the Danbury land records a mechanic's lien in the amount of $76,468, relating to the renovations at the Padanaram Road property.

On October 24, 2001, the plaintiff and Scalzo agreed to a stipulated judgment in an adversarial proceeding the plaintiff had commenced in the bankruptcy action. Pursuant to that stipulation, Scalzo's debt of $43,935.44 was declared nondischargeable, and the plaintiff agreed to withdraw its Superior Court action against Scalzo and Martino and to release the mortgage on the Padanaram Road property. The Superior Court action was withdrawn on December 17, 2001. The Padanaram Road property ultimately was sold to Miller in January, 2002.

During the course of the bankruptcy proceedings, Organschi had learned from Scalzo what the defendant had known about the ownership of the Padanaram Road property in early 2000. Consequently, on September 12, 2001, the plaintiff filed the present action against the defendant, raising claims of fraud, tortious interference with contractual relations and conspiracy. As to fraud, the plaintiff alleged that the defendant, through his knowing misrepresentations and nondisclosures surrounding Scalzo's execution of the note and mortgage, had induced the plaintiff to refrain from otherwise obtaining security for its debt or taking alternative steps to collect the amount owed, resulting in damages of "$43,935.44 plus interest of $12,234.68 accrued through August 2001 plus accruing interest, attorney's fees, and the costs of collection." As to tortious interference with contractual relations, the plaintiff alleged that the defendant, in negotiating the note and mortgage, had interfered with the relationship between the plaintiff and Scalzo and their credit agreement by arranging for Scalzo to shirk his obligations under that agreement. Finally, the plaintiff alleged that the defendant had conspired with Scalzo to defraud the plaintiff.

A jury trial held on multiple days in September, 2004, resulted in a verdict in favor of the plaintiff on all three counts. The jury awarded the plaintiff a total of $55,500 in compensatory damages, the components of which were not specified. In response to interrogatories, the jury found that the defendant had acted with reckless indifference to the plaintiff's rights or had committed an intentional and wanton violation of those rights, that the defendant's conduct amounted to the wrongful detention of money due to the plaintiff and that the wrongful detention had commenced on April 17, 2000.

Following the jury's verdict, the plaintiff filed motions for prejudgment interest pursuant to § 37-3a, exemplary damages and offer of judgment interest pursuant to General Statutes (Rev. to 2001) § 52-192a, as amended by No. 01-71 of the 2001 Public Acts (P.A. 01-71).⁹ The defendant objected to each of the plaintiff's motions, and he filed motions to set aside the verdict and to have judgment rendered in accordance with a...