Opinion
FSTCV135014155S
01-20-2016
Diane Consoli v. Hakan Basaran aka Alan Basaran aka Ibrahaim Basaran aka Brahim Basaran et al
UNPUBLISHED OPINION
MEMORANDUM OF DECISION
A. WILLIAM MOTTOLESE, Judge Trial Referee.
The second amended compliant which is the operative complaint contains multiple counts which seek recovery in damages for (1) an unpaid balance for interior decorating work; (2) numerous loans which were not repaid, and (3) two investments that never materialized. The plaintiff's original complaint named only Hakan Basaran as a defendant but later joined Eli Moshenayov (" Moshenayov") and EH Restaurant, LLC as added defendants. On August 13, 2015 Moshenayov was defaulted for failure to plead and on October 19, 2015 Basaran was defaulted for abusing the discovery process pursuant to P.B. § 13-14(b)(1).
EH Restaurant, LLC was dissolved by the Connecticut Secretary of the State during the course of the litigation.
Because of the defaults the case proceeded to trial as a hearing in damages. The defendants did not file a notice of defenses within ten days after entry of default. P.B. § § 17-34; 17-35. Thus the procedure in such a case is that which is delineated in Whitaker v. Taylor, 99 Conn.App. 719, 725-27, 916 A.2d 834 (2007). Because the factual basis for both Whitaker and the present case are similar, that court's explanation of the legal effect of a no defense default is particularly informative.
" 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 request, 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 and 17-37 delineate a defendant's right to contest liability in a hearing in damages after default. Unless the defendant provides the plaintiff written notice of any defenses [however] the defendant is foreclosed from contesting liability." Schwartz v. Milazzo, 84 Conn.App. 175, 178-79, 852 A.2d 847, cert. denied, 271 Conn. 942, 861 A.2d 515 (2004). Thus, a defaulted party who fails to file a timely notice of defenses prior to the hearing in damages " does so at his peril." (Internal quotation marks omitted.) Bank of New York v. National Funding, supra, 97 Conn.App. at 141.
Here, as a consequence of the default the court was bound by the material, factual allegations set forth in the plaintiff's complaint. See Mountview Plaza Associates, Inc. v. World Wide Pet Supply, Inc., 76 Conn.App. 627, 634, 820 A.2d 1105 (2003). If those allegations provided a sufficient basis as to Anderson's liability for the debt or the liability of Taylor and Anderson (with respect to the fraud and civil theft claims) the court should have rendered judgment against them and awarded damages accordingly. See id.
Thus, we must examine whether the allegations set forth in each count of the plaintiff's complaint are sufficient on their face to make out a valid claim for the relief requested. See Tang v. Bou-Fakhreddine, 75 Conn.App. 334, 338, 815 A.2d 1276 (2003)." (Alternate citations omitted.) Id. at 726-27.
In the present case the complaint contains the following causes of action: fraud, larceny by false pretenses, civil theft, unjust enrichment, promissory estoppel, conversion and piercing the corporate veil as to EH Restaurant, LLC. Since each of these causes of action applies to different categories of Basaran's misconduct it is necessary to begin by examining those allegations which apply to each of the categories of the plaintiff's claims set forth above.
The Loans
The first loan of $30,000 was made to a strawman, Ender Erhan whom Basaran instigated to ask plaintiff for a loan for himself (Basaran) upon the misrepresentation that, he, Erhan needed the money to hire a litigation attorney.
The remaining loans were made to assist Basaran in the opening of a restaurant in New Canaan called Carpe Diem. The factual basis for these transactions is found at paragraphs 53 through 131. These allegations not only catalogue each of the numerous additional loans which Basaran has not repaid but establish that he gave the plaintiff two checks purporting to constitute repayments with strict instructions not to deposit them until he authorized her to do so. Despite the repeated demands of the plaintiff she never received this authorization. Other loans were generated by Basaran's frantic pleas to satisfy emergency needs and promises to repay, stating repeatedly that he was " a man of my word." On February 4, 2013 Basaran bolstered the plaintiff's hopes for repayment by representing to her that: " This time there is actual money in the account to be realized." No payment was made pursuant to these promises. In May 2013 Basaran promised to pay $100,000 out of the proceeds of sale of Picador. The sale closed in September 2013 but Basaran paid the plaintiff nothing from the proceeds. Furthermore, he did not inform her that the sale had in fact taken place.
