Whitaker v. Taylor

• Decision Date: 06 March 2007
• Docket Number: No. 26549.,26549.
• Citation: 99 Conn.App. 719,916 A.2d 834
• Court: Connecticut Court of Appeals
• Parties: Rosemary WHITAKER v. Douglas TAYLOR et al.

916 A.2d 834

99 Conn.App. 719

Rosemary WHITAKER v. Douglas TAYLOR et al.

No. 26549.

Appellate Court of Connecticut.

Argued September 29, 2006.

Decided March 6, 2007.

Roy S. Ward, Westport, for the appellant (plaintiff).

Joseph Mirsky, Bridgeport, for the appellee (defendant John M. Anderson).

McLACHLAN, LAVINE and DUPONT, Js.

McLACHLAN, J.

The plaintiff, Rosemary Whitaker, appeals from the judgment of the trial court rendered following a hearing in damages after the defendants John M. Anderson and Douglas Taylor¹ were defaulted for failure to plead. On appeal, the plaintiff claims that the court improperly (1) declined to enter a damages award against Anderson and (2) applied a heightened standard of proof to her damages claims on the counts of her complaint alleging fraud, statutory theft under General Statutes § 52-564 and violation of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq. We reverse in part the judgment of the trial court.

The following facts and procedural history are relevant to our disposition of the plaintiff's appeal. On July 1, 2004, the plaintiff filed an application for the prejudgment remedy of attachment and disclosure of assets, as well as a complaint against Taylor, Anderson and T & A Capital Management, Inc. (corporation). The seven count complaint alleged breach of contract, unjust enrichment, theft and violation of CUTPA against Taylor, Anderson and the corporation, as well as fraud and negligent misrepresentation against Taylor and Anderson, and breach of fiduciary duty against Taylor only.²

The complaint alleged that on or about February 7, 2004, Taylor and Anderson went to the plaintiff's house and sought a loan from her for an investment in which they were involved. They represented to the plaintiff that they operated T & A Capital Management, Inc., a Connecticut corporation. Taylor held himself out to be the chief executive officer of the corporation, and Anderson held himself out to be the vice president. They told the plaintiff that they had invested in the purchase of foreign bonds, which they claimed was a safe investment. They requested that the plaintiff lend to them $97,000, which they needed to complete the bond purchase. They agreed to repay the loan together with interest at the rate of 4 percent annually within two weeks from the time that the plaintiff provided them with the money. As an additional inducement, they promised the plaintiff that they would buy her a new car and pay for certain renovations to her home.

When the plaintiff explained to Taylor and Anderson that she did not have the money available, they advised her that she could easily arrange a loan or withdrawal from her annuity³ in order to make the loan. The plaintiff, acting in reliance on the representations made by Taylor and Anderson, applied for a loan and also sought a free withdrawal and partial surrender of the annuity from the insurance company holding it. On February 13, 2004, the insurance company issued the plaintiff two checks totaling $97,000: one, the amount of a $50,000 loan, and the other, a withdrawal from the annuity. After tax consequences and penalty assessments, the total cost of the loan to the plaintiff at that time was $113,832.06, not including additional interest accrued.

On February 16, 2004, Taylor delivered a letter to the plaintiff, on the letterhead of the corporation, promising to repay the loan of $97,000, together with any and all charges required to restore the account to its original balance and to deliver the aforementioned gifts. The letter was signed by both Anderson and Taylor. Upon receipt of the letter, the plaintiff endorsed the checks to Taylor.

Thereafter, despite numerous demands, Taylor and Anderson failed, refused and neglected to repay any portion of the original loan or any of the additional charges and failed to deliver any of the promised items. In early May, 2004, the plaintiff received a letter from Taylor dated April 30, 2004, on the letterhead of the corporation, stating that the transaction for which he and Anderson had used her money was fraudulent and was being investigated by their bank. The letter further stated that they would be unable to repay the loan for at least nine months to one year. The plaintiff subsequently learned that T & A Capital Management, Inc., was not a Connecticut corporation and was not authorized to transact business as a foreign corporation within the state of Connecticut.

On July 26, 2004, the court issued an order granting the plaintiff's request for a prejudgment remedy attaching certain assets of Taylor, Anderson and the corporation. On December 14, 2004, the court granted the plaintiff's motions for default against Taylor and Anderson for failure to plead. The court denied the plaintiff's motion for default for failure to plead against the corporation because there was no appearance filed by that defendant.

