Suffield Develop. v. National Loan Inv.

Full title: SUFFIELD DEVELOPMENT ASSOCIATES LIMITED PARTNERSHIP v. NATIONAL LOAN…

Court: Connecticut Superior Court, Judicial District of Hartford at Hartford

Date published: Feb 17, 2005

2005 Ct. Sup. 3325 (Conn. Super. Ct. 2005)

Opinion

No. CV 99-0590031 S

February 17, 2005

MEMORANDUM OF DECISION

SHELDON, JUDGE.

In this case, plaintiff Suffield Development Associates Limited Partnership ("SDA") has sued defendants Berman and Sable, a Hartford, Connecticut law firm now known as Berman, Sable and Oliver ("BSO"), and Attorney James W. Oliver, a BSO partner, to recover money damages for alleged abuse of process in connection with the defendants' allegedly wrongful procurement, service, and maintenance of what is claimed to have been an excessive execution on behalf of their client, National Loan Investors, L.P. ("National"). The defendants obtained and served the challenged execution on May 4, 1999 for the stated purpose of collecting unpaid damages assertedly due and owing to National under a judgment against SDA in an action entitled National Loan Investors v. Suffield Development Associates, Ltd. Partnership, Docket No. CV 91-0391286 S (the "National Action"), which had previously been entered by stipulation before this Court. The execution in question, in the amount of $375,000.00, was directed against funds then owed to SDA by a third party, BankBoston, as proceeds from the then-recent settlement of a separate civil action between SDA and BankBoston, as successor-in-interest to Society for Savings, entitled Suffield Development Associates Ltd. Partnership v. Society for Savings, Docket No. (X04) CV 94-0534196 S (the "Society for Savings Action" or the "Lender Liability Action").

In its Second Amended Complaint dated August 30, 2002, the plaintiff alleges that the Attorney Oliver wrongfully obtained the challenged execution both by misrepresenting to this Court, in his written application on behalf of National, that National had an established right to recover a particular sum of damages from the plaintiff under its judgment in the National Action, when that right was still disputed by SDA, and further, by misrepresenting the total damages National could conceivably recover under that judgment even if it prevailed in the aforementioned dispute. Id., Count I, ¶ 10. The plaintiff also claims that the defendants' subsequent efforts to enforce the execution after it was so obtained and served were wrongful because such efforts were allegedly made with full knowledge that the "application for [the] execution was false, . . . that the amount of said execution was inflated, and that National's right to such execution was disputed." Id., ¶ 12. Contending that the defendants' above-described actions were "malicious, and . . . undertaken in an attempt to pressure the plaintiff into paying monies to National, notwithstanding the dispute as to whether or not any sums are due and owing"; id., ¶ 13; the plaintiff asserts that it is entitled to recover both compensatory and punitive damages from the defendants for all injuries and losses it has suffered as a result of the defendants' actions.

The defendants answered the plaintiff's abuse-of-process claim by denying each and every allegation of wrongful or malicious conduct made against them. Defendants' Answer To The Plaintiff's Second Amended Complaint, Set Off And Counterclaim (10/10/02), ¶¶ 9-14.

With the issues so joined between them,¹ the parties tried this case before the Court on divers days between March 5 and March 16, 2004. Thereafter, upon filing comprehensive briefs addressing the factual and legal issues that divide them in this case, they presented final oral arguments to the Court. Based on the law of this case, as established by our Supreme Court in reviewing the legal sufficiency of the claim now before this Court, and the credible evidence presented at trial, the Court respectfully submits the following Memorandum of Decision.

1 At the start of trial, the parties informed the Court that the defendants' Set Off, Special Defenses and Counterclaim were no longer before the Court. Hence, the scope of trial was limited to the contested allegations of the plaintiff's operative Complaint.

I. PROCEDURAL HISTORY/LAW OF THE CASE

This case came before the Court for trial on remand from the Connecticut Supreme Court, which in Suffield Development Associates Ltd. Partnership v. National Loan Investors, L.P., 260 Conn. 766, 775, 802 A.2d 44 (2002), reversed that portion² of the Appellate Court's earlier decision in this matter, captioned Suffield Development Associates Ltd. Partnership v. National Loan Investors, L.P., 64 Conn.App. 192, 779 A.2d 822 (2001), which upheld the prior striking of the first count of the plaintiff's Amended Complaint, alleging abuse of process, for alleged failure to state a claim upon which relief could be granted. The claim now pending before this Court — which was repleaded after remand, with only slight modification, as the sole count of the plaintiff's Second Amended Complaint — is identical in substance to the claim which our Supreme Court found legally sufficient to state a valid claim of abuse of process.

2 The other challenged portions of the Appellate Court's earlier decision, which had upheld the trial court's prior striking of the plaintiff's claims of fraudulent misrepresentation and violation of the Connecticut Unfair Trade Practices Act, were affirmed. Id., 780, 784.

Before discussing the merits of the plaintiff's stricken abuse-of-process claim, the Supreme Court recounted the previous procedural history of this litigation as follows:

This litigation arises from a previous dispute between the plaintiff and National (National litigation). In the National litigation, National was represented by [Attorney James W.] Oliver and the law firm of Berman and Sable. Suffield Development Associates Ltd. Partnership v. National Loan Investors, L.P., supra, 64 Conn.App. 195. The National litigation was resolved by a stipulated judgment between the parties that contained a provision that the judgment could "be satisfied only by proceeds from a certain Lender Liability Judgment in favor of [the plaintiff] . . ."

The term "certain Lender Liability Judgment" in the stipulated judgment referred to a judgment that the plaintiff previously had obtained against Society for Savings and its successor bank, BankBoston, as a result of a damages action instituted by the plaintiff (Society for Savings litigation). At the time that the stipulated judgment containing this term was entered in the National litigation, the judgment that the plaintiff had obtained in the Society for Savings litigation was on appeal. The Society for Savings judgment was vacated on appeal and a new trial was ordered. See Suffield Development Associates Ltd. Partnership v. Society for Savings, 243 Conn. 832, 846, 708 A.2d 1361 (1988). Prior to the new trial, the plaintiff settled the Society for Savings litigation with BankBoston for $1.5 million. Suffield Development Associates Ltd. Partnership v. National Loan Investors, L.P., supra, 64 Conn.App. 195-96.

Essentially, under the stipulated judgment in the National litigation, National could recover from the plaintiff only out of funds that the plaintiff recovered from BankBoston in the Society for Savings litigation. The stipulated judgment entitled National to 15 percent of the amount recovered by the plaintiff in the Society for Savings litigation if that amount exceeded $1,333,333.33.

After the plaintiff and BankBoston agreed to settle the Society for Savings litigation for $1.5 million, the plaintiff notified the defendants in the present action of the settlement. The plaintiff stated that it did not believe it had any duty under the stipulated judgment and offered to place in escrow some of the funds received from the settlement. The plaintiff then instituted an action seeking a declaratory judgment that it did not have a duty to pay a portion of the $1.5 million settlement to National. Id., 196 n. 3; see Suffield Development Associates Ltd. Partnership v. National Loan Investors, L.P., 60 Conn.App. 842, 844-46, 763 A.2d 1049 (2000). The plaintiff alleged that the phase "certain Lender Liability Judgment" applied to the first award in the Society for Savings litigation, which had been vacated, and not to the eventual $1.5 million settlement. Essentially, the plaintiff alleged that because it had not recovered any money under the original judgment against Society for Savings, it owed no money to National in the National litigation. [Footnote omitted.] In response, the defendants applied to the trial court for an execution in the National litigation to seize $375,000 of settlement funds received by the plaintiff from BankBoston. The trial court granted the application, and the defendants directed a sheriff to carry out the execution.

The plaintiff then instituted the present action alleging that: (1) the defendants' execution overstated the amount due them under the stipulated judgment between the parties and was an abuse of process; (2) the defendants committed fraud on the court by misrepresenting the amount owed them under the stipulated judgment; (3) the defendants' execution on the settlement proceeds constituted tortious interference with the contractual relationship between the plaintiff and BankBoston; (4) the defendants were engaged in the conduct of trade or commerce and their actions were immoral, oppressive, unethical and unscrupulous, and therefore violated CUTPA. After the trial court granted the defendants' motions to strike the amended complaint, the plaintiff appealed to the Appellate Court. The Appellate Court affirmed the judgment of the trial court; Suffield Development Associates Ltd. Partnership v. National Loan Investors, L.P., supra, 64 Conn.App. 195; and the plaintiff petitioned this court for certification to appeal. We granted the plaintiff's petition for certification to appeal, limited to the following question: "Did the Appellate Court properly conclude that the plaintiff had not sufficiently alleged facts constituting causes of action for: (1) abuse of process; (2) fraudulent misrepresentation; or (3) violation of [CUTPA]?" Suffield Development Associates Ltd. Partnership v. National Loan Investors, L.P., 258 Conn. 922, 782 A.2d 1252 (2001).

Suffield Development Associates Ltd. Partnership v. National Loan Investors, L.P., 260 Conn. 766, 769-71, 802 A.2d 44 (2002).

Turning, against this background, to the first certified question before it, concerning the Appellate Court's ruling that the plaintiff's abuse-of-process claim was legally insufficient, the Supreme Court first described as follows the essential elements of abuse of process:

An action for abuse of process lies against any person using a legal process against another in an improper manner or to accomplish a purpose for which it was not designed. Varga v. Pareles, [ 137 Conn. 663, 667, 81 A.2d 112 (1951)]; Schaefer v. O.K. Tool Co., 110 Conn. 528, 532-33, 148 A. 330 (1930). Because the tort arises out of the accomplishment of a result that could not be achieved by the proper and successful use of process, the Restatement Second (1977) of Torts, § 682, emphasizes that the gravamen of the action for abuse of process is the use of a legal process . . . against another primarily to accomplish a purpose for which it is not designed . . . Comment b to § 682 explains that the addition of primarily is meant to exclude liability when the process is used for the purpose for which it is intended, but there is an incidental motive of spite or an ulterior purpose of benefit to the defendant. See also 1 F. Harper, F. James O. Gray, Torts (2d Ed. 1986) § 4.9; R. Mallen V. Levit, Legal Malpractice (2d Ed. 1981) § 61; W. Prosser W. Keeton, Torts (5th Ed. 1984) § 121." (Emphasis in original; internal quotation marks omitted.) Mozzochi v. Beck, 204 Conn. 490, 494, 529 A.2d 171 (1987).

Suffield Development Associates Ltd. Partnership v. National Loan Investors, L.P., supra, 260 Conn. at 772-73. Concluding, in light of those elements, that ". . . the gravamen of the action for abuse of process is the use of `a legal process . . . against another primarily to accomplish a purpose for which it is not designed,'" id., at 773 (quoting 3 Restatement (Second), Torts § 682 (1977)), the Supreme Court "first examine[d] the purpose for which the process at issue in this case, namely an execution against debts due from a bank, is designed." Id. "Our statutes," said the Court,

provide various mechanisms for a party with a judgment in its favor to recover money from an adversary that is unwilling to pay voluntarily. See General Statutes § 52-350f ("money judgment may be enforced, by execution or by foreclosure of a real property lien, to the amount of the money judgment"); Black's Law Dictionary (7th Ed. 1999) (defining execution as "judicial enforcement of a money judgment"). The defendants in the present case specifically availed themselves of General Statutes § 52-367a, [footnote omitted] which provides a mechanism for a party to obtain an execution against, and execute on, money held in a bank by the debtor. Essentially, the purpose of an execution is to provide a means for a party to recover under a judgment for money damages, the liability for, and amount of which, has been specifically determined by a court.

Suffield Development Associates Ltd. Partnership v. National Loan Investors, L.P., supra, 260 Conn. at 773-74. (Emphasis added.)

With that purpose in mind, the Court next examined the particular allegations of the plaintiff's challenged claim, which it summarized as follows:

The plaintiff and National had entered into a stipulated judgment under which the plaintiff was to pay $375,000 to National. That recovery, however, was to be paid only after application of a specified formula to funds recovered by the plaintiff in separate litigation with a third party. Application of the formula could reduce the actual recovery by National to less than $375,000, depending on the amount recovered by the plaintiff. The plaintiff alleged that the defendants: (1) wrongfully applied for the execution to pressure the plaintiff into paying under the stipulated judgment in the National litigation even though the defendants were aware that the plaintiff believed no money was due under the agreement; and (2) misrepresented their right as a matter of law to, and inflated the amount of, the execution. The plaintiff alleged, therefore, that the defendants used the process of an execution to pressure the plaintiff into paying money to National and to recover money that the plaintiff did not owe under the stipulated judgment.

