Court Opinion

ID: 9964211
Source: CourtListenerOpinion
Date Created: 2024-04-29 12:02:31.695197+00
Date Added: 2024-06-11T08:25:14.183375
License: Public Domain

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                                        Rubin v. Brodie

                      EITAN RUBIN ET AL. v. BARNETT
                             BRODIE ET AL.
                               (AC 46348)
                                 Alvord, Elgo and Prescott, Js.

                                            Syllabus

         Pursuant to the rule of practice (§ 61-11 (a)), an automatic appellate stay
            applies to ‘‘proceedings to enforce or carry out the judgment.’’
         The plaintiffs, three individuals, including R and G, and three limited liability
            companies, including E Co., commenced this civil action to recover
            damages from the defendants for, inter alia, breach of fiduciary duty.
            The plaintiffs’ complaint alleged that the defendant B had engaged in
            certain ultra vires actions that constituted self-dealing, and, therefore,
            breached his fiduciary duties in managing the LLCs. Prior to the com-
            mencement of this action, the parties’ dispute was submitted to a binding
            rabbinical arbitration proceeding in which B sought to buy out the
            interests of R and G in E Co. The arbitrators’ decision, which ordered
            R and G to sell their interests in E Co. to B, was issued approximately
            one month after this action had been commenced. B, in the same action,
            filed an application to confirm the arbitration award pursuant to statute
            (§ 52-417 et seq.). B and the other defendants thereafter filed motions
            to dismiss the action. The parties agreed that the trial court should
            resolve the motions to dismiss prior to the hearing on the application
            to confirm. The court granted the motions to dismiss for lack of subject
            matter jurisdiction and rendered judgment thereon, from which the
            plaintiffs appealed to this court. Subsequently, B attempted to reclaim
            his application to confirm the arbitration award. The clerk issued an
            order indicating that no hearing would be scheduled, as the case was
            ‘‘stayed during the pendency of appeal.’’ B and various other defendants
            filed a motion for review, asking this court for an order clarifying whether
            Practice Book § 61-11 (a) automatically stayed proceedings in the Supe-
            rior Court on the pending application to confirm. Held that the motion
            for review was granted and the relief requested was granted in accor-
            dance with this court’s prior order: contrary to the plaintiffs’ claim,
            the application to confirm the arbitration award, a special statutory
            proceeding, survived the dismissal of the plaintiffs’ complaint, as there
            was no dispute that B could have secured affirmative relief had he filed
            the application to confirm in a separate action, and, thus, assuming the
            conditions of § 52-417 et seq. have been met, the application to confirm
            can proceed to judgment separately from the judgment on the complaint;
            moreover, the present appeal from the judgment dismissing the com-
            plaint did not automatically stay proceedings before the court on the
            application to confirm the arbitration award because proceedings on
            that application will not ‘‘enforce or carry out the judgment’’ dismissing
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                                     Rubin v. Brodie
          the complaint pursuant to Practice Book § 61-11 (a), the court having
          dismissed the entirety of the complaint, which sought damages from
          the defendants under various theories of liability, for lack of subject
          matter jurisdiction, and, should that judgment ultimately be reversed
          by this court, the action would be restored to the pleading stage; further-
          more, the court’s resolution of B’s application to confirm the arbitration
          award will result in a separate judgment with its own appeal period,
          and, although the present appeal from the judgment of dismissal resulted
          in an automatic stay as to that judgment, this appeal did not have any
          effect on the eventual judgment on the application to confirm, and it
          did not deprive the court of authority to act on the application to confirm.
              Considered February 14—officially released April 30, 2024

                                   Procedural History

          Action to recover damages for, inter alia, breach of
       fiduciary duty, and for other relief, brought to the Supe-
       rior Court in the judicial district of New Haven, where
       the named defendant filed an application to confirm an
       arbitration award; thereafter, the court, Jongbloed, J.,
       granted the defendants’ motions to dismiss, and ren-
       dered judgment thereon, from which the plaintiffs
       appealed to this court; subsequently, the named defen-
       dant et al. filed a motion for review. Motion for review
       granted.
         Jack G. Steigelfest, in support of the motion.
        Ridgely Whitmore Brown, in opposition to the
       motion.
                                         Opinion

