Coan v. Dunne

• Decision Date: 15 July 2021
• Docket Number: No. 3:15-cv-00050 (JAM),Adv. Proc. No. 15-5019 (JAM) (consol.),3:15-cv-00050 (JAM)
• Court: U.S. District Court — District of Connecticut
• Parties: RICHARD M. COAN, Plaintiff-Trustee, v. SEAN DUNNE et al., Defendants.

RICHARD M. COAN, Plaintiff-Trustee, v. SEAN DUNNE et al., Defendants.

No. 3:15-cv-00050 (JAM)

Adv. Proc. No. 15-5019 (JAM) (consol.)

UNITED STATES DISTRICT COURT DISTRICT OF CONNECTICUT

July 15, 2021

OMNIBUS RULING ON POST-TRIAL ISSUES

This long-running case is a consolidated action involving claims by a bankruptcy Trustee seeking to recover assets relating to the bankruptcy of Sean Dunne. In May 2019, I presided over a 19-day jury trial on the Trustee's claims. The jury returned a split verdict. It found that Dunne engaged in numerous fraudulent transfers of assets to his former spouse, Gayle Killilea, in violation of the U.S. Bankruptcy Code, Irish law, and Connecticut law, and it awarded the Trustee total damages of €17,765,706 and $278,297.18 against Killilea for those transfers. But the jury also found that the Trustee had not proven various other claims, including fraudulent transfers with respect to certain assets and veil-piercing claims against certain corporate entities.

Following the jury trial, the parties engaged in extended settlement negotiations that have ultimately not succeeded. As a result, this ruling will resolve a number of post-trial issues that have arisen while those settlement negotiations have been taking place over the past two years. For the reasons set forth below, I will deny Sean Dunne's motion for post-verdict relief including a new trial. I will grant in part and deny in part the Trustee's motion for prejudgment interest, and I conclude that the Trustee is entitled to prejudgment interest against Killilea in the total amount of €1,407,229.60. I will deny the Trustee the equitable relief that he seeks on certain issues were reserved for the Court's determination.

I further conclude that, after resolution of these motions, there are no further substantive issues to take up in this long-drawn-out action. Accordingly, final judgment shall enter against Killilea in the total amount of €19,172,935.60 and $278,297.18.

Because the entry of judgment obviates the need for a prejudgment remedy, I will also overrule as moot Killilea and other defendants' objection to Judge Garfinkel's ruling on the Trustee's motion for post-verdict, prejudgment remedies. Additionally, I will grant Killilea and defendant Wahl, LLC's motion to discharge the lis pendens on a property located at 22 Stillman Lane in Greenwich, Connecticut subject to their proposed stipulation and representations that the proceeds of any sale of the property will be provided to the Trustee to secure and/or satisfy the judgment in this case. Any motion for reconsideration or to re-open the judgment must be filed within 14 days from the entry of judgment.

BACKGROUND

Sean Dunne was a prominent real estate developer in Ireland with a reported net worth of more than $900 million in 2007. See Coan v. Dunne, 2019 WL 302674, at *1 (D. Conn. 2019). But Dunne soon suffered devastating financial reversals after the global financial crisis struck in 2008, and this has set in motion more than a decade of efforts by creditors and bankruptcy trustees in the United States and Ireland to recover from him. Ibid.

In 2010 the government of Ireland created the National Asset Management Agency ("NAMA") to acquire troubled bank assets and other obligations. Ibid. In the meantime, Dunne and his then-spouse—defendant Gayle Killilea—moved to Greenwich, Connecticut in 2010. Ibid. In 2012 Dunne consented to a stipulated judgment against him and in favor of a NAMA-related entity known as National Asset Loan Management, Ltd. ("NALM") for about$235 million stemming from personal guarantees that Dunne had given to secure debt for his companies. Ibid.

NALM, however, suspected that Dunne had concealed assets from his creditors, and so NALM filed an action in 2012 in the Connecticut Superior Court claiming that Dunne had fraudulently transferred various assets to others including Killilea. Ibid. Among the defendants named in NALM's action were Dunne, Killilea, and several corporate entities. Ibid.

While the state court action was pending, Dunne filed for bankruptcy in March 2013 in the U.S. Bankruptcy Court in the District of Connecticut, and his creditors soon commenced a bankruptcy action against him as well in Ireland. Id. at *2. In January 2015, Dunne waived his discharge in the U.S. bankruptcy action, and the bankruptcy Trustee—plaintiff Richard Coan—moved to intervene in the state court action and to remove it to this Court. Ibid. The Court granted the Trustee's motion to intervene and denied defendants' motion to remand. Ibid.

