Source: http://ct.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20190723_0000878.CT.htm/qx
Timestamp: 2019-10-16 05:21:11
Document Index: 223743164

Matched Legal Cases: ['§ 34', '§ 52', '§ 52', '§ 34', '§ 34', '§ 52', '§ 34', '§ 34', '§ 34', '§ 34', '§ 34', '§ 1', '§ 34', '§ 34', '§ 34', '§ 34', '§ 34', '§ 6', '§ 34', '§ 34', '§ 74', '§ 34', '§ 34', '§ 34', '§ 34', '§ 34', '§ 52', '§ 52', '§ 52', '§ 52', '§ 52', '§ 52', '§ 52', '§ 52', '§ 52', '§ 52', '§ 52', '§ 52', '§ 52']

FindACase™ | McKay v. Longman
McKay v. Longman
STUART L. LONGMAN ET AL.
Action seeking, inter alia, to enforce a foreign judgment, brought to the Superior Court in the judicial district of Stamford-Norwalk, where the case was withdrawn as to the defendant The Savings Bank of Danbury et al.; thereafter, Manufacturers and Traders Trust Company was substituted as a defendant; subsequently, the case was transferred to the Complex Litigation Docket and tried to the court, Povodator, J.; judgment for the defendant Manufacturers and Traders Trust Company et al., and judgment in part for the plaintiff as against the named defendant et al., from which the plaintiff and the named defendant et al. filed separate appeals with the Appellate Court; subsequently, the appeals were consolidated and transferred to this court. Affirmed.
James R. Fogarty, for the appellant in Docket No. SC 20013 and appellee in Docket No. SC 20014 (plaintiff).
Gary S. Klein, with whom was Todd R. Michaelis, for the appellees in Docket No. SC 20013 and appellants in Docket No. SC 20014 (named defendant et al.).
David K. Fiveson, pro hac vice, with whom was Gerald L. Garlick, for the appellee in Docket Nos. SC 20013 and S.C. 20014 (defendant Manufacturers and Traders Trust Company).
Robinson, C. J., and Palmer, D'Auria, Mullins, Kahn and Ecker, Js. [*]
These consolidated appeals require us to consider three main issues: (1) whether a plaintiff who is neither a party to a mortgage nor an intended beneficiary thereof has standing to challenge the enforce-ability of that mortgage under the Connecticut Limited Liability Company Act, General Statutes (Rev. to 2017) § 34-130;[1] (2) whether specified transfers between an owner of property and the limited liability companies of which he is either an officer or equity holder constitute fraudulent transfers under the Connecticut Uniform Fraudulent Transfer Act (CUFTA), General Statutes §§ 52-552e (a) (1) and (2) and 52-552f; and (3) whether this court recognizes the doctrine of reverse piercing of the corporate veil and, if so, whether the trial court properly applied the doctrine to the facts in the present case. The plaintiff, Robert J. McKay, and the defendants Stuart L. Longman and various entities related to him- Sapphire Development, LLC (Sapphire); Lurie Investments, LLC (Lurie); R.I.P.P. Corp. (R.I.P.P.); 2 Great Pasture Road Associates, LLC (Great Pasture); W.W. Land Company, LLC (W.W. Land); Solaire Development, LLC; Solaire Management, LLC; and Solaire Funding, Inc. (collectively, corporate defendants)-filed separate appeals, [2] following a bench trial, from the trial court's judgment.
The present case arises from the plaintiff's efforts to enforce a foreign judgment. The trial court found the following facts. In July, 1996, after a falling out between the plaintiff and Longman, who were once business partners, the plaintiff obtained a judgment in New York against Longman in the amount of $3, 964, 046.86 on the basis of the New York trial court's finding that Longman's actions constituted affirmative fraud against the plaintiff and that Longman's conduct was gross, wanton and wilful (New York judgment).[3] The plaintiff promptly filed a certified copy of the New York judgment in Connecticut. The plaintiff's efforts over the years to collect on the New York judgment have been unsuccessful, including his attempts to attach Longman's assets, which, over time, were in the form of two Connecticut properties: real property located in Ridgefield, which was the location of Longman's family residence (Ridge-field Property), and real property located in Greenwich (Greenwich Property).
Throughout the relevant time period, Longman transferred ownership of the Ridgefield and Greenwich Properties between himself and his various entities. Included among these land transfers are three contested transactions that ‘‘[set] the stage for . . . the predominant issues [on appeal].'' Those three transactions, the additional details of which we set forth as necessary, occurred on the following dates and between the following parties. First, in October, 2007, Sapphire, a real estate development business owned partly by Longman that held record title to the Ridgefield Property during that time, obtained a loan from the defendant Manufacturers and Traders Trust Company (M&T Bank)[4]secured by a mortgage against the Ridgefield Property. Second, in November, 2007, after Sapphire obtained the M&T mortgage and transferred title to the Ridge-field Property to Longman, Longman obtained a loan from J.P. Morgan Chase Bank, N.A. (Chase Bank), also secured by a mortgage against the Ridgefield Property (Chase Bank mortgage), and transferred title to that property back to Sapphire. Finally, in February, 2010, Longman individually acquired the Greenwich Property and transferred title of that property to Lurie, another real estate development business owned partly by him, allowing Lurie to sell the property to a bona fide purchaser several weeks later. Each of these contested transactions occurred and was recorded ‘‘prior to any filing of a lis pendens or judgment lien by the plaintiff . . . .''