          PRESCOTT, J. The issues before this court are
       whether an application to confirm an arbitration award
       filed in a pending civil action survives the dismissal of
       the civil action and, if so, whether an appeal from the
       judgment dismissing the civil action operates to auto-
       matically stay proceedings on the application to confirm
       the arbitration award. We reject the argument that the
       application to confirm did not survive the dismissal of
       the complaint and conclude that this appeal does not
       automatically stay proceedings before the Superior
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                                        Rubin v. Brodie

         Court on the pending application to confirm an arbitra-
         tion award filed by the named defendant, Barnett Bro-
         die. Accordingly, we grant the motion for review filed
         by Brodie and other defendants and grant the relief
         requested in accordance with this court’s February 14,
         2024 order.1
            On February 15, 2022, the individual plaintiffs, Eitan
         Rubin, Reuven Gidanian, and Eitan Rubin by power of
         attorney on behalf of George Rohr,2 on their own behalf
         and purportedly on behalf of the plaintiff limited liability
         companies (LLCs)—E.R. Holdings, LLC; L.E. Ventures,
         LLC; and Whalley Group, LLC—commenced this civil
         action. The plaintiff LLCs owned land and rental proper-
         ties in and around New Haven (assets). Brodie was the
         managing member of the plaintiff LLCs and owned a
         30 percent membership interest in each of those enti-
         ties. The individual plaintiffs, Rubin, Gidanian and Rohr,
         owned the remaining membership interests in the plain-
         tiff LLCs. Brodie also owns or controls five additional
         business entities that were named as defendants (Bro-
         die defendants).3
           In the first count of their complaint, the plaintiffs
         sought damages for Brodie’s alleged ultra vires actions
         and breaches of his fiduciary duties in his management
         of the plaintiff LLCs. They alleged that Brodie acted
         beyond the scope of his authority under the relevant
             1
              On February 14, 2024, this court granted the motion for review and
         granted the relief requested, in part, by clarifying that Practice Book § 61-
         11 (a) does not automatically stay proceedings before the Superior Court
         on the pending application to confirm the arbitration award. Our order
         indicated an opinion would follow. This opinion explains our reasons for
         that determination.
            2
              One contested issue in this appeal is whether George Rohr is properly
         a party plaintiff to this action. Rohr’s party status, however, is not relevant
         to the automatic stay issue, and we decline to address it.
            3
              The Brodie defendants include Brodie and the following defendant enti-
         ties: Reichman Brodie Real Estate, LLC; RBC DE2, LLC; Sperry Group DE2,
         LLC; Riley Group DE2, LLC; and TZ DE2, LLC.
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                                    Rubin v. Brodie

       operating agreements and engaged in self-dealing by
       dissolving and merging the plaintiff LLCs ‘‘into the
       downstream Brodie controlled entities,’’ and by improp-
       erly obtaining mortgages on the assets.
         The plaintiffs named additional defendants in this
       action, including holders of mortgages on the underly-
       ing assets, CoreVest American Finance Lender, LLC,
       formerly known as Colony American Finance Lender,
       LLC (CoreVest), and 5 Arch Funding Corporation (5
       Arch), as well as Attorney Lawrence Levinson. In the
       second count of the complaint, which is directed to the
       Brodie defendants, CoreVest, and 5 Arch, the plaintiffs
       sought to quiet title to the listed asset properties. In
       count three, they sought to recover damages from all
       defendants for their alleged violations of the Connecti-
       cut Unfair Trade Practices Act, General Statutes § 42-
       110a et seq. Finally, count four alleged legal malpractice
       by Levinson arising out of his representation of the
       plaintiff LLCs.
          The dispute at the heart of the plaintiffs’ complaint
       was also the subject of a binding rabbinical arbitration
       proceeding in which Brodie sought to buy out the inter-
       ests of Rubin and Gidanian in E.R. Holdings, LLC. Hear-
       ings before the arbitrators occurred prior to the com-
       mencement of this action and terminated on February
       15, 2022, the day this action was commenced. The deci-
       sion of the arbitrators was issued on March 23, 2022,
       approximately one month after the plaintiffs com-
       menced this action. The arbitrators ordered that Rubin
       and Gidanian sell their interests in E.R. Holdings, LLC,
       to Brodie for $168,425. On March 24, 2022, in this civil
       action, Brodie filed an application to confirm the arbi-
       tration award pursuant to General Statutes § 52-417
       et seq.4
         4
           E.R. Holdings, LLC’s 2014 operating agreement predates October 1, 2018;
       thus, the Revised Uniform Arbitration Act, General Statutes § 52-407aa et
       seq., does not apply.
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                                Rubin v. Brodie