Id., 774.

The defendants, noted the Court, had made two basic arguments as to why the foregoing allegations could not possibly constitute an actionable abuse of process. For the following reasons, the Court rejected both arguments, determining, to the contrary, that the plaintiff's claim, as pleaded, stated a valid and sufficient claim of abuse of process:

First, the defendants point out that in the amended complaint the plaintiff did not contest the validity of the stipulated judgment in the National litigation. The complaint alleged only that the stipulated judgment did not apply to the plaintiff's eventual settlement with BankBoston. The defendants argue that, because an execution is designed to enforce a valid money judgment, a claim for abuse of process simply does not arise where an execution was obtained pursuant to a valid stipulated judgment. In other words, the defendants assert, although there may be some dispute surrounding the sum of money subject to the execution, the execution itself was used in a manner consistent with its design and purpose.

This argument is unpersuasive. The plaintiff's amended complaint supports a claim for abuse of process because it alleged that the defendants had misrepresented the amount to which National was entitled as a matter of law under the stipulated judgment, inflated the amount owed, and thereby obtained an excessive execution all for the purpose of coercing the plaintiff into making payment to National. We conclude that such allegations may give rise to a claim for abuse of process because executions are properly obtained and used only in accordance with a valid judgment and in an appropriate amount.

Second, the defendants argue that, at worst, the plaintiff has alleged only a difference of opinion between the parties, whereas the plaintiff's position was that no money was owed under the stipulated judgment or less money was owed than the amount for which the defendants obtained the execution. [Footnote omitted.]

This argument is also unpersuasive because an execution is to be used to enforce payment of a valid and specific court judgment. See General Statutes § 52-350f ("money judgment may be enforced, by execution or by foreclosure of a real property lien, to the amount of the money judgment"); Black's Law Dictionary, supra (definition of execution). The plaintiff alleged that the defendants used the execution to pressure the plaintiff in an extortionate manner and to recover money the amount of which was still in dispute. Obtaining an execution is not a mechanism designed to pressure a party into settlement in other litigation, to determine how much one party owes another, or to secure money pending the outcome of litigation. To use it for any of those purposes potentially constitutes an abuse of process.

Suffield Development Associates Ltd. Partnership v. National Loan Investors, L.P., supra, 260 Conn. at 774-76. (Emphasis added.)

The Court concluded its analysis by distinguishing the allegations of the plaintiff's challenged claim from those found insufficient to state a valid claim of abuse of process in Mozzochi v. Beck, 204 Conn. 490, 494, 529 A.2d 171 (1987). On that score, it observed that

In Mozzochi, the plaintiff alleged that the defendant attorneys pursued litigation after discovering that the action was baseless. Id., 491. We concluded that an attorneys duty not to pursue groundless litigation "does not give rise to a third party action for abuse of process unless the third party can point to specific misconduct intended to cause specific injury outside of the normal contemplation of private litigation." Id., 497 The complaint at issue in Mozzochi, we concluded, did not state a cause of action for abuse of process because it did not allege a specific instance where a procedural tool was used for some purpose other than the one for which it was designed. Id. As examples of actions that might give rise to claims for abuse of process, however, we listed," unreasonable force, excessive attachments or extortionate methods . . ." Id., 493. The excessive execution alleged in the present case is similar to the excessive attachment discussed in Mozzochi because, if it is assumed that an improper purpose was alleged in each case, both the execution here and the attachment there constitute the use of process to recover or secure an amount of money greater than the amount determined to be owed or, in the case of excessive attachment, greater than the amount necessary to provide security pending the outcome of litigation.

The defendants' reliance on Mozzochi is misplaced for two reasons. First, unlike the plaintiff in Mozzochi, the plaintiff in the present case alleged a specific instance of misconduct with an ulterior motive as a basis of its claim for abuse of process. Second, the misconduct alleged in the present case fits easily into the category of actions that we stated in Mozzochi might have constituted abuse of process had they been alleged.

Suffield Development Associates Ltd. Partnership v. National Loan Investors, L.P., supra, 260 Conn. at 774-76. (Emphasis added.)

In light of the Supreme Court's foregoing discussion of applicable legal principles, this Court's threshold inquiry, on the issue of liability, must be whether the plaintiff has proved, as it has pleaded, that the defendants obtained, served and maintained the challenged execution to recover or secure an amount of money greater than the amount determined to be owed under a valid legal judgment, and thereby used a legal process for a purpose other than that for which it was designed. If such a misuse is established, the Court must go on to determine if the defendants' primary purpose for so doing was, as alleged, to pressure the plaintiff into paying money to National that the plaintiff did not owe it under a valid and specific legal judgment, to wit: the stipulated judgment in the National Action. Thereafter, if the defendants' liability is so established, the Court must determine what damages, if any, the plaintiff is entitled to recover as a result of the defendants' proven abuse of process. To that end, it must first determine what injuries and losses the plaintiff has suffered as a result of the defendants' alleged abuse of process, then award it compensatory damages therefor. In addition, if it further determines that the defendants' actionable conduct was malicious, it must award the plaintiff punitive damages.

II. FINDINGS OF FACT

1. On December 17, 1996, National Loan Investors, L.P. ("National" or "NLI"), as plaintiff in a case then pending in this Court entitled National Loan Investors v. Suffield Development Associates Limited Partnership et al., Docket No. CV 91-0391286 S (the "National Action"), joined with all defendants in that Action — including the current plaintiff, Suffield Development Associates, Limited Partnership ("SDA"), and four related persons or entities³ — in moving this Court for the entry of a Stipulated Judgment of Strict Foreclosure ("Stipulated Judgment") in favor of National and against all defendants. The Stipulated Judgment was negotiated on behalf of the parties over a period of several weeks by both their principals, William Smith for National and James Sutton for SDA, and their counsel in the National Action, Attorneys Joel Sable and James W. Oliver of Berman and Sable for National and Attorney Richard P. Weinstein of Weinstein Wisser for SDA.

3 Such related persons or entities were SDA's general partner, Suffield Development Corporation, and its three principals, James G. Sutton, Barrett L. Krass and James J. Heneghan.

2. Among the terms of the Stipulated Judgment, as finally agreed to by the parties, were the following:

1. The Defendants agree to stipulate to the entry of Judgment of Strict Foreclosure, with law days commencing on January 6, 1997;

2. The Defendants agree to stipulate to the entry of a deficiency judgment against [SDA] in favor of N[ational] in the amount of Three Hundred Seventy-five Thousand ($375,000) Dollars, which judgment shall be satisfied only by proceeds from a certain Lender Liability Judgment in favor of [SDA] in a certain civil action known as Suffield Development Associates, L.P. v. Society for Savings, Docket No. CV 94-0534196 S.

3. The Defendants and N[ational] agree that the above-referenced deficiency judgment, together with statutory interest thereon, shall be satisfied only from proceeds of the Lender Liability Judgment received by the defendant limited partnership, as follows:

a) Fifteen percent (15%) of the Lender Liability Judgment, including statutory interest, if the proceeds received are equal to or exceed One Million Three Hundred Thirty-three Thousand Three Hundred Thirty-three and 33/100 ($1,333,333.33) Dollars;

b) Two Hundred Thousand ($200,000) Dollars from the Lender Liability Judgment, if the proceeds received fall between Two Hundred Thousand ($200,000) Dollars and One Million Three Hundred Thirty-three Thousand Three Hundred Thirty-three and 33/100 ($1,333,333.33) Dollars;

c) All proceeds from the Lender Liability Judgment if the proceeds received fall between One ($1.00) Dollar and Two Hundred Thousand ($200,000) Dollars. In the event that the defendant receives no proceeds from the Lender Liability Judgment, N[ational] agrees to accept One ($1.00) Dollar in full satisfaction of said deficiency.

4. Suffield agrees that it will not object to or oppose the efforts of N[ational] to secure said deficiency judgment by means of a garnishment or execution duly served upon Bank of Boston Connecticut. N[ational] agrees that it shall take no further action to collect on said Lender Liability Judgment and further agrees that it shall have no control over the resolution or disposition of the Lender Liability Judgment.

5. Richard P. Weinstein hereby consents to and does hereby subordinate any and all attorney liens which he or his law firm may have against the above-referenced Lender Liability Judgment in favor of N[ational] with respect to the first Two Hundred Thousand ($200,000) Dollars in proceeds of said Lender Liability Judgment.

. . .

3. When the Stipulated Judgment was negotiated and agreed to by National and SDA, the Lender Liability Judgment therein referenced, from which the $375,000.00 deficiency judgment was to be satisfied, was on appeal before the Connecticut Supreme Court. The amount of that Judgment, as it had been rendered by the trial court upon the verdict of a jury on SDA's claim of breach of contract, was $2.5 million.

4. On March 3, 1998, the Connecticut Supreme Court reversed the judgment of the trial court in the Lender Liability Action on the ground that there was insufficient evidence to support the jury's finding that SDA and Society for Savings had ever entered into a binding contract. Suffield Development Associates Ltd. Partnership v. Society for Savings, 243 Conn. 832, 845, 708 A.2d 1361 (1998). Instead, however, of directing the entry of a final judgment for Society of Savings, the Court remanded the case for a new trial on SDA's alternative claim of promissory estoppel, which SDA had duly pleaded and attempted to prove at trial, but the jury had never decided because of its finding of breach of contract. Id., 846.

5. After the remand of the Lender Liability Action for a new trial on SDA's alternative claim of promissory estoppel and an initial, abortive attempt to retry the case in the Hartford Superior Court resulted in a mistrial, the case was transferred to the Complex Litigation Docket in Norwich, where a second retrial was begun before Judge Joseph Q. Koletsky. Near the end of the second retrial, SDA and Bank Boston Connecticut ("Bank Boston"), as successor-in-interest to Society for Savings, by and through their counsel, Attorney Weinstein for SDA and Attorney Ben M. Krowicki of Bingham Dana for Bank Boston, finally settled the Action. Under the parties' settlement agreement (the "Lender Liability Settlement"), which was not reduced to writing but was put on the record before Judge Joseph Koletsky in open court when the Action was withdrawn, BankBoston agreed to pay SDA the gross sum of $1.5 million on or before May 13, 1999, in full satisfaction of all of its pending claims.

6. At some point after the Supreme Court vacated its $2.5 million judgment in the Lender Liability Action, SDA decided, without input from its counsel, that any monies recovered in the Lender Liability Action on its alternative claim of promissory estoppel could not be considered "proceeds from a certain Lender Liability Judgment in favor of Suffield," within the meaning of Paragraph 2 of the Stipulated Judgment in the National Action. Accordingly, after settling the Lender Liability Action with Bank Boston for $1.5 million, it instructed Attorney Weinstein to inform National that National was not entitled to any proceeds from the Lender Liability Settlement. Instead, it took the position that since it had received no proceeds from the Lender Liability Judgment, but only from the Lender Liability Settlement, National was only entitled, under Paragraph 3(c) of the Stipulated Judgment, to receive One ($1.00) Dollar in full satisfaction of its deficiency judgment.

7. SDA first informed National of its settlement of the Lender Liability Action with BankBoston, and of its above-described position concerning the amount it thereby owed to National under the Stipulated Judgment, in a telephone conversation between its counsel, Attorney Weinstein, and BSO's senior partner, Attorney Joel Sable, on April 22, 1999. In the course of that conversation and in follow-up conversations between them, Attorney Weinstein: (a) informed Attorney Sable that the amount of the Settlement was $1.5 million; (b) acknowledged his client's position that it had received no proceeds from the Lender Liability Judgment would probably be contested by National, and thus volunteered to file a declaratory judgment action to put the parties' dispute on that issue before the court; and (c) offered, despite his client's position that it owed National no part of the Lender Liability Settlement proceeds, to hold $200,000.00 of those proceeds in escrow pending the outcome of the declaratory judgment action. The latter sum represented the total recovery to which National would be entitled under Paragraph 3(b) of the Stipulated Judgment if, contrary to SDA's argument, proceeds of the Lender Liability Settlement were deemed to constitute "proceeds of a certain Lender Liability Judgment," and if, as he further represented to Attorney Sable, the total of such proceeds, net of attorneys fees, was less than $1,333,333.33 but greater than or equal to $200,000.00.

