Opinion
CV166071027S
11-28-2018
STATE of Connecticut v. DRESSLER STRICKLAND, LLC
UNPUBLISHED OPINION
Jane S. Scholl, J.
Introduction
In this action the plaintiff, State of Connecticut, claims, in its complaint dated August 18, 2016, that it provided public assistance to, and on behalf of, Janet Serrano between February 15, 1996 and November 1, 1997, in the unreimbursed amount of $13, 338.00. It claims that the defendant law firm, Dressler Strickland, represented Serrano in a personal injury claim. The state claims that on March 1, 2012 it provided the defendant, via facsimile, with a Notice of Lien letter and a Lien Amount Letter. The State claims both documents were faxed to 860-522-1203, facsimile number used by the defendant. The State alleges that on or about December 5, 2012 the defendant settled Serrano’s claim in the net amount of $6, 500.00 and paid the full net proceeds to Serrano. The State claims that the failure of the defendant to first pay the State its statutory lien in the amount to $3, 075.00 constituted a violation of General Statutes 17b-94. The State alleges that the defendant’s acquisition, conversion and transfer of said monies was wrongful, unauthorized and in derogation of, and to the exclusion of the statutory lien and property rights of the State.
Trial to the court was held on May 10th and 11th 2018. At that time the court heard testimony from Reyne Maturo, an employee of the collections unit of the Department of Administrative Services; Theodore Doolittle, IT Director for A & A Office Systems; Bonnie Stokosa, business manager and bookkeeper for the defendant; Gail Katz, claims manager and office manager for the defendant’s office; Samuel Vega, office director for the defendant; and William Flanagan of Flanagan Consulting, an expert on networking technology.
Post-trial memoranda of law were filed on May 25th and June et, 2018. On September 27, 2018 the court issued a decision concluding that judgment should enter for the defendant. On October 17, 2018 the plaintiff filed a Motion to Reargue and Reconsider and on October 29, 2018 the defendant filed an objection to the motion. The court did hear reargument on November 28, 2018 and issues this revised decision as a result.
Discussion and Findings of Fact
The defendant has admitted the following allegations of the complaint: On or about February 7, 2012, Janet Serrano was involved in a personal injury accident. The defendant, Dressler Strickland, LLC a/k/a Dressler Law, is a domesticated limited liability corporation operating as a law firm, and represented Janet Serrano in connection with said personal injury claim. Number 860-522-1203 is one of defendant’s fax numbers. On or about December 5, 2012, the defendant settled Janet Serrano’s personal injury claim for the net amount of $6, 500.00. The defendant paid the full net proceeds to Janet Serrano. The defendant has failed to pay the $3, 075 claimed to the plaintiff.
From the evidence presented, the court makes the following additional findings of facts and conclusions. DAS faxed a lien letter regarding its claim to part of the proceeds of Serrano’s cause of action to the defendant’s number 860-522-1203 on March 1, 2012. DAS received an "OK" report indicating that the fax had been successfully transmitted to that number. Such a report simply indicates that the sending machine has communicated with the receiving machine, it does not mean that the information, which was digitally sent, was printed out in a readable format. No assignment by Serrano was faxed at that time. DAS has faxed other lien letters to Dressler and this is the only instant in which Dressler has not paid DAS pursuant to those letters. As soon as DAS liens are received by Dressler the attorney handling the case is made aware of it and the file is red flagged. There was nothing in the Serrano file with Dressler otherwise indicating that there was any lien by DAS on the proceeds of her case. The file indicated that Serrano was employed by a Board of Education and had private insurance.
Claim Pursuant to General Statutes § 17b-94(a)
General Statutes § 17b-94(a), on which the State’s claim is based, provides: "In the case of causes of action of beneficiaries of aid under the state supplement program, medical assistance program, aid to families with dependent children program, temporary family assistance program or state-administered general assistance program, subject to subsections (b) and (c) of section 17b-93, or of a parent liable to repay the state under the provisions of section 17b-93, the claim of the state shall be a lien against the proceeds therefrom in the amount of the assistance paid or fifty per cent of the proceeds received by such beneficiary or such parent after payment of all expenses connected with the cause of action, whichever is less, for repayment under section 17b-93, and shall have priority over all other claims except attorneys fees for said causes, expenses of suit, costs of hospitalization connected with the cause of action by whomever paid over and above hospital insurance or other such benefits, and, for such period of hospitalization as was not paid for by the state, physicians’ fees for services during any such period as are connected with the cause of action over and above medical insurance or other such benefits; and such claim shall consist of the total assistance repayment for which claim may be made under said programs. The proceeds of such causes of action shall be assignable to the state for payment of the amount due under section 17b-93, irrespective of any other provision of law. Upon presentation to the attorney for the beneficiary of an assignment of such proceeds executed by the beneficiary or his conservator or guardian, such assignment shall constitute an irrevocable direction to the attorney to pay the Commissioner of Administrative Services in accordance with its terms, except if, after settlement of the cause of action or judgment thereon, the Commissioner of Administrative Services does not inform the attorney for the beneficiary of the amount of lien which is to be paid to the Commissioner of Administrative Services within forty-five days of receipt of the written request of such attorney for such information, such attorney may distribute such proceeds to such beneficiary and shall not be liable for any loss the state may sustain thereby." (Emphasis added.)