On April 15, 2005, the plaintiff, Taylor and Anderson appeared before the court for a hearing in damages. The corporation did not appear. Prior to the hearing, neither Taylor nor Anderson gave notice to the plaintiff of an intention to contest liability with respect to the allegations set forth in the plaintiff's complaint as provided by Practice Book § 17-34, which is titled "Hearings in Damages; Notice of Defenses." At the hearing, the plaintiff testified regarding the allegations set forth in her complaint and elaborated on those allegations. Specifically, the plaintiff testified, inter alia, that she had known Anderson for most of her life and had known Taylor for more than nineteen years. She testified that she was approached by them and had agreed to lend them some money. She further testified that in addition to promising to repay the loan, they promised to help her refinish her bathroom and agreed to purchase a Land Rover for her at a price of $46,000. The plaintiff testified that, as of the date of the hearing, they had not made good on any of their promises.

The plaintiff also introduced five exhibits, which consisted of (1) a copy of the February 16, 2004 letter signed by Anderson and Taylor, (2) a copy of the April 30, 2004 letter signed by Taylor, (3) two checks, exhibits three and four, totaling $97,000 made payable to the plaintiff, endorsed by the plaintiff to Taylor and endorsed on the reverse by Taylor, and (4) a letter by the plaintiff indicating that she had sustained consequential damages as a result of the actions of Anderson and Taylor. Neither Anderson nor Taylor testified or presented any evidence at the hearing.

At the conclusion of the hearing, the court rendered judgment against Taylor, awarding damages to the plaintiff in the amount of $125,400.47 on the basis of the exhibits before the court. This total was comprised of the loan and consequential damages totaling $113,833.06 and $11,567.41 in accrued interest.

With respect to Anderson, however, the court found at the hearing that there was no evidence that Anderson actually received any of the moneys that were paid by the plaintiff to Taylor. Accordingly, the court ordered Anderson defaulted with zero damages awarded to the plaintiff. With respect to the plaintiff's counts related to theft and fraud, the court found that although the plaintiff had proved a failure to repay the loan, there was insufficient evidence from which the court could award treble damages for theft and, in declining to award damages arising from the fraud related counts, found "insufficient evidence by clear and convincing evidence to demonstrate fraud. . . ." The court did not specifically mention the plaintiff's CUTPA count in its oral decision.

Thereafter, the plaintiff sought to reargue the court's April 15, 2005 judgment of damages with respect to Anderson and the court's refusal to award damages on the plaintiff's fraud and civil theft claims in light of the default. On April 26, 2005, the court denied the plaintiff's motion to reargue the April 15, 2005 judgment. This appeal followed.

I

The crux of the plaintiff's claims on appeal relates to the effect of the default on the court's factual determinations at the hearing in damages. "A default admits the material facts that constitute a cause of action . . . and entry of default, when appropriately made, conclusively determines the liability of a defendant. . . . If the allegations of the plaintiff's complaint are sufficient on their face to make out a valid claim for the relief requested the plaintiff, on the entry of a default against the defendant, need not offer evidence to support those allegations. . . . Therefore, the only issue before the court following a default is the determination of damages. . . . A plaintiff ordinarily is entitled to at least nominal damages following an entry of default against a defendant in a legal action. . . .

"In an action at law, the rule is that the entry of a default operates as a confession by the defaulted defendant of the truth of the material facts alleged in the complaint which are essential to entitle the plaintiff to some of the relief prayed. It is not the equivalent of an admission of all of the facts pleaded. The limit of its effect is to preclude the defaulted defendant from making any further defense and to permit the entry of a judgment against him on the theory that he has admitted such of the facts alleged in the complaint as are essential to such a judgment. It does not follow that the plaintiff is entitled to a judgment for the full amount of the relief claimed. The plaintiff must still prove how much of the judgment prayed for in the complaint he is entitled to receive." (Emphasis in original; internal quotation marks omitted.) Bank of New York v. National Funding, 97 Conn.App. 133, 138-39, 902 A.2d 1073, cert. denied, 280 Conn. 925, 908 A.2d 1087 (2006).

"After a default, a defendant may still contest liability. Practice Book §§ 17-34,⁴ 17-35 and 17-37 delineate a defendant's...