Sarfaty v. PNN Enterprises, Inc.

Full title: MARCELLO SARFATY, DERIVATIVELY ON BEHALF OF MERIDEN ASSOCIATES, A LIMITED…

Court: Connecticut Superior Court Judicial District of New Haven at Meriden

Date published: Jun 21, 2007

2007 Ct. Sup. 11131 (Conn. Super. Ct. 2007)

Opinion

No. CV 02 0280255

June 21, 2007

MEMORANDUM OF DECISION

MARK H. TAYLOR, Judge.

I. BACKGROUND

This is a derivative action¹ brought by the plaintiff Marcello Sarfaty, the sole limited partner of Meriden Associates, against the defendant, PNN Enterprises, Inc., (PNN). Meriden Associates is a Connecticut Limited Partnership created for the purpose of managing and operating all business activities relating to a restaurant at the Days Inn Hotel in Meriden. The general partner of Meriden Associates is PFY Management (PFY). Meriden Associates was capitalized with a combined investment of $1,200,000 from Sarfaty and PFY.

1 This action is brought pursuant to General Statute § 34-34a, which provides: "A limited partner may bring an action in the right of a limited partnership to recover a judgment in its favor if general partners with authority to do so have refused to bring the action or if an effort to cause those general partners to bring the action is not likely to succeed."

The defendant in this action is PNN, a Connecticut corporation which owned and operated another hotel in Connecticut, the Ramada Inn in East Hartford. The action against PNN was initiated by an application for a temporary restraining order, order to show cause, proposed order for prejudgment remedy and a two-count complaint dated March 25, 2002.

Sarfaty alleges that a single individual, Paul Yeh, is primarily responsible for the management and operation of both PNN and PFY,² resulting in a conflict of interest concerning certain transactions between Meriden Associates and PNN. The plaintiff alleges that Yeh, as president of PFY and general partner of Meriden Associates, transferred $1,155,000 to creditors of PNN.

2 The plaintiff alleges that, at all times relevant to the allegations in the complaint, Yeh was the president, chief executive officer, treasurer and director of PFY and that he was also the president, chairman of the board, chief executive officer and director of PNN.

Count one of the complaint is a count in breach of contract for the repayment of a loan by Meriden Associates to PNN. Count two is for unjust enrichment. The court (Gilardi. J.) granted the prejudgment remedy of garnishment on May 2, 2002, in the amount of $1,250,000.

II. FACTS

The court finds the following facts which are relevant to these proceedings. The court notes, however, that neither the plaintiff nor Yeh appeared at trial. Instead, the plaintiff offered the deposition testimony of Yeh for his case in chief. Pursuant to Practice Book § 13-31a(3), the court admitted the deposition testimony of Yeh over the defendant's objection.³ (Exhibit 3.) At the request of PNN, the court further admitted the cross-examination of Yeh pursuant to Practice Book section § 13-31a(5). This portion of Yeh's deposition was admitted over the plaintiff's objection that certain evidence relating to the plaintiff's immigration status was irrelevant to these proceedings.

3 In Gateway Co. v. DiNoia, 232 Conn. 223, 238, 654 A.2d 342 (1995), our Supreme Court approved the liberal use of deposition testimony, as follows: the "interpretation of § 248(1)(c) is consistent with the rules of evidence. In Connecticut, a statement of a party opponent may be admitted into evidence as an exception to the hearsay rule. This exception generally includes any words or acts of a party opponent. C. Tait J. LaPlante, Connecticut Evidence (2d Ed. 1988) § 11.5.1, p. 330. It is essential that such evidence be offered by the party who is the opponent to the party declarant; Bell Food Services, Inc. v. Sherbacow, 217 Conn. 476, 489, 586 A.2d 1157 (1991); although the statement of a party opponent need not be against the declarant's interest either at the time the statement was made or at the time it is sought to be admitted into evidence. C. Tait J. LaPlante, supra, § 11.5.1, p. 331; see State v. Stepney, 191 Conn. 233, 249-54, 464 A.2d 758 (1983), cert. denied, 465 U.S. 1084, 104 S.Ct. 1455, 79 L.Ed.2d 772 (1984) (defendant's out-of-court statement was admissible against him as admission of party opponent even though statement was not inconsistent with defendant's position at trial). Therefore, our finding that § 248(1)(c) permits the liberal admission of the deposition testimony of an adverse party for any purpose is in accord with this rule of evidence." Gateway Co. v. DiNoia, supra 232 Conn. 223, 238.