The plaintiff made a total of 23 loans in varying amounts which totaled $158,500. Of this he has repaid only $11,500 leaving a balance of $147,000.
The First " Investment"
Paragraphs 132 through 138 support the misrepresentation that Basaran made to extract $20,000 which he borrowed from the plaintiff which she effectuated by borrowing against her American Express card. Basaran represented this to be an investment in a textile company that would earn her 25%. The plaintiff never received evidence of the investment but was obligated to repay the loan to American Express.
The Second " Investment"
In an effort to provide a dependable means by which she could be repaid, the plaintiff invested a total of $106,000 in a restaurant called Vespa which Basaran proposed to open in Greenwich. Basaran represented to her that he needed the money to secure a lease for the business premises. The allegations to support this are found in paragraphs 152 through 182. The investment was made on Basaran's representation that the plaintiff would receive $5,000 per week until his loans were repaid in full. The plaintiff has not only not received the $5,000 weekly payment but she lost the $106,000 investment as well. Basaran never opened Vespa, never disclosed that fact to the plaintiff and has never repaid any portion of the so called investment because the restaurant never opened.
General
At trial Basaran did not appear but was represented by counsel. Counsel offered no excuse for the non attendance of his client. The defendant did not dispute the amount of the plaintiff's claims either by offering contrary evidence or by oral argument. The little cross examination which Basaran's counsel conducted did not affect the plaintiff's testimony. Thus, the total base amount due the plaintiff is $290,160 which is the total of the amounts set forth in paragraphs 178, 179 and 180 of the Complaint. To bolster the allegations of the complaint which the court must accept as true, the court is permitted to take judicial notice of the remainder of the court file in its deliberations on the issue of damages even though not expressly made a part of the record at trial. Hryniewicz v. Wilson, 51 Conn.App. 440, 444, 722 A.2d 288 (1999).
Because the plaintiff made out a prima facie case the court is entitled to draw an inference that if produced, Basaran's testimony would have been antagonistic to his present contention. Middletown Trust Co. v. Bregman, 118 Conn. 651, 657, 174 A. 67 (1934).
On October 6 and 8 this court heard testimony in support of the plaintiff's motion for default predicated on discovery abuses and thereafter memorialized its findings and conclusions in a memorandum of decision dated October 19, 2015. In that adjudication the court found that Basaran's conduct in evading, hindering, and frustrating the plaintiff's efforts to discover his assets constituted an egregious abuse of the discovery process. The factual findings are relevant to the plaintiff's causes of action which are based on Basaran's intent to deceive and evade his obligations because they reflect a pattern of such misconduct. Accordingly, the memorandum of decision (#158.03) is hereby incorporated by reference herein for that purpose.
Specific Counts
Fraud--Count I
The first count of the complaint alleges that Basaran committed a fraud with respect to the Vespa restaurant investment " . . . Fraud involves deception practiced in order to induce another to act to her detriment, and which causes that detrimental action . . . The four essential elements of fraud are (1) that a false representation of fact was made; (2) that the party making the representation knew it to be false; (3) that the representation was made to induce action by the other party; and (4) that the other party did so act to her detriment . . . Because specific acts must be pleaded, the mere allegation that a fraud has been perpetrated is insufficient." (Citation omitted; internal quotation marks omitted.) Chiulli v. Zola, supra, 97 Conn.App. at 709, 97 Conn.App. 699, 905 A.2d 1236; see also Maruca v. Phillips, 139 Conn. 79, 81, 90 A.2d 159 (1952) (" [w]here a claim for damages is based upon fraud, the mere allegation that a fraud has been perpetrated is insufficient; the specific acts relied upon must be set forth in the complaint"). Id. at 729-30.
With respect to the scienter element, " [w]e have had occasion to point out that where a defendant has special means of knowledge, and a plaintiff can under the circumstances attribute to the former accurate knowledge of what is represented, the plaintiff need not show the actual knowledge of the falsity of the representation." J. Frederick Scholes Agency v. Mitalsee, 191 Conn. 353, 358, 464 A.2d 795 (1983).