After learning of these and other transactions entered into by either Longman or the entities he purportedly controlled, in October, 2010, the plaintiff filed an eight count complaint against Longman and twenty entities affiliated with him, M&T Bank, and The Savings Bank of Danbury. See footnote 2 of this opinion. The action by the plaintiff included, inter alia, [5] three main claims that are before us on appeal. First, the plaintiff alleged that various land transfers from Longman to entities he controlled-including his November, 2007 transfer of the Ridgefield Property to Sapphire and his February, 2010 transfer of the Greenwich Property to Lurie- violated §§ 52-552e (a) (1) and (2) and 52-552f of CUFTA, and requested that the trial court impose constructive trusts on the Ridgefield Property and the proceeds from the sale of the Greenwich Property. Second, the plaintiff alleged that the M&T mortgage was unenforceable under § 34-130 and requested that the trial court declare it void in order to render the Ridgefield Property ‘‘unencumbered'' by that mortgage when the plaintiff enforced the New York judgment against Longman and the corporate defendants. Third, the plaintiff alleged that the corporate defendants constituted alter egos of Longman and requested that the trial court apply reverse veil piercing to the corporate defendants ‘‘to the extent necessary to satisfy the [New York] judgment.''
After an eight day bench trial, the trial court rendered judgment relevant to the issues on appeal in the following manner. The trial court rendered judgment as to counts one, three, and four in favor of M&T Bank, holding, inter alia, that the plaintiff lacked standing to challenge the M&T mortgage. The trial court rendered judgment as to counts three through eight in favor of the plaintiff as against Longman, Sapphire, Lurie, R.I.P.P., and Great Pasture. As against W.W. Land and Solaire Development, LLC, Solaire Management, LLC, and Solaire Funding, Inc. (Solaire entities), however, the trial court rendered judgment as to counts seven and eight in their favor. These consolidated appeals followed.
In order to place the parties' arguments on appeal in the proper context, we begin by outlining the trial court's decision. First, the trial court rendered judgment in favor of the plaintiff as to counts three and four of his substituted complaint in the form of a declaratory judgment avoiding and setting aside the fraudulent transfer of the Ridgefield Property by Longman to Sapphire. Second, the court imposed a constructive trust on the Ridgefield Property, subjecting it to all postjudgment remedies that may be applicable. Third, the trial court rendered judgment in favor of the plaintiff as to counts five and six of his substituted complaint in the form of a declaratory judgment avoiding and setting aside the fraudulent transfer of the Greenwich Property by Longman to Lurie. Fourth, the trial court imposed a constructive trust on all moneys received from or other items of value acquired through the transfer of the Greenwich Property. Fifth, in addition to this constructive trust, the trial court entered an award of $250, 000 in damages in favor of the plaintiff and against Lurie. Sixth, the trial court rendered judgment in favor of the plaintiff as to counts seven and eight of his substituted complaint in the form of a judgment declaring that Sapphire, Lurie, R.I.P.P., and Great Pasture are alter egos of Longman, and, as such, ‘‘their separate corporate existence shall be disregarded for purposes of satisfying the debt of . . . Longman to the plaintiff, '' and enjoined those defendants from disposing of any assets prior to the satisfaction of the plaintiff's foreign judgment. Seventh, the trial court rendered judgment in favor of M&T Bank as to all the claims asserted against it, including the plaintiff's claim under counts one, three, and four that a mortgage on the Ridgefield Property between M&T Bank and Sapphire (M&T mortgage) should be declared void. Eighth, the trial court rendered judgment in favor of the Solaire entities and W.W. Land as to all counts asserted against them.[6]
The plaintiff appeals from the trial court's judgment in favor of M&T Bank as to its claim under counts one, three, and four that the M&T mortgage should be declared void. The plaintiff claims that the trial court incorrectly determined that he lacked standing to challenge the enforceability of that mortgage under § 34-130 (b), (c) and (d), because those subsections are silent as to who may bring a claim under them. M&T Bank responds that the trial court properly held that, as neither a party to nor an intended beneficiary of the mortgage between it and Sapphire, the plaintiff lacked standing to challenge it.[7]
Longman and the corporate defendants appeal from the trial court's judgment as to counts three through six whereby that court rendered two declaratory judgments avoiding and setting aside two specified transfers-one between Longman and Sapphire and the other between Longman and Lurie-under §§ 52-552e (a) (1) and (2) and 52-552f of CUFTA, and imposed constructive trusts on the Ridgefield Property and the proceeds from or other items acquired through the sale of the Greenwich Property. Those defendants claim that, with respect to both transfers at issue, Longman did not transfer an ‘‘asset, '' which is required in order to find that a transfer is fraudulent under CUFTA. In response, the plaintiff claims that Longman and the corporate defendants misconstrue the facts and case law applicable to the question of whether the transfers were fraudulent and asks this court to uphold the trial court's determination.