Pursuant to a limited partnership agreement, PFY was the general partner of Meriden Associates and provided $200,000.00 of capital to the limited partnership for a business enterprise associated with the Day's Inn Hotel in Meriden. As the sole limited partner in Meriden Associates, Mr. Sarfaty invested $1,000,000 in the limited partnership. As contemplated in the limited partnership agreement, the plaintiff's schedule of capital contributions to Meriden Associates was in two stages. The first $500,000 was to be provided upon approval of Sarfaty's application for immigration investor status by the United States Immigration Service. The second $500,000 was to be provided following his admission as a lawful, permanent resident of the United States. For these investments, the plaintiff and PFY each owned a fifty percent interest in Meriden Associates.

For the performance of his duties as limited partner, the plaintiff was entitled to receive an annual salary of $50,000, as well as room and board on the premises of the hotel. Based upon his deposition, the court finds that the plaintiff performed no work for Meriden Associates and never resided at the hotel. Additionally, the court finds that the plaintiff had only a rudimentary understanding of the business purposes of the limited partnership agreement. His understanding was that his $1,000,000 investment in Meriden Associates would entitle him to apply for a green card⁴ and that this arrangement had been entered into by his attorneys, as directed by his father.

4 At the time of' these transactions, the parties had the understanding that the plaintiff would be eligible for immigration investor status under the Immigration Act of 1990 and that this would lead to his eligibility to be a lawful permanent resident of the United States. The court takes no position on whether this was the law of the United States at the time the parties entered into the limited partnership agreement. Although the defendant suggests that this was a "sham," there has been no proof that the plaintiff's intentions, as stated, violated the U.S. immigration laws at the time of the transaction.

At all times relevant to these proceedings, Yeh was the president, chief executive officer, treasurer and director of the corporate general partner of Meriden Associates, PFY Management Company, and was simultaneously the president, chairman of the board, chief executive officer and director of the defendant, PNN Enterprises, Inc. In 1996, Yeh caused $700,000 of the funds of Meriden Associates to be transferred to Jin Jan Wu of Taiwan to partially repay money owed to him by PNN, which had been used in the operation of the Ramada Inn, owned and operated by PNN in East Hartford. Therefore, the transfer of $700,000 from Meriden Associates to Wu was made for the financial benefit of PNN, and not for Meriden Associates.

In addition to this transfer of $700,000 to Wu, Yeh also transferred a total of $455,000 from the funds of Meriden Associates to PNN or creditors of PNN. Uncontroverted evidence was presented at trial that these debts were incurred by PNN in the operation of the Ramada Inn in East Hartford, Connecticut, and these transfers were made for the benefit of PNN, not Meriden Associates.⁵

5 Yeh's deposition testimony authenticated exhibits offered at trial which show the transfers of funds from Meriden Associates to PNN or creditors of PNN totaling $1,155,000. These exhibits include: (1) the second page of Plaintiff's Exhibit 7, which shows wire transfers totaling $200,000 from the checking account of Meriden Associates to Wu's company and Wu's wife; (2) Plaintiff's Exhibit 9, a copy of an Outgoing Wire Transfer of $500,000 from the account of Meriden Associates to Wu's company, Fortex Electronic Co., LTD; and Plaintiff's Exhibit 8, a copy of a Cash Activity Summary Worksheet of the funds of Meriden Associates, prepared by the accountant for Meriden Associates, showing transfers from Meriden Associates to PNN in the net amount of $455,000.