            On March 28, 2022, the Brodie defendants filed a
         motion to dismiss the plaintiffs’ complaint for lack of
         personal and subject matter jurisdiction. The other
         defendants—Levinson, CoreVest and 5 Arch—sepa-
         rately moved to dismiss the plaintiffs’ complaint. The
         plaintiffs objected to these motions, and the defendants
         filed replies. The court scheduled a hearing on Brodie’s
         application to confirm the arbitration award. The par-
         ties ultimately agreed that the court should resolve the
         motions to dismiss prior to hearing the application to
         confirm.
            On December 23, 2022, the court, Jongbloed, J.,
         granted the defendants’ motions to dismiss and dis-
         missed the entirety of the plaintiffs’ complaint for lack
         of subject matter jurisdiction. The court determined
         that the individual plaintiffs did not have standing to
         commence the suit as a derivative action and that they
         failed to plead facts that met the statutory prerequisites
         to demonstrate that the plaintiff LLCs had authorized
         the commencement of the action. This appeal followed.
            After the plaintiffs filed this appeal, Brodie attempted
         to reclaim his application to confirm the arbitration
         award for a hearing before the Superior Court. The
         plaintiffs objected. On November 3, 2023, the clerk
         issued an order indicating that ‘‘[n]o hearing to be
         scheduled at this time as matter is stayed during pen-
         dency of the appeal. Party may reclaim.’’
           The Brodie defendants filed a motion to reargue on
         November 8, 2023. They argued that the automatic
         appellate stay of Practice Book § 61-11 applies to pro-
         ceedings to ‘‘enforce or carry out the judgment’’ but
         does not stay all activity before the Superior Court.
         Instead, they argued that the court has continuing juris-
         diction over the application to confirm. Accordingly,
         the Brodie defendants requested that the application
         to confirm be scheduled for argument and disposition.
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                               Rubin v. Brodie

       The plaintiffs filed an opposition, in which they argued
       that ‘‘[a]ny subject matter jurisdiction that the trial court
       may have had over the application to confirm the arbi-
       tration award was lost when the plaintiffs’ case was
       dismissed, and the automatic appellate stay operates
       to preclude any further action in the case.’’
          On November 24, 2023, the court, Frechette, J., denied
       the Brodie defendants’ motion and sustained the plain-
       tiffs’ objection. The Brodie defendants filed a timely
       motion for review of the court’s decision, asking this
       court for an order clarifying whether Practice Book
       § 61-11 (a) automatically stays proceedings in the Supe-
       rior Court on the pending application to confirm. The
       plaintiffs filed an opposition, renewing their arguments
       that the Superior Court lost jurisdiction over the appli-
       cation to confirm when it dismissed the plaintiffs’ com-
       plaint and, alternatively, that further proceedings are
       automatically stayed during the pendency of their
       appeal.
         Before reaching the applicability of an appellate stay,
       we must first address the plaintiffs’ claim that Brodie’s
       application to confirm the arbitration award did not
       survive the dismissal of the plaintiffs’ complaint. We
       conclude that the application to confirm survived the
       dismissal of the plaintiffs’ complaint.
          ‘‘Judicial enforcement of an arbitration award in Con-
       necticut is governed by statute. Section 52-417 controls
       applications for confirmation of an arbitration award
       and states in relevant part: ‘At any time within one year
       after an award has been rendered and the parties to the
       arbitration notified thereof, any party to the arbitration
       may make application to the superior court . . . for
       an order confirming the award. . . .’ The specific steps
       for applying for confirmation of an arbitration award
       are set out in [General Statutes] § 52-421 (a), which
       provides: ‘Any party applying for an order confirming,
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                                Rubin v. Brodie