Additionally, Longman and the corporate defendants appeal from the trial court's judgment as to counts seven and eight whereby that court rendered a judgment declaring that Sapphire, Lurie, R.I.P.P., and Great Pasture constitute alter egos of Longman and, as such, applied the doctrine of reverse piercing of the corporate veil to reach their assets to satisfy the plaintiff's foreign judgment. Those defendants claim that the reverse piercing doctrine conflicts with Connecticut law and that, in the alternative, the evidence in the present case does not support the application of reverse piercing. The plaintiff responds that this court should recognize reverse veil piercing as a viable remedy and conclude that the trial court properly applied the doctrine in the present case with respect to Sapphire, Lurie, R.I.P.P., and Great Pasture.
The plaintiff appeals separately, however, from the trial court's judgment as to counts seven and eight rendered in favor of the Solaire entities and W.W. Land with respect to that court's refusal to declare those entities alter egos of Longman. The plaintiff claims that the trial court's findings supported reverse piercing as to those entities. Longman and the corporate defendants respond that, if this court were to adopt reverse veil piercing, the trial court properly declined to apply it with respect to these four entities, because these entities are engaged in legitimate businesses and the application of reverse piercing would affect nonculpable parties who have an interest in those companies. We affirm the judgment of the trial court.
Because the question of standing implicates subject matter jurisdiction, we first consider the plaintiff's claim that the trial court improperly held that he lacked standing to bring an action under § 34-130, [8] challenging the sufficiency of Longman's authority, as a member of Sapphire, to bind the company to the mortgage agreement between it and M&T Bank. The plaintiff challenges the trial court's determination that he lacked standing to challenge the M&T mortgage, because, although he was a stranger to the transaction, he claims that the trial court did not analyze whether he lacked standing specifically under § 34-130, a statute that he claims was intended by the legislature to authorize third parties like him to bring claims. The threshold issue we must address, therefore, is whether the plaintiff is an individual who can challenge an alleged failure by Longman to comply with the requirements of § 34-130 when entering into a contract, when the plaintiff is neither a party to nor an intended beneficiary of that contract. We conclude that the trial court correctly determined that the plaintiff lacked standing to challenge the M&T mortgage.[9]
The record reveals the following additional facts that are relevant to our resolution of this claim. In October, 2007, Sapphire entered into a loan agreement with M&T Bank, secured by the $2.5 million M&T mortgage on the Ridgefield Property. Longman, acting as one of Sapphire's members, [10] executed the mortgage documents. At the time he executed those documents, however, Longman owned only a 5 percent interest in Sapphire, with the remaining 95 percent interest owned almost exclusively by his wife, Gayla Longman (Gayla). Longman did not request Gayla's approval before executing the M&T mortgage.
Among its provisions, Sapphire's operating agreement vested in the operating manager the authority to manage the company, ‘‘[e]xcept for actions requiring the approval of the [m]embers pursuant to the provisions of the [Connecticut Limited Liability Company] Act, the [a]rticles [of organization], or this [operating] [a]greement . . . .'' Under the same section, the operating agreement noted that the operating manager ‘‘shall not have the authority'' to mortgage any property of Sapphire without the approval of a super majority of Sapphire's members, which was defined as ‘‘[m]embers holding an aggregate of . . . 100 [percent] or more of the [p]ercentage [i]nterests held by all [m]embers.''[11]
At trial, M&T Bank introduced into evidence Sapphire's 2008 statement of annual resolutions, which was signed by Gayla on January 27, 2008, a few months after Sapphire entered into the M&T mortgage, and contained a provision resolving ‘‘that all prior acts of the officers . . . including but not limited to entering into agreement[s] and executing documents prior to the adoption of said resolutions . . . are hereby ratified.'' Gayla testified at trial that, upon signing the document, she intended to ratify all the acts taken by Longman on behalf of Sapphire prior to January, 2008.
The plaintiff asked the trial court to declare the M&T mortgage unenforceable under § 34-130, because Sapphire's operating agreement did not authorize Longman, a 5 percent shareholder, to obtain a mortgage from M&T Bank without approval from Gayla, and because M&T Bank had failed to confirm whether the mortgage to Sapphire had been approved according to the terms of that operating agreement. Although, ultimately, M&T Bank argued that Gayla ratified Longman's actions, it first claimed that the trial court lacked subject matter jurisdiction over the plaintiff's claim, because the plaintiff, who was neither a party to nor a third party beneficiary of the mortgage, lacked standing to challenge its enforceability.