The court further finds that Yeh intended the transfers of these Meriden Associates funds to be loans to PNN. It was his understanding, in his dual capacities as president, chief executive officer, treasurer and director of PFY, and president, chairman of the board, chief executive officer, and director of PNN, that PNN was obligated to repay said funds to Meriden Associates. However, Meriden Associates received no promissory notes in connection with said transfers or any documentation of any kind showing the terms and conditions for the repayment of these funds. Meriden Associates received no money or property as consideration for said transfers, and no part of these transfers of funds has been repaid to Meriden Associates, to its detriment.

III. DISCUSSION A. Derivative Actions

The complaint in this action is brought derivatively pursuant to General Statutes § 34-34a by Sarfaty, the sole limited partner in Meriden Associates at all times relevant to these proceedings. At the outset of this discussion, it must be clearly stated that this action is brought by the plaintiff on behalf of Meriden Associates derivatively and that the plaintiff's personal interest in the proceeds of this action will not be determined or distributed by this court to the two investors or to any creditors of Meriden Associates.

At trial, the court found that the plaintiff was a proper party to bring this action pursuant to General Statutes § 34-34a, et seq.,⁶ over the PNN's objection. In particular, the court found that any efforts to cause PFY to bring this action were not likely to succeed because Yeh was simultaneously the general partner of PFY and the president of PNN when he made the loans from Meriden Associates to PNN. Therefore, he had a direct conflict of interest in this particular matter. Based upon this determination, the court concluded that any effort to cause the general partner of Meriden Associates to bring this action would have been futile, as provided by General Statutes § 34-34a. The court also determined that the plaintiff met the legal requirements for acting derivatively on behalf of Meriden Associates pursuant to the standards set forth in Fink v. Goldberg, 238 Conn. 183, 205, 680 A.2d 1243 (1996).

6 See footnote 1. General Statutes § 34-34b provides: "In a derivative action, the plaintiff shall be a partner at the time of bringing the action and (1) at the time of the transaction of which he complains or (2) his status as a partner had devolved upon him by operation of law or pursuant to the terms of the partnership agreement from a person who was a partner at the time of the transaction." General Statutes § 34-34c provides: "In a derivative action, the complaint shall set forth with particularity the effort of the plaintiff to secure initiation of the action by a general partner or the reasons for not making the effort."

During the course of the trial, PNN offered the testimony of Mr. Sarfaty as proof of his incompetence to enter into the Meriden Associates Limited Partnership Agreement. This proof was in a form of a deposition conducted at the request of PNN. Neither party called Sarfaty as a witness and, therefore, he did not appear in court to testify where his credibility and demeanor could be evaluated in person by the court. Although this was similarly true for the deposition testimony of Yeh, his competence was not at issue in the trial. Based upon Sarfaty's deposition testimony, the court has previously found, as a matter of fact, that he had only a rudimentary understanding of the business purposes of the limited partnership agreement and that his understanding was that the $1,000,000 investment in Meriden Associates would entitle him to apply for a green card.

PNN further argues that the plaintiff's interest in Meriden Associates was not a bona fide business investment but, instead, an improper vehicle to obtain his green card in a manner inconsistent with the purposes of the immigration law of the United States. PNN contends that the $1,000,000 "investment" was not a business investment at all but, instead, money for the purchase of a green card by the plaintiff. In addition, PNN argues that the plaintiff failed to meet his obligation to perform services pursuant to the limited partnership agreement. For these and other reasons stated above, PNN claims that the plaintiff had unclean hands and should be denied relief. No evidence was solicited from the plaintiff that he intended to violate any immigration law by his conduct relating to Meriden Associates.