The allegations of the complaint as incorporated into the first count satisfy the elements necessary to support a cause of action in fraud primarily because the entire pattern of Basaran's conduct compels the belief that Basaran never intended to reimburse the plaintiff for any of the monies which she advanced and the only purpose of the single repayment of $11,500 mentioned in #2 above was to induce the plaintiff to extend further monetary advances including this investment. Because these allegations must be taken as true there is no need for the evidence to satisfy the clear and convincing standard. Whitaker v. Taylor, supra, Id. at 735. The fraud allegations at paragraphs 190 through 196 satisfy the requisite elements of a cause of action for fraud and describe Basaran's conduct which induced the plaintiff to perform decorating services and make the loans and investments for which recovery is sought.
False Pretenses--Counts II, III
The plaintiff has alleged that three of the transactions constitute larceny by false pretenses in violation of G.S. § 53a-119(2) and seeks treble damages pursuant to G.S. § 52-564. False pretenses occurs only when someone misrepresents a past or existing fact, a representation of a fact or circumstance calculated to mislead which is not true. State v. Robington, 137 Conn. 140, 142, 75 A.2d 394 (1950). Basaran lied about his need for the $106,000 to open a restaurant which he had no right or ability to open. Furthermore, he instigated his agent Ender Erhan to lie about his need to employ a litigation attorney in order to obtain $30,000. Finally, he lied about the ability of the plaintiff to earn a 25% return in six weeks in a textile business on a $20,000 investment. These misrepresentations were each made with respect to circumstances or conditions which were supposed to be in existence at the time that they were made but in fact were not, that is, there was no Vespa Restaurant, litigation attorney or textile manufacturer. The plaintiff has alleged in the applicable counts the necessary predicate facts to entitle her to a finding that § 53a-119(2) has been violated. " In reaching this conclusion we are mindful that [s]tatutory theft under . . . § 52-564 is synonymous with larceny [as defined in] G.S. § 53-119." Stuart v. Stuart, 297 Conn. 26, 41, 996 A.2d 259 (2010). Statutory theft requires the satisfaction of a three-part test: (1) the decorating services and the money for the loans and investments belonged to the plaintiff; (2) Basaran intended at the outset to deprive the plaintiff of her money; (3) Basaran's retention of the plaintiff's funds despite her repeated demands for repayment was unauthorized. Suarez-Negrete v. Trotta, 47 Conn.App. at 521-22 (1998).
Civil Theft--Count IV
No discussion needed.
Unjust Enrichment--Count V
For the unpaid decorating work the plaintiff does not seek recovery under a theory of express or implied oral contract but rather under the equitable remedy of unjust enrichment. Unjust enrichment is a principle of restitution which is a non-contractual means of recovery without a valid contract. Gagne v. Vaccaro, 255 Conn. 390, 401, 766 A.2d 416 (2001) " . . . Plaintiffs seeking recovery for unjust enrichment must prove (1) that the defendants were benefited, (2) that the defendants unjustly did not pay the plaintiffs for the benefits, and (3) that the failure of payment was to the plaintiffs' detriment." (Citations omitted; internal quotation marks omitted.) Hartford Whalers Hockey Club v. Uniroyal Goodrich Tire Co., 231 Conn. 276, 282-83, 649 A.2d 518 (1994).
Paragraphs 19 through 42 describe how the plaintiff purchased materials and furnished decorating services for two restaurants which Basaran opened, Picador and Carpe Diem for which he has not paid in full. The total charge was $24,310.77. At one point Basaran delivered a check for $6,400 in partial payment for that charge but the check was returned for insufficient funds. Subsequently, Basaran made a partial payment of $2,500 but made no further payments. These allegations must be considered in the context of the allegations made in the remainder of the factual portion of the complaint. The unpaid balance is $21,810.77. The plaintiff's allegations in paragraphs 19 through 42 and 213 through 219 satisfy the requirement for unjust enrichment.
Conversion--Count VII
A plaintiff is entitled to a single measure of damages. MD Drilling & Blasting, Inc. v. MLS Construction, LLC, 96 Conn.App. 798 804, 902 A.2d 686 (2006). The plaintiff asserts that Moshenayov committed the tort of conversion.
" [C]onversion is an unauthorized assumption and exercise of the right of ownership over goods belonging to another, to the exclusion of the owner's rights." Discover Leasing, Inc. v. Murphy, supra, 309, citing Devitt v. Manulik, 176 Conn. 657, 660, 410 A.2d 465 (1979). In addition, conversion requires that the owner be harmed as a result of the unauthorized act. Devitt v. Manulik, supra, 660. Conversion may arise subsequent to an initial rightful possession. Maroun v. Tarro, 35 Conn.App. 391, 396 646 A.2d 251, cert. denied, 231 Conn. 926, 648 A.2d 164 (1994). (Alternate citations omitted.) Suarez-Negrete v. Trotta, 47 Conn.App. 517, 521, 705 A.2d 215 (1998).
