Opinion
No. NNHCV095028282S
February 8, 2010
MEMORANDUM OF DECISION RE DEFENDANT'S MOTION FOR SUMMARY JUDGMENT (#106) PROCEDURAL AND FACTUAL BACKGROUND
The plaintiff, Dealer Services Corporation (DSC), filed a twelve-count complaint against the defendants, American Auto Auction Inc. (AAA), Steve Yancoskie, Theresa J. Thompson and Harry Hirsch on April 16, 2009. The plaintiff alleges the following facts. DSC is a Delaware corporation that is registered to do business in the state of Connecticut and is in the business of automotive inventory financing. AAA is a Connecticut corporation in the business of buying and selling automobiles and conducting automobile auctions. On August 9, 2005, DSC and AAA entered into a financing agreement evidenced by a promissory note payable to DSC. In consideration for the promissory note, AAA granted DSC a blanket security interest covering all AAA assets. DSC properly perfected its security interest. As a condition of the DSC line of credit, AAA promised to pay the amount loaned and all fees and interest accrued at the time of sale for each vehicle. AAA subsequently issued payments to DSC for which AAA had insufficient funds, after which AAA failed and refused to make further payments.
Harry Hirsch is identified in the complaint as Harry Hirsch, d/b/a Harry Hirsch Trustee and/or Harry Hirsch Trust.
Harry Hirsch is an attorney residing in Fairfield, Connecticut, who allegedly loaned AAA money as trustee on behalf of others and filed a UCC-1 financing statement against AAA in favor of the "Harry Hirsch Trust." Hirsch claims his security interest is superior to that of DSC. The AAA financial statement of August 31, 2008 disclosed a liability to "Harry Hirsch" of $397,000 and Hirsch now holds a claim against AAA as trustee for the "Harry Hirsch Trust." AAA transferred its leasehold interest in a property in Wallingford, Connecticut, to Hirsch on March 4, 2009. Hirsch accepted the transfer of the AAA leasehold interest without adequate consideration even though he had knowledge of the AAA debt to DSC, DSC's blanket security interest, and that AAA was unable to meet its obligations to DSC. Three of the twelve counts in the DSC complaint are leveled against Hirsch: count six, alleging the fraudulent transfer of the AAA lease to Hirsch; count seven, requesting a declaratory judgment that any security interest held by the Harry Hirsch Trust be subordinated to DSC's secured claim; and count eleven, alleging unfair trade practices in violation of CUTPA, General Statutes § 42-110(a) et seq.
On September 8, 2009, Hirsch filed a motion for summary judgment as to counts six, seven and eleven with a supporting memorandum of law and attached exhibits. DSC filed a memorandum in opposition to the motion for summary judgment on November 5, 2009, with a supporting memorandum of law and evidentiary exhibits. The parties argued the matter at short calendar on November 30, 2009.
The exhibits attached to Hirsch's motion for summary judgment are as follows: the affidavit of Harry Hirsch, dated September 3, 2009; the first and second secured promissory notes from AAA to Hirsch, both dated March 13, 2005, and each for the amount of $500,000; the security agreement between AAA and Hirsch, dated March 13, 2005; certified copies of two UCC financing statements, the first filed July 26, 2005 with AAA listed as debtor and Hirsch as the secured party, the second filed August 12, 2005 with AAA as debtor and DSC as the secured party; a lease default notice from Wallingford Realty Trust to AAA dated December 5, 2008; a lease termination notice from Wallingford Realty Trust to AAA dated February 13, 2009; and a notice of judgment in Harry Hirsch, Trustee v. American Auto Auction, Inc., Superior Court, judicial district of Fairfield, Docket No. CV 09 5021486 (July 27, 2009, Stodolink, J.).
