Suffield Dev. Assoc. v. Nat. Loan Investors

• Decision Date: 19 September 2006
• Docket Number: No. 26450.,26450.
• Citation: 905 A.2d 1214,97 Conn.App. 541
• Court: Connecticut Court of Appeals
• Parties: SUFFIELD DEVELOPMENT ASSOCIATES LIMITED PARTNERSHIP v. NATIONAL LOAN INVESTORS, L.P., et al.

Page 1214

905 A.2d 1214

97 Conn.App. 541

SUFFIELD DEVELOPMENT ASSOCIATES LIMITED PARTNERSHIP v. NATIONAL LOAN INVESTORS, L.P., et al.

No. 26450.

Appellate Court of Connecticut.

Argued April 17, 2006.

Decided September 19, 2006.

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Kerry R. Callahan, with whom, on the brief, were Barbara A. Frederick, Hartford, and Ffiona M. McDonough, for the appellants-appellees (defendant Berman and Sable et al.).

Kerry M. Wisser, with whom, on the brief, were Richard P. Weinstein and Nathan A. Schatz, West Hartford, for the appellee-appellant (plaintiff).

BISHOP, ROGERS and PELLEGRINO, Js.

ROGERS, J.

This action arose from an abuse of process in connection with the procurement, service and maintenance of an excessive execution. The defendant law firm of Berman and Sable and the defendant attorney James W. Oliver¹ appeal, and the plaintiff, Suffield Development Associates Limited Partnership, cross appeals from the judgment of the trial court awarding damages to the plaintiff. The defendants claim that the court improperly (1) found that the execution at issue was excessive, (2) concluded that the defendants had engaged in abuse of process and (3) awarded certain damages. In its cross appeal, the plaintiff also challenges the court's damages award. We affirm in part and reverse in part the judgment of the trial court.

The events underlying this matter extend back well over a decade and have spawned three prior appeals. The following facts and procedural history, gleaned from the reported decisions in the earlier appeals or found by the court in the present matter, are necessary to give context to the issues on appeal.

The plaintiff is an entity that was formed for the purpose of developing certain commercial property. It sought funding for the project in two phases from Society for Savings, whose successor in interest was Bank-Boston (bank). Although the bank supplied the initial funding as contemplated, it declined to lend further amounts, and the development project failed. The plaintiff brought a two count action against the bank for its failure to provide the secondary financing (lender liability action), alleging breach of contract and, alternatively, promissory estoppel. Following a jury trial in the lender liability action, the plaintiff was awarded $2.5 million on its breach of contract claim. The bank appealed from the judgment, which our Supreme Court reversed. The case was remanded for a new trial on the promissory estoppel claim. See generally Suffield Development Associates Ltd. Partnership v. Society for Savings, 243 Conn. 832, 708 A.2d 1361 (1998).

The failed development project also resulted in the bank's commencing foreclosure proceedings against the plaintiff (foreclosure action).² During the litigation, National Loan Investors, L.P. (National), was substituted for the bank in the foreclosure action.³ The defendants acted as legal counsel for National in the foreclosure action, and it is their conduct in relation to that action that gave rise to the present matter.

On December 17, 1996, while the lender liability action was on appeal, the parties to the foreclosure action agreed to a stipulated judgment. Pursuant to the stipulation in the foreclosure action, a deficiency judgment in the amount of $375,000 was rendered in favor of National. The stipulation provided further, however, that the deficiency judgment could be satisfied only from the damages award, if any, eventually received by the plaintiff in the lender liability action (lender liability judgment).⁴ The plaintiff had other creditors potentially interested in the lender liability judgment. Furthermore, at the time the stipulation was reached, the ultimate amount of that judgment was uncertain. Accordingly, the stipulation established a sliding scale formula that eventually would be applied to determine the amount to which National was entitled to satisfy the deficiency judgment in the foreclosure action.

Stated simply, pursuant to that formula, if the proceeds of the lender liability judgment were to exceed $1,333,333.33, National would recover 15 percent of those proceeds in satisfaction of the deficiency judgment. If the proceeds of the lender liability judgment fell between $200,000 and $1,333,333.33, National would recover $200,000. If the proceeds of the lender liability judgment were between $1 and $200,000, National would recover all of those proceeds. Finally, if the plaintiff received no proceeds from the lender liability judgment, National would accept $1 in full satisfaction of the deficiency judgment.