8. At some point between April 22 and April 28, 1999, after having one such conversation with Attorney Weinstein, Attorney Sable informed his partners, Attorney Oliver and Attorney Michael Berman, of what Attorney Weinstein had told him.⁴ Attorney Oliver responded to this news by asking Attorney Sable certain questions about the details of the Lender Liability Settlement which Attorney Sable was unable to answer, including whether the $1.5 million payment constituted the gross or net proceeds of the Settlement, and whether, in addition to that sum, the Settlement Agreement contemplated that SDA would receive other valuable consideration of any sort.

4 The latter date is the latest date on which Attorney Oliver could have learned of the Lender Liability Settlement from Attorney Sable, for he testified both at his deposition and at trial that he had learned of the Settlement before arguing "the Carabetta case" against Attorney Wisser in the Appellate Court. The Court hereby takes judicial notice of the fact that Attorneys Wisser and Oliver presented oral argument before the Appellate Court in Federal Deposit Ins. Corp. v. Carabetta, 55 Conn.App. 369, 739 A.2d 301, cert. denied, 251 Conn. 928, 742 A.2d 362 (1999), on April 28, 1999.

9. Thus it was that on April 29, 1999, Attorney Oliver telephoned Attorney Ben Krowicki, Bank Boston's counsel in the Lender Liability Action, to request further information concerning the Settlement. When Attorney Krowicki demurred to this request, suggesting that Attorney Oliver redirect his inquiry to Attorney Weinstein, Attorney Oliver informed him that, in light of SDA's determination to pay National nothing despite its claimed entitlement to payment under the Stipulated Judgment in the National Action, he might be required to garnish the Settlement proceeds then held for SDA by BankBoston to protect National's rights. Attorney Krowicki informed Attorney Oliver that the Bank had no interest in getting caught in the middle of a dispute between SDA and National, and that it certainly did not wish to participate in an interpleader action concerning the contested funds. Even so, he persisted in his suggestion that Attorney Oliver obtain the details of the Settlement from Attorney Weinstein. Not wishing to press Attorney Krowicki further if he was uncomfortable discussing the details of the Lender Liability Settlement, Attorney Oliver did not ask him if the Settlement had been reduced to writing or placed on the record before Judge Koletsky, and failed to inform him that all he really wanted to do was to confirm the accuracy and completeness of that what Attorney Weinstein had already told Attorney Sable about the Settlement.

10. Shortly after receiving Attorney Oliver's call, Attorney Krowicki telephoned Attorney Weinstein to inform him of its contents, including, particularly, Attorney Oliver's suggestion that he might garnish the proceeds of the Lender Liability Settlement then held for SDA by BankBoston. Upon learning of Attorney Oliver's call, which he understood to be a rejection by Berman and Sable of his offer to hold $200,000 in escrow pending the resolution of a declaratory judgment action which he would file, Attorney Weinstein telephoned Attorney Oliver to complain that there was no need to involve BankBoston in SDA's dispute with National. When asked by Attorney Oliver for additional details concerning SDA's Lender Liability Settlement with BankBoston, Attorney Weinstein told him that, although the size of the Settlement had already been communicated to Attorney Oliver's partner, Attorney Sable, its particulars were truly irrelevant to the dispute between National and SDA since the proceeds of the Settlement were not "proceeds of a certain Lender Liability Judgment," within the meaning of the Stipulated Judgment in the National Action, and thus National was not entitled to any part of them. The call ended abruptly and with considerable bad feeling.

11. At the end of his conversation with Attorney Oliver, Attorney Weinstein wrote a pointed letter to Attorney Sable, whom he had known for years, expressing great disappointment that BSO was planning to "garnish Ben Krowicki when I assured you that I would hold the money in escrow in regard to NLI until there can be a determination or settlement." Plaintiff's Exhibit # 9 (R. Weinstein letter to J. Sable of 4/29/99). "I always thought," wrote Attorney Weinstein,

that we could practice law in a forthright manner. The conversation I had late this afternoon with Oliver raises serious questions about the same. Whether you like it or not, your best argument is there is an ambiguity in the settlement with NLI. In fact, reading the settlement literally, your client is not owed one dime. Nevertheless, I agreed to hold the money in escrow. I encourage your firm to rethink its actions and the way it does business in the community as to whether or not it needs to take some action to name Krowicki or Bingham Dana.

12. Upon receiving Attorney Weinstein's April 29, 1999 letter, Attorney Sable showed it to his other partner, Attorney Michael Berman, who together with Attorney Oliver and William Smith of National had been formulating National's response to SDA's claim that it owed National nothing from the proceeds of the Limited Liability Settlement under the terms of the Stipulated Judgment.

13. Attorney Oliver has testified that throughout the period between April 29 and May 4, 1999, he remained uncertain about the details of SDA's Lender Liability Settlement with Bank Boston because all he had learned about it was that the amount of the Settlement was $1.5 million. In particular, he claims not to have known if the $1.5 million represented the gross proceeds of the Settlement or the net proceeds after attorneys fees had been deducted from it, whether other consideration had been given or was to be given to SDA in exchange for the Settlement, or thus whether the true value of the Settlement actually exceeded $1.5 million. Even so, he concedes that, apart from posing questions to Attorneys Weinstein and Krowicki as to the details of the Settlement, he never took other steps to ascertain those matters, such as by ordering a transcript of the hearing before Judge Koletsky where the stipulation was put on the record in open court.

14. Attorney Oliver claims that over the weekend following the April 29 conversation, it suddenly dawned on him that since National already had a Stipulated Judgment in its Action against SDA, it could therefore execute on the proceeds of SDA's Settlement with BankBoston, and thus take direct possession of the disputed funds rather than seeking to garnish or attach them, which might take more time and risk their transfer from BankBoston to SDA or Attorney Weinstein, in whose hands they assertedly might disappear and be lost forever. Leaving the disputed funds in Attorney Weinstein's control was assertedly unacceptable to his client's principal, William Smith, who had a deep distrust of Attorney Weinstein and his law firm that was not shared by Attorney Oliver or BSO.

15. The amount on which Attorney Oliver claimed that National had a right to execute was $375,000.00, because: (a) that was the full amount of the deficiency judgment, as set forth in the Stipulated Judgment; (b) SDA had assertedly failed to give it sufficient information about the Lender Liability Settlement to determine if a lesser amount was actually owed to it under the satisfaction provisions in Paragraph 3 of the Stipulated Judgment; (c) Paragraph 4 of the Stipulated Judgment specifically provided that SDA would not object to efforts by National to "secure said deficiency judgment by means of a garnishment or execution duly served upon Bank of Boston Connecticut[;] and (d) two years earlier, in the early stages of BankBoston's appeal to the Supreme Court from the Lender Liability Judgment, National had served a $375,000.00 execution upon BankBoston, later returned as unsatisfied, to which SDA had not objected.

16. Attorney Berman, who consulted with Attorney Oliver in that time frame, similarly contends that an execution in the amount of $375,000.00 was appropriate because that was the face value of the deficiency judgment. The value selected did not reflect any calculation based upon the sliding scale formula set forth in paragraph 3 of the stipulated judgment and contained no additional sum for costs or interest due on the deficiency judgment. Attorney Berman also claims to have believed that SDA had repudiated the agreement by refusing to pay National the amount called for by the satisfaction provisions of paragraph 3. Interestingly, however, he suggests that one avenue available to National in light of SDA's alleged repudiation was to seek to reopen the Stipulated Judgment in order to collect its entire deficiency, which exceeded $1.3 million.

17. Against this background, despite his awareness of SDA's desire to obtain a judicial determination as to how much, if anything, it owed to National under the Stipulated Judgment, of Attorney Weinstein's stated willingness, to that end, to file a declaratory judgment action to put the parties' dispute before the court for decision and to hold the contested portion of the Lender Liability Settlement proceeds in escrow during the pendency of that action, and of his own lack of any factual basis for believing that the gross amount of the Lender Liability Settlement exceeded $1.5 million, Attorney Oliver applied to this Court for an execution in the amount of $375,000.00. In support of this application, Attorney Oliver represented to this Court that National's "TOTAL UNPAID DAMAGES AND COSTS" in the National Action were $375,000.00, although, in light of what he then knew about the Lender Liability Settlement, the maximum amount he could conceivably have claimed entitlement to, exclusive of interest, under paragraph 3(a) of the Stipulated Judgment, was 15% of $1.5 million, or $225,000.00.

18. Later in the day on May 4, 1999, after the execution had been obtained and put in the hands of the sheriff for service upon Bank Boston, Attorney Berman wrote and sent a letter to Attorney Weinstein "FOR SETTLEMENT AND COMPROMISE PURPOSES ONLY," which read as follows:

Dear Richard,

This letter is in response to your letter to Joel Sable of April 29, 1999.

At the outset, there is no ambiguity in the Stipulated Judgment of Strict Foreclosure ("Stipulation"). What is clear is that your clients are attempting to get out of an obligation to pay National Loan Investors ("NLI"). I was glad to see, at least, that your clients are not certain of their position (hence the escrow offer).

Since the proceeds arise from the action entitled Suffield Development Associates, L.P. v. Society for Savings, Docket No.: CV-94-0534196-S, the attachment and execution process by NLI served on Bank of Boston Connecticut ("BankBoston") with respect to the proceeds of that case, remains in place and in full force and effect. We are this day, notifying BankBoston's counsel that NLI intends to pursue its rights under the attachment and execution. In fact, due to your clients' unauthorized, unilateral decision to ignore their obligation, NLI intends to make a claim against the entire amount of the recovery of proceeds in that case to the extent of NLI's full deficiency, which is far in excess of $1 million, and will be filing papers to reopen the Stipulation as to the deficiency in order to obtain a judgment for the entire amount of NLI's deficiency claim.

I will urge NLI to accept 15% of the gross proceeds from the BankBoston case provided payment is received by us on or before May 11, 1999.

* * * *

Very truly yours, /ss/ Michael P. Berman

* * * *

Plaintiff's Ex. #10 (M. Berman letter to R. Weinstein of 5/4/99).

19. Earlier in the day on May 4, 1999, before he learned that Attorney Oliver had obtained the execution on behalf of National and caused it to be served on BankBoston, Attorney Weinstein, on behalf of SDA, finished drafting and delivered to a sheriff for service a writ, summons and complaint designed to initiate the Declaratory Judgment Action, in which SDA would contest National's claimed right to recover part of the Lender Liability Settlement proceeds to satisfy its deficiency judgment in the National Action. The Declaratory Judgment Action, which was made returnable to the Hartford Superior Court, was originally captioned Suffield Development Associates Limited Partnership v. National Loan Investors, L.P., Docket No. CV 99-0589326 S.⁵

5 Upon later transfer to Judge Koletsky on the Complex Litigation Docket in Norwich, the Action was reassigned Docket No. (X04) CV 99-0118051 S.

20. On May 5, 1999, after learning from Attorney Krowicki that a $375,000.00 execution had been served upon Bank Boston, Attorney Weinstein's partner, Attorney Kerry Wisser, telephoned Attorney Oliver to complain about the execution and demand that it be withdrawn forthwith. Attorney Wisser's words of protest and warning, as recorded on Attorney Oliver's answering machine, were in relevant part as follows:

. . . I am giving you this warning in advance; I am aware that you served an execution for $375,000. I have read the agreement more than once. Your filing of an execution of that amount of money is an absolute per se abuse of process and misuse of process. Under that agreement, at most, and I don't conce[de] this at all, but at most, you would be entitled to $225,000, but when you take attorneys fees out of what they are getting, at most if you are entitled to anything you are entitled to $200,000. There is no way, shape or form you could ever possibly read that you are entitled to $375,000. You know that, you know that full well and you can't claim a breach of the agreement and then go get an execution under the agreement, so the bottom line is there is no way to shake out the fact that an execution for $375,000 is wrong . . . I am going to send you a letter tomorrow that demands that you reduce that execution to[,] at best, $225,000 without any concession that you are entitled to anything. If that is not done immediately I am going to immediately file a lawsuit against your client and your firm for abuse of process and misuse of process and then we can go to war. This is going to be the only warning except for the letter you get tomorrow . . . This should never have come to this level, ever.

* * * *

Defendants' Ex. Q (Transcript of K. Wisser call to J. Oliver of 5/5/99).