The trial court determined that, ‘‘[a]bsent a viable claim that the mortgage transaction was a fraudulent transfer . . . the plaintiff [lacked standing] to challenge the sufficiency of the ratification process.'' The court reasoned that ‘‘the plaintiff . . . provided no authority that a third-party stranger to a transaction has the right to challenge the ratification of the transaction . . . when the actual parties have done everything possible to show consent and have engaged in substantial performance.''
On appeal, we begin with the general principles governing standing to assert a claim. ‘‘If a party is found to lack standing, the court is without subject matter jurisdiction to determine the cause. . . . A determination regarding a trial court's subject matter jurisdiction is a question of law. When . . . the trial court draws conclusions of law, our review is plenary and we must decide whether its conclusions are legally and logically correct and find support in the facts that appear in the record. . . .
‘‘Standing is not a technical rule intended to keep aggrieved parties out of court; nor is it a test of substantive rights. Rather it is a practical concept designed to ensure that courts and parties are not vexed by suits brought to vindicate nonjusticiable interests and that judicial decisions [that] may affect the rights of others are forged in hot controversy, with each view fairly and vigorously represented. . . . These two objectives are ordinarily held to have been met when a complainant makes a colorable claim of direct injury he has suffered or is likely to suffer, in an individual or representative capacity. Such a personal stake in the outcome of the controversy . . . provides the requisite assurance of concrete adverseness and diligent advocacy. . . . The requirement of directness between the injuries claimed by the plaintiff and the conduct of the defendant also is expressed, in our standing jurisprudence, by the focus on whether the plaintiff is the proper party to assert the claim at issue. . . .
‘‘Two broad yet distinct categories of aggrievement exist, classical and statutory. . . . Classical aggrievement requires a two part showing. First, a party must demonstrate a specific, personal and legal interest in the subject matter of the [controversy], as opposed to a general interest that all members of the community share. . . . Second, the party must also show that the [alleged conduct] has specially and injuriously affected that specific personal or legal interest. . . . Statutory aggrievement [however] exists by legislative fiat, not by judicial analysis of the particular facts of the case. In other words, in cases of statutory aggrievement, particular legislation grants standing to those who claim injury to an interest protected by that legislation.'' (Internal quotation marks omitted.) PNC Bank, N.A. v. Kelepecz, 289 Conn. 692, 704-705, 960 A.2d 563 (2008).
‘‘In order to determine whether a party has standing to make a claim under a statute, a court must determine the interests and the parties that the statute was designed to protect. . . . Essentially the standing question in such cases is whether the . . . statutory provision on which the claim rests properly can be understood as granting persons in the plaintiff's position a right to judicial relief. . . . [Stated differently, the] plaintiff must be within the zone of interests protected by the statute.'' (Citation omitted; internal quotation marks omitted.) McWeeny v. Hartford, 287 Conn. 56, 65, 946 A.2d 862 (2008).
The issue of whether an individual who was neither a party to nor an intended third-party beneficiary of a mortgage between a limited liability company and a bank falls within the zones of interests protected by § 34-130 so as to afford him standing to challenge whether a member of the limited liability company that executed the mortgage agreement as the company's agent possessed sufficient authority to bind the company through his actions presents a question of statutory interpretation, over which we exercise plenary review, guided by well established principles regarding legislative intent. See, e.g., Kasica v. Columbia, 309 Conn. 85, 93, 70 A.3d 1 (2013) (explaining plain meaning rule under General Statutes § 1-2z and setting forth process for ascertaining legislative intent).
On the basis of the plain language of this statute, only members and managers-who represent either their own interests as agents or those derivative of the limited liability company-and the parties with whom those members or managers contract fall within the zone of interests protected by § 34-130. We begin by noting that the statutory language found in § 34-130 (b), (c) and (d) governs the agency powers of members and managers to execute legal instruments in different contexts, including ordinary business transactions, extraordinary business transactions, transactions entered into under a member-managed limited liability company, and transactions entered into under a manager-managed limited liability company. A limited liability company may be ‘‘member-managed'' or ‘‘manager-managed.'' See General Statutes (Rev. to 2017) § 34-140 (a) and (b). By default, the members of a limited liability company manage the company's affairs. The members, however, may, in the articles of organization, vest management of the business in a manager or managers. See General Statutes (Rev. to 2017) § 34-140 (a) and (b).