Following our Supreme Court's remand of the lender liability action, a new jury trial commenced on the promissory estoppel count. On April 22, 1999, before the conclusion of that trial, the plaintiff and the bank agreed to a settlement whereby the bank would pay the plaintiff $1.5 million by May 13, 1999, in full satisfaction of the pending claim (lender liability settlement).⁵

Also on April 22, 1999, Richard P. Weinstein, the plaintiff's counsel in both the foreclosure and lender liability actions, telephoned Joel Sable, a senior partner at Berman and Sable, and informed him that the lender liability action had settled for $1.5 million. Weinstein also apprised Sable of the plaintiff's position that National, pursuant to the stipulation in the foreclosure action, was entitled to only $1. According to the plaintiff, the term "lender liability judgment," as used in the stipulation, did not encompass the lender liability settlement; thus, the proceeds of the lender liability judgment, as contemplated by the stipulation, were zero. Correctly predicting that National would disagree with the plaintiff's interpretation of the stipulation, Weinstein offered to put $200,000 of the lender liability settlement proceeds into escrow⁶ and to immediately file a declaratory judgment action in which the plaintiff's and National's respective rights to those proceeds could be determined by a court.

At some point between April 22 and 28, 1999, Sable relayed what Weinstein had told him to Oliver, another attorney at Berman and Sable who had served as trial counsel in the foreclosure action. Sable was unable to answer Oliver's questions regarding whether $1.5 million represented the gross or net amount of the lender liability settlement, and whether the settlement agreement involved any other type of valuable consideration. On April 29, 1999, Oliver contacted the bank's counsel and attempted, unsuccessfully, to learn further details of the lender liability settlement.⁷ Oliver also suggested to the bank's counsel that he might have to protect National's rights by garnishing the settlement proceeds, which then were still held by the bank. The bank's counsel indicated to Oliver his disinclination to be involved in an interpleader action over the contested funds. The bank's counsel then called Weinstein and relayed what Oliver had told him.

Weinstein subsequently contacted Oliver and told him that Sable already had been informed about the amount of the lender liability settlement. Also on April 29, 1999, Weinstein wrote to Sable and expressed disappointment at Oliver's suggestion of a garnishment, given Weinstein's earlier offer to hold $200,000 in escrow pending a judicial determination of what National was owed pursuant to the stipulation. Thereafter, relations between Weinstein and the defendants, which previously had been cordial, deteriorated.

Over the next few days, Oliver considered how to respond to the foregoing events and, ultimately, decided to seek an execution in the amount of $375,000, the full value of the deficiency judgment in the foreclosure action, to protect National's interest in the lender liability settlement proceeds. This amount did not reflect any calculation on the basis of the sliding scale outlined in the stipulation. Rather, it represented National's maximum possible entitlement under the stipulation, which would have been available only if the proceeds of the lender liability action were $2.5 million, i.e., the amount of the now vacated jury verdict.

As stated by the court, "[a]gainst this background, despite his awareness of [the plaintiff's] desire to obtain a judicial determination as to how much, if anything, it owed to National under the [stipulation], of attorney Weinstein's stated willingness, to that end, to file a declaratory judgment action to put the parties' dispute before the court for decision and to hold the contested portion of the lender liability settlement proceeds in escrow during the pendency of that action, and of his own lack of any factual basis for believing that the gross amount of the lender liability settlement exceeded $1.5 million, attorney Oliver applied to this court [on May 4, 1999] for an execution in the amount of $375,000. In support of his application, attorney Oliver represented to this court that National's `TOTAL UNPAID DAMAGES AND COSTS' in the [foreclosure] action were $375,000, although, in light of what he then knew about the lender liability settlement, the maximum amount he could conceivably have claimed entitlement to, exclusive of interest, under [the stipulation], was 15 percent of $1.5 million, or $225,000."⁸ That same day, the defendants obtained the sought execution and delivered it to a sheriff for service on the bank. Also on May 4, 1999, unaware of the execution, Weinstein commenced a declaratory judgment action seeking to determine the amount of the lender liability settlement to which National was entitled.

The next day, when he learned that the execution had been served on the bank, Weinstein's partner, Kerry M. Wisser, called Oliver and left a message on his answering machine in which Wisser protested that under no reading of the stipulation was National entitled to $375,000 and, therefore, the execution was excessive. In his message and also in a letter he sent to Oliver that day, Wisser demanded...