In its memorandum in opposition to the motion for summary judgment, DSC broadens the allegations in its complaint on the counts for fraudulent transfer and CUTPA to include any "beneficial interest in [the] leasehold . . . transferred directly or indirectly to Attorney Hirsch, or his purported trust." DSC's exhibits include portions of Hirsch's deposition testimony of September 22, 2009; Hirsch's interrogatory responses of August 28, 2009; a document purporting to assign the trust interest of Roberta O'Byrne to Hirsch, dated April 10, 2005; a letter from Hirsch to Paul Giacobbe, dated April 1, 2005; and a purported copy of AAA's loan account records that is for the most part, illegible.
DISCUSSION
"Practice Book § 17-49 provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party." (Internal quotation marks omitted.) Provencher v. Enfield, 284 Conn. 772, 790-91, 936 A.2d 625 (2007).
"The courts are in entire agreement that the moving party for summary judgment has the burden of showing the absence of any genuine issue as to all the material facts, which, under applicable principles of substantive law, entitle him to a judgment as a matter of law. The courts hold the movant to a strict standard. To satisfy his burden the movant must make a showing that it is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact . . . As the burden of proof is on the movant, the evidence must be viewed in the light most favorable to the opponent . . . When documents submitted in support of a motion for summary judgment fail to establish that there is no genuine issue of material fact, the nonmoving party has no obligation to submit documents establishing the existence of such an issue . . . Once the moving party has met its burden, however, the opposing party must present evidence that demonstrates the existence of some disputed factual issue . . . It is not enough, however, for the opposing party merely to assert the existence of such a disputed issue. Mere assertions of fact . . . are insufficient to establish the existence of a material fact and, therefore, cannot refute evidence properly presented to the court under Practice Book § [17-45]." (Internal quotation marks omitted.) Zielinski v. Kotsoris, 279 Conn. 312, 318-19, 901 A.2d 1207 (2006).
"In ruling on a motion for summary judgment, the court's function is not to decide issues of material fact, but rather to determine whether any such issues exist." Nolan v. Borkowski, 206 Conn. 495, 500, 538 A.2d 1031 (1988). The court may consider not only the facts presented by the parties' affidavits and exhibits, but also the "inferences which could be reasonably and logically drawn from . . . them . . ." United Oil Co. v. Urban Redevelopment Commission, 158 Conn. 364, 381, 260 A.2d 596 (1969).
As a preliminary matter, the court must determine whether the parties' submitted documents are admissible before the court. Under Connecticut law, "before a document may be considered by the court in support of a motion for summary judgment, there must be a preliminary showing of [the document's] genuineness, i.e., that the proffered item of evidence is what its proponent claims it to be." (Internal quotation marks omitted.) New Haven v. Pantani, 89 Conn.App. 675, 679, 874 A.2d 849 (2005). Despite this rule, a court has discretion to consider unauthenticated documentary evidence when no objection has been raised by the opposing party. Barlow v. Palmer, 96 Conn.App. 88, 92, 898 A.2d 835 (2006). As neither party has objected to the use of unauthenticated documentary evidence, the court may consider such documents when ruling on this motion for summary judgment.
I. Counts six and eleven, fraudulent transfer and CUTPA violation
In his memorandum of law in support of the motion for summary judgment, Hirsch argues that there are no genuine issues of material fact with respect to counts six and eleven and, as a result, he is entitled to judgment as a matter of law. Specifically, Hirsch argues that he could not have received a fraudulent transfer of the AAA leasehold because he never received any leasehold interest from AAA and the AAA leasehold was terminated prior to the date of its alleged transfer to him. Hirsch further argues that since the fraudulent transfer claim was the basis of the CUTPA claim, both counts six and eleven must fail.
In its memorandum in opposition, DSC argues that Hirsch is not entitled to summary judgment because issues of material fact still exist as to counts six and eleven. DSC argues first, that Hirsch has merely denied the allegations of the complaint in his affidavit rather than establishing that he should prevail as a matter of law if the facts are as alleged in the complaint; second, that Hirsch has demonstrated a propensity for giving conflicting testimony on these matters under oath; and third, that fact questions exist as to whether the AAA leasehold was transferred to a third party as custodian or designee for Hirsch. Hirsch filed a reply memorandum to DSC's objection on November 24, 2009, arguing that DSC does not controvert any of Hirsch's proof, fails to address the fact that the AAA leasehold was terminated and no interest was transferred and that DSC merely asserts there are remaining questions of fact as to the AAA leasehold interest without submitting any supporting evidence.