General Statutes (Rev. to 2017) § 34-130 (b), which addresses situations in which the limited liability company is manager-managed, provides in relevant part that a ‘‘manager . . . execut[ing] . . . any instrument, for apparently carrying on in the usual way the business or affairs of the . . . company . . . binds the limited liability company, unless the manager so acting has, in fact, no authority to act for the . . . company in the particular matter and the person with whom he is dealing has knowledge of [that] fact . . . .'' On its face, this subsection deals with protecting the interests of the party with whom the agent of a limited liability company contracts when that party is unaware that the agent lacks authority and seeks to enforce an agreement made between it and the agent. See 2 Restatement (Third), Agency § 6.01, comment (b), p. 4 (2006) (‘‘[a]n agent has power to make contracts on behalf of the agent's principal when the agent acts with actual or apparent authority'').
Section 34-130 (c), by contrast, addresses situations in which a member or manager acts as an agent and that member or manager ‘‘is not apparently . . . carrying on in the usual way the business or affairs of the . . . company, '' in which case his actions ‘‘[do] not bind the . . . company, unless authorized in accordance with the operating agreement . . . .'' Subsection (c) appears to create a protection for the limited liability company itself, by restricting agents of the limited liability company from binding the limited liability company to extraordinary dealings, unless previously agreed on in the operating agreement.
Finally, § 34-130 (d), which also governs actions by the managers and members as agents of the limited liability company, provides that ‘‘[a]n act of a manager or member in contravention of a restriction on authority shall not bind the limited liability company to persons having knowledge of that restriction.'' (Emphasis added.) Unlike subsections (b) and (c), which protect the contracting parties when the agent does not have actual authority to act on behalf of the limited liability company, § 34-130 (d) addresses situations in which the agent has apparent authority to act on behalf of the limited liability company. On the one hand, this subsection protects the unknowing party with whom the agent contracts, as it prevents the limited liability company from subsequently avoiding liability by alleging that the agent lacked authority to enter into the agreement. On the other hand, it also protects the limited liability company from being bound to transactions in which the party with whom the agent is contracting knows of a restriction on the agent's authority to enter into an agreement on behalf of its principal. See 3 Am. Jur. 2d 516, Agency § 74 (2013) (‘‘[t]he doctrine . . . may not be invoked by one who knows or has good reason to know the limits and extent of an agent's authority'').
We conclude that the plaintiff in the present case, who was neither a party to the M&T mortgage nor a third-party beneficiary of it, does not fall within the zone of interests that § 34-130 was meant to protect.[12] The plaintiff does not claim that he was either a member or manager of Sapphire; nor does he claim that he was a party to the mortgage agreement. Additionally, the plaintiff failed to establish that he was an intended third-party beneficiary of the mortgage. At the time Sapphire and M&T Bank entered into the mortgage agreement, the plaintiff had not yet recorded a lis pendens on the land records and, therefore, had no recorded title interest in the property.[13]
The plaintiff asks this court, however, to interpret the statute's silence as to who may bring an action under § 34-130 as an indication of the legislature's affirmative intent to allow persons other than members or managers of the limited liability company or the party with whom its agent contracts to bring a claim challenging the enforceability of an agreement between those two parties. That interpretation is inconsistent with the general contract principle, articulated by this court, that ‘‘one who [is] neither a party to a contract nor a contemplated beneficiary thereof cannot sue to enforce the promises of the contract . . . .''[14] (Internal quotation marks omitted.) Tomlinson v. Board of Education, 226 Conn. 704, 718, 629 A.2d 333 (1993). We observe that other courts have applied this proposition in the context of mortgages. See, e.g., In re Espanol, 509 B.R. 422, 429 (Bankr. D. Conn. 2014) (citing Tomlinson and holding that ‘‘[o]nly a party to the contract or intended [third-party] beneficiary has standing to challenge or seek to enforce the terms of [a] mortgage''); Crimmino v. Household Realty Corp., 104 Conn.App. 392, 393, 395- 96, 933 A.2d 1226 (2007) (citing Tomlinson and holding that plaintiff lacked standing to request that judgment of strict foreclosure on residence in which he lived be set aside because he was not party to mortgage on which bank foreclosed and he had no recorded interest in subject property after transferring it to his children to ‘‘insulate the property from [his] creditors''), cert. denied, 285 Conn. 912, 943 A.2d 470 (2008).
Additionally, to the extent that the plaintiff claims that, because the statute is silent, it confers standing on creditors of parties that enter into contracts with or on behalf of a limited liability company, his claim lacks merit because such a reading of § 34-130 would expose future lenders to any and all claims by any creditors of any party that enters into a contract with or on behalf of a limited liability company. The effect of such a rule would contradict the apparent intent of the legislature in enacting the Connecticut Limited Liability Company Act, General Statutes (Rev. to 2017) § 34-100 et seq., which was to ‘‘give maximum effect to the principle of freedom of contract and to [the] enforceability of limited liability company agreements.'' General Statutes (Rev. to 2017) § 34-242 (a). Because we conclude that the trial court correctly determined that the plaintiff lacked standing to challenge the M&T mortgage, we do not reach the issue of whether the circumstances of this case would render the mortgage void or voidable.