As to the assignment of responsibility for the above sums including the $41,558.99 Moshenayov received from Basaran, it was clear from the evidence that the loans were made to Basaran individually and the allegations of the complaint are sufficient to hold Basaran liable in his individual capacity. These allegations indicate clearly that while many of the loans ultimately benefitted EH Restaurant, LLC they were made to Basaran individually as the plaintiff relied on him for repayment. There is no evidence that the LLC was involved in any way. Therefore, all sums awarded as damages are awarded against Basaran individually and not the LLC. As for Moshenayov, while he may have been a member of the LLC, all sums which were paid to his wife were from funds which plaintiff loaned to Basaran. Moshenayov testified that he was entitled to these payments based on his own investment in the LLC. It was not Moshenayov who misused the plaintiff's money but Basaran who used plaintiff's loans to fund a so called return on Moshenayov's investment.
Damages
Having concluded that the allegations of the complaint satisfy the requisite elements of fraud and larceny by false pretenses, and because the amounts claimed in the complaint have not been successfully challenged, the following damages are awarded in accordance with the evidence which varies somewhat from the amounts claimed in the complaint. The plaintiff has set forth amounts which she claims are due under each count. Because it was not clear from the evidence presented which amounts claimed correlate with each count of the complaint the court asked the plaintiff to clarify the matter by filing an affidavit of debt linking the various sums to each of the counts. On December 11, 2015 the plaintiff filed such an affidavit which eliminates the confusion. Basaran replied on December 23, 2015. The plaintiff has objected to Basaran's reply, asserting that it impermissably attempts to relitigate the merits of the case when the trial was a hearing in damages held pursuant to the order of default that had been entered against Basaran.
In his objection to the plaintiff's surreply Basaran argues that by virtue of the special defenses which he filed with his answer he is free to contest the substantive merits of the plaintiff's claims. Basaran misunderstands the legal effect of a default and thereby ignores the controlling provisions of P.B. § 17-34 through 17-40 and flouts the teaching of Whitaker v. Taylor, supra . That decision updated the law of defaults and made it clear that " unless the defendant provides written notice of defenses (after a default has entered) the defendant is foreclosed from contesting liability." 99 Conn.App. at 727. Although the defendants in Whittaker were defaulted for failure to plead whereas Basaran was defaulted pursuant to P.B. § 13-14(b)(1), a default is a default. The court notes that P.B. § 17-31 specifically includes a Sec. 13-14 default triggered by a failure to comply with P.B. § § 13-8 through 13-11. So it is immaterial that special defenses had been filed. By the default, the allegations of the complaint conclusively determine Basaran's liability in the absence of a duly filed notice of defenses under P.B. § § 17-34, 17-35 and 17-37.
In the present case enhanced damages can only be awarded in amounts which have been properly plead and which are liquidated in amount. As the plaintiff is entitled to a single measure of damages, MD Drilling & Blasting, Inc. v. MLS Construction, LLC, 96 Conn.App. 798, 804, 902 A.2d 686 (2006), damages are awarded as follows:
Count I (Fraud) = $106,000.00
Not subject to a treble damages award but subject to an award of attorneys fees.
Count II (Larceny by false pretenses)--$30,000 x 3 (treble damages) = $90,000.00
Count III (Larceny by false pretenses)--$20,000 x 3 (treble damages) = $60,000.00
Count IV (Civil theft)--$147,000 x 3 (treble damages) = $441,000.00
Count V (Unjust enrichment) = $21,810.77
TOTAL DAMAGES $718,810.77
Attorneys Fees
In her prayers for relief the plaintiff seeks reasonable attorneys fees.