"Under Connecticut law, a plaintiff may maintain an action for fraudulent conveyance under either the common law or the Uniform Fraudulent Transfer Act. Whether a claim is brought under the common law or the applicable statute, General Statutes § 52-552e, the elements are the same." Hamrah v. Emerson, Superior Court, judicial district of Fairfield, Docket No. CV 05 4012872 (August 20, 2009, Maiocco, J.). "A party alleging a fraudulent transfer or conveyance under the common law bears the burden of proving either: (1) that the conveyance was made without substantial consideration and rendered the transferor unable to meet his obligations or (2) that the conveyance was made with a fraudulent intent in which the grantee participated . . . The party seeking to set aside a fraudulent conveyance need not satisfy both of these tests . . . The determination of whether a fraudulent transfer took place is a question of fact . . . (Citations omitted; internal quotation marks omitted.) Lafleur v. Pohronezny, Superior Court, judicial district of Windham at Willimantic, Docket No. CV 06 4003658 (September 10, 2009, Swords, J.).
In the present motion, Hirsch argues that there are no issues of material fact as to whether AAA transferred its leasehold interest in a property in Wallingford to him because no conveyance, fraudulent or otherwise, took place and AAA's lease was terminated prior to the alleged conveyance. In support, Hirsch has attached two letters from the Wallingford Realty Trust (Wallingford Realty) to AAA and the affidavit of Harry Hirsch. The first Wallingford Realty letter is a lease default notice, dated December 5, 2008, giving AAA notice that it was in default for failure to make payments on its lease from October 2008 through December 2008. The second letter, dated February 13, 2009, is a lease termination notice for the property at 95 Country Club Lane, Wallingford, Connecticut. The letter terminates the AAA lease pursuant to the terms of a commercial lease agreement for rental payments past due from November 2008 through February 2009. In his affidavit, dated September 30, 2009, Hirsch acknowledged that he had notice of the lease default and termination, and affirmed that "AAA did not transfer any leasehold or similar interest in any leased property to me in any capacity. Nor am I aware of any such transfer by AAA to any party."
The complaint does not specify that the Wallingford leasehold interest referenced therein is the 95 Country Club Lane address. Nevertheless, since both parties treat it as such and no party has objected, the 95 Country Club Lane property shall be treated as the leasehold interest referenced in the complaint.
The Wallingford Realty letters demonstrate that AAA was divested of its leasehold interest on February 13, 2009, prior to the March 4, 2009 date when DSC alleged the transfer to Hirsch occurred. In addition, Hirsch's sworn statement affirms that he did not obtain any AAA leasehold interest, nor was he aware of such a transfer to another party. As such, Hirsch has carried his initial burden that AAA did not fraudulently convey its leasehold interest to him.
In response, DSC argues that there are still issues of material fact because AAA may have transferred its leasehold to a party other than Hirsch for the benefit of the trust agreement. DSC has submitted the following evidence in support: portions of Hirsch's deposition testimony, Hirsch's interrogatory responses, a document purporting to assign the trust interest of Roberta O'Byrne to Hirsch, a letter from Hirsch to Paul Giacobbe and a purported copy of AAA's loan account records.
In his deposition testimony of September 22, 2009, Hirsch describes his relationship with Jeffrey Raup and Raup's involvement in the trust agreement at length. Prior to the execution of the trust agreement, Hirsch had both provided legal representation for Raup in real estate transactions. One such transaction involved Yancoskie or Thompson and Raup, wherein Raup transferred the property at 95 Country Club Road in Wallingford to Thompson for $1 by a quitclaim deed prepared by Hirsch. Hirsch did not recall whether he represented Raup in this matter. Prior to the execution of the trust agreement, Hirsch and his father, Mike Hirsch, had also each invested $50,000 in AAA. Hirsch believes that Raup also invested funds in AAA prior to the creation of the trust agreement.
