State Of Conn. v. Sunrise Herbal Remedies Inc. State Of Conn., No. 18371.

• Decision Date: 08 June 2010
• Docket Number: No. 18371.
• Citation: 2 A.3d 843,296 Conn. 556
• Court: Connecticut Supreme Court
• Parties: STATE of Connecticut v. SUNRISE HERBAL REMEDIES, INC., et al. State of Connecticut v. David Hoffman et al.

296 Conn. 556

2 A.3d 843

STATE of Connecticut

v.SUNRISE HERBAL REMEDIES, INC., et al.

State of Connecticut

v.David Hoffman et al.

No. 18371.

Supreme Court of Connecticut.

Argued March 18, 2010.

Decided June 8, 2010.

COPYRIGHT MATERIAL OMITTED.

Robert W. Clark, assistant attorney general, with whom were Phillip Rosario, assistant attorney general, and, on the brief, Richard Blumenthal, attorney general, and Brendan T. Flynn and Jose Rene Martinez Onofre, assistant attorneys general, for the appellant (state).

James W. Oliver, with whom, on the brief, was Sylvia M. Ho, Meriden, for the appellees (named defendant et al. in each case).

Thomas A. Kaelin, Watertown, for the appellee (intervening defendant Wachovia Bank, N.A.).

ROGERS, C.J., and NORCOTT, KATZ, PALMER, VERTEFEUILLE, ZARELLA and McLACHLAN, Js. ^*

KATZ, J.

The plaintiff, the state of Connecticut, appeals from the decision of the trial court granting the motions of the defendants, Valerie Hawk-Hoffman and David Hoffman, ¹ to dissolve prejudgment attachments originally filed against their property on which the intervening defendant Wachovia Bank, N.A. (Wachovia), had held a mortgage. ² The state claims that the trial court improperly concluded that it lacked subject matter jurisdiction over the applications for those attachments because the applications had not complied with the requirements of General Statutes § 52-278e(a). ³ Specifically, the state claims that the trial court improperly concluded that the applications for the prejudgment attachments were invalid because they had not been accompanied by affidavits from a “competent affiant” as required under § 52-278e(a). We agree with the state, and, accordingly, we reverse the decision of the trial court.

The record reflects the following undisputed facts. This appeal arises from an enforcement action brought by the state, at the request of the commissioner of consumer protection, pursuant to General Statutes § 42-110m(a) ⁴ of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq., against Hawk-Hoffman, Sunrise Herbal Remedies, Inc. (Sunrise), and Sage Advice, Inc. (Sage). In that action, the state alleged that Hawk-Hoffman was the principal of Sunrise and Sage, and that, in that capacity, she had directed, controlled and participated in various unfair or deceptive acts in violation of General Statutes § 42-110b(a) in connection with the sale of herbal products.

Subsequent to filing the CUTPA action, the state filed an ex parte application for a prejudgment remedy pursuant to § 52-278e(a). Specifically, the state sought an attachment of a parcel of Hawk-Hoffman's real property located adjacent to 35 Codfish Hill Road in Bethel, in order to secure at least $1,391,000, representing $91,000 in restitution and $1,300,000 in civil penalties on the basis of 260 alleged wilful violations of CUTPA. The application was accompanied by an affidavit signed by Assistant Attorney General Matthew F. Fitzsimmons, in which he averred, inter alia, that the state had received 260 consumer complaints or inquiries about the business practices of Hawk-Hoffman, Sunrise and Sage, reporting an average consumer loss of approximately $362. The affidavit also stated that, prior to the commencement of the action, the state had served Hawk-Hoffman with a civil investigative demand, and that, after receiving the demand and discussing her responses with the state, Hawk-Hoffman had dissolved Sunrise and transferred her interest in 35 Codfish Hill Road in Bethel by quitclaim deed to Hoffman, her husband. The trial court, Miller, J., granted the ex parte application.

The state in a separate action also filed a complaint against the defendants alleging fraudulent conveyance in connection with the transfer of the 35 Codfish Hill Road property, and an application for an ex parte prejudgment remedy seeking an attachment on that property. This application was accompanied by an affidavit from Fitzsimmons setting forth details of the underlying CUTPA action and the alleged fraudulent transfer. The trial court, Wiese, J., granted that ex parte application as well.

