In re Probate Appeal of the Cadle Co.

• Decision Date: 26 August 2014
• Docket Number: No. 35576.,35576.
• Court: Connecticut Court of Appeals
• Parties: In re PROBATE APPEAL OF the CADLE COMPANY.

152 Conn.App. 427

100 A.3d 30

In re PROBATE APPEAL OF the CADLE COMPANY.^*

No. 35576.

Appellate Court of Connecticut.

Argued May 28, 2014.

Decided Aug. 26, 2014.

Brian P. Daniels, New Haven, for the appellant (defendant Red Knot Acquisitions, LLC).

C. Donald Neville, for the appellee (The Cadle Company).

ALVORD, MULLINS and LAVERY, Js.

Opinion

ALVORD, J.

The defendant, Red Knot Acquisitions, LLC,¹ appeals from the trial court's denial of its motion for summary judgment on the ground of res judicata.² The defendant argues that the court should have granted its motion, thereby precluding the plaintiff, The Cadle Company, from litigating its claims in the present action, because the plaintiff could have raised those claims in a prior proceeding between the parties. We disagree and affirm the judgment of the trial court.

The following facts and procedural history are relevant to the resolution of the defendant's appeal. F. Francis D'Addario (decedent) was an entrepreneur with extensive real estate and business holdings. He died in a plane crash on March 5, 1986, and a probate estate was opened the same year in the Probate Court for the district of Trumbull. The decedent's sons, David D'Addario and Lawrence D'Addario, are the current coexecutors of his estate.

In 1994, the plaintiff purchased a promissory note from a creditor of the decedent and filed a notice of a claim in excess of $1 million against the estate. The plaintiff, an unsecured creditor, subsequently pursued its claim to judgment against the estate in the amount of $3 million. The probate estate remains open, more than twenty-seven years after the decedent's death, and the judgment remains unpaid.

In December, 1997, the estate was indebted to a consortium of banks in an amount totaling more than $48 million (bank debt). At the request of the estate, the defendant purchased the bank debt for approximately $5 million (Red Knot Transaction), conditioned, inter alia, on the simultaneous execution of a forbearance agreement. The liens on certain estate assets that secured the bank debt were assigned to the defendant. Pursuant to the terms of the forbearance agreement, the defendant would refrain from taking any legal action against the estate on the bank debt for a designated period of time. The agreement provided that the estate could purchase the indebtedness from the defendant at a substantial discount if the estate exercised this option by a specified date (estate option). To further secure the estate's indebtedness to the defendant, the agreement required the estate to grant security interests in additional estate assets. The forbearance agreement was executed on December 30, 1997, and the defendant became the largest secured creditor of the estate.

On or about October 9, 1997, which was nearly three months before the execution of the forbearance agreement, the plaintiff filed a motion for order with the Trumbull Probate Court seeking removal of the estate's executors³ pursuant to General Statutes § 45a–242 (a).⁴ In the motion, the plaintiff alleged that the executors had mismanaged the estate and breached their fiduciary duties by failing to settle the estate. The plaintiff sought orders to (1) remove the executors, (2) appoint a successor professional executor, (3) hire a competent attorney for the estate, (4) hire a competent accounting firm that would prepare an immediate accounting, and (5) obtain appraisals of the estate's real estate holdings. The Probate Court denied the plaintiff's motion on April 29, 1998.

Pursuant to General Statutes § 45a–186,⁵ the plaintiff appealed to the Superior Court (prior probate appeal). The plaintiff filed a “Revised Reasons for Appeal,” dated May 7, 1999, alleging that it was a creditor of the estate, that the estate had been open for more than thirteen years, that the estate had the assets to pay the plaintiff's claim but failed to do so, that there had been no current appraisals of the estate's assets, and that the current executors were not attorneys, accountants or professional executors. The plaintiff further alleged that its pecuniary interests as a creditor of the estate had been adversely affected by the Probate Court's order and decree because: “(a) the [Probate] Court failed to remove the current executors of the estate, despite the foregoing; (b) the [Probate] Court failed to appoint a professional executor to settle the estate, despite the foregoing; (c) the [Probate] Court failed to appoint an attorney to protect the estate's legal interests, despite the foregoing; (d) the [Probate] Court failed to appoint an accounting firm to administer the estate and failed to order an immediate accounting of the estate, despite the foregoing; (e) the [Probate] Court failed to order the posting of a probate bond, despite the foregoing; [and] (f) the [Probate] Court failed to order appraisals of the real estate owned by the estate, despite the forgoing.”