Hirsch stated that Raup first raised the idea of creating the trust agreement, though Hirsch cannot remember when this occurred. Hirsch did not know whether Raup worked for or had an ownership interest in AAA. The trust agreement was executed on April 1, 2005 with five trust beneficiaries: Raup, Hirsch, Roberta O'Byrne, Hirsch's father Mike Hirsch and Hirsch as trustee for Shlomo Katz. Although the trust agreement made Hirsch trustee for all of the trust beneficiaries, Hirsch managed the funds for only three trust beneficiaries, himself, Mike Hirsch and Hirsch as trustee for Katz. Hirsch claims that he and Mike Hirsch rolled over their preexisting $100,000 loan to AAA into the trust agreement and was unsure of whether any preexisting obligation to Raup was also rolled over into the trust. Hirsch stated that some of the funds for the trust agreement went through his IOLTA account before being transferred to AAA, but is unsure of how much and the amounts.
Throughout his deposition, Hirsch frequently claimed that he could not remember or lacked specific knowledge as to various details about the management and financial workings of the trust arrangement.
Hirsch's interrogatory responses attempt to clarify his position as "trustee" for the entity which DSC often refers to as the "Harry Hirsch Trust." Hirsch answered "[t]here is no entity [called the Harry Hirsch Trust]. From time to time, I act in the capacity of trustee for various beneficiaries, sometimes pursuant to written declarations, and sometimes not." Likewise, the declaration of the trust agreement of April 1, 2005 states that the trustee is granted "the sum of [$500,000] to invest on [the trust beneficiaries'] behalf with others, as part of a loan package with [AAA] in the total amount of $500,000 . . ." Hirsch maintains that the trust agreement did not create a trust in a legal sense, but memorialized an agreement wherein he acted as fiduciary for the trust beneficiary in managing the loan to AAA.
The investment of these three totaled $200,000 of the $500,000 stated in the trust agreement. Of the $200,000 he directly oversaw, Hirsch invested $100,000 and Mike Hirsch and Katz each invested $50,000.
Raup received the monthly payments on the trust loan directly from AAA and withdrew funds for himself and O'Byrne before forwarding Hirsch the monies due to the remaining trust beneficiaries. Raup never provided Hirsch with an accounting of the funds received from AAA.
AAA supposedly sent checks to either Raup or Alberta Management, Raup's corporate alter ego. According to the trust agreement, Raup invested $200,000 and O'Byrne invested $100,000 of this amount.
Hirsch maintains that his powers as trustee allowed him to delegate these responsibilities to Raup. Hirsch also stated that he was comfortable with Raup's role because "Raup was the owner of the majority. So, he . . . collected his own funds for his portion . . . All I know is we received funds that we were supposed to get on a monthly basis."
Regarding O'Byrne, Hirsch initially stated that she had assigned her interest in the trust to Raup. However, there is a document purporting to transfer O'Byrne's share in the trust agreement to Hirsch, dated April 10, 2005, which has been submitted as plaintiff's exhibit #8. Hirsch also claimed that O'Byrne's interest went to Raup since he had bought out her share, and that a subsequent trust agreement was executed to memorialize the change. However, when confronted with payments to O'Byrne from the AAA loan accounts ledger dated after the assignment, Hirsch could not explain the entries and disclaimed any knowledge of the arrangement between Raup and O'Byrne for the share buyout. After a break, however, Hirsch then claimed Raup had informed him that O'Byrne was still in the trust, her assignment was not operative and that the original trust agreement was still the operative document.
Incidentally, Hirsch has never met O'Byrne, never saw the check from Raup to O'Byrne for the transfer of her interest and did not witness her sign the assignment of her interest to Hirsch. The assignment is not notarized. (Hirsch, deposition 9/22/09.)