" [A]bsent contractual or statutory authorization, there can be no recovery, either as costs or damages . . . for counsel fees by a party opponent from his opponent." Gionfriddo v. Avis Rent A Car System, Inc., 192 Conn. 280, 297, 472 A.2d 306 (1984). An exception to this general rule is that attorneys fees may be awarded as a component of punitive damages. Markey v. Santangelo, 195 Conn. 76, 80, 485 A.2d 1305 (1985). Punitive damages may be awarded upon a showing of fraud. Id., 77; Manning v. Michael, 188 Conn. 607, 619, 452 A.2d 1157 (1982)." (Alternate citations omitted.) O'Leary v. Industrial Park Corporation, 211 Conn. 648, 651, 560 A.2d 968 (1989).
While neither party has briefed the plaintiff's entitlement to attorneys fees, the court is guided by Lauder v. Peck, 11 Conn.App. 161, 167, 526 A.2d 539 (1987) wherein the court held that prejudgment interest is a proper, albeit a discretionary element, of the plaintiff's damages because it saw " no reason to carve out of a treble damages award as a matter of law" the prejudgment interest element for the benefit of a defendant who has been found liable pursuant to G.S. § 52-564." Applying the same reasoning to the eligibility of attorneys fees for separate treatment when a § 52-564 claim has been made, attorneys fees should not be carved out of a treble damages award because fraud is implicit in a larceny by false pretenses. See State v. McKenna, 188 Conn. 671, 453 A.2d 435 (1982).
Additionally, " In an action for fraud, the plaintiffs are entitled to punitive damages, in addition to general and special damages . . . The [purpose] of awarding punitive damages is not to punish the defendant for his offense, but to compensate the plaintiff for his injuries . . . The rule in this state as to torts is that punitive damages are awarded when the evidence shows a reckless indifference to the rights of others or an intentional and wanton violation of those rights." (Citations omitted.) DeSantis v. Piccadilly Land Corp., 3 Conn.App. 310, 315, 487 A.2d 1110 (1985). " An award of punitive damages is discretionary, and the exercise of such discretion will not ordinarily be interfered with an appeal unless the abuse is manifest or injustice appears to have been done." (Internal quotation marks omitted.) Arnone v. Enfield, 79 Conn.App. 501, 522, 831 A.2d 260, cert. denied, 266 Conn. 932, 837 A.2d 804 (2003)." (Alternate citations omitted.) Whitaker v. Taylor, 99 Conn.App. 719 at 730, 916 A.2d 834.
The plaintiff's attorneys and former attorney who represented her for a short period of time submitted affidavits itemizing their service performance in detail. In the present case, the exercise of discretion in the award of attorneys fees to the plaintiff is particularly compelling in view of Basaran's serious discovery abuses which produced the default (P.B. § 13-14(b)(2)) as well as the indifference for the process that he showed by failing to appear personally for the trial without apology or excuse. The attorneys have submitted affidavits showing hourly charges ranging from $150 per hour to $675 per hour. No objection has been filed to any of these claims. Accordingly, attorneys fees and reimbursement is awarded in accordance with the affidavits as follows:
See note 2 page 5, supra.
Neal Rogan - $6,520.80
Tibbets, Keating & Butler, LLC - $25,429.58
Nancy Geary - $83,374.94
Total Attorneys Fees and Reimbursements - $115,325.32*
*Any taxable costs included in this figure are excluded because they are otherwise recoverable by statute. Wedig v. Brinster, 1 Conn.App. 123, 134, 469 A.2d 783 (1983).
Prejudgment Interest
The plaintiff has not requested prejudgment interest pursuant to G.S. § 37-3a, although it is awardable under Lauder v. Peck, supra . While P.B. § 10-28 does not require that interest be claimed in the demand for relief, the plaintiff has not requested prejudgment interest in any of her filings or orally at trial. Nevertheless, the plaintiff's final prayer for relief seeks " such other relief of law or in equity as the court deems appropriate." Such a catchall prayer is sufficient to alert the defendants that the plaintiff seeks generally to recover everything that she is entitled to under the law and therefore Basaran cannot claim surprise or prejudice. Giulietti v. Giulietti, 65 Conn.App. 813, 860, 784 A.2d 905 (2001). Accordingly, interest pursuant to G.S. § 37-3a is awarded at the rate of 10% per annum from the earliest dates plaintiff made demands for repayment of the various loans and investments. Interest on the amount for the decorating work shall commence on the date of completion of the work. The maximum sum allowable by statute is intended, within the court's equitable discretion, to reflect the depth of Basaran's chicanery as previously identified by the court. Perl v. Case, 3 Conn.App. 111, 116, 485 A.2d 1331 (1985).