21. Later on May 5, 1999, as he had promised in his earlier phone call, Attorney Wisser wrote Attorney Oliver a letter to demand that National promptly release its $375,000.00 execution against the proceeds of the Lender Liability Settlement then held for SDA by BankBoston or he, Attorney Wisser, would institute suit for abuse of process on behalf of SDA against National, BSO and Attorney Oliver. The essential points made by Attorney Wisser in this letter were: (a) that even if National were entitled to a portion of the proceeds of the Lender Liability Settlement, which SDA did not concede, National had "no colorable claim to . . . an execution in the amount of $375,000.00[;] Defendants' Ex. R (Letter from K. Wisser to J. Oliver of 5/5/99), p. 1; (b) that, although the Stipulated Judgment entitled National to serve an execution on BankBoston to secure its deficiency judgment, that provision did not entitle it to execute on a greater sum than that which it was entitled to recover under the deficiency judgment; id., p. 2; (c) that because "the gross settlement proceeds [in the Lender Liability Action] are $1.5 million, . . . the maximum you could receive [under paragraph 3 of the Stipulated Judgment] is 15% of the gross settlement, which is $225,000.00[;]"; id. and (d) that because "the language of the [Stipulated Judgment], (once again assuming your client is entitled to any funds) clearly establishes that your client is not entitled to 15% of the gross proceeds, but rather, the proceeds after attorneys fees have been reduced[, . . . and] the net settlement proceeds will be less than $1,333,333,33, . . . the maximum amount of any alleged execution should be $200,000.00." Id.

22. Despite this demand and threat of legal action, the execution was not withdrawn.

23. In the week following the service of the execution and the commencement of the Declaratory Judgment Action, Attorney Wisser for SDA and Attorney Oliver for National attempted without success to reach a satisfactory resolution of their dispute as to how National's claimed interest in part of the proceeds of the Lender Liability Settlement might be protected to the mutual satisfaction of their clients pending the final adjudication of the Declaratory Judgment Action. Attorney Wisser initially urged Attorney Oliver to accept Attorney Weinstein's original offer to hold $200,000.00 in escrow, arguing that, under the terms of the Stipulated Judgment, $225,000.00 was the greatest sum against which National could colorably claim the right to execute. Attorney Oliver's response to this suggestion was that his client was actually entitled to recover, and thus to execute against, the greater sum of $345,483.00, comprised of: (a) $225,000.00, representing 15% of the gross proceeds of the Lender Liability Settlement, as assertedly made payable under paragraph 3(a) of the Stipulated Judgment; (b) $89,075.00, representing 10% annual interest on the $375,000.00 deficiency judgment, calculated from the date of judgment, December 17, 1996, until the date of the execution, May 4, 1999; and (c) $31,408.00, representing the sheriff's costs for the service of the execution, calculated at the statutory rate of 10% of all funds against which the execution was served. At some point in their series of conversations, Attorney Wisser suggested to Attorney Oliver that Weinstein Wisser would be willing to hold the sum calculated by Attorney Oliver in a Client Funds Account or a special bank account until the conclusion of the Declaratory Judgment Action. That proposal, however, was flatly rejected by William Smith of National, whose distrust of Weinstein Wisser and its attorneys was extreme. Indeed, Smith went so far as to insist that SDA be presented with a settlement proposal that included provisions under which Weinstein Wisser would never again take part in any litigation against National. Attorneys Oliver and Sable found this proposal to be so repugnant, inadvisable, and potentially illegal or unethical, that they never presented it to SDA despite their client's instructions.

24. By the end of the Wisser-Oliver negotiations, Attorney Wisser decided, on behalf of SDA, to file a Motion to Open Withdrawal to Enforce Settlement, by which he sought to enjoin BankBoston from releasing the Lender Liability Settlement proceeds to National notwithstanding the service of the execution. The latter Motion was served not only on BankBoston but on National, through Berman and Sable.

25. On May 17, 1999, the parties attended a hearing before Judge Koletsky at which the Motion to Open Withdrawal to Enforce Settlement was orally argued. At the conclusion of the argument, Judge Koletsky granted the motion and ruled that since the execution had been improperly obtained and served, BankBoston must turn over the contested funds to SDA notwithstanding the execution. Through Attorney Oliver, National promptly gave oral notice of its intent to appeal.

26. After the hearing was over, National promptly filed an appeal from Judge Koletsky's order and took immediate steps to protect its interests in the disputed Settlement proceeds which had been the subject of that order. Through Attorney Oliver, National first wrote to Attorney Krowicki to advise BankBoston that the appeal had been filed, and thus to advise him that, in his view, the appealed-from order to turn the contested proceeds over to SDA should not be followed because it had been automatically stayed. Thereafter, when Attorney Weinstein wrote to Attorney Oliver to advise him that, in his view, his efforts to persuade Attorney Krowicki not to release the funds at once were contumacious because the filing of the appeal had not automatically stayed Judge Koletsky's order, BankBoston moved for instructions from the Court as to the applicability of the automatic stay pending appeal and National moved for a stay in case Judge Koletsky determined that the appeal had not automatically stayed the order. Meanwhile, SDA responded to National's efforts to delay the turnover of the contested funds both by filing a motion for contempt against National with Judge Koletsky and filing a memorandum in opposition to its motion for stay. In that same time frame, by and through Attorney Weinstein, it commenced the instant action.

27. On June 18, 1999, after more abortive efforts by Attorneys Weinstein, Berman and Sable to reach a mutually satisfactory agreement as to how to protect National's claimed interest in the disputed Settlement proceeds pending final adjudication of the Declaratory Judgment Action, the parties attended a hearing before Judge Koletsky to argue their pending motions, including BankBoston's motion for instruction and National's motion for stay. Instead of hearing argument on those motions, however, Judge Koletsky attempted to promote the efficient resolution of the parties' underlying dispute, as to which of them was entitled to the $375,000.00 in Lender Liability Settlement proceeds against which National had executed, and of their immediate dispute concerning what should be done with those proceeds while the underlying dispute was being adjudicated. First, he proposed that two related actions then pending in Hartford — the original National Action, in which the Stipulated Judgment had been entered, and the recently filed Declaratory Judgment Action, in which the meaning of the Stipulated Judgment's payment terms was contested — be consolidated with the Lender Liability Action on the Complex Litigation Docket in Norwich so that all related issues could be heard and decided in a single forum. All parties agreed to this proposal, with the understanding that a hearing would be held in the Declaratory Judgment Action by the end of the summer. Second, Judge Koletsky urged the parties to agree how and by whom the disputed Settlement proceeds should be held pending final adjudication of the Declaratory Judgment Action to avoid the unnecessary time and expense of an appeal from his May 17, 1999 ruling or of an interpleader action by BankBoston.

28. Initially, SDA rejected National's new proposal that the entire $375,000.00 against which it had executed be held in a joint account controlled by Attorney Weinstein and Attorney Sable as co-escrowees. It also rejected National's alternative proposal that the money be held in trust by a neutral financial institution such as Webster Trust, citing the unnecessary expense of such an escrow arrangement. National then rejected SDA's counterproposal that the entire $375,000.00 be held by Attorney Weinstein in his law firm's Client Account, where it could accumulate interest pending the outcome of the Declaratory Judgment Action. Attorney Berman, speaking for National, clarified for the record that, although he and his law firm had complete trust in Attorney Weinstein, his client did not and thus it refused to consent to such an escrow arrangement. Finally, it was proposed and agreed by all parties that the money would be placed, at no charge, in an interest-bearing account of Bingham Dana LLP, the law firm of BankBoston's counsel, Attorney Krowicki, where it would remain, subject to the initial execution served by National upon Bank Boston, until further order of the Court. By this arrangement, Attorney Berman, ensured, as he had insisted on behalf of National, that the first priority of its interest in the escrowed money be established, in relation to that of any of SDA's other creditors who might file a claim against it. In exchange for the arrangement to escrow the money under its initial execution, which required and resulted in the vacation by Judge Koletsky of his May 17, 1999 order that the execution was invalid and could not be enforced, National agreed to withdraw its appeal and its motion to stay, both of which had thereby been rendered moot.

29. Through Attorney Weinstein, who made it clear on the record before Judge Koletsky that, in his and his client's view, the execution had always been and continued to be unlawful, SDA agreed to this escrow arrangement for three reasons. First, it would eliminate the need for BankBoston to pursue a potentially costly interpleader action, which would diminish the Settlement proceeds. Second, it would ensure that at least moderate interest would accumulate on the proceeds pending final adjudication of the Declaratory Judgment Action. Third, and of special relevance here, it would not require SDA to abandon its motion for contempt against National or its claim for damages in this action.

30. Within one week of the June 18, 1999 hearing, Attorney Krowicki set up and deposited the disputed $375,000.00 on which National had executed into an interest-bearing escrow/client's funds account in the Hartford branch of BankBoston. The account which was known as the Suffield Development Associates Limited Partnership Escrow Agent By Bingham Dana LLP account bore account number 1183-58871.

31. On August 30, 1999, Judge Koletsky held a hearing on the merits of Declaratory Judgment Action and heard reargument on SDA's motion for contempt against National in the National Action. In his argument on the Declaratory Judgment Action, Attorney Weinstein initially pressed his longstanding claim that National was not entitled, under the Stipulated Judgment in the National Action, to any proceeds of that Settlement because they were not "proceeds of a certain Lender Liability Judgment," which the Supreme Court had set aside. In addition, he argued that even if National was entitled to part of the Lender Liability Settlement proceeds, all it could conceivably recover, under paragraph 3(b) of the Stipulated Judgment, was $200,000.00, since net proceeds of the Settlement, after attorneys fees were deducted from gross proceeds, were less than $1,333,333.33 but greater than or equal to $200,000.00. National, through Attorney Oliver, rejected both of these arguments as follows. First, he insisted that the proceeds of the Lender Liability Settlement were obviously proceeds of the Lender Liability Judgment, within the meaning of the Stipulated Judgment in the National Action, for they were realized in a subsequent, post-remand stage of that very Action, albeit on a different theory of liability. Second, he claimed that the total sum National was entitled to recover under the Stipulated Judgment had grown to $358,931.80, comprised of: (a) 15% of $1.5 million, the gross proceeds of the Lender Liability Settlement, for a total of $225,000.00, which was assertedly made payable under paragraph 3(a) of the Stipulated Judgment; (b) 10% annual interest on the $375,000.00 deficiency judgment, calculated from the date of judgment, December 17, 1996, until the date of the hearing, August 30, 1999, for a total of $101,301.64, which was also assertedly made payable under paragraph 3(a) of the Stipulated Judgment; and (c) sheriff's costs for the service of the execution totaling $32,630.16, calculated at the statutory rate of 10% of all funds against which the execution was served.

At the end of the hearing, the Court ruled from the bench that, under the Stipulated Judgment in the National Action, National was entitled to $200,000.00 from the proceeds of the Lender Liability Settlement, because such proceeds constituted "proceeds of a certain Lender Liability Judgment" within the meaning of the Stipulated Judgment, and the amount of such proceeds, net of attorneys fees, was less than $1,333,333.33 but greater than or equal to $200,000.

32. With respect to SDA's motion for contempt against National, which Judge Samuel Freed had originally denied on the papers when it mistakenly appeared as a non-arguable matter on the Hartford Short Calendar, but later referred for reargument to Judge Koletsky when the case was transferred to Norwich, Attorney Weinstein argued as follows that the execution was manifestly excessive:

Very briefly, your Honor, . . . I think that when a lawyer certifies to the clerk's office that the lawyer — and in effect to the Court, that his client is entitled to an execution in a certain amount, the lawyer is certifying as a matter of law, in effect, that that sum is due and owing.

Th[e] sum [of $375,000.00] was not due and owing by any stretch of anyone's imagination. I don't care what kind of mathematical hurdles we jump through, contrary to the suggestion of counsel that somehow that was the only way that N[ational] could protect itself.

Plaintiff's Ex. #4 (Transcript of 8/30/99 hearing before Koletsky, J.), p. 47.

33. Attorney Oliver responded to the foregoing argument by claiming that he did not know and was frustrated in his efforts to learn the amount of the Lender Liability Settlement before he applied for the $375,000.00 execution. On this score, he made the following statement to Judge Koletsky:

A stipulated judgment of deficiency was entered in the Hartford Superior Court in an amount and working down. At the time N[ational] — I should say legal counsel for N[ational] heard about the settlement, we made requests. Of the attorneys involved in the lender liability suit to confirm for us in writing the nature and scope of the settlement. I know because I was that attorney.

Phone calls were made to Attorney Weinstein's office. I believe Attorney Weinstein was out and I spoke to his partner, Attorney Kerry Wisser. No writing was forthcoming.

We then made phone calls to Attorney Ben Krowicki at Bingham Dana who represented the Bank of Boston, in order to determine once again what the nature and scope of the settlement was.