DSC's other exhibits include a letter from Hirsch to Paul Giacobbe, the brother-in-law of Yancoskie, dated April 1, 2005, and Hirsch's interrogatory answers. In the letter, Hirsch, at the instruction of Yancoskie, issued Giacobbe a check for $200,000 on behalf of AAA "as partial repayment of the monies due you by American Auto." Hirsch stated that these funds "were part of the loan proceeds" to AAA, but that these specific funds may have come from Raup. In Hirsch's interrogatory responses, he states that the "Harry Hirsch Trust" was created on March 13, 2005 and that "there was a declaration of trust agreement . . . created at the time I first began making loans to AAA in the capacity of trustee." (Plaintiff's Ex. 11.)
DSC's exhibits are sufficient to create questions of material fact on the issue of fraudulent transfer. Hirsch's deposition statements establish that he may not have known about a transfer of AAA's leasehold interest to Raup or another party for the benefit of the trust. In his deposition testimony, Hirsch consistently states that he had little to no knowledge of the precise manner in which AAA paid the trust beneficiaries their dividends and he could not know whether these payments involved the transfer of assets such as a leasehold interest. Hirsch's affidavit, in which he states that he received no lease interest for the benefit of the trust, is unpersuasive in light of his delegation of trust duties to Raup, his lack of specific knowledge of Raup's management of the trust and the dearth of a full accounting of how Raup managed and distributed trust assets.
Hirsch's affidavit specifically affirms that "AAA did not transfer any leasehold or similar interest . . . to me in any capacity. Nor am I aware of any such transfer by AAA to any party."
Nor does AAA's receipt of the notice of termination for the lease on February 13, 2009, foreclose the possibility that a fraudulent transfer took place with respect to the lease. The prior sale of the leased property at 95 Country Club Road, Wallingford, from Raup to Thompson for $1, the purported investments made by Raup in AAA, the uncertainty over the present ownership of the property and leasehold interest, and the close nature of the business dealings over many years between the parties involved in these claims, establish that there are still issues of material fact surrounding these claims. Nor has Hirsch established that AAA did not reacquire its interest or negotiate a deal to transfer the leasehold interest after it received the lease termination letter.
By way of example, the owner of the leased property might allow AAA to transfer its lease to a party willing to take on some of AAA's obligation for rent past due.
While the trust agreement grants Hirsch broad discretion to manage trust assets and delegate trust functions, neither Hirsch nor any trust beneficiary may use this power to shield himself or trust assets from an inquiry into the legality and propriety of the trust's financial dealings. As such, since DSC has established that there are factual issues in dispute as to whether AAA transferred its leasehold interest to either Hirsch or another individual on behalf of the trust beneficiaries, the court need not reach DSC's other arguments. Accordingly, the motion for summary judgment is denied with respect to count six. Because there are still issues of material fact on the underlying count for fraudulent transfer, likewise the motion for summary judgment on count eleven for a violation of CUTPA is denied.
II. Count seven, declaratory judgment
As to count seven, Hirsch argues that because his security interest was perfected prior to DSC's security interest, the court should not grant DSC a declaratory judgment giving them priority as a creditor of AAA. In its memorandum in opposition, DSC argues that there are issues of material fact on whether the Harry Hirsch Trust exists, whether Harry Hirsch, as trustee, provided any value to AAA in exchange for his security interest and whether fraud or other conduct by Hirsch or other trust beneficiaries precludes Hirsch from enforcing his claim under the doctrine of unclean hands. In his reply memorandum, Hirsch notes that DSC does not dispute that Hirsch obtained a valid perfected security interest prior to DSC and argues that the other issues of fact raised by DSC are not relevant. Specifically, Hirsch argues that AAA's payments to Raup or another individual on behalf of the trust has no bearing on whether Hirsch, as a trustee, made a loan to AAA; that Hirsch has demonstrated by his documentary evidence that he rendered value to AAA as consideration for his security interest; and that DSC's claim of unclean hands is founded on vague, conclusory and unsupported assertions and an inappropriate equitable defense.
