Jpmorgan Chase Bank, N.A. v. Herman

• Decision Date: 22 August 2017
• Docket Number: AC 38126.
• Citation: 175 Conn.App. 662,168 A.3d 514
• Court: Connecticut Court of Appeals
• Parties: JPMORGAN CHASE BANK, N.A. v. J. Maurice HERMAN

175 Conn.App. 662

168 A.3d 514

JPMORGAN CHASE BANK, N.A.

v.J. Maurice HERMAN

AC 38126.

Appellate Court of Connecticut.

Argued February 15, 2017

Officially released August 22, 2017

Jack Kallus, with whom were Shivani Desai and, on the brief, John W. Cannavino, Jr., Stamford, for the appellant (defendant).

Matthew Triggs, with whom were Kelley Franco Throop, New Canaan, and, on the brief, Lisa Markofsky, for the appellee (plaintiff).

Lavine, Keller and Bishop, Js.

KELLER, J.

The defendant, J. Maurice Herman, appeals following the trial court's issuance of a turnover order pursuant to General Statutes § 52–356b. The plaintiff, JPMorgan Chase Bank, N.A., applied for the order.

The defendant claims that (1) the court improperly exercised personal jurisdiction over him, and (2) the order improperly deviated from the court's prior oral ruling granting the plaintiff's application.¹ We disagree. Accordingly, we affirm the judgment of the trial court.

On the basis of the evidence presented and the parties' representations, the following facts are not in dispute. The plaintiff was the defendant's broker. Some years ago, that relationship soured, and the parties became embroiled in an action in Florida. The record discloses neither the date of commencement nor the precise nature of the litigation. On April 28, 2011, the Florida court rendered judgment in favor of the plaintiff, and later awarded the plaintiff attorney's fees and costs totaling $259,539.96, with interest continuing to accrue. The defendant thereafter exhausted his appeals in the Florida courts.

On March 26, 2014, while the judgment was still unsatisfied, the plaintiff served on the defendant interrogatories in aid of execution under Florida law. The interrogatories directed the defendant to provide, inter alia, information concerning any trusts in which he held an interest. In his answers to the interrogatories, the defendant indicated that he held an interest in a "bilateral trust" (trust) in which he was settlor, trustee, and beneficiary. He further stated that the trust "[d]oes business under the fictitious name Marstack & Co.," "[the trust's] [a]ssets are owned by Marstack & Co. and are located in Connecticut," and "[t]he broker is David Watkins from UBS [Financial Services, Inc. (UBS) ] in Westport, Connecticut."

On October 17, 2014, a proceeding in aid of execution was held in Florida Circuit Court. At the hearing, the defendant testified under oath that the trust held assets worth approximately $120 million, and that those assets were still being held in the Connecticut UBS account. The defendant further testified: "I cannot tell you with absolute certainty where [the] securities are registered, but it is a Connecticut account. If you were to look at the [Depository Trust Company],² all of their assets are held in New York, and that's where all securities—or virtually all securities are held by the member banks. So, I can't speak to the legal logistics as to how securities are held, but it's Connecticut or—and/or New York."

On February 13, 2015, the plaintiff registered its Florida judgment in Connecticut pursuant to the Uniform Enforcement of Foreign Judgments Act, General Statutes § 52–604 et seq. On May 6, 2015, the plaintiff submitted its application for a turnover order (order) to the trial court. General Statutes § 52–356b, the turnover statute, sets forth a postjudgment procedure permitting a judgment creditor to "(a) ... apply to the court for an execution and an order in aid of the execution directing the judgment debtor, or any third person, to transfer to the levying officer³ either or both of the following: (1) Possession of specified personal property that is sought to be levied on; or (2) possession of documentary evidence of title to property of, or a debt owed to, the judgment debtor that is sought to be levied on." "The court may issue a turnover order pursuant to [this section], after notice and hearing ... on a showing of need for the order." General Statutes § 52–356b (b). In its application for the order, the plaintiff asserted that the defendant held an interest in the trust and that the trust's assets were held in a UBS brokerage account located in Connecticut. The plaintiff therefore requested that the court issue an order compelling the defendant and UBS to "transfer to the levying officer cash or marketable securities held by UBS in the name of or for the benefit of [the defendant], including without limitation, the assets in the [trust] ... sufficient to satisfy [the plaintiff's] judgment ...."