Historically, derivative actions are equitable in nature.⁷ In Connecticut, a limited partner's right to bring a derivative action has been established by statute through the adoption of the Uniform Limited Partnership Act. General Statutes § 34-9 et seq. This Act does not specifically identify derivative actions as equitable or legal in nature, and it is unclear whether principles of equity, such as the clean hands doctrine, may be employed to thwart a derivative action by a limited partner. Further, the act does not identify who may argue the equitable issues presented in a derivative action, such as the other partners or, as in this case, the defendant PNN, which is a separate business entity. Instead, one provision of the Act simply states that "[i]n any case not provided for in this chapter. . . the rules of law and equity. . . shall govern." General Statutes § 34-37. The Act also provides that it should be "interpreted and construed as to effect its general purpose to make uniform the law of those states which enact it." General Statutes § 34-36.⁸

7 "The right of a stockholder to maintain a derivative action is of an equitable nature and, in the absence of a statute to the contrary, is recognizable only in equity; however, the practical effect of the action's equitable nature is minimized by the merger of law and equity in the Federal Rules of Civil Procedure." Am. Jur. Corporations § 1948.

8 The Court of Appeals of South Carolina has addressed the issue of whether a derivative action under the Uniform Limited Partnership Act is equitable or legal in nature. That court held that it was equitable in nature; however, the issues of equity in that case were raised between the general and limited partners. "[T]his case arises out of the South Carolina Uniform Limited Partnership Act. [The limited partners]. . . argue since there was no provision in the historic courts of equity permitting a derivative action on behalf of a limited partnership, the determination of whether this case is one "at law" or "in equity" should be made by referring to the nature of the remedy sought. Inasmuch as they seek only monetary damages, the limited partners maintain this case should be labeled as one "at law," citing O'Shea v. Lesser, 308 S.C. 10, 416 S.E.2d 629 (1992).
"We agree with the general partners that our scope of review is in equity. Section 33-42-1810 of the South Carolina Code of Laws Annotated (1990) permits a limited partner to pursue a derivative suit "in the right of a limited partnership" to secure judgment "in its favor if general partners. . . have refused to bring the action or if an effort to cause those general partners to bring the action is not likely to succeed." Anthony v. Padmar, Inc., 320 S.C. 436, 445-46, 465 S.E.2d 745 (1995).
Here, there are no equitable issues raised between the partners of Meriden Associates.

Although it would be illogical to permit an illegal enterprise to engage the legal or equitable powers of the court for the purpose of enforcing its legal or equitable rights, the facts in this case do not rise to the level where the plaintiff should be denied access to the courts for the satisfaction of Meriden Associates claims as they relate to PNN. See Santangelo v. Elite Beverage, Inc., 65 Conn.App. 618, 623-24, 783 A.2d 500 (2001). This business was established to operate a restaurant in a Meriden hotel. No evidence has been offered to show that Meriden Associates intended to operate its business in any way that was contrary to the laws of Connecticut or of the United States. Despite the lack of the formalities of a loan, there is nothing in the record to suggest that the plaintiff or Meriden Associates had unclean hands in their dealings with PNN. Id. Similarly, there is nothing in the record to suggest that the plaintiff does not fairly represent the interests of Meriden Associates or otherwise properly qualify as the plaintiff, derivatively, under the holding of Fink v. Goldberg, supra, 238 Conn. 183.

The fact that the plaintiff desired a green card as an investor pursuant to U.S. immigration law should not disqualify him from acting derivatively in this case. PNN's allegation that this plan was inconsistent with U.S. immigration law at the time of this limited partnership agreement has not been adequately proven or shown to the court. Similarly, the allegation that the plaintiff did not meet his obligation to the business enterprise has not been adequately proven to the court and does not appear to be relevant to the issue of whether Meriden Associates ought to be repaid for a loan to PNN. If the plaintiff failed to meet his obligation to Meriden Associates, this breach of contract, if any, is a matter for Meriden Associates to litigate, not PNN.

Finally, the allegation that the plaintiff was unable to understand the limited partnership agreement sufficiently and to perform his duties and responsibilities to the business enterprise should not disqualify him from pursuing the legal rights of Meriden Associates. If a party to a lawsuit was required to understand all of their legal rights in order to enforce them through counsel, far fewer rights would be actionable in a court of law. The adoption of such an approach would undermine the rule of law and would benefit the unscrupulous who might seek contracts with witless parties to avoid otherwise lawful obligations. As a fifty percent owner and the primary investor in Meriden Associates, the plaintiff may be the person best able to represent Meriden Associates in this matter, despite allegations of his cognitive limitations.