About two months later, the Trustee commenced a separate but somewhat duplicative adversary proceeding in the Bankruptcy Court against Killilea and others in March 2015. See Coan v. Killilea, Adv. Proc. No. 15-05019 (D. Conn.). The Trustee alleged 35 causes of action based on alleged fraudulent transfer of assets or money to Killilea from 2005 to 2008. See Coan v. Dunne, 2019 WL 302674, at *2.

In 2018, the removed state court action and the adversary proceeding that had been proceeding on a separate track in the Bankruptcy Court were consolidated before this Court.¹ In April 2019, the Trustee was substituted for NALM as the plaintiff in the state court action as well.² In addition to Sean Dunne, several other defendants in the consolidated case arerepresented by the same counsel—Killilea, John Dunne, Mountbrook USA, LLC, Wahl, LLC, and TJD21, LLC (together, the "Killilea defendants"). Parallel and related proceedings have also taken place in Ireland, led by the Irish Official Assignee ("OA"), who is the equivalent of the Trustee in the parallel Irish proceedings. See Coan v. Dunne, 2019 WL 276203, at *1 (D. Conn. 2019).

Shortly before trial, I limited the claims in this case to only those expressly alleged in the complaints in the removed state court proceeding and the bankruptcy adversary proceeding, and I denied the Trustee leave to file a second amended complaint including additional claims.³

The case proceeded to trial in May 2019. The parties presented extensive evidence through 14 trial days. The jury was instructed on 18 counts involving allegedly fraudulent transfers under the U.S. Bankruptcy Code, Irish law, and Connecticut law.⁴ For these counts, the jury was instructed that, if it found a fraudulent transfer took place, it should determine which, if any, of the Killilea defendants to hold liable for damages and to provide the amount of damages that each liable defendant should owe.⁵ Additionally, the jury was charged with determining whether the Trustee had proven that the corporate veil should be pierced with respect to four corporate entities on either identity or instrumentality theories, and whether the Trustee had proven a fraudulent transfer for which he was entitled to the return of a property located at 22 Stillman Lane in Greenwich, Connecticut.⁶ As agreed by the parties, other counts involving equitable claims—including claims for unjust enrichment, an accounting, constructive trust, anddeclaratory judgments—were reserved for my determination based on the evidence submitted at trial.⁷

After five days of deliberations, the jury returned a split verdict. Specifically, the jury found that Sean Dunne engaged in fraudulent transfers under nine of the counts submitted to it:

• In Count 1, the jury found that Dunne engaged in an intentionally fraudulent transfer of an Irish property known as Walford in violation of the U.S. Bankruptcy Code. It found that only Killilea was liable for the transfer and that Killilea was liable for €14,000,000 in damages.⁸

• In Count 2, the jury found that Dunne engaged in a constructively fraudulent transfer of Walford in violation of the U.S. Bankruptcy Code, though it did not hold any of the defendants liable for the transfer.⁹

• In Count 3, the jury found that Dunne engaged in an intentionally fraudulent transfer of an Irish property located at 81 North Wall Quay in violation of the U.S. Bankruptcy Code. It found that only Killilea was liable for the transfer and that Killilea was liable for €100,000 in damages.¹⁰

• In Count 4, the jury found that Dunne engaged in a constructively fraudulent transfer of the North Wall Quay property in violation of the U.S. Bankruptcy Code. It found that only Killilea was liable for the transfer and that Killilea was liable for €200,000 in damages.¹¹

• In Count 10, the jury found that Dunne engaged in three constructively fraudulent transfers between August 2011 and April 2012 of a stream of payments known as the Lucy Partnership payments in violation of the U.S. Bankruptcy Code. It found that only Killilea was liable for the transfers and that Killilea was liable for €258,000 in total damages for the transfers.¹²

• In Count 11, the jury found that Dunne engaged in two intentionally fraudulent transfers of other Lucy Partnership payments between October 2010 and March 2011 in violation of Irish law. It found that only Killilea was liable for the transfers and that Killilea wasliable for €192,706 in total damages for the transfers. The jury also found that three other transfers charged in Count 11 were not intentionally fraudulent under Irish law.¹³

• In Count 21, the jury found that Dunne engaged in an intentionally fraudulent transfer of €3,015,000 from his joint Credit Suisse account with Killilea to her individual account in violation of Irish law. It found that only Killilea was liable for the transfer and that Killilea was liable for damages in the full €3,015,000 amount of the transfer.¹⁴

• In Count 25, the jury found that Dunne engaged in an intentionally fraudulent transfer of his 50% interest in the IGB Lands to Killilea in violation of Irish law, though it did not hold any of the defendants liable for the transfer.¹⁵

• In Count 27, the jury found that Dunne engaged in intentionally fraudulent transfers of approximately $278,297.18 to Killilea on various dates between July 2010 and November 2010 in violation of Connecticut law. It found that only

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