FRAUDULENT TRANSFERS UNDER CUFTA
We next address whether the trial court incorrectly determined that, under §§ 52-552e and 52-552f, Longman fraudulently transferred title to the Ridgefield Property to Sapphire in December, 2007, and title to the Greenwich Property to Lurie in February, 2010. Longman and the corporate defendants claim that, with respect to both transactions, Longman did not transfer an ‘‘asset'' under CUFTA. The plaintiff responds that Longman and the corporate defendants misconstrue the facts and case law applicable to his CUFTA claims. We conclude that the trial court's findings that these two transfers by Longman were fraudulent under §§ 52-552e[15] and 52-552f [16] were not clearly erroneous.
We begin with the legal principles guiding our review of these claims. ‘‘A party alleging a fraudulent transfer or conveyance under the common law bears the burden of proving either: (1) that the conveyance was made without substantial consideration and rendered the transferor unable to meet his obligations or (2) that the conveyance was made with a fraudulent intent in which the grantee participated. . . . The party seeking to set aside a fraudulent conveyance need not satisfy both of these tests. . . . These are also elements of an action brought pursuant to §§ 52-552e (a) and 52-552f (a). Indeed, although the statute provides a broader range of remedies than the common law . . . [CUFTA] is largely an adoption and clarification of the standards of the common law of [fraudulent conveyances] . . . .
‘‘The determination of whether a fraudulent transfer took place is a question of fact and it is axiomatic that [t]he trial court's [factual] findings are binding upon this court unless they are clearly erroneous in light of the evidence and the pleadings in the record as a whole. . . . We cannot retry the facts or pass on the credibility of the witnesses. . . . A finding of fact is clearly erroneous when there is no evidence in the record to support it . . . or when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed. The elements of fraudulent conveyance, including whether the defendants acted with fraudulent intent, must be proven by clear, precise and unequivocal evidence.'' (Citations omitted; footnote omitted; internal quotation marks omitted.) Certain Underwriters at Lloyd's, London v. Cooperman, 289 Conn. 383, 394-95, 957 A.2d 836 (2008). With these principles in mind, we turn to the plaintiff's claims.
We first address the contention by Longman and the corporate defendants that the trial court improperly held that Longman's December 4, 2007 transfer of the Ridgefield Property back to Sapphire for nominal consideration constituted a fraudulent transfer under §§ 52-552e (a) (1) and (2) and 52-552f. With respect to this transfer, Longman and the corporate defendants specifically claim that the transfers were intended only to satisfy Chase Bank's lending requirements, that Longman was merely ‘‘the facilitator for Sapphire that allowed Sapphire to effectuate [obtainment of the loan], '' and, therefore, that Longman's temporary title to the property for this purpose did not render it his asset. The plaintiff responds that the timing of the transfers surrounding the Chase Bank mortgage indicates the fraudulent intent behind this transaction and that the timing of this particular transfer shielded the mortgage from the plaintiff. We conclude that the trial court's determination that the December 4, 2007 transfer was fraudulent is not clearly erroneous.
Because we agree with the trial court that reviewing the history of the transactions involving the Ridgefield Property is helpful in a context such as this one, in which ‘‘[t]he number of days that title to the property was in . . . Longman's name [since 1995] could be . . . measured in days out of a multiyear period of time, '' we observe that the following additional facts found in the record are relevant to our resolution of the plaintiff's fraudulent transfer claims with respect to the Ridgefield Property. In 1985, Longman purchased the Ridgefield Property, and, since 1987, he and his family lived in the residence located there. In 1995, while the New York action was pending against Longman, Longman executed a quitclaim deed conveying the Ridgefield Property to Gayla. Gayla provided no consideration for this transfer.
At approximately the same time as the New York judgment was rendered, the Ridgefield Property went into strict foreclosure, and a deficiency judgment was rendered in favor of Webster Bank, which entered into a settlement agreement in 1997 with Longman while the case was on appeal. Thereafter, the Ridgefield Property was transferred by Webster Bank in two portions: one portion to Longman's friend, David A. Thomas, and the second portion to R.I.P.P., a corporation created by Longman, of which Gayla was its sole shareholder and Longman its only director. Thomas transferred title to his portion of the property to R.I.P.P. in return for a mortgage. In 2001, Thomas filed an action to foreclose his mortgage from R.I.P.P., before assigning his interest in the mortgage to Highland Connecticut Investment, LLC (Highland), of which Longman had a 5 percent ownership stake and of which Emerald Investments, L.L.C. (Emerald) had a 95 percent ownership stake. At that time, The Stuart Longman Family Trust had a 90 percent ownership stake in Emerald, and Longman and Gayla each had a 5 percent ownership stake in Emerald. After this transfer, a judgment of strict foreclosure was rendered on behalf of Highland.