B. Oral Contract

In count one of the complaint, Sarfaty sets forth a cause of action for breach of an unwritten contract to repay a loan from Meriden Associates to PNN totaling $1,155,000. The court has concluded, as a matter of fact, that Yeh intended these transfers as loans to PNN and that they have not been repaid to Meriden Associates. PNN has offered no evidence to the contrary. Instead, PNN attacks the plaintiff's capacity and performance as well as the integrity of his contract with Meriden Associates. The court has previously found the plaintiff to be a proper party in this derivative action. PNN's arguments, therefore, have no legal bearing on the question of whether PNN ought to repay a loan of $1,150,000 it received from Meriden Associates.

Sarfaty contends that the loan is outside the statutes of frauds⁹ provision requiring a written contract "upon any agreement for a loan in an amount which exceeds fifty thousand dollars." General Statutes § 52-550(6). A simple reading of this provision of the statute of frauds might lead one to conclude that no civil action may be brought for an unwritten loan of $1,150,000.00, which most certainly exceeds the statutory threshold of $50,000.00. This statutory language must be interpreted in light of the adoption the so-called "plain meaning rule," codified at General Statutes § 1-2z. This statute was enacted in response to the case of State v. Courchesne, 262 Conn. 537, 816 A.2d 562 (2003).¹⁰ The codified plain meaning rule provides that "[t]he meaning of a statute shall, in the first instance, be ascertained from the text of the statute itself and its relationship to other statutes. If, after examining such text and considering such relationship, the meaning of such text is plain and unambiguous and does not yield absurd or unworkable results, extratextual evidence of the meaning of the statute shall not be considered." General Statutes § 1-2z.

9 General Statutes § 52-550 provides: "(a) No civil action may be maintained in the following cases unless the agreement, or a memorandum of the agreement, is made in writing and signed by the party, or the agent of the party, to be charged: (1) Upon any agreement to charge any executor or administrator, upon a special promise to answer damages out of his own property; (2) against any person upon any special promise to answer for the debt, default or miscarriage of another; (3) upon any agreement made upon consideration of marriage; (4) upon any agreement for the sale of real property or any interest in or concerning real property; (5) upon any agreement that is not to be performed within one year from the making thereof; or (6) upon any agreement for a loan in an amount which proceeds fifty thousand dollars."

10 "In State v. Courchesne, [the Supreme Court] explained that, as part of the judicial task of statutory interpretation, [it] would not follow the so-called plain meaning rule, which operates to preclude the court, in certain cases, from considering sources in addition to the statutory text in order to determine its meaning. [The court is] cognizant that, subsequent to [its] decision in Courchesne, No. 03-154, § 1, of the 2003 Public Acts (PA. 03-154), has legislatively overruled that part of Courchesne in which [it] stated that [it] would not require a threshold showing of linguistic ambiguity as a precondition to consideration of sources of the meaning of legislative language in addition to its text. State v. Courchesne, supra, 577." (Internal quotation marks omitted.) New Haven v. Bonner, 272 Conn. 489, 493-94 n. 5, 863 A.2d 680 (2004).

As a threshold matter, a court must determine, after considering the text of the statute and its relationship with other statutes, whether the statute is plain and unambiguous and, if it is, whether it yields absurd or unworkable results. See Schiano v. Bliss Exterminating Co., 260 Conn. 21, 42, 792 A.2d 835 (2002) ("[i]n determining the meaning of a statute. . . we look not only at the provision at issue, but also to the broader statutory scheme to ensure the coherency of our construction").