The matter was tried to the Superior Court, McWeeny, J., on July 29 through August 1, 2002. The plaintiff had argued throughout the trial that, because the coexecutors were fiduciaries, it was their burden to show that they had acted properly in their management of the estate.

At the close of the plaintiff's case-in-chief, the court ruled from the bench that it was the plaintiff's burden to show that removal of the coexecutors was warranted and that the plaintiff had failed to meet its burden of proof. The court made no finding as to whether the coexecutors had breached their fiduciary duties, but, rather, the court focused on the lack of evidence warranting removal of the coexecutors. The court dismissed the appeal, sua sponte.⁶ Our Supreme Court affirmed the judgment of the trial court. Cadle Co. v. D'Addario, 268 Conn. 441, 463, 844 A.2d 836 (2004).

On or about April 20, 2010, the plaintiff filed an “Omnibus Motion for Relief” with the Trumbull Probate Court seeking, inter alia, an order of the Probate Court “invalidating and/or voiding liens of [the defendant] on certain assets of the estate.” The motion additionally requested an order of the Probate Court directing the defendant “to disgorge all monies and/or benefits that it received, directly or indirectly, from the sale of properties that were subject to invalidated and/or voided liens.” The Probate Court denied the plaintiff's motion on September 15, 2010, and the plaintiff appealed to the Superior Court pursuant to § 45a–186 (present probate appeal).

In its complaint, the plaintiff alleged that it has a valid claim against the estate, that the Probate Court improperly denied its motion for relief seeking the invalidation of the defendant's liens on certain estate assets and the disgorgement of monies and benefits received from the sale of the properties subject to those liens, and that the plaintiff was entitled to the relief sought in its motion. On September 23, 2011, the defendant filed a motion for summary judgment, claiming that the plaintiff's action was “barred by the doctrines of collateral estoppel⁷ and/or res judicata in that the enforceability of the [forbearance] agreement pursuant to which [the defendant] was granted the subject liens actually and necessarily was determined in, or, at a minimum, could have been raised in, a prior proceeding in which a judgment was entered against [the plaintiff] after trial.” (Footnote added.) The defendant was referring to the prior probate appeal decided by Judge McWeeny on August 1, 2002. The plaintiff filed its objection to the motion for summary judgment on October 10, 2012, and the court held a hearing on January 8, 2013.

On March 28, 2013, the court issued its memorandum of decision denying the defendant's motion for summary judgment. In its decision, the court determined that the doctrine of res judicata was not applicable. In reaching that conclusion, the court stated that it had compared the complaint in the present probate appeal with the complaint and trial record in the prior probate appeal. According to the court, the forbearance agreement was relevant in the prior probate appeal “because of the estate option contained therein.” Further, “the plaintiff's claim that the executors fail[ed] to exercise [the option] in a timely fashion, [thereby] causing substantial financial loss to the estate, was one of many acts that [allegedly] warranted their removal.... The concern of the court and parties in the [prior probate appeal] was, with respect to the forbearance agreement, whether the executors' conduct was improper, not whether the forbearance agreement itself was improper. Given these circumstances, the court cannot conclude that the facts underlying the prior and present probate appeals ‘are related in time, space, origin or motivation’ or ‘form a convenient trial unit,’ such that there is sufficient identity between the causes of action to warrant the application of res judicata.” (Emphasis in original.) This appeal followed.

We begin with the applicable legal principles that govern our analysis. “Summary judgment is the appropriate method for resolving a claim of res judicata.” Sotavento Corp. v. Coastal Pallet Corp., 102 Conn.App. 828, 833, 927 A.2d 351 (2007). “Practice Book [§ 17–49 ] provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.... In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party.... The party seeking summary judgment has the burden of showing the absence of any genuine issue [of] material facts which, under applicable principles of substantive law, entitle him to a judgment as a matter of law ... and the party opposing such a motion must provide an evidentiary foundation to demonstrate the existence of a genuine issue of material fact.... [T]he scope of our review of the...