Opinion
No. 0128971
September 20, 2006
MEMORANDUM OF DECISION: #118 DEFENDANT'S EXAMINATION OF JUDGMENT DEBTOR
FACTS
Wiese Construction Environmental Services, Inc. ("Wiese Construction") is a judgment debtor to Forest Homes. Wiese Construction is a one-man operation run by its president and sole shareholder, Mel Wiese. There are no employees, no other officers or directors, and no other shareholders. Work is done by subcontractors using their own equipment.
Since the judgment, Wiese Construction, formerly a thriving company, has effectively stopped doing work. It has no active accounts, few or no receivables, and no assets against which to execute. Thus, Forest Homes, as the judgment creditor, is unable to satisfy its judgment against Wiese Construction. However, Mel Wiese has stated, under oath, that, since the judgment, he has started a new company through which he is working his construction projects.
In October 2005, Forest Homes, in its efforts to gather information about Wiese Construction's assets, served post-judgment interrogatories upon Dime Bank, pursuant to General Statutes § 52-351b(a). Dime Bank's disclosures did not indicate sufficient assets to cover the judgment amount; therefore, Forest Homes subsequently served post-judgment interrogatories on Mel Wiese on October 20, 2005, pursuant to General Statutes § 52-351b(c). Since Mel Wiese did not respond to the interrogatories, the judgment creditor has examined Wiese Construction through Wiese pursuant to General Statutes § 52-397. During the course of the examination that originally took place on May 30, 2006, counsel for Forest Homes sought to ask questions of Mr. Wiese surrounding his personal assets owned, his wife's name and assets and his father's name, amongst other questions. Counsel for the plaintiff objected and the court ordered briefs. A memorandum of support was filed on July 13, 2006 and a memorandum in opposition is dated August 4, 2006. Oral argument was heard on August 7, 2006.
"A judgment creditor may obtain discovery from the judgment debtor, or from any third person the judgment creditor reasonably believes, in good faith, may have assets of the judgment debtor, or from any financial institution . . . of any matters relevant to satisfaction of the money judgment . . . Such person shall answer the interrogatories and return them to the judgment creditor within thirty days of the date of service . . . With respect to assets, the person served is required to reveal information concerning the amount, nature and location of the judgment debtor's nonexempt assets up to an amount clearly sufficient in value to ensure full satisfaction of the judgment with interest and costs . . ."
"On failure of a person served with interrogatories to return, within the thirty days, a sufficient answer or disclose sufficient assets for execution, or on objection by such person to the interrogatories, the judgment creditor may move the court for such supplemental discovery orders as may be necessary to ensure disclosure . . ."
"Any judgment debtor, an execution against whom has been returned unsatisfied . . . or who has failed to respond within thirty days to any postjudgment interrogatories . . . may be examined on oath . . . Such examination shall be on questions put by the judgment creditor or his attorney . . ."
DISCUSSION
Under General Statutes § 52-198: "If a corporation is party to an action, the opposite party may examine the president, treasurer, secretary, clerk or any director or other officer thereof in the same manner as if he were a party to the suit." When interpreting this statute, the court recognizes that, in cases such as this, the individual is not a named party, but merely speaks for the inanimate corporation. See Lieberman v. Reliable Refuse Co., 212 Conn. 661, 673, 563 A.2d 1013 (1989). "[T]his language implemented the legislature's recognition that the legal entity known as a corporation could not speak for itself, but only through its agents. See Wood v. Hartford Fire Ins. Co., 13 Conn. 202, 211 (1839)." (Internal quotation marks omitted.) Id. Pursuant to the statute, Forest Homes is entitled to examine Mr. Wiese, the only officer and shareholder of the judgment debtor corporation. The job of this court is to determine the appropriate scope of that examination. The judgment creditor argues that questions about other entities, personal income taxes, and the assets and receivables of Wiese Construction are all "wholly relevant to identify assets that might be used to satisfy the judgment." This court disagrees, in part.
Forest Homes argues that questions regarding Thamesville, LLC are relevant because it acts as the landlord of the commercial property that Wiese Construction rents for $1,000 per month. The judgment creditor asked the following questions:
1. What are the purposes of Thamesville, LLC?
2. Who are the other members, if any?
3. Who owns the property at the address that Thamesville rents to Wiese Construction?
4. What is Mel Wiese's father's full name?
The court directs Mr. Wiese to answer these questions in his capacity as the officer of Wiese Construction and finds that, as a payor to the other organization, information pertaining to the entity with whom it contracts for monthly rental transactions is discoverable in the quest to identify additional entities and other assets by which to satisfy the judgment.
Forest Homes further argues that Mr. Wiese's personal affiliation with other business entities is relevant because it claims to have reason to believe that Mr. Wiese is hiding Wiese Construction assets in other entities in order to evade Wiese Construction's judgment responsibilities. The court takes guidance from Presidential Capital Corporation v. Reale, 240 Conn. 623, 692 A.2d 794 (1996) (denying immediate appellate review in the event of a trial court's denial of a protective order to shield a witness from discovery in statutory postjudgment proceedings). In the underlying facts of that case, the court allowed examinations of two nonparty witnesses and required them to answer questions as to the assets of the defendant. As a nonparty witness in this case, the court directs Mr. Wiese to answer questions about his affiliations with other LLCs and corporate entities as they may relate to undisclosed assets of Wiese Construction.
Forest Homes questioned Mr. Wiese about his 2005 personal income tax filing because it would like to know how much money Mr. Wiese took from the company in salary or other distributions and when those outlays occurred. Our superior courts have ruled that a plaintiff should not be obligated to produce a document or, through the confidentiality of a private tax return, disclose title to property that is not material to the present action. Total Register, Inc. v. Prince, Superior Court, judicial district of Danbury, Docket No. 30 04 38 (December 1, 1993, McGrath, J.) ( 10 Conn. L. Rptr. 492). Mr. Wiese is not a party to the present action, having never been served individually. Prime Bank v. Lutsky, Superior Court, judicial district of New Haven, Docket No. 98-0410075 (February 29, 2000, Pittman, J.) ( 26 Conn. L. Rptr. 626). He is examined only in his capacity as an officer of the judgment debtor. Title to property held in Mr. Wiese's name is not material in a judgment action against Wiese Corporation. The court, therefore, does not direct Mr. Wiese to disclose his personal tax records, his social security number, his personal assets owned, or any information regarding his wife's personal information and assets. The court does, however, direct him to answer questions, in his capacity as an officer of the corporation, regarding his salary and distributions and when those outlays occurred.
The judgment creditor has raised the possibility of piercing the corporate veil to get discovery as to the personal assets of Mr. Wiese. The judgment creditor must first demonstrate that Mr. Wiese is personally liable for the debts of the corporation and that the required elements of both the instrumentality rule and identity rule are satisfied. See Toshiba America Medical Systems, Inc. v. Mobile Medical Systems, 53 Conn.App. 484, 730 A.2d 1219 (1999). That question is not properly before this court.
Finally, the court directs that Mr. Wiese, as the agent for Wiese Construction, must answer Forest Homes' questions about Wiese Construction's receivables, its assets, and its other holdings.
ORDER
The defendant's president and sole stockholder, Mel Wiese, shall answer questions under oath posed by the plaintiff consistent with this opinion.