Prior to the attachments, the Bethel properties had been encumbered by two mortgages; Wachovia held the first mortgage and IndyMac Bank held the second mortgage. Following the execution and recording of the state's attachments, the defendants executed a third mortgage with Wachovia on the Bethel properties. ⁵ After Wachovia and IndyMac Bank instituted foreclosure actions against the properties, an agreement was reached among the state, the defendants and Wachovia, according to which the properties would be sold, the proceeds of the sale would be used to pay off the mortgages on the property entered before the state's attachments and Wachovia would be permitted to intervene as an interested party in the proceedings relating to those attachments. In accordance with the parties' agreement, the balance of the proceeds was placed in an escrow account and the trial court ordered the substitution of the state's attachments on the property with attachments on the contents of the escrow account.

Thereafter, in accordance with § 52-278e(d), ⁶ the defendants and Wachovia moved to dissolve the attachments on the ground that the applications were fatally defective and, therefore, that the court lacked subject matter jurisdiction over the attachments. Specifically, they contended that the affidavits were not supported by personal knowledge and, therefore, had not been filed by a competent affiant, as required by § 52-278e(a). The state thereafter filed a “substitute affidavit in support of the application for an ex parte [prejudgment remedy]” from Patrick M. Ahlquist, an investigator in the office of the attorney general, to which the defendants objected as unauthorized under, and in contravention of, the prejudgment remedy scheme.

The court scheduled a consolidated evidentiary hearing to consider the jurisdictional issue. At the hearing, Fitzsimmons testified that he had acquired personal knowledge of the facts recited in the two affidavits by, inter alia: (1) reading the state's civil investigative demand and Hawk-Hoffman's responses thereto; (2) attending a meeting with Hawk-Hoffman and her attorney; (3) reviewing the complaint file, including all documents submitted with the complaints; (4) reviewing the Bethel land records for the Codfish Hill properties at the Bethel town clerk's office; and (5) reviewing the secretary of the state's records for Sunrise.

The trial court treated Fitzsimmons' affidavits as the operative ones in the proceedings and, therefore, did not address the objections to Ahlquist's substitute affidavit. In considering Fitzsimmons' affidavits, the trial court first reasoned that there is a distinction under our case law between properly executed affidavits lacking sufficient facts and invalid affidavits, and concluded that the latter was an improper basis for the court's jurisdiction to grant a prejudgment attachment. The trial court concluded that the affidavits were invalid because Fitzsimmons was not a competent affiant, as required by the statute. ⁷ See General Statutes § 52-278e(a). Specifically, the trial court noted: “[I]t is clear that evidence has not been introduced sufficient to support a finding that Fitzsimmons had personal knowledge of the matters in the affidavits regarding the consumer complaints. Before making out the affidavits, Fitzsimmons basically reviewed the consumer complaint files.”

The trial court then concluded that “Fitzsimmons' review of the consumer complaint files did not make him a competent affiant of the essential facts.... Fitzsimmons lacked personal knowledge of the essential facts supporting the prejudgment attachments. He did not possess the requisite legal qualifications to provide the affidavits in question.” ⁸ Therefore, the trial court determined that it did not have jurisdiction over the state's applications for the ex parte prejudgment attachments, and accordingly granted the motions to dissolve the attachments. This appeal followed.

The state claims that the trial court improperly concluded that it did not have subject matter jurisdiction over the applications for the ex parte prejudgment attachments because Fitzsimmons had personal knowledge of the relevant matters, and the mere fact that the affidavits may have contained some hearsay relating to the consumer complaints did not render the affidavits invalid. The state further contends that, even if that hearsay is deemed improper support for the applications, because the state had met the threshold requirement for a proper affidavit, it was entitled to present further evidence to demonstrate probable cause at a hearing pursuant to § 52-278e(e). ⁹ In response, the defendants and Wachovia claim that the trial court properly concluded that Fitzsimmons was not a competent affiant. ¹⁰ Wachovia further contends that the interpretation of § 52-278e(a) advanced by the state would violate due process because it would allow ex parte prejudgment attachments to be imposed on the basis of conclusory allegations and hearsay, rather than facts. We agree with the state that Fitzsimmons was a competent affiant and, therefore, that the trial court must conduct a hearing to determine whether there is probable cause to maintain the attachments. We further conclude that Wachovia's due process claim is inadequately briefed.

I

We first turn to the question of whether the trial court properly determined that it lacked subject matter jurisdiction over the applications for a prejudgment attachment because Fitzsimmons' affidavits were invalid. That determination was predicated on the court's conclusion that Fitzsimmons did not have personal knowledge of the facts in the affidavits and, therefore, was not a “competent affiant” under § 52-278e(a). We conclude that the trial court's conclusion was premised on an incorrect interpretation of that...