Attorney Krowicki was very polite. But he said he was not at liberty to discuss those terms. At the same time, we were receiving correspondence from Attorney Weinstein indicating that our — and I'm quoting him in his letter — your client is not entitled to one dime. And it is in this context when we knew that a check was shortly going to be cut. Maybe it had already been cut by the Bank of Boston to go to S[DA], that we applied to the bank for the execution.

We applied to the bank for the execution in the amount that we did because opposing counsel would not cooperate, despite the fact that his client had entered into a contract which would have required them in good faith to disclose the amount, so we would know that that money wasn't going to disappear. We're not getting that cooperation. What were we to do?

Id., pp. 50-51.

34. Attorney Weinstein promptly disputed Attorney Oliver's recitation of the relevant facts, noting that before the execution was served he had expressly told Attorney Oliver's partner, Attorney Sable, that the total amount of the Settlement was $1.5 million. He added, moreover, without contradiction by Attorney Oliver, that he had never received any correspondence from anyone at BSO demanding written confirmation of the amount of the Settlement. Finally, when pressed by Judge Koletsky to indicate if he contested Attorney Weinstein's assertion that he had told Attorney Sable the amount of the Settlement, Attorney Oliver conceded that he did not. Id., p. 53. It was his client, he claimed, who wanted the written confirmation, and yet he had never requested such written confirmation in writing, either before or after the challenged execution was obtained and served. Even so, when asked by the Court if he had any other reason for the amount of the execution, Attorney Oliver's final words on the subject were as follows:

MR. OLIVER: Your Honor, the sole reason was that we had not gotten confirmation as to the amount. That was the sole reason . . . I mean, if we had attached — if we had executed for a smaller amount without confirmation, and it had turned out to be a larger amount —

THE COURT: And the funds went south —

MR. OLIVER: — we would have had a real problem.

Id., p. 56.

35. On this record, in light of Attorney Oliver's concession as to what Attorney Weinstein had told Attorney Sable about the amount of the Settlement before the challenged execution was obtained, Judge Koletsky "accept[ed] as proved that National was well aware of a [$1.5 million] settlement between S[DA] and BankBoston." Id., p. 57. Thus, he also "accept[ed] as proved that there's no legitimate way that $375,000 could have been the actual figure owed[.]" Id., 58. "Nonetheless," he continued, "while the Court does not approve of or condone the practice, it does not amount to a contempt of court." Id.

36. Judge Koletsky's oral decision in the Declaratory Judgment Action was further articulated in a written Memorandum of Decision dated December 8, 1999. So articulated, the decision was appealed to the Appellate Court, which ultimately affirmed it on November 28, 2000. Suffield Devel. Assoc. L.P. v. National Loan Inv., 60 Conn.App. 842, 763 A.2d 1049 (2000). The $375,000 held in escrow by Attorney Krowicki, plus interest, was released on December 15, 2000. Of that sum, National received $190,000.00, representing $200,000.00 in proceeds from the Lender Liability Settlement, as ordered by the trial court and affirmed by the Appellate Court, less $10,000.00 to settle SDA's claim against it in this action, and SDA received the remainder, including all interest that had accumulated on the money in escrow since the escrow account was opened on June 25, 1999.

37. In the years since the escrow money was released, while this action has been pending, SDA has maintained its existence as a business entity, and to that end it has continued to file annual reports, file annual state and federal income tax returns, and pay annual minimum state income taxes totaling $500 ($250/yr.) for 2001 and 2002 and $600 ($300/yr.) for 2003 and 2004.

38. As further specified in this Memorandum of Decision, records maintained by the law firm of Weinstein Wisser demonstrate that between May 4, 1999 and June 25, 1999, the plaintiff incurred reasonable and necessary attorneys fees totaling $6,225.00 to resist, do away with or attempt to mitigate the adverse consequences of the defendants' challenged $375,000.00 execution.

III. LEGAL ANALYSIS OF CLAIM A. Liability for Abuse of Process 1. Alleged Misuse of Process

In this case, plaintiff SDA has clearly established that on May 4, 1999, when Attorney Oliver first obtained and served the challenged $375,000.00 execution on behalf of National, National had no right to recover that amount from SDA under the Stipulated Judgment in the National Action. Instead, for the reasons that follow, National's only right of recovery under the Stipulated Judgment was limited, by the relevant terms thereof, to the sum of $225,000.00. Hence, the defendants' execution in the amount of $375,000.00 was an improper overexecution and, as such, a misuse of legal process.

The Stipulated Judgment provided, in paragraph 2 thereof, that the amount of National's deficiency judgment against SDA was $375,000.00. Even in that paragraph, however, SDA and National expressly agreed that the "judgment shall be satisfied only by proceeds from a certain Lender Liability Judgment in favor of S[DA] in a certain civil action known as Suffield Development Associates, L.P. v. Society for Savings, Docket No. CV 94-0534196 S." Such language unambiguously restricted the source of funds from which the deficiency judgment was to be satisfied to the proceeds of the referenced Lender Liability Judgment. In addition, it implicitly assured SDA that notwithstanding the full face value of National's deficiency judgment, it could never be required to pay that full amount to National unless it received sufficient funds, as proceeds of its Lender Liability Judgment, to make that possible.

The limitations on the source and amount of SDA's required payment to National to satisfy its deficiency judgment which were only suggested in paragraph 2 of the Stipulated Judgment were then made more specific and considerably tightened in paragraph 3. There, the parties agreed as follows that the only way in which SDA would ever be required to satisfy that deficiency judgment would be to pay National the sum determined by applying the sliding scale formula described in that paragraph to the proceeds received by it from its Lender Liability Judgment, which was then on appeal:

[T]he above-referenced deficiency judgment, together with statutory interest thereon, shall be satisfied only from the proceeds of the Lender Liability Judgment in favor of S[DA] in a certain civil action known as Suffield Development Associates, L.P. v. Society for Savings, Docket No. CV94-0534196S, received by the defendant limited partnership, as follows:

a) Fifteen percent (15%) of the Lender Liability Judgment, including statutory interest, if the proceeds received are equal to or exceed One Million Three Hundred Thirty-three Thousand Three Hundred Thirty-three and 33/100 ($1,333,333.33) Dollars;

b) Two Hundred Thousand ($200,000) Dollars from the Lender Liability Judgment, if the proceeds received fall between Two Hundred Thousand ($200,000) Dollars and One Million Three Hundred Thirty-three Thousand Three Hundred Thirty-three and 33/100 ($1,333,333.33) Dollars;

c) All proceeds from the Lender Liability Judgment if the proceeds received fall between One ($1.00) Dollar and Two Hundred Thousand ($200,000) Dollars. In the event that the defendant receives no proceeds from the Lender Liability Judgment, N[ational] agrees to accept One ($1.00) Dollar in full satisfaction of said deficiency.

Contrary to the suggestion made in the testimony of Attorneys Berman, Sable and Oliver, this paragraph was not a satisfaction clause which imposed a default obligation upon SDA to pay National the full face value of its deficiency judgment plus statutory interest if SDA failed or refused to make the payment specifically required of it under the applicable subparagraph thereof. Instead, it made payment under the sliding scale formula — and then "only from [proceeds received by it] from the Lender Liability Judgment — SDA's exclusive payment obligation to National under the Stipulated Judgment." Therefore, unless it moved successfully to vacate the Stipulated Judgment on grounds of fraud, duress or mistake so that it might pursue greater damages against SDA, National's only recourse in the event of SDA's failure or refusal to pay money due it under the Stipulated Judgment, or failure to provide it with information needed to the full extent of its entitlement to payment thereunder, was to seek enforcement of that particular payment obligation, such as by filing a motion for contempt or a motion to enforce the judgment according to its terms. Because it had no reversionary right to pursue and collect the full face value of the deficiency judgment in the event of such non-payment or non-cooperation with its efforts to enforce its rights under the Stipulated Judgment, it similarly had no right to serve an execution in that amount.

Against this background, two related questions obviously arise. The first, of course, is how much money was National actually entitled to recover from SDA at the time of the execution, in light of the proceeds it received from the Lender Liability Settlement; and the second, related to (and answered by) it, is whether or not that sum was greater than or equal to $375,000.00, the amount of the challenged execution.

As is more fully described in the Findings of Fact, SDA's threshold position on this issue was that it owed no part of the Lender Liability Settlement proceeds to National, for such proceeds were assertedly not "proceeds of [the] Lender Liability Judgment," within the meaning of the Stipulated Judgment. Accordingly, reasoning that it had received "no proceeds" from Lender Liability Judgment, it claims to have concluded, under subparagraph 3(c) of the Stipulated Judgment, that it owed National just One ($1.00) Dollar in full satisfaction of its deficiency judgment. Even so, well aware that this claim would be disputed, SDA reasonably offered from the outset to have its counsel, Attorney Weinstein, hold the sum of $200,000.00 in escrow until the parties' inevitable dispute on the matter could be presented to and resolved by a court in a declaratory judgment action which Attorney Weinstein would promptly file.

Implicit in this offer, and later made explicit in communications from Attorney Wisser to Attorney Oliver just after the execution was served, was SDA's fixed view that, even if proceeds from the Lender Liability Settlement were ultimately held to be proceeds of the Lender Liability Judgment, the full extent of National's claim to those proceeds could at most be $200,000.00. SDA reached this conclusion by reasoning that the "proceeds received" by it from the Lender Liability Judgment were necessarily net proceeds — that is, gross proceeds less attorneys fees — because amounts payable to it as attorneys fees would never actually be "received by" SDA in the sense allegedly contemplated by the Stipulated Judgment.

Apart from challenging SDA's threshold position that the proceeds of the Lender Liability Settlement did not constitute proceeds of the Lender Liability Judgment, National disagreed with SDA's fallback position that, if it owed National any part of those proceeds, the amount it owed would have to be calculated by applying the sliding scale formula of paragraph 3 to its net proceeds from the Lender Liability Settlement, after deducting for attorneys fees. To the contrary, National and its lawyers, Attorney Oliver and his BSO partners, insisted that the true measure of National's entitlement to payment under the Stipulated Judgment had to be determined by applying the sliding scale formula to SDA's gross proceeds, without first deducting for attorneys fees.

After hearing argument in the Declaratory Judgment Action, Judge Koletsky rejected SDA's threshold argument that its proceeds from the Lender Liability Settlement did not constitute proceeds from the Lender Liability Judgment. He decided, however, that SDA was correct in its fallback position that National's right of recovery with respect to such proceeds was limited, under paragraph 3(b) of the Stipulated Judgment, to $200,000.00, because the total proceeds received by SDA, net of Attorney Weinstein's attorneys fees, were stipulated by all the parties to be less than $1,333,333.33 but not more than $200,000.00. National's later claim of error with respect to this aspect of Judge Koletsky's decision, which was not explained in his Memorandum of Decision but was never made the subject of a motion for articulation, was not reviewed in substance on appeal for failure to create a suitable record for appellate review. Accordingly, it was upheld. Suffield Development A. v. Nat. Loan Investors, 60 Conn.App. 842, 849-52, 763 A.2d 1049 (2000).

Although SDA was a party to the Declaratory Judgment Action, the current defendants — Attorney Oliver and Berman and Sable — were not. Hence, the defendants are not bound by Judge Koletsky's unreviewed decision on this issue in the Declaratory Judgment Action, and the question remains open for this Court to decide in this action as between them and SDA.

In arguing this question, both sides take note of paragraph 5 of the Stipulated Judgment, in which Attorney Weinstein expressly "consent[ed] to and . . . subordinate[d] any and all attorney liens which he or his law firm may have against the above-referenced Lender Liability Judgment in favor of N[ational] with respect to the first Two Hundred Thousand ($200,000) Dollars in proceeds of said Lender Liability Judgment." SDA contends that the purpose of this language was to ensure that National would recover at least $200,000 towards its deficiency judgment even if, as Attorney Weinstein reportedly feared, the Supreme Court substantially reduced the amount of SDA's judgment on appeal. In light of the substantial unpaid attorneys fees he and his law firm had earned doing legal work for SDA in the five-plus years preceding the entry of the Stipulated Judgment, Attorney Weinstein claimed that the provision had been crafted to assure Attorney Sable, on behalf of National, that all of the proceeds of the Lender Liability Judgment would not be used up before distribution simply to pay his attorneys fees.