In January, 2002, Highland, acting through Longman, transferred title to the Ridgefield Property[17] to Longman individually. ‘‘[O]n the same day'' that Longman executed the deed that transferred the Ridgefield Property from Highland to him, he individually executed an ‘‘open-end mortgage from . . . Washington Mutual Bank, FA . . . .'' He recorded both the mortgage and the deed six days later. Longman admitted at trial that ‘‘the reason for the quitclaim deed . . . [was] obviously to effect this financing.'' The original principal amount of this mortgage was $1, 920, 000. On February 7, 2002, Longman recorded a quitclaim deed conveying the Ridgefield Property back to Highland.
On July 27, 2007, Longman recorded a merger, executed on November 21, 2006, of Highland into Sapphire, then owned 95 percent by Emerald and 5 percent by Longman. Thereafter, on August 28, 2007, [18] Sapphire -the remaining entity post merger-quitclaimed the Ridgefield Property to Longman, as trustee of The Stuart Longman Family Trust. This conveyance was made ‘‘in connection with''a second Washington Mutual mortgage on the Ridgefield Property that Longman executed as trustee of The Stuart Longman Family Trust.[19] The second mortgage, which was obtained on August 27, 2007, [20] in the amount of $2, 800, 000, was used in part to pay off the first Washington Mutual mortgage made to Longman individually.
On August 28, 2007, the day after he obtained the second Washington Mutual mortgage, Longman applied for the M&T mortgage loan.[21] On August 31, 2007, Longman, as trustee for The Stuart Longman Family Trust, quitclaimed the property back to Sapphire. The M&T mortgage was closed on October 26, 2007, and the proceeds were disbursed to Sapphire on October 31, 2007. Certain proceeds from the M&T mortgage, in the amount of $2, 294, 596.24, were paid to Washington Mutual for the satisfaction of the second mortgage, given to The Stuart Longman Family Trust. There was a net balance of $199, 921.55 remaining from the M&T mortgage proceeds, which was disbursed to Longman, and Longman testified that he does not know where that money went or how he spent it.
On the same dates that the M&T mortgage was closed and the proceeds were disbursed, Sapphire executed and recorded a quitclaim deed to the Ridgefield Property back to Longman, subject to the M&T mortgage, in order ‘‘to facilitate the closing of a financing with Chase Bank for [an additional] mortgage loan [secured by the Ridgefield Property] in the amount of . . . $500, 000'' to Longman individually. Longman executed the Chase Bank mortgage on November 20, 2007. Four days before the execution of that mortgage loan, however, Longman transferred his title to the Ridgefield Property to Sapphire for $1 ‘‘and other valuable consideration.'' The record indicates that no other consideration was provided.[22] Longman did not record the quitclaim deed for that transfer until December 4, 2007. Similarly, the Chase Bank mortgage was not recorded until December 26, 2007, which was more than one month after Longman executed the loan agreement and twenty-two days after he quitclaimed the Ridgefield Property back to Sapphire.
With this background in mind, we turn to the governing law. As we have indicated, the plaintiff's claims of fraudulent transfer fall under §§ 52-552e and 52-552f of CUFTA. See footnotes 15 and 16 of this opinion. Consequently, the trial court considered the plaintiff's claims under each of these statutes and concluded that Longman's December 4, 2007 transfer of the Ridge-field Property back to Sapphire before recording the $500, 000 Chase Bank mortgage that he obtained through a previous transfer of the property to him for that purpose ‘‘facially and substantively satisf[ies]'' § 52-552e (a) (1) and (2), as ‘‘the prompt transfer back to Sapphire likely . . . was intended to shield the property from any creditors . . . .''
The trial court first considered the plaintiff's fraudulent transfer claims regarding the Ridgefield Property under § 52-552e (a) (1). With respect to finding ‘‘actual intent'' as set forth in § 52-552e (a) (1), we have stated that, because fraudulent intent is ‘‘almost always . . . proven by circumstantial evidence, '' courts may consider numerous factors in determining whether a transfer was made with ‘‘actual intent'' to defraud. Canty v. Otto, 304 Conn. 546, 564, 41 A.3d 280 (2012). In its memorandum of decision, the trial court relied on various factors set forth in § 52-552e (b) to support its finding of fraudulent intent: ‘‘Longman appears to have been an ‘insider' with respect to Sapphire; he retained control of the property in a functional sense . . . there is a history of substantial delays in recording transactions; a multimillion dollar judgment had entered against [Longman] a decade earlier; at the time of the transfer back to Sapphire, the property was or appeared to be the overwhelming majority of assets (by value) then identifiable as owned by Longman; there was no consideration stated or paid for the transaction; [and] he appears to have been rendered in solvent by the transfer, to the extent that the outstanding judgments appear to have exceeded all of his identified assets.''[23] (Footnotes omitted.) In its analysis of § 52-552 (a) (2), the trial court noted both ‘‘the absence of any consideration for the transfer[s]'' and the fact that the transfer of the Ridgefield Property back to Sapphire ‘‘rendered [Longman] insolvent, '' with ‘‘no indication as to an even theoretical ability . . . to pay debts'' he then owed.