The defendant filed an objection to the application in which he asserted that the court lacked personal jurisdiction in the matter because UBS's Connecticut branch did not have physical possession of the certificates of the securities held by the trust. The defendant claimed that those certificates were in the possession of the aforementioned Depository Trust Company (Depository Trust); see footnote 2 of this opinion; in New York. He, therefore, argued that the securities had a New York situs⁴ and, accordingly, that the plaintiff was not entitled to execute on those assets in Connecticut.

The plaintiff countered that the court had in rem jurisdiction⁵ because, under article 8 of the Uniform Commercial Code (UCC); General Statutes § 42a–8–101 et seq. ; the location of the broker—in this case, Connecticut—rather than the location of the securities certificates, determines the situs of the assets. See General Statutes § 42a–8–112 (c).

The court held a hearing on the application on June 22, 2015. During the hearing, the parties relied on the foregoing facts and arguments. The court also admitted evidence at the hearing. In addition to the answers to the interrogatories and a transcript of the proceeding in aid of execution, the court admitted an account statement for the trust. The statement provided a Stamford address for UBS, and also listed Watkins as the financial advisor.

At the conclusion of the hearing, the court orally granted the application. In so doing, the court reasoned: "I don't believe that it is the obligation of [the plaintiff] or any other creditor to [serve the Depository Trust]. [The Depository Trust], frankly, would have to have a legal department of 5000 lawyers if [it] had to litigate every time somebody had to attach a brokerage account by some individual debtor." A written turnover order directed at UBS followed. The defendant then filed the present appeal. Additional facts will be discussed in the context of our analysis.

I

The defendant's first claim is that the court improperly exercised personal jurisdiction over him. We disagree.

At the outset, we need to clarify what the defendant is and is not arguing. The defendant is not attacking the judgment by arguing that the Florida court was without personal or subject matter jurisdiction, which is the typical method by which a party defends against the enforcement of a foreign judgment. See, e.g., Cahaly v. Somers , 89 Conn.App. 816, 820, 877 A.2d 837, cert. denied, 275 Conn. 910, 882 A.2d 669 (2005). Nor does the defendant dispute that the trial court had jurisdiction over UBS, to the extent that it has offices in Connecticut. Instead, the defendant challenges only the personal jurisdiction of the courts of this state over him . The defendant argues that Connecticut lacks personal jurisdiction over him because he has never been to this state, owns no property here, and has not otherwise availed himself of the state such that haling him into court here would not violate due process. As previously mentioned, he contends that the mere presence of his broker here, a fact that he also disputes, as discussed later in this opinion, is insufficient to confer personal jurisdiction because the target of the present action—the defendant's securities—have certificates that are physically located in New York. Our review of this claim is plenary. See Walshon v. Ballon Stoll Bader & Nadler, P.C. , 121 Conn.App. 366, 371, 996 A.2d 1195 (2010).

"The standard for determining whether an exercise of jurisdiction over the interests of persons is consistent with the Due Process Clause is the minimum-contacts standard elucidated in International Shoe [Co. v. Washington , 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945) ]." Shaffer v. Heitner , 433 U.S. 186, 207, 97 S.Ct. 2569, 53 L.Ed.2d 683 (1977). "[I]f [a defendant] be not present within the territory of the forum, he [must] have certain minimum contacts with it such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." (Internal quotation marks omitted.) International Shoe Co. v. Washington , supra, at 316, 66 S.Ct. 154.

The preceding standard, however, does not apply in the same manner to postjudgment enforcement proceedings like the one in this case. The United States Supreme Court has stated: "[W]e know of nothing to justify the assumption that a debtor can avoid paying his obligations by removing his property to a State in which his creditor cannot obtain personal jurisdiction over him. The Full Faith and Credit Clause, after all, makes the valid in personam judgment of one State enforceable in all other States." (Footnote omitted.) Shaffer v. Heitner , supra, 433 U.S. at 210, 97 S.Ct. 2569. Accordingly, "[o]nce it has been determined by a court of competent jurisdiction that the defendant is a debtor of the plaintiff, there would seem to be no unfairness in allowing an action to realize on that debt in a State where the defendant has property, whether or not that State would have jurisdiction to determine the existence of the debt as an original matter." Id., at 210 n.36, 97 S.Ct. 2569. Thus, to the extent that the defendant argues that personal jurisdiction is lacking because his contacts with Connecticut would be insufficient to commence the original action here, he is mistaken.

Nevertheless, it seems axiomatic that there at least be property in the jurisdiction where postjudgment...