The defendants respond to this argument by noting that the key question presented is not whether the purpose of the subordination clause was to ensure payment of at least some minimum sum to National, but whether, in calculating that sum, the "proceeds of the Lender Liability Judgment received by the defendant limited partnership," to which the percentage in subparagraph 3(a) was to be applied, should be gross proceeds or net proceeds after deducting for attorneys fees? In essence, the defendants argue that if Attorney Weinstein's substantial attorneys fees were subtracted from gross proceeds first, before the percentage in subparagraph 3(a) were applied to the remainder, there would be no need to subordinate his claims to National's with respect to any of those proceeds, and certainly not to "the first $200,000" of them, for such fees would already have been taken off the top. This is true for two reasons. First, if those fees were subtracted from gross proceeds before the percentage was applied to the remainder, there would be no need to subordinate Attorney Weinstein's interest in the first $200,000 of those fees to the interest of National, for National, by definition, would have no claim to any of them. Similarly, as to that portion of the gross proceeds not deducted for attorneys fees, Attorney Weinstein would, by definition, logically have no competing interest in them to subordinate, for his fees would already have been deducted from gross proceeds.

The Court agrees with the defendants that a more logical reading of the subordination clause is that both Attorney Weinstein's claim and National's claim were understood to apply to the gross proceeds of the Lender Liability Judgment, and thus to the entire amount of the Lender Liability Settlement to which it ultimately led when the case was remanded for a new trial. Hence the conflict between them, which otherwise would not exist, and the need for Attorney Weinstein to subordinate his claim to the first $200,000 of those gross proceeds to National. Because of the existence of that agreement, the parties had a mechanism in place to ensure that if the combined total of National's and Attorney Weinstein's claims exceeded the $1.5 million total of gross proceeds, making full payment of both claims impossible, Attorney Weinstein would subordinate his claim to that of National with respect to the first $200,000 of those proceeds.

The Court concludes, on this basis, that because the gross proceeds of the Lender Liability Settlement were $1.5 million, which exceeded the $1,333,333.33 cutoff between subparagraph 3(a) and subparagraph 3(b) of the Stipulated Judgment, the amount due and owing to National thereunder, calculated at the rate of fifteen (15%) percent of gross proceeds under subparagraph 3(a) thereof, was $225,000.00.

Although Attorneys Berman and Oliver admitted in their trial and deposition testimony that, in originally executing in the amount of $375,000.00, they gave no thought to adding statutory interest to the claimed amount of their judgment, one argument they developed shortly thereafter and consistently featured in later discussions with Attorney Wisser, communications with their client, and arguments before the Court, was that, in addition to the amount of their judgment, they were entitled to execute on an additional amount of approximately $89,000 in statutory interest on the deficiency judgment, representing 10% annual interest on the full amount of the deficiency judgment from the date of the Stipulated Judgment, December 17, 1996, through the date of the execution, May 4, 1999. This argument is also based upon the following portion of paragraph 3 of the Stipulated Judgment:

[T]he above-referenced deficiency judgment, together with statutory interest thereon, shall be satisfied only from the proceeds of the Lender Liability Judgment in favor of S[DA] in a certain civil action known as Suffield Development Associates, L.P. v. Society for Savings, Docket No. CV94-0534196S, received by the defendant limited partnership, as follows:

a) Fifteen percent (15%) of the Lender Liability Judgment, including statutory interest, if the proceeds received are equal to or exceed One Million Three Hundred Thirty-three Thousand Three Hundred Thirty-three and 33/100 ($1,333,333.33) Dollars[.]

(Emphasis added.)

Though superficially appealing in light of the language underscored above, this argument cannot withstand closer scrutiny for the following reasons. First and foremost, it must be remembered that the language of paragraph 3 established a mandatory sliding scale formula for determining the amount that National would be entitled to recover, in full satisfaction of its deficiency judgment. Therefore, the preface of the paragraph, before the start of its three subsections, is just a preface. Because its sole purpose is to introduce the three subparagraphs which follow it, which together effect a complete substitution of the payment obligation set forth therein for the obligation to pay the face value of the deficiency judgment plus statutory interest, as referenced therein, the preface merely identifies what is substituted for by the new payment formula without affording any substantive rights itself. In effect, it promptly takes away precisely what it seems to give by providing that National's right to such a deficiency judgment plus statutory interest "shall be satisfied only . . . as follows" — to wit: by payment of a sum determined in accordance with the formula set forth in the subparagraphs below it.

Second, the reference in subparagraph 3(a) to "statutory interest" refers not to interest on the deficiency judgment, but to statutory interest on the corpus of the Lender Liability Judgment. Its inclusion in this subparagraph simply means that if and to the extent that such interest accumulated on the unpaid Lender Liability Judgment before the date on which the proceeds of that Judgment were finally received, then if total proceeds of the Judgment, including such accumulated interest, exceeded $1,333,333.33, National would be entitled, under subparagraph 3(a), to recover 15% of the entire corpus, including 15% of the accumulated interest. If, then, by way of example, the Supreme Court had upheld SDA's $2.5 million judgment on its breach-of-contract claim two years to the day from the date judgment was rendered on the jury's verdict, the gross proceeds of the Lender Liability Judgment, including statutory interest running at an annual rate of 10% per year, would total $3 million dollars. In that event, National would have been entitled to recover a grand total of $450,000.00 from the gross proceeds of the Lender Liability Judgment, including not only 15% of SDA's original $2.5 million Judgment, totaling $375,000.00, but 15% of its $500,000.00 (2 × 10% × $2.5 million) in accumulated statutory interest on the Judgment.

In the Lender Liability Action, however, the only judgment ever entered was vacated by the Supreme Court when it reversed the jury's verdict for the plaintiff on its breach-of-contract claim and remanded the case for a new trial on its alternative claim of promissory estoppel. Upon the vacation of that judgment, all statutory interest that had thus far accumulated on the judgment was irrevocably lost, for the defendant was no longer withholding from the plaintiff any proceeds from a valid final judgment. After the remand, moreover, the case was finally disposed of between SDA and BankBoston by the entry of the Lender Liability Settlement, to which no statutory interest attached because it was not a judgment. As a result, when Attorney Oliver applied for the challenged execution on May 4, 1999, his client's only right of recovery under subparagraph 3(a) of the Stipulated Judgment consisted only of 15% of the gross proceeds of the Lender Liability Settlement, on which there was no accumulated statutory interest, for a total of $225,000. Against this background, the defendants' use of an execution in the amount of $375,000.00 clearly constituted an excessive execution, and thus a misuse of legal process.

2. Alleged Misuse of Legal Process Primarily for a Purpose for Which it is Not Designed

The fact that legal process has been misused, however, does not alone establish an actionable abuse of process. Instead, as our Supreme Court has ruled in this very case that a misuse of process only constitutes an abuse of process when it is proved to have been used primarily to accomplish a purpose for which it was not designed.

In this case, the plaintiff has sought to prove that the defendants obtained and used an excessive execution primarily for two purposes it was not designed to accomplish: to coerce it into making a payment of money not owed by it under a valid and specific legal judgment when its obligation to do so was in open dispute in pending litigation; and second, to secure such money in an excessive amount pending the outcome of litigation to determine how much of that money was in fact owed.

In this case, the defendants have advanced several reasons why this Court should not find that they used their excessive execution against SDA primarily to accomplish a purpose for which it was not designed. These reasons fall in four general categories: (1) that their purpose was in fact entirely proper because their client actually had the legal right to execute in an amount equal to or greater than $375,000.00; (2) that even if they then had no legal right to execute in that amount, they believed that they had such a right, and sought only to pursue it; (3) that they were required by law, in order to execute in any amount, to list the full amount of their $375,000.00 deficiency judgment on the application for the execution; and (4) that in light of the noncooperation of SDA and its counsel in giving them sufficient information to know and timely act upon their rights under the Stipulated Judgment, they had no choice but to act as they did to protect their client's interest in the proceeds of the Lender Liability Judgment, which might otherwise have disappeared. For the following reasons, the Court finds each of these arguments unpersuasive and concludes that the defendants used the excessive execution in this case primarily for the improper purpose of securing monies to which they were not yet entitled under a valid and specific legal judgment.

First, as to the defendants' claim that they were entitled to execute in the full amount of the deficiency judgment, $375,000.00, because of SDA's failure and refusal to pay the specific amount required of it under the sliding scale formula set forth in paragraph 3 of the Stipulated Judgment, the Court has already rejected that claim on the ground that the Stipulated Judgment gave it no such right. Instead, the Stipulated Judgment clearly provided that the only payment National was entitled to receive in satisfaction of its deficiency judgment was that called for under the appropriate subparagraph of the sliding scale formula in paragraph 3 thereof. National's remedy in the event of a failure by SDA to pay what it owed or to cooperate with it in establishing how much it was entitled to receive under the Stipulated Judgment to move for contempt or move to enforce the judgment according to its terms. Having no right to recover the full face value of the deficiency judgment from SDA due to SDA's failure or refusal to pay it the lesser sum it actually owed under the sliding scale formula in the Stipulated Judgment, National had no right to execute against SDA's property in that full amount either.

Nor, in fact, did the defendants actually or reasonably believe that SDA was repudiating the Stipulated Judgment, or violating any of its rights thereunder, when it took the position that it owed National nothing from the Lender Liability Settlement proceeds. SDA made it clear from the outset that, although it disputed National's right to recover any part of the Settlement proceeds, it was plainly willing to resolve those issues promptly in a court of law. To that end, it provided all the relevant details of the Settlement to the defendants, through Attorney Sable, and volunteered both to file a declaratory judgment action to raise the contested issues and to hold $200,000.00 in escrow pending the outcome of that action. Attorney Sable had been told the amount of the Lender Liability Settlement by Attorney Weinstein several days before the execution was obtained.

The day after the execution was served, moreover, Attorney Wisser wrote Attorney Oliver a lengthy letter in which he specifically stated that the gross proceeds from the Settlement were $1.5 million. At that moment at the very latest, Attorney Oliver and Berman and Sable had the very thing they claimed they needed but had not yet received — express written conformation as to the gross amount of the Lender Liability Settlement. The lawyers of Berman and Sable had no reason to distrust Attorney Weinstein or his law firm. Indeed, each member of BSO went out of his way to so testify. In truth, however, they felt themselves driven to reject Attorney Weinstein's escrow offer, which they knew to have been made in good faith, with no risk of dissipating assets, at the insistence of their unhappy, distrustful client, who deeply disliked Weinstein Wisser and wanted to play hardball with them because of what he regarded as their baseless refusal to have their client pay what it owed. Such reasoning does not persuade this Court that the excessive execution was somehow justified. To the contrary, it provides persuasive evidence that the true purpose was to satisfy an unreasonable client without any appropriate legal basis therefore.

A second basis upon which the defendants claim that they had the right to execute in the full amount of their deficiency judgment is their claim, also previously discussed and rejected, that they were entitled to execute not only in the full amount they were entitled to recover under the mandatory sliding scale formula set forth in subparagraphs 3(a), (b) and (c), but in an additional amount equal to the accumulated statutory interest on their full deficiency judgment at the rate of 10% per year from the date of the Stipulated Judgment to the date of the execution, from December 17, 1996 to May 4, 1999. The Court has already rejected this claim because, to reiterate, National's right to recover a percentage of accumulated statutory interest under the Stipulated Judgment could not have arisen where, as here, no interest actually accumulated on the Lender Liability Judgment before the proceeds of that Judgment were distributed. Here, since any statutory interest that had accumulated on the Lender Liability Judgment before the Supreme Court vacated that Judgment had been wiped away and no such interest had accumulated after the remand, either before or after the reaching of the Lender Liability Settlement, National had no right to recover any larger sum from BankBoston to account for such statutory interest, and thus no right to execute in a larger amount to collect such a sum. Even, moreover, if Attorney Oliver mistakenly believed that National was entitled to recover such additional sums as interest, as his repeated invocation of that right suggests, the $89,000 total of such interest calculated up until May 4, 1999, when added to the sum of $225,000.00, still falls far short of $375,000.00.

A third basis advanced by the defendants for claiming that they had the right to execute in the full amount of their $375,000.00 deficiency judgment is the language of paragraph 4 of the Stipulated Judgment, which provides in relevant part as follows:

4. S[DA] agrees that it will not object to or oppose the efforts of N[ational] to secure said deficiency judgment by means of a garnishment or execution duly served upon Bank of Boston Connecticut . . .