         modifying or correcting an award shall, at the time the
         order is filed with the clerk for the entry of judgment
         thereon, file the following papers with the clerk: (1)
         The agreement to arbitrate, (2) the selection or appoint-
         ment, if any, of an additional or substitute arbitrator
         or an umpire, (3) any written agreement requiring the
         reference of any question as provided in section 52-415,
         (4) each written extension of the time, if any, within
         which to make the award, (5) the award, (6) each notice
         and other paper used upon an application to confirm,
         modify or correct the award, and (7) a copy of each
         order of the court upon such an application.’ [General
         Statutes §] 52-420 (a) directs the trial court to handle
         arbitration issues in an efficient manner, providing: ‘Any
         application under section 52-417, 52-418 or 52-419 shall
         be heard in the manner provided by law for hearing
         written motions at a short calendar session, or other-
         wise as the court or judge may direct, in order to dispose
         of the case with the least possible delay.’ ’’ Windham
         v. Doctor’s Associates, Inc., 161 Conn. App. 348, 353–34,
         127 A.3d 1082 (2015).
            In Windham, the plaintiff claimed that the ‘‘court
         improperly confirmed the arbitration award because a
         proper application to confirm the award was not before
         the court. [The defendant] requested that the court con-
         firm the award, but it did not file a separate and distinct
         application to confirm.’’ Id., 352. Instead, the defendant
         had included its application to confirm the award as
         an opposition to the plaintiff’s application to vacate the
         award and, therefore, did not pay a filing fee. Id. The
         plaintiff claimed that this was fatal to the judgment
         confirming the award in favor of the defendant.
           This court in Windham determined that the trial court
         did not improperly confirm the arbitration award. Id.,
         355. In support of its conclusion, this court reasoned:
         (1) the defendant had provided sufficient notice of its
         request to confirm the award; (2) the defendant’s
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                               Rubin v. Brodie

       motion ‘‘was filed within one year of the date of the
       arbitration award’’ as required by § 52-417; (3) the mate-
       rials required by § 52-421 were before the court; and
       (4) the court’s decision to consider both the application
       to vacate and application to confirm ‘‘simultaneously,
       in furtherance of judicial economy, is a reasonable way
       to ‘dispose of the case with the least possible delay’ ’’
       as required by § 52-420 (a). Windham v. Doctor’s Asso-
       ciates, Inc., supra, 161 Conn. App. 354–55.

          Here, Brodie’s application to confirm was filed in the
       Superior Court within days of the issuance of the award.
       It will be for that court to determine, in the first instance,
       whether the essential conditions prescribed by § 52-417
       et seq. have been met. Under the rationale of Windham,
       however, the Superior Court has the authority to con-
       sider the application, even though the application was
       not filed independently but, instead, was made in a
       pending civil action. See also, e.g., Lemma v. York &
       Chapel, Corp., 204 Conn. App. 471, 475–76, 254 A.3d
       1020 (2021) (rejecting defendant’s argument, made for
       first time on appeal, that Superior Court lacked jurisdic-
       tion over application to confirm arbitration award when
       application was filed in same docket as earlier statutory
       proceeding between parties).