Subsection 6 of the statute of frauds, General Statutes § 52-550, was enacted by the General Assembly in 1989. See No. 89-338, § 3, of the 1989 Public Acts ( P.A. 89-338). The new language that was enacted at that time closely resembles the existing real estate contract statute of frauds, which requires a written contract "upon any agreement for the sale of real property. . ." Under the long standing interpretation of the real estate contracts subsection of the statute of frauds, partially executed contracts for the sale of real property have been determined by our courts to be outside the statute.¹¹ Therefore, it appears from the text of the statute, taken as a whole, that a partially executed loan is outside the statute of frauds. In addition, the legislative history of Public Act makes it abundantly clear that although a civil action may not be brought to enforce an oral promise to make a loan over $50,000, oral loans actually made over $50,000 are outside the statute and may be enforced by our courts.¹² Any other meaning would bring the absurd and unjust result of oral loans being transformed into gifts without a writing to the contrary.

11 "The doctrine was settled at an early day in England, and has been fully adopted in nearly all of the American states, that a verbal contract for the sale or leasing of land, if part performed by the party seeking the remedy, may he specifically enforced by courts of equity, notwithstanding the statute of frauds," (Internal quotation marks omitted.) Andrew v. Babcock, 63 Conn. 109, 119-20, 26 A. 715 (1893). "In those cases where one party in reliance upon the contract has partly performed it to such an extent that a repudiation of the contract by the other party would amount to the perpetration of a fraud, equity looks upon the contract as removed from the operation of the Statute of Frauds and will enforce it by specific performance or give other relief as the case may be. Eaton v. Whitaker, 18 Conn. 222, 229; Andrew v. Babcock, 63 Conn. 109, 119, 26 A. 715; Verzier v. Convard, 75 Conn. 1, 6, 52 A. 255; Corpus Juris, vol. 27, p. 343, § 427." Santoro v. Mack, 108 Conn. 683, 690-91, 145 A. 273 (1929).

12 See 32 H. R. Proc., Pt. 38, 1989 Sess., p. 13552-64, as well as 32 S. Proc., Pt. 10, 1989 Sess., p. 3614-18.

C. Unlicensed Loan

In a motion to dismiss filed on February 12, 2007, PNN claims that Meriden Associates was unauthorized to make a loan because it was unlicensed to do so under General Statutes § 36a-555.¹³ The court finds this statutory requirement to be inapplicable to Meriden Associates, as it was not engaged in the business of making loans. The facts in this case are limited to a series of transactions involving loans to a single business entity. Further, no interest was sought for these loans, so the regulatory purposes of the licensing scheme cited by PNN would not be furthered by requiring a license for the transaction complained of in this case.

13 General Statute § 36a-555 provides "No person shall engage in the business of making loans of money or credit in the amount or to the value of fifteen thousand dollars or less for loans made under section 36a-563 or section 36a-565, and charge, contract for or receive a greater rate of interest, charge or consideration than twelve per cent per annum therefore, unless licensed to do so by the commissioner pursuant to sections 36a-555 to 36a-573, inclusive. The provisions of this section shall not apply to (1) a bank, (2) an out-of-state bank, (3) a Connecticut credit union, (4) a federal credit union, (5) an out-of-state credit union, (6) a savings and loan association wholly owned subsidiary service corporation, (7) a person to the extent that such person makes loans for agricultural, commercial, industrial or governmental use or extends credit through an open-end credit plan, as defined in subdivision (8) of section 36a-676, for the retail purchase of consumer goods or services, (8) a mortgage lender licensed pursuant to sections 36a-485 to 36a-498a, inclusive, when making first mortgage loans, as defined in section 36a-485, (9) a mortgage lender licensed pursuant to sections 36a-510 to 36a-524, inclusive, when making secondary mortgage loans, as defined in section 36a-510, or (10) a licensed pawnbroker."

D. Unjust Enrichment

In count two, the plaintiff claims that if there is no contract for a loan, PNN has been unjustly enriched by the transfer of $1,150,000 by Meriden Associates. "Unjust enrichment is a legal doctrine to be applied when no remedy is available pursuant to a contract. . . Recovery is proper if the defendant was benefited, the defendant did not pay for the benefit and the failure of payment operated to the detriment of the plaintiff." (Internal quotation marks omitted.) Russell v. Russell, 91 Conn.App. 619, 637-38, 882 A.2d 98, cert. denied, 276 Conn. 924, 888 A.2d 92, cert. denied, 276 Conn. 925, 888 A.2d 92 (2005); see 26 S. Williston, Contracts (4th Ed. 2003) § 68:5, p. 58. "[A] right of recovery under the doctrine of unjust enrichment is essentially equitable, its basis being that in a given situation it is contrary to equity and good conscience for one to retain a benefit which has come to him at the expense of another." (Internal quotation marks omitted.) Gagne v. Vaccaro, 255 Conn. 390, 408, 766 A.2d 41 (2001).