The defendants argue that this provision entitled them to execute against funds of SDA in the amount of $375,000.00 even if the full extent of their client's right of recovery under the sliding scale formula in paragraph 3 of the Stipulated Judgment was far less than that amount. Such an argument simply flies in the face of the sole proper purpose of an execution, which, to reiterate, is to provide a vehicle for the recovery of funds due and owing under a valid and specific legal judgment. By agreeing to the issuance of an execution to secure "said deficiency judgment," the parties obviously agreed to the issuance of an execution in an amount equal to that determined to be due and owing by applying the sliding scale formula in paragraph 3 to the proceeds of the Lender Liability Judgment.

The requirement of the Stipulated Judgment that the execution be "duly served," moreover, plainly contemplated that, if an execution were issued, it would be obtained and used in accordance with controlling law. That, in turn, required that the party or attorney who applied for the execution provide the Court with correct information as to the amount actually due and owing under the judgment at that time of the application. Here, for reasons previously stated, that was not done, for only $225,000.00 was due and owing under the Stipulated Judgment when Attorney Oliver applied for the issuance of the $375,000 execution. In short, paragraph 4c of the Stipulated Judgment did not authorize the defendants to obtain and serve an excessive execution against SDA based upon the misrepresentation that the amount of the execution was one that the applicant's client had a right to recover under a valid and specific legal judgment.

Attorney Oliver, moreover, could not reasonably have believed, and did not in fact believe, that he was entitled to issue the execution in question merely because paragraph 4 of the Stipulated Judgment empowered National to obtain a duly served execution in a proper amount. Had that been the case, Attorney Oliver would not have felt compelled to make any of the efforts he claims to have made to ascertain the true amount of the gross proceeds of the Lender Liability Settlement, for that amount would not have changed his thinking or his client's claimed right to execute at all.

Another suggestion made by the defendants as to why they were justified in filing their application for an execution as they did, in the full amount of their $375,000 deficiency judgment, is that they were somehow forced to do so by the structure of the execution form itself. The form, they note, required them to list their total damages under the judgment as rendered, which in fact they did. However, just below the box which directs the applicant to list the "AMOUNT OF DAMAGES" for which he has a valid judgment is another line that directs him to list, both in numbers and in words, his "TOTAL UNPAID DAMAGES AND COSTS." Plainly, it is on this line of the form that a party or attorney who knows that he or his client cannot lawfully execute on the entire amount of his judgment, as originally rendered by the trial court, must indicate the lesser amount for which he claims a current right to execute in the case in question. Here, however, Attorney Oliver wrote "$375,000.00" or "Three Hundred Seventy-five Thousand and 00/100 Dollars" in all three spaces, without differentiating between them. Plainly, the making of these entries did not result from any constraint imposed by the structure of the execution form.

The defendants' final explanation for their conduct is clearly the most persuasive. In sum and in substance, it is as follows. When Attorney Oliver belatedly learned of the Lender Liability Settlement from Attorney Sable, several days after Attorney Weinstein first called to inform him of it, he was confused and concerned. What confused him was how SDA and Attorney Weinstein could possibly claim that SDA owed nothing to his client from the proceeds of the settlement, after it had settled the case for the reported sum of $1.5 million. What concerned him was that those settlement proceeds were to be the sole source of funds from which his own client's deficiency judgment was to be satisfied under the Stipulated Judgment, and he did not want them to disappear. Hence, driven by his own lack of knowledge of the details of the Lender Liability Settlement, the inability of his senior partner to provide useful details to him about the Settlement based upon his own prior conversations with Attorney Weinstein, and the demands of his irate client, who did not trust SDA or Attorney Weinstein and wanted to be paid forthwith, he decided to ask some basic questions.

In particular, Attorney Oliver wanted to know if the gross proceeds of the Lender Liability Settlement might be greater than Attorney Weinstein had described them, thus increasing his client's right of recovery under the Stipulated Judgment. What concerned him most was that other consideration for which no cash value had been paid might appropriately be assigned such a value, in light of their true worth, to increase the value of his client's recovery based upon a percentage of gross settlement proceeds.

Not long down this road, however, Attorney Oliver met with resistance — first light, then unexpectedly fierce — to his inquiries. First, on speaking with Attorney Krowicki of BankBoston, his efforts to learn the details of the settlement were politely rebuffed. Afraid that the clock was ticking and that the proceeds of the Settlement might soon be distributed, he advised Attorney Krowicki that he might have to garnish the Settlement proceeds in the hands of BankBoston to protect his client's interests. Within minutes of this conversation, he received a call from Attorney Weinstein, who, frustrated by what he took to be Berman and Sable's rejection of his reasonable proposal to resolve the matter amicably in a declaratory judgment action he would file, dressed him down about the manner in which he and his firm practiced law and advised him that his clients were not entitled to any proceeds from the Settlement.

Over the following weekend, with time apparently running out on him and no authority from his client to work with Attorney Weinstein, Attorney Oliver searched for an effective way to protect his client's interests in a judgment of unknown size. Upon reviewing the Stipulated Judgment, he thought for the first time about pursuing an execution. Once before in the case, during the pendency of appeal of the Lender Liability Judgment, he had filed an execution in the amount of $375,000.00 — the face amount of the deficiency judgment — on behalf of National. The execution had been returned unsatisfied, but as he then recalled, it had not been objected to. He also knew that paragraph 4 of the Stipulated Judgment authorized him to serve an execution, although he was well aware that, under the sliding scale formula in paragraph 3, he had no right to collect the amount of $375,000.00 if the gross proceeds of the Lender Liability Judgment were only $1.5 million. Still, because of the resistance he had encountered to his inquiries about the full amount of the judgment, he suspected that the gross proceeds of the Settlement might possibly be higher than reported. Thus, to protect his client's potential interest in securing a larger recovery, if in fact he had the right to one, and to prevent the disappearance of the contested Settlement proceeds while his client's entitlement to all or part of them was being litigated, he applied for an execution in the amount of $375,000.00, the full face value of the deficiency judgment.

Attorney Oliver's purpose for pursuing the execution was not extortionate or malicious. He did not seek to force SDA to pay National money it did not truly owe, nor did he attempt to persuade it to abandon or reach a prompt, potentially disadvantageous settlement of a contested legal issue to avoid the burden of an excessive execution.

Even so, under our Supreme Court's controlling analysis in this very case, Attorney Oliver's decision to procure and use an execution under these circumstances constituted a classic abuse of process, for his primary purpose for executing in an amount that exceeded any amount he then knew or reasonably believed to be due and owing to his client under a valid and specific legal judgment, was to secure his client's possible interest in monies as to which he as yet had no known or established right or interest. His effort, fueled only by inchoate suspicions about the completeness and accuracy of information he in fact had received but his client refused to trust, was designed to prevent those monies from disappearing while an active dispute about their ownership was litigated in court. These are not lawful purposes which an execution is designed to accomplish. Attorney Oliver's use of an execution for those purposes constituted an abuse of process.

B. Damages for Abuse of Process 1. Compensatory Damages CT Page 3367

Damages for abuse of process are confined to the damages flowing from the abuse. McGann v. Allen, 105 Conn. 177, 191 (1926). Compensatory damages include the natural consequences resulting from the abuse as well as special damages incurred as a result of the wrong, such as loss of business or property or expenses incurred to protect against the wrong.

In this case, the plaintiff seeks to recover special damages of three kinds as a result of the defendants' proven abuse of process: (1) attorneys fees incurred to resist, do away with, and/or mitigate the adverse consequences of the excessive execution; (2) lost interest on the money wrongfully withheld; and (3) expenses incurred by it from the date of the wrongful execution until the present to maintain its existence as a business entity so that it might lawfully prosecute this action against the defendants, and thereby recover damages for injuries caused by the defendants' abuse of process.

a. Claim for Attorneys Fees

There is no question that, as a result of the defendants' decision to obtain, serve and later press their claimed right to keep in place the excessive execution, the plaintiff incurred substantial attorneys fees for the services of Attorneys Weinstein and Wisser. The services in question were rendered for several related purposes, including communicating with the defendants in the wake of the service of the execution in an effort to persuade them to withdraw it, the preparation, filing and argument of motions for contempt in the National Action and to open the withdrawal and enforce the settlement agreement in the Lender Liability Action so as to prevent the taking of the funds made subject to the execution, efforts throughout the six weeks after the service of the execution to negotiate a satisfactory escrow arrangement to hold a lesser, more appropriate sum in escrow pending final adjudication of the Declaratory Judgment Action, and communications with the plaintiff's principal and Bank Boston's counsel, Attorney Krowicki, about all of the foregoing. The Court has no doubt that such attorneys fees were all related to and made reasonably necessary by the defendants' actionable conduct, and thus that they are awardable as compensatory damages to the extent that have been proved.

Here, however, the Court's task is complicated in several ways. First, contemporaneously with the rendering of the above-described legal services, the plaintiff was also pursuing, on its own initiative, the Declaratory Judgment Action Attorney Weinstein had told Attorney Sable he would file to determine whether or not the defendant's client, National, was entitled to any of the proceeds from the Lender Liability Settlement. Plainly, no attorneys fees incurred to prosecute the Declaratory Judgment Action are in any way attributable to defendants' abuse of process, and thus they are not sought and cannot be awarded on this claim.

Also in this time period, starting in late May of 1999, SDA, again through Attorney Weinstein, commenced the present action. Though attorneys fees for the prosecution of this action would be awardable to the plaintiff as the measure of its punitive damages if the defendants were found to have acted with malice in abusing legal process as they have, such fees are not awardable as compensatory damages under the standard "American rule" that a party must typically bear its own attorneys fees in a legal dispute. Hence, such fees are also not awardable on this claim.

A third factor that complicates the Court's assessment of attorneys fees in this case is that, at the time when all of the above-described matters were going forward, the law firm of Weinstein Wisser did not keep its time records segregated by lawsuit but by client. Hence all hours logged and fees billed in the myriad of legal proceedings conducted by Weinstein Wisser on behalf of SDA were all compiled in one place. Absent specific testimony identifying which matter any individual task pertained to, or some other indication in the firm's billing records which discloses that purpose, it is difficult to attribute hours worked, as evidenced by many potentially relevant entries in the records, to efforts by Attorneys Weinstein and/or Wisser to resist and/or attempt to overcome and/or attempt to mitigate the adverse consequences of the challenged execution.

To overcome these vagaries, Attorney Wisser, in his post-trial brief, sharply narrowed his client's claim for attorneys fees as compensatory damages by calling out 40 specific entries, documenting 18.8 hours of work performed by himself and Attorney Weinstein at the rate of $375.00/hour between April 29, 1999 and July 29, 1999. On reviewing these entries, all of which pertain to dates in a quick moving time sequence with which the Court has become quite familiar, the Court concludes that each such entry documenting work performed between May 4, 1999, when the execution was obtained and served, through June 25, 1999, when the escrow with Attorney Krowicki was finally in place, evidences an expense actually and reasonably incurred to resist, do away with and/or mitigate the adverse consequences of the excessive execution. Such entries document the performance of 16.6 hours of work at the rate of $375.00/hour, for a total compensable cost of $6,225.00. The plaintiff's documented request for compensation for work performed before the execution was actually filed is rejected because, although the work in question was done in anticipation of Attorney Oliver's possible effort to garnish the settlement proceeds, it was not done in anticipation of an excessive execution, or thus his proven abuse of process in this case. SDA's further request for compensation for time spent making two telephone calls and writing two letters after June 25, 1999 is denied because the file entries are too non-specific to warrant any inferences that these are related to the execution, which by then was already in place and made applicable to the funds held in escrow by Attorney Krowicki pursuant to the parties' agreement of June 18, 1999. The Court cannot appropriately resolve this ambiguity based on the representations of Attorney Wisser, because he made those representations not as a witness, which he was at the start of this case, but as trial counsel.

In sum, the Court awards SDA compensatory damages of $6,225.00 for attorneys fees reasonably incurred by it to resist, attempt to do away with and/or to mitigate the adverse consequences of the defendants' excessive execution.

b. Claim for Loss of Use of Money

SDA's second claim for compensatory damages in this case is to recover for the loss of interest on all monies it was deprived of by virtue of the excessive execution between May 13, 1999 when it was to have received the proceeds of the Lender Liability Settlement from BankBoston, and December 15, 2000. When those monies were finally released by Attorney Krowicki after the Appellate Court affirmed Judge Koletsky's decision in the Declaratory Judgment Action, SDA argues that the measure of its recovery on such improperly detained funds should be 8% annual interest on the difference between the amount of the execution and the maximum amount on which the defendants could properly have executed, which they claim to have been $200,000.00.