The plaintiff claims that it complied with the statute when it faxed the lien notice to the defendant. It argues that the State’s lien is enforceable even without presentation of an assignment executed by Serrano as required by the statute. The plaintiff cites State v. Blawie, 31 Conn.Supp. 552 (1974), cert. denied, 167 Conn. 693 (1975) in support of its claim. There the court held that the statute created a nonconsensual lien by operation of law on the proceeds of causes of action in the hands of the defendant attorneys on receipt of the notice of the lien despite their client’s refusal to execute an assignment. The court there relied on McDougald v. Norton, 361 F.Supp. 1325, 1326 (D.C.Conn., 1973) in which the court stated, without explanation, that "[e]ven in the absence of such assignment, this section [C.G.S. § 17-83f (predecessor statute to § 17-94) ] gives the State a lien against all causes of action belonging to a public assistance beneficiary." In McDougald the beneficiary had executed such an assignment. In any event, the issue there was not the effectiveness of a State lien but whether the State could seek recoupment of public assistance payments made from a beneficiary’s subsequently received workers’ compensation award.
The plaintiff also cites State v. Angelo, 39 Conn.App. 709, 713 (1995), cert. denied, 236 Conn. 901 (1996) for its position that the defendant was required to honor the State’s lien despite the lack of presentation of an assignment. There the defendant had twice been advised of the State’s lien on his client’s cause of action. The court agreed with the decision in Blawie, as well as its citation to McDougald, "that ‘even in the absence of an assignment as provided for in § 17-83f, this section gives the state a lien against all causes of action belonging to a public assistance beneficiary’" and that "§ 17-83f grants to the department of social services a valid lien on the proceeds of the cause of action in the hands of the defendant and that the action of the defendant in disbursing the funds in disregard of the state’s lien constituted a conversion for which the state is entitled to damages."
In both Blawie and Angelo the court concluded that the disbursement of the funds in disregard of the State’s lien was a conversion. They did not explicitly find that it was a violation of the statute. Yet, since in both those cases the attorney was aware of the State’s lien, the court found that the disbursement of the funds contrary to the state’s lien constituted conversion.
Therefore the case law does not support the conclusion that the state can enforce a lien pursuant to the statute absent presentation of an assignment. The statute refers to the assignment as constituting the direction to the attorney to pay the Commissioner. In the absence of such an assignment there exists no direction to the attorney. To hold otherwise would render the language of the statute meaningless. "It is a ‘cardinal’ maxim of statutory interpretation that statutes shall not be construed to render any sentence, clause, or phrase superfluous or meaningless ... [I]t is a basic tenet of statutory construction that the legislature [does] not intend to enact meaningless provisions ... [I]n construing statutes, we presume that there is a purpose behind every sentence, clause, or phrase used in an act and that no part of a statute is superfluous." Allen v. Commissioner of Revenue Services, 324 Conn. 292, 309-10 (2016), cert. denied sub nom. Allen v. Connecticut Commissioner of Revenue Services, 137 S.Ct. 2217 (2017). (Citations omitted; internal quotation marks omitted.) The Appellate Court in Commissioner of Administrative Services v. Gerace, 40 Conn.App. 829, 834 (1996), appeal dismissed, 239 Conn. 791 (1997), recognized that the punitive nature of an action against an attorney pursuant to General Statutes § 17b-94, that is, that such an action seeks to impose personal liability on the attorney for funds that he may have distributed to his client, requires a strict interpretation of the statute.
The court in Blawie also noted that: "The provision for assignment eliminates any possible conflict of interest claim by the attorney’s client for the disbursing of funds to the state, since the client has already consented by the assignment to the payment to the welfare commissioner. The assignment provision has the added feature of protecting the attorney in the event of disagreement between the client and the state welfare department regarding the amount of the latter’s claim. With or without the assignment provision of the statute, the attorney becomes, not a collection agency for the state, but a stakeholder of funds against which conflicting claims are outstanding. The execution of an assignment puts to rest these adversary claims and relieves the stakeholder of a contingent liability in the future." State v. Blawie, 31 Conn.Supp. 552, 557-58 (1974), cert. denied, 167 Conn. 693 (1975).
None of the cases cited above support the proposition that in the absence of presentation to the attorney of an assignment, as well as any notice to the attorney of the State’s lien, the State still has a valid claim against the attorney under the statute. The Blawie court noted that there the plaintiff conceded that in order to satisfy due process concerns notice of a statutory lien against proceeds of a cause of action must be received by third parties before any liability would attach as to them.