          The fact that the plaintiffs’ complaint subsequently
       was dismissed does not alter our analysis. Proceedings
       to confirm or vacate arbitration awards are special stat-
       utory proceedings. Pickard v. Dept. of Mental Health &
       Addiction Services, 210 Conn. App. 788, 795, 271 A.3d
       178 (2022). The statutes relating to arbitration ‘‘[confer]
       a definite jurisdiction upon a judge and [define] the
       conditions under which such relief may be given . . . .
       [J]urisdiction is only acquired if the essential conditions
       prescribed by [the] statute are met.’’ (Internal quotation
       marks omitted.) Id.
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                                Rubin v. Brodie

            Principles pertaining to ordinary civil actions are nev-
         ertheless helpful in framing this discussion. ‘‘[A] coun-
         terclaim is a cause of action . . . on which the defen-
         dant might have secured affirmative relief had he sued
         the plaintiff in a separate action.’’ (Internal quotation
         marks omitted.) Historic District Commission v. Sci-
         ame, 152 Conn. App. 161, 176, 99 A.3d 207, cert. denied,
         314 Conn. 933, 102 A.3d 84 (2014). ‘‘The term [counter-
         claim] itself is a general and comprehensive one, natu-
         rally including within its meaning all manner of permis-
         sible counterdemands. . . . [T]he word counterclaim
         was intended to be the generic term for all cross
         demands other than setoffs, whether in law or in
         equity.’’ (Citations omitted; internal quotation marks
         omitted.) 98 Lords Highway, LLC v. One Hundred
         Lords Highway, LLC, 138 Conn. App. 776, 798, 54 A.3d
         232 (2012); cf. Gattoni v. Zaccaro, 52 Conn. App. 274,
         279–80, 727 A.2d 706 (1999) (trial court had jurisdiction
         to consider defendant’s motion for injunctive relief,
         despite plaintiffs’ withdrawal of complaint, where ‘‘trial
         court properly treated that motion as a counterclaim’’).
         ‘‘A final judgment on a [complaint] establishes a distinct
         appeal period from the appeal period related to the
         judgment on a [counterclaim] in the same case. See
         Practice Book §§ 61-2 and 61-3.’’ Sovereign Bank v.
         Licata, 178 Conn. App. 82, 99, 172 A.3d 1263 (2017).
            There can be no dispute that Brodie could have
         secured affirmative relief had he filed the application
         to confirm the arbitration award in a separate action.
         The plaintiffs have offered no authority for the proposi-
         tion that the dismissal of their complaint, by itself, strips
         the Superior Court of jurisdiction to consider Brodie’s
         application filed in the same case. Assuming the condi-
         tions of § 52-417 et seq. have been met, the application
         to confirm, like a counterclaim, can proceed to judg-
         ment separately from the judgment on the complaint.
         We therefore reject the plaintiffs’ argument that the
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                                      Rubin v. Brodie

       application to confirm the arbitration award did not
       survive the dismissal of their complaint.
         We must next determine whether this appeal from
       the judgment dismissing the plaintiffs’ complaint oper-
       ates to stay proceedings in the Superior Court on Bro-
       die’s application to confirm the arbitration award. We
       conclude that it does not.5
          The automatic appellate stay delineated in Practice
       Book § 61-11 (a) applies to ‘‘proceedings to enforce or
       carry out the judgment . . . .’’ Our appellate courts
       regularly draw distinctions between proceedings to
       enforce or carry out a judgment, which are automati-
       cally stayed; e.g., RAL Management, Inc. v. Valley View
       Associates, 278 Conn. 672, 683–84, 899 A.2d 586 (2006)
       (law days in foreclosure actions are automatically
       stayed because they carry out judgment of strict foreclo-
       sure); and trial court proceedings that do not enforce
       or carry out the judgment. E.g., All Seasons Services,
       Inc. v. Guildner, 89 Conn. App. 781, 787–88, 878 A.2d
       370 (2005) (filing judgment lien and engaging in post-
       judgment discovery do not violate § 61-11 (a)).
         Proceedings on Brodie’s application to confirm do
       not enforce or carry out the judgment dismissing the
       plaintiffs’ complaint. The plaintiffs filed a civil action
         5
           Our conclusion is limited to the question presented here, namely, whether
       Practice Book § 61-11 (a) automatically stays trial court proceedings on the
       application to confirm. We conclude that it does not. We express no opinion
       as to whether the Superior Court, in the exercise of its discretion, may
       impose a stay of proceedings on the application to confirm for the duration
       of this appeal. ‘‘We are mindful of the well established principle that [t]he
       power to stay proceedings is incidental to the power inherent in every court
       to control the disposition of the causes on its docket with economy of time
       and effort for itself, for counsel, and for litigants. How this can best be done
       calls for the exercise of judgment, which must weigh competing interests
       and maintain an even balance.’’ (Internal quotation marks omitted.) Fairlake
       Capital, LLC v. Lathouris, 214 Conn. App. 750, 774, 281 A.3d 1240 (2022).
       But see General Statutes § 52-420 (a) (trial court is to ‘‘dispose of the case
       with the least possible delay’’).
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                                Rubin v. Brodie