We conclude that these findings are not clearly erroneous. The record revealed, among other facts detailed by the trial court, that Longman was an insider, as Sapphire was owned directly and indirectly by him and Gayla, and he made all of the decisions for the company. See, e.g., Zapolsky v. Sacks, 191 Conn. 194, 200-201, 464 A.2d 30 (1983) (close relationship between defendants supported finding of fraudulent intent). The record revealed that, through this close relationship, various transfers enabled Longman to use the Ridgefield Property as security for multiple loans, some of which were obtained by Longman in an individual capacity and paid off by loans acquired in a representative role; a recording delay with respect to both Longman's transfer of the Ridgefield Property back to Sapphire and the Chase Bank mortgage allowed Longman to obtain that mortgage without ever holding the proceeds under his name; there was a lack of consideration; and there was no indication of any benefit to Sapphire for allowing Longman, through these transfers, to extract equity from its sole asset.
We also reject Longman's argument that the trial court incorrectly determined that Longman's transfer of the Ridgefield Property to Sapphire in October, 2007, constituted a fraudulent transfer because he was merely the facilitator of the loan for Sapphire. As we have explained, there is no evidence in the record that Sapphire, a purportedly independent real estate entity whose only asset was the Ridgefield Property, did or would benefit from Longman's obtaining an individual home equity loan secured by the property less than one month after Sapphire itself obtained the proceeds from the M&T mortgage.[24] We observe that, from the circumstances surrounding Longman's application for and recording of the Chase Bank mortgage, coupled with the history of multiple transfers, the trial court correctly found fraudulent intent. See, e.g., National Council on Compensation Ins., Inc. v. Caro & Graifman, P.C., 259 F.Supp.2d 172, 179 (D. Conn. 2003) (under Connecticut law, ‘‘[a]ctual fraudulent intent may be inferred from the circumstances surrounding the transaction'').
The trial court next considered the plaintiff's fraudulent transfer claims under § 52-552f. See footnote 16 of this opinion. The trial court held that ‘‘the transactions whereby Sapphire transferred the property to [Longman], [Longman] then obtained a loan secured by the Ridgefield Property, and then transferred the property back to Sapphire subject to that mortgage, facially and substantively satisfy this statute.'' The court reasoned that ‘‘there was no consideration whatsoever for the transfer back to Sapphire, much less ‘reasonably equivalent value' and [that] the existence of the multimillion dollar judgment [that had] essentially doubled by the time of this transaction . . . rendered . . . [Longman] insolvent . . . .'' We conclude that the trial court's finding that the transfer at issue was fraudulent under § 52-552f was not clearly erroneous, as the record indicates that nothing more than nominal consideration was provided.
We next address the claim by Longman and the corporate defendants that the trial court improperly found that the February 12, 2010 transfer of the Greenwich Property to Lurie constituted a fraudulent transfer under §§ 52-552e (a) (1) and (2) and 52-552f of CUFTA. See footnotes 15 and 16 of this opinion. Longman and the corporate defendants argue that the trial court improperly found that Longman had provided the purchase money for the equity piece of the property, when the record indicates-through Longman's deposition testimony-that ‘‘Lurie and/or Emerald'' provided it. They further argue, therefore, that, because Longman purportedly purchased the Greenwich Property with equity received from Lurie-thus, purchasing the property on Lurie's behalf-he never owned the ‘‘asset, '' and its transfer to Lurie did not constitute a fraudulent transfer under Connecticut law. The plaintiff responds that the trial court properly found that the equity to purchase the Greenwich Property came from Longman, as the sequence of transfers indicates that, although the purchase money transferred through Lurie, it originated in Longman's personal bank account and was funneled through the other corporate defendants. We conclude that the trial court's determination was not clearly erroneous.
The record reveals the following additional facts that are relevant to our resolution of this claim. On February 9, 2010, Longman acquired the Greenwich Property for $1, 049, 000 from Thomas, the same friend who, at one time, acquired an interest in the Ridgefield Property. Longman financed the purchase with a $600, 000 commercial mortgage loan and paid the equity remainder. The closing statement for this transaction lists the balance of funds paid by Longman as $515, 000.
At trial, the plaintiff introduced records from Longman's personal bank account and the bank accounts of Solaire Funding, Inc., Lurie, and R.I.P.P. to chronicle the following series of transactions, which occurred during the days leading up to the purchase of the Greenwich Property. On February 3, 2010, Longman transferred $500, 000 from his personal bank account to the bank account of Solaire Funding, Inc., a corporation whose operating agreement lists Lurie as its sole member and Longman as its sole director. Solaire Funding, Inc., received the transfer on February 5, 2010, and three days later, transferred $500, 000 to Lurie's bank account. Lurie received this transfer on February 8, 2010, and, on the same day, Lurie transferred amounts that totaled $514, ...