They argue that 8% is a proper rate of interest to use in calculating the amount of their loss because 10% is a standard rate used in this state to assess loss arising from the wrongful detention of money, and 2% is the average rate at which interest accumulated on that sum during the time it remained in escrow.

The defendants object to the lion's share of the award of damages here requested, suggesting first that the plaintiff should have challenged the amount of the execution in other ways; and second, that the plaintiff agreed to the escrow arrangement with Attorney Krowicki when the parties were in court with Judge Koletsky on June 18, 1999, and thus cannot complain about the loss of interest resulting from the use of that arrangement.

The Court first notes that the reason why the parties had assembled before Judge Koletsky on June 18, 1999 was to litigate a number of motions that had been filed by interested parties to address the legality of the size of the execution. Attorney Weinstein, on behalf of SDA, made it crystal clear at that time, as he had throughout the six-week period preceding the hearing, that in SDA's view the execution was excessive because the most National could hope to recover from the Lender Liability Settlement proceeds was, in his view, $200,000, under paragraph 3(b) of the Stipulated Judgment. Far from sitting on his client's rights and doing nothing, Attorney Weinstein had filed two motions for contempt, a motion to open the withdrawal of the Lender Liability Action and for an order enjoining Bank Boston from turning over the Settlement proceeds to National notwithstanding the execution, and this very action seeking compensatory and punitive damages from the defendants for what he termed, then as now, an abuse of process.

Notwithstanding this all-out effort to stop the execution and gain access to the settlement proceeds, Attorney Weinstein and SDA found themselves stymied by the defendants, who not only insisted upon freezing the full $375,000.00 until the Declaratory Judgment Action had been resolved, but had taken steps to ensure that the execution would remain in place by appealing from Judge Koletsky's earlier injunctive order and, in case the automatic stay provisions in the appellate rules did not apply to that order, moving separately for a stay pending appeal. With this flurry of activity taking place around him, Attorney Krowicki, on behalf of Bank Boston, resolved not to let the money go anywhere, to anyone, until he got a specific order from the court authorizing such a transfer. Accordingly, he filed a motion for instructions.

Attorney Weinstein thus found himself in a serious dilemma. He could, of course, litigate the several motions then pending before Judge Koletsky and still face the prospect of a certain appeal and a lengthy stay that would keep the money in limbo while Attorney Krowicki took the next logical step open to him, as the disinterested holder of money claimed by others, and instituted a potentially costly interpleader action. In the alternative, he could attempt to mitigate his client's damages and stop the proverbial leaking of the boat by making the best interim deal he could in all the circumstances and agreeing to the least costly escrow he could negotiate. What he would not give up — and he made this very clear — was his right to seek damages from the defendants and their client for the losses they had caused to SDA by serving and continuing to insist on the enforcement of the execution or its equivalent. Thus the escrow arrangement was entered into, with Attorney Weinstein expressly preserving his client's right to seek damages from the defendants and their client for abuse of process.

It might have been tempting in other circumstances to treat the plaintiff's loss of use of money from June 25, 1999 through December 15, 2000, as a result of his own making, a deal to which he freely agreed, and then about which he cannot appropriately complain. In these circumstances, however, that would be completely inappropriate, for as our Supreme Court strongly suggested when ordering the reinstatement of the plaintiff's abuse of process claim, one particularly improper use of an excessive execution is to force the party against whose assets it is directed to reach a hasty, potentially disadvantageous settlement of litigation in order to rid himself of the burden of the excessive execution. Logically, if that is the sort of harm to be avoided by forbidding excessive executions, it would be unfair and absurd to treat losses suffered by one who capitulates to such pressure to avoid more costly consequences as non-compensable self-inflicted wounds.

Here, then, this Court concludes that the plaintiff is entitled to compensatory damages for lost interest on all money on which the defendant overexecuted from May 13, 1999 until December 15, 2000 — a period of 581 days. The Court has already determined that the difference between what the defendants were entitled to execute on, the sum of $225,000.00, and the excessive amount they did execute on, $375,000.00, is $150,000.00. Agreeing with the plaintiff that annual interest of 10% less paid interest of 2% is an appropriate measure of its damages for lost use of money in that period, and finding that 8% interest accumulates on the sum of $150,000.00 at the rate of $32.877 per day, the Court awards the plaintiff compensatory damages of $18,453.00 for lost interest.

c. Claim for Miscellaneous Business Continuation Expenses

The plaintiff's third and final claim for compensatory damages in this case is that, because of the defendants' abuse of process, it has been compelled to remain in existence as a business entity from May 1999 through the present in order to maintain this lawsuit, and thus to recover damages for the losses the defendants have caused it to sustain. In particular, it seeks compensation for costs incurred for each of the following: (1) $225 for biennial reports filed by its general partner, Suffield Development Corporation, with the Secretary of the State in 1999, 2002 and 2003; (2) $3550 for state taxes paid for the limited partnership in 2003 and 2004; (3) $300 for minimum state taxes due in 2005; (4) $800 for state taxes associated with the plaintiff's corporate general partner tax in 2001, 2003 and 2004; (5) $300 for minimum state taxes for the corporate general partner due in 2005 (for 2004); (6) additional accounting costs of $2475 paid in 2001 for 2000 returns; (7) $900 paid in 2004 for 2001 returns and $1000 paid in 2004 for 2003 returns; and (8) an estimated $1,500 to be paid in 2005 for 2004 returns.

The logic supporting SDA's request for compensation with respect to these items is that but for the defendants' abuse of process, which improperly tied up funds belonging to SDA for over 19 months, SDA would not have suffered the losses that caused it to file this lawsuit, that to recover for such losses it had to maintain its legal power to prosecute the lawsuit, and that incurring the above-listed expenses has been required of it for that purpose ever since the execution was served and this controversy was initiated.

This Court is persuaded that but for its dispute with National concerning National's right to recover proceeds from the Lender Liability Settlement to satisfy its deficiency judgment in the National Action, SDA and its general partner would have wound up their respective businesses and dissolved. It must first be remembered, however, that the original spark that ignited this controversy was set off by SDA itself, when it unexpectedly took the position later rejected by Judge Koletsky and the Appellate Court that National was entitled to none of the proceeds of the Lender Liability Settlement. It was in that context, in fact, that Attorney Weinstein volunteered, on behalf of SDA, to file the Declaratory Judgment Action, which surely required SDA to prolong its existence as a business entity no less than the pendency of the instant action, at least until the Appellate Court affirmed the trial court's judgment on November 28, 2000. Therefore, the starting point of this Court's analysis of this claim for damages must be to reject any claim that the defendant's abuse of process was a cause in fact of any of SDA's business continuation expenditures though the end of 2000.

As for expenses incurred in 2001 and thereafter, the question next arises whether or not any of the claimed expenditures were truly made necessary by SDA's need to pursue this action. On this score, the defendants urge this Court to find that it is not in fact necessary for a limited partnership to maintain its existence as a business entity while it pursues litigation in the course of winding up its business affairs. In support of their position, the defendants cite General Statutes § 34-28c, which provides in relevant part as follows:

(a) Except as provided in the partnership agreement, the general partners who have not wrongfully dissolved a limited partnership or, if none, the limited partners, may wind up the limited partnership's affairs; . . .

(b) Upon the dissolution of a limited partnership and until the filing of a certification of cancellation as provided in Section 34-32a, the persons winding up the affairs of the limited partnership may, in the name of, and for and on behalf of the limited partnership, prosecute and defend suits, whether civil, criminal or administrative . . .

The issue raised by this statute is obviously whether or not the obligation of a limited partnership to file reports with the Secretary of State and to pay minimum state taxes ends before or after "the filing of a certificate of cancellation as provided in [General Statutes] 34-32a," when the rights of persons winding up the affairs of a dissolving limited partnership lose their right, under the above-quoted statute, to prosecute "in the name of, and for and on behalf of the limited partnership." General Statute Sec. 34-28c.

On this score, General Statute § 34-32a provides in relevant part as follows:

A certificate of limited partnership shall be cancelled upon the dissolution and the completion of winding up of the partnership or at any other time when there are no limited partners . . .

What this statute plainly contemplates is that until all winding-up activity is at an end — in other words, until all activity concluding the affairs of the limited partnership, including the prosecution and defense of lawsuits, is finally over — the limited partnership is not cancelled, and thus continues to exist, with all of its powers and obligations as a limited partnership intact.

This inference is confirmed, moreover, by the following language in General Statutes § 34-32c, which provides for the reinstatement of cancelled limited partnerships by the filing of a certificate of reinstatement:

(f) Upon the filing of the certificate of reinstatement with the Secretary of the State, reinstatement shall be effective, the legal existence of the reinstated limited partnership shall commence and it shall be revested with its rights and powers under this chapter.

This language removes all doubt that, until a limited partnership is cancelled, it not only continues its legal existence, but retains all of its vested rights and powers, and thus, as well, its obligations.

A limited partnership's obligation to file an annual report arises under General Statutes § 34-13e, which requires that such a report be filed with the Secretary of the State each year of its existence upon the anniversary of the formation of the limited partnership along with the filing fee established by General Statutes Sec. 34-38n. The filing fee for such an annual report, which has not been sought by the plaintiff, is $10 per year. Id. Here, instead, the only filing fees for which the plaintiff seeks compensation were incurred by its general partner, Suffield Development Corporation, for the submission of biennial reports required of it as a Connecticut stock corporation. Such costs are not compensable in this lawsuit for the simple reason that Suffield Development Corporation is a separate legal entity which is not a party to this action. In fact, for that reason, all expenses claimed by the plaintiff on behalf of Suffield Development Corporation must be rejected.

The obligation of a Connecticut limited partnership to pay minimum state taxes arises under General Statutes § 12-284b. That obligation applies to every "limited partnership which is required to file an annual report with the Secretary of State as provided in Section 34-38n;" General Statutes § 12-284b(a)(4), which is further defined in the latter statute to include all annual reports filed under General Statute § 34-13e. The amount of such tax for the years 2001 and 2002 was $250 per year. The amount of such tax for the years 2003 and 2004 was $300 per year. These amounts are properly awarded as compensatory damages in this case, for a total of $1100.

The final element of damages claimed is for accounting costs, which were documented by the submission of three bills from Bobrow Company, P.C. dated: (1) June 28, 2001 ($2,465.00 for year-end accounting services and preparation of December 31, 2000 income tax returns for Suffield Development Corporation and Suffield Development Associates, L/P); (2) February 28, 2002 ($900 for professional fees related to preparation of federal and state partnership tax returns for the year ended December 31, 2002); and (3) February 27, 2004 ($1,000 for professional fees related to preparation of state and federal income tax returns for Suffield Development Corporation and Suffield Development Associates, L/P for the year ended December 31, 2003). The first bill submitted, even if reasonable in amount for the services rendered, was not incurred as a result of the defendant's abuse of process since it relates to the year 2000, when SDA would have maintained its corporate existence whether or not there was an excessive execution in order to prosecute the Declaratory Judgment Action. It, moreover, like the third bill, expressly states that it was rendered for services provided both to SDA and to its general partner, without in any way differentiating between them. The Court has no basis to determine that all or any part of either such bill was reasonably incurred, especially in light of the fact that each dwarfs the total taxes actually owed and paid by SDA for the relevant year. The Court cannot award damages for such expenses without inappropriate speculation.

As for the second bill from Bobrow Company, it too appears to be excessive in light of the minimal amount of tax actually owed by SDA for the year in question. Unable to find that any part of this expense was made reasonably necessary by SDA's need to file a 1-page form and submit a check to the State for $250 for the year in question, the Court rejects the plaintiff's claim for damages with respect thereto.

In conclusion, the court hereby awards SDA the additional sum of $1,100.00 in compensatory damages for minimum taxes to the State of Connecticut to maintain its existence as a business entity throughout that period, and thereby retain its power to prosecute the instant action to recover for losses resulting from the defendants' abuse of process.

Conclusion

The Court awards the plaintiff total compensatory damages of $25,778.00, consisting of $6,225.00 in attorneys fees, $18,453.00 in lost interest, and $1,100 in business continuation expenses made necessary for the continued prosecution of this lawsuit.

2. Punitive Damages

As the Court has found that the defendants did not act with malice in committing this abuse of process, it respectfully declines to award the plaintiff punitive damages in this case.

V. CONCLUSION

For all of the foregoing reasons, the Court finds the issues for the plaintiff, SDA, on its claim of abuse of process, and awards it compensatory damages totaling $25,778.00 in accordance with its findings of fact and conclusions of law as stated in this Memorandum of Decision.

Michael R. Sheldon, J.