          seeking damages from the defendants under various
          theories of liability. The Superior Court dismissed the
          entirety of their complaint for lack of subject matter
          jurisdiction. Should that judgment of dismissal ulti-
          mately be reversed by this court, the plaintiffs’ action
          will be restored to the pleading stage.
             The court’s resolution of Brodie’s application to con-
          firm the arbitration award will result in a separate judg-
          ment with its own appeal period. ‘‘Our rules of practice
          unquestionably establish that, for purposes of filing an
          appeal, a final judgment disposing of a counterclaim is
          separate and distinct from a judgment on the associated
          complaint. . . . For example, a judgment rendered on
          an entire counterclaim is an immediately appealable
          independent judgment even if an undisposed complaint
          remains in the case. . . . Such a final judgment on a
          counterclaim establishes a distinct appeal period from
          the appeal period related to the judgment on a com-
          plaint in the same case.’’ (Citations omitted.) Sovereign
          Bank v. Licata, supra, 178 Conn. App. 99.
            ‘‘As a result of these different appeal periods, differ-
          ent appellate stays of execution arise, and any auto-
          matic stay that is extended as the result of filing an
          appeal from a counterclaim will not stay proceedings
          to enforce or carry out the judgment on the complaint.’’
          Id. The present appeal from the judgment of dismissal
          resulted in an automatic stay as to that judgment. This
          appeal does not have any effect on the eventual judg-
          ment on the application to confirm.
             This pending appeal also does not deprive the Supe-
          rior Court of authority to act on the application to
          confirm. It is well settled that ‘‘the filing of an appeal
          does not stay a trial court’s continuing authority to
          adjudicate any properly filed motions to reargue, recon-
          sider or open the judgment that is the subject of the
          appeal; see Practice Book § 11-11; irrespective of the
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                              Rubin v. Brodie

       possibility that the trial court’s action on such a motion
       potentially could render the appeal moot. See Ahneman
       v. Ahneman, 243 Conn. 471, 482–84, 706 A.2d 960 (1998).
       Said another way, although the filing of an appeal may,
       in certain instances, result in a stay of actions to enforce
       or carry out the judgment on appeal . . . any such
       appellate stay does not affect a court’s authority to rule
       on motions filed with the trial court . . . .’’ (Citation
       omitted; emphasis omitted.) 307 White Street Realty,
       LLC v. Beaver Brook Group, LLC, 216 Conn. App. 750,
       762 n.8, 286 A.3d 467 (2022).
         We conclude that proceedings before the Superior
       Court on Brodie’s application to confirm the arbitration
       award would not run afoul of the automatic appellate
       stay described in Practice Book § 61-11 (a) because
       such proceedings would not ‘‘enforce or carry out’’ the
       judgment dismissing the plaintiffs’ complaint.
         The motion for review is granted and the relief
       requested is granted in accordance with this court’s
       February 14, 2024 order.
         In this opinion the other judges concurred.