Claim of Conversion
The plaintiff claims that the failure of the defendant to pay its lien is conversion. Therefore irrespective of whether the statute requires an assignment to be presented to the attorney in order for the state to prevail here, the issue is whether the defendant had "notice" of the lien. In order for the plaintiff to prevail on its claim of conversion the plaintiff must prove that the defendant had knowledge of the plaintiff’s interest in the settlement funds and acted in contravention of that interest. The plaintiff must prove that: (1) the funds at issue belonged to the plaintiff, (2) that the defendant deprived the plaintiff of those funds, (3) that the defendant’s conduct was unauthorized, and (4) that the defendant’s conduct harmed the plaintiff. See News America Marketing In-Store, Inc. v. Marquis, 86 Conn.App. 527, 545 (2004), aff’d, 276 Conn. 310 (2005). "A conversion is an unauthorized assumption and exercise of a right of ownership over property belonging to another, to the exclusion of the owner’s right. The essence of the wrong here is that property rights of the plaintiff have been dealt with in a manner which is adverse to it, is inconsistent with its right of dominion, and is to its harm ... Courts have previously held that the failure of an attorney to honor a lien or obligation which has been properly asserted constitutes a conversion." (Citations omitted; internal quotation marks omitted.) State v. Audrey Porzio, Superior Court, Judicial District of Hartford at Hartford, Docket No. HHDCV106008253S (Robaina, J., Nov. 10, 2010) .
Therefore the issue here is whether the lien was properly asserted, that is, did the defendant have notice of the lien and act in contravention of the State’s interest such as to constitute conversion. The plaintiff cannot prevail unless it can establish that the defendant knew of the State’s interest in the funds. A plaintiff cannot prevail on a claim of conversion unless the plaintiff can prove that the defendant was advised of the plaintiff’s ownership interest in the property or refused to return the property to the plaintiff after demand by its rightful owner. See, Coleman v. Francis, 102 Conn. 612 (1925).
The plaintiff asserts that it faxed notice of the lien to the defendant and that the receipt of a fax delivery confirmation sheet should establish, similar to the mail box rule, a rebuttable presumption of receipt. "[T]the mailbox rule ... provides that a properly stamped and addressed letter that is placed into a mailbox or handed over to the United States Postal Service raises a rebuttal presumption that it will be received ... We already have concluded that the defendant has met its burden of proving that the notice of cancellation was sent to the plaintiffs. Pursuant to the mailbox rule, the burden then shifts to the plaintiffs to present evidence that rebuts this presumption." Echavarria v. National Grange Mutual Insurance Company, 275 Conn. 408, 418 (2005). The plaintiff cites cases from other jurisdictions which support the application of the same presumption to facsimile transmissions. For example, in American Paging of Texas, Inc. v. El Paso Paging, Inc., 9 S.W.3d 237, 240 (Tex.App. 1999), the court held: "Admission of evidence showing a telephonic document transfer to the recipient’s current telecopier number gives rise to a presumption that notice was duly received by the addressee ... In the absence of any proof to the contrary, the presumption has the force of a rule of law." (Citations omitted.)
It has been held, however, that the mail box rule does not apply to the provision of notice required by statute. "In the case of the statute, there is no place for the operation of that rule." Rapid Motor Lines v. Cox, 134 Conn. 235, 239 (1947). The statute here requires "presentation to the attorney." Under our Uniform Commercial Code, for example, presentation is defined as "delivery of a document." General Statues § 42a-5-102.
In any event, this court need not decide whether faxing a notice of lien complies with the statutory language requiring "presentation" or whether the mail box rule applies to a fax transmission. This is because any presumption created by such a rule was clearly rebutted by the defendant. The evidence established that the State had faxed lien letters to the defendant in the past and this was the only time the defendant had not paid a lien. The defendant firm has a system for handling State liens. As soon as one is received it is scanned into the computer and the attorney handling the case is made aware of it. The database system has a red flag for it on the client’s file. There was nothing in the client’s file here indicating that there was a lien or any evidence that such a lien might exist. This is unlike the situation in Erwin v. Town of Jena, 2008-137 (La.App. 3 Cir. 6/5/08), 987 So.2d 281, 285-86, cited by the plaintiff. There the court held: "We find the fax transmission confirmation sheet was enough to create a presumption of receipt by the Defendant. Facsimile transmissions are generally accepted as a vital means of communication in modern technological culture. As a result of the existence of this commonplace practice, the judicial world has recognized that fax transmissions are reliable and trustworthy for some purposes, subject to compliance with certain rules ... In this case, once the fax transmission confirmation sheet was placed into the record, it was incumbent upon the Defendant to provide documentary evidence or testimony to rebut the presumption that their office received the demand for payment contained in facsimile transmission. The Defendant failed to offer any explanation for its failure to timely pay Mr. Erwin’s pharmaceutical expenses. The Defendant did not present their normal business records, the testimony of the record keeper, or the actual claim file to show that the transmission was not received and it would have been their normal business practice to record or maintain evidence of such transmissions." (Citations omitted; internal quotation marks omitted.)
Conclusion
Here the only evidence presented in support of the State’s claim of compliance with the statute and its claim of conversion was a fax transmission confirmation sheet. Without more, and in light of the facts established by the evidence which rebutted any presumption of delivery such confirmation sheet may provide, such evidence was insufficient to prove compliance by the State with the requirements of the statute, that is, that an assignment had been executed and presented to the defendant, or that the defendant converted the State’s funds.
The court finds that the plaintiff failed to meet its burden of proof. Judgment shall enter for the defendant.