"The judicial authority will, in cases not herein excepted, render declaratory judgments as to the existence or nonexistence (1) of any right, power, privilege or immunity; or (2) of any fact upon which the existence or nonexistence of such right, power, privilege or immunity does or may depend, whether such right, power, privilege or immunity now exists or will arise in the future." Practice Book § 17-54. "An action for a declaratory judgment is an action at law . . . at least when, as in the present case, the rights or immunities to be declared are such as would normally be decided in an action at law." (Internal quotation marks omitted.) Sagamore Ins. v. Deming, Superior Court, judicial district of New Haven, Docket No. CV 07 5011800 (August 6, 2008, Bellis, J.) ( 46 Conn. L. Rptr. 137).
General Statutes § 42a-9 governs secured transactions in Connecticut. "[P]riority among conflicting security interests . . . in the same collateral is determined according to the following rules: (1) Conflicting perfected security interests . . . rank according to priority in time of filing or perfection. Priority dates from the earlier of the time a filing covering the collateral is first made or the security interest . . . is first perfected . . ." General Statutes § 42a-9-322(a).
General Statutes § 42a-9-203(b) provides that "a security interest is enforceable against a debtor and third parties with respect to the collateral only if: (1) Value has been given; (2) The debtor has rights in the collateral or the power to transfer rights in the collateral to a secured party; and (3) . . . (A) The debtor has authenticated a security agreement that provides a description of the collateral . . ." "[A] person gives value for rights if the person acquires them: (1) In return for a binding commitment to extend credit or for the extension of immediately available credit, whether or not drawn upon and whether or not a charge-back is provided for in the event of difficulties in collection; (2) As security for, or in total or partial satisfaction of, a preexisting claim; (3) By accepting delivery under a preexisting contract for purchase; or (4) In return for any consideration sufficient to support a simple contract." General Statutes § 42a-1-204. The statute similarly provides that to "authenticate" means "(A) To sign; or (B) To execute or otherwise adopt a symbol, or encrypt or similarly process a record in whole or in part, with the present intent of the authenticating person to identify the person and adopt or accept a record." General Statutes § 42a-9-102(a)(7).
In the present case, Hirsch contests DSC's allegations that DSC should be granted a declaratory judgment that the DSC security interest in AAA's assets is superior to Hirsch's security interest. Hirsch argues that there are no issues of material fact to support a superior claim by DSC, and judgment should enter for Hirsch as a matter of law. In support of his motion for summary judgment, Hirsch has submitted the following documents: two promissory notes and a security agreement between Hirsch and AAA, two UCC Financing Statements, a Notice of Judgment and the affidavit of Harry Hirsch.
The two promissory notes and the security agreement were all executed on March 13, 2005. In each of the two promissory notes, AAA promises to pay "Harry Hirsch, Trustee . . . or any other subsequent holder the principal sum of [$500,000] together with interest thereon . . ." The first installment of interest was scheduled for payment on May 1, 2005 and the initial maturity date was specified as April 1, 2006. Each promissory note further states "This Note and the indebtedness evidenced thereby are secured by a Security Agreement and UCC financing statement covering all of the assets of [AAA] . . ." The security agreement between AAA and Hirsch granted Harry Hirsch, Trustee, AAA's assets as collateral, specifically "the property described in Schedule A . . . all property, goods and chattels of the same classes as those scheduled or acquired by the debtor subsequent to the execution of this agreement . . . proceeds of the collateral . . . [and] all increases, substitutions, additions, and accessions thereto."
The first UCC Financing Statement, dated July 26, 2005, identifies AAA as the debtor and Harry Hirsch, Trustee as the secured party. The collateral identified in the financing statement is identical to Schedule A in the security agreement of March 13, 2005. The second UCC Financing Statement, dated August 12, 2005, identifies AAA as the debtor and DSC as the secured party. The collateral identified in this document is a blanket security interest in all of AAA's assets.