As an equitable cause of action, a claim of unjust enrichment clearly allows the court to consider the issue of unclean hands. However, the plaintiff claims that PNN has not filed a special defense on this issue and, in fact, the doctrine of unclean hands was never mentioned in any of the pleadings. The court, however, may still consider unclean hands because "in light of the court's inherent equitable powers in a [claim for unjust enrichment], the court [would] not improperly consider the equitable doctrine of unclean hands without it being specifically pleaded." McKeever v. Fiore, 78 Conn.App. 783, 789, 829 A.2d 846 (2003).

"The doctrine of unclean hands holds that one who seeks to prove that he is entitled to the benefit of equity must first come before the court with clean hands. . . It expresses the principle that when a plaintiff seeks equitable relief, he must show that his conduct has been fair, equitable and honest as to the particular controversy in issue." (Citations omitted; internal quotation marks omitted.) McKeever v. Fiore, supra, 78 Conn.App. 789. "[T]he court will not go outside of the case for the purpose of examining the conduct of the complainant in other matters or questioning his general character for fair dealing. . . When a court of equity is appealed to for relief it will not go outside of the subject-matter of the controversy, and make its interference to depend upon the character and conduct of the moving party in no way affecting the equitable right which he asserts against the defendant, or relief which he demands. In other words, the dirt upon the plaintiff's hands must be his bad conduct in the transaction complained of. If he is not guilty of inequitable conduct toward the defendant in that transaction, his hands are as clean as the court can require." (Citations omitted; emphasis in original; internal quotation marks omitted.) Santangelo v. Elite Beverage, Inc. supra, 65 Conn.App. 623-24 (2001).

The relevant transaction at issue in this case is the loan of $1,150,000 from Meriden Associates to PNN. In this particular matter, the plaintiff had no involvement and, therefore, any allegation that he is incompetent, that he breached his contract with Meriden Associates or that he sought a green card by investing in Meriden Associates has no bearing on the specific transaction complained of in this case. Therefore, the court finds there is no relevant evidence of unclean hands that prevents the court from considering the plaintiff's claim, on behalf of Meriden Associates, of unjust enrichment.

Based upon the facts in this case, the court finds that if no remedy were available pursuant to a contract,¹⁴ the defendant was nonetheless benefited by the transfer of $1,150,000 to its creditors, the defendant did not pay for the benefit and the failure of payment operated to the detriment of the plaintiff.

14 The court is fully aware of its finding of a remedy at law pursuant to count one of the complaint. If, however, the court's ruling on count one is found to be in error, the second count is ruled upon, in the alternative, for purposes of judicial efficiency.

IV CONCLUSION

The court finds for the plaintiff on count one, and, in the alternative, on count two. The plaintiff is due the original amount of the loan of $1,150,000, plus interest pursuant to General Statutes § 37-3a in the amount of ten percent per annum since the time of demand for repayment of the loan which, in this case, was the initiation of the lawsuit by Meriden Associates.¹⁵ Costs and reasonable expenses, including a reasonable attorneys fee, are awarded pursuant to General Statutes § 34-34d, subject to an affidavit of expenses and time expended to bring this action on behalf of Meriden Associates.

15 General Statutes § 37-3a specifically provides for interest ". . . as damages for the detention of money after it becomes payable." The court interprets the loan in this case to be one made on demand, since no evidence was presented to show that there was a specified date for repayment of the loan. The court notes that this is consistent with the law of instruments. See General Statutes § 42a-3-108(a)(ii).

BY THE COURT