Justia.com Opinion Summary: Defendant was the wife of Kenneth Otto, who was convicted of the murder of Shamaia Smith. Before his conviction, Otto transferred title to certain property to Defendant. Otto and Defendant subsequently received a judgment of dissolution, which included a division of the marital property. During a hearing in the wrongful death action filed by the estate of Smith against Otto, the trial court found that Smith's estate was a creditor of Otto and that the transfer of Otto's assets to Defendant was fraudulent. Plaintiff, administratrix of Smith's estate, filed an action against Defendant pursuant to the Uniform Fraudulent Transfer Act, along with an application for a prejudgment remedy. The trial court concluded that there was probable cause to show that the assets transferred from Otto to Defendant through the dissolution action were fraudulent transfers and awarded Plaintiff a prejudgment remedy. The Supreme Court affirmed, holding (1) Plaintiff had standing to bring a claim under the Act; (2) the trial court's determination that the dissolution action was undertaken with actual intent to hinder, delay or defraud Smith's estate was proper; and (3) the trial court had jurisdiction over Plaintiff's claim because it could grant practical relief under the Act.
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REGINA CANTY, ADMINISTRATRIX
(ESTATE OF SHAMAIA SMITH) v.
KATHLEEN J. OTTO
(SC 18610)
Rogers, C. J., and Norcott, Palmer, McLachlan, Eveleigh and Harper, Js.
Argued January 13—officially released May 1, 2012
Proloy K. Das, with whom was Glenn E. Coe, for the
appellant (defendant).
Stephen F. McEleney, for the appellee (plaintiff).
Campbell D. Barrett, Arnold H. Rutkin and Jon T.
Kukucka filed a brief for the American Academy of
Matrimonial Lawyers, Connecticut Chapter, as amicus curiae.
Opinion
EVELEIGH, J. The defendant, Kathleen J. Otto,
appeals1 from the judgment of the trial court granting
the application of the plaintiff, Regina Canty, administratrix of the estate of Shamaia Smith, for a prejudgment remedy. On appeal, the defendant contends that
the plaintiff, who is a creditor of her debtor spouse,
Kenneth Otto, Sr. (Otto), cannot collect the debt from
the defendant, a nondebtor spouse, by bringing a claim
under the Uniform Fraudulent Transfer Act (act), General Statutes § 52-552a et seq. Specifically, the defendant claims that: (1) the plaintiff lacks standing to bring
a claim under the act because the distribution of marital
assets in a dissolution decree is not a transfer under
the act; (2) the trial court’s determination that the plaintiff had standing under the act because the dissolution
was undertaken with actual intent to hinder, delay or
defraud the estate of Smith was clearly erroneous; and
(3) the trial court lacked subject matter jurisdiction
over the plaintiff’s claim under the act because it could
not disturb the property distribution in the dissolution
decree. The plaintiff responds that she does have standing to bring a claim under the act, that the trial court’s
determination that the dissolution action was undertaken with actual intent to hinder, delay or defraud
Smith’s estate was proper, and that the trial court did
have jurisdiction over her claim because it could grant
practical relief under the act.2 We agree with the plaintiff
and, accordingly, affirm the judgment of the trial court.
The following facts, found by the trial court,3 and
procedural history, are relevant to our resolution of the
issues on appeal. In early 2007, the East Hartford police
department and state police began to investigate Otto
in connection with the disappearance of Smith. The
defendant, who was the wife of Otto, first learned of
the police investigation ‘‘several weeks prior to April
7, 2007.’’ At that time, the defendant learned from the
police that Smith was an exotic dancer and a prostitute
with whom Otto had been sexually involved. On April
13, 2007, the defendant transferred $8000 from a bank
account held jointly with Otto to an account in her
name alone, because she feared that the money might
be ‘‘attached by someone.’’ Subsequently, on April 16,
2007, pursuant to a search warrant, the police commenced searching a property located in Stafford
(Stafford property), which was co-owned by Otto and
his son, for evidence in connection with Smith’s disappearance. Otto was present when the search commenced. Within one or two days of that search, Smith’s
remains were found buried on the Stafford property.
Thereafter, on April 17, 2007, Otto and the defendant
traveled together to the department of motor vehicles
to transfer title in a jointly owned vehicle to the defendant. The couple then continued to Tewksbury, Massachusetts, where Otto transferred his title to certain
residential property to the defendant. No consideration
was paid by the defendant to Otto for these transfers.
On either April 20 or April 23, the defendant telephoned
a local attorney concerning the filing of a dissolution
action. Thereafter, she contacted attorney Bruce S.
Beck for an appointment on that day. Otto drove the
defendant to Beck’s office. A dissolution proceeding
was then initiated on that day by service upon Otto as
he waited in the reception area of Beck’s office. Pursuant to the dissolution action, the next day a notice of
lis pendens was filed against Otto’s interest in property
he owned in Ellington, as well as the Stafford property.
The dissolution action was formally filed on April 27,
2007 (dissolution action). On May 9, 2007, the estate of
Smith commenced a civil action against Otto, alleging
that he had caused Smith’s death (wrongful death
action). On May 14, 2007, the state arrested Otto and
charged him with one count of murder in violation of
General Statutes § 53a-54a, and two counts of tampering
with physical evidence in violation of General Statutes
§ 53a-155 (criminal case). The defendant continued living with Otto until he was incarcerated.
Thereafter, on June 4, 2007, after a full hearing in the
wrongful death action, the plaintiff obtained a prejudgment remedy order against Otto in the amount of $4.5
million. The plaintiff then moved to intervene in the
dissolution action. This motion was denied on November 27, 2007. The plaintiff appealed from the denial of
her motion to intervene to the Appellate Court, which
dismissed her appeal.
Subsequently, on June 3, 2008, after a trial, the court
in the dissolution action, Schumann, J., rendered a
judgment of dissolution, which included a division of
the marital property. In the dissolution decree, the
defendant received all of the real property, and Otto
received an automobile, some shares of stock and a
relatively small remaining balance of his retirement
funds. The plaintiff again appealed to the Appellate
Court from the decision of the trial court denying her
motion to intervene. The Appellate Court again dismissed her appeal for lack of a final judgment. On
November 5, 2008, Otto was convicted of Smith’s
murder.
During the hearing in the wrongful death action, the
trial court found probable cause to believe that the
defendant did not truly want the dissolution from Otto
that she was seeking. The defendant had testified that
she wanted Otto released from jail so that he could
come home and live with her. She admitted at the probable cause hearing that she still loved Otto and that she
visited him in jail before and after he was convicted
of murdering Smith. The court further found that the
defendant did not truly intend to divorce Otto, but
rather to conspire with him to obtain a judgment of
dissolution in order to shield Otto’s assets from Smith’s
estate. The court also found that Smith’s estate is a
creditor of the debtor, Otto, as defined under the act,
and that Otto transferred assets shortly before commencement of the dissolution action with the specific
intent to defraud his creditors, including the estate. The
court further found that, knowing he would likely be
arrested and prosecuted for Smith’s murder, Otto made
transfers in a hurried fashion. Additionally, the court
found that there was not a ‘‘scintilla’’ of evidence suggesting that Otto’s intent in transferring assets to his
wife was nonfraudulent. The court also found that Otto
had encouraged and facilitated the defendant’s institution of a dissolution action against him and did not
seriously contest those proceedings in order to ensure
that most or all of his assets could not be reached by
the plaintiff in the wrongful death action.
Thereafter, the plaintiff filed the present action
against the defendant pursuant to the act,4 along with
an application for a prejudgment remedy.5 On May 8,
2009, the defendant filed a motion to dismiss the action
on the ground that a dissolution judgment could not
be collaterally attacked through a claim under the act.
Thereafter, on August 28, 2009, the trial court, Domnarski, J., denied that motion. Subsequently, on September
3 and September 16, the trial court, Prescott, J., heard
evidence on the plaintiff’s application for a prejudgment
remedy. On February 2, 2010, that court concluded that
there was probable cause to show that the assets transferred from Otto to the defendant through the dissolution action were fraudulent transfers. In doing so, that
court adopted the prior decision of Judge Domnarski,
concluded that a dissolution judgment could be subject
to a claim under the act, and awarded a prejudgment
remedy in the amount of $670,000. Thereafter, the
defendant appealed.
On February 11, 2010, the defendant filed a motion
for reconsideration in which she claimed, inter alia,
that the