The notice of judgment in Harry Hirsch, Trustee v. American Auto Auction, Inc., Superior Court, judicial district of Fairfield, Docket No. CV 09 5021486 (July 27, 2009, Stodolink, J.), was entered in favor of Hirsch for a sum of $1,218,699 on July 27, 2009. The affidavit of Harry Hirsch, dated September 3, 2009, attests that AAA was indebted to Hirsch as trustee for certain beneficiaries, that Hirsch executed the promissory notes and security agreement with AAA to secure repayment of the loans and that Hirsch later perfected the security interest by filing the UCC-1 financing statement on July 26, 2005.
Hirsch's submitted documents meet his initial burden that there are no issues of material fact on whether his security interest in the AAA collateral is superior to the security interest held by DSC. The two UCC financing statements demonstrate that Hirsch perfected his security interest on July 26, 2005. Section 42a-9-310. Since Hirsch perfected his security interest prior to DSC, it would appear that his claim has priority under § 42a-9-322(a).
However, in its memorandum in opposition to Hirsch's motion for summary judgment, while DSC does not contest that Hirsch perfected his security interest first, it challenges the validity of Hirsch's underlying security agreement by arguing that Hirsch did not provide any value to support the first secured promissory note. In support, DSC refers to the exhibits discussed above.
The requirements of an enforceable security agreement under § 42a-9-203(b) include that value be given, the debtor has rights to the collateral and the debtor has authenticated a security agreement describing the collateral. "Value" is defined broadly under § 42a-1-204, and can be established when a party received rights "for a binding commitment to extend credit . . . as security for, or in total or partial satisfaction of, a preexisting claim," or gave "consideration sufficient to support a simple contract." Although Hirsch claims that the first and second secured promissory notes constitute value, there are insufficient financial records to confirm this. Likewise, there is no record of the loan funds Hirsch purports to have "rolled over" from prior loans to AAA, and Hirsch cannot trace the source of the capital for the first promissory note. In his deposition, Hirsch admits that not all funds went through his IOLTA account, that he had little knowledge of how trust funds were managed, that there was no accounting and there was an absence of clear financial records for the trust, and he took Raup's word at face value on matters relating to the trust agreement's finances. Based on his deposition testimony, Hirsch only took note of whether he, Mike Hirsch, and Katz received their proper monthly payout from the loan proceeds. As such, Hirsch's deposition testimony suggests that Hirsch lacks a sufficient knowledge to affirm the financial details of the trust agreement as he does in his affidavit. In light of this evidence, the two secured promissory notes and the security agreement, none of which have been notarized or authenticated, do not definitively establish that Hirsch gave value for his AAA security interest. Viewing the evidence in the light most favorable to the nonmoving party, this demonstrates that an issue of material fact exists as to whether value was given in consideration for the first promissory note.
Issues also arise relating to the other elements of an enforceable security agreement under § 42a-9-203(b). Hirsch's evidence seeks to establish (1) that AAA has rights in the collateral by using text in the security agreement, and (2) that the security agreement describing the collateral has been authenticated since it was signed by a AAA representative pursuant to 42a-9-102(a)(7). Nevertheless, neither the security agreement, nor the promissory note which alleges to render value have been notarized or authenticated. As previously discussed, while the court has discretion to consider unauthenticated documentary evidence, it will not consider this evidence in light of the many inconsistencies raised.
In light of the strict standard for summary judgment, other inconsistencies also suggest that there are relevant issues of material fact relating to these claims. Hirsch never accounts for the $500,000 value in the second secured promissory note. The funds supporting this note were not connected with the trust agreement, but it nevertheless names Hirsch as trustee. The purported value of the trust was $500,000, yet Hirsch has secured a judgment for $1,218,699 in his role as trustee. In Hirsch's interrogatories he claims that the "declaration of trust agreement . . . [was] created at the time I first began making loans to AAA in the capacity of trustee" and that the trust was created on March 13, 2005. These statements are belied by the trust agreement itself, which was executed on April 1, 2005. Because DSC has established issues of material fact with respect to count seven, the court denies the motion for summary judgment and does not reach DSC's other arguments.
CONCLUSION
Accordingly, for the foregoing reasons, the court denies Hirsch's motion for summary judgment on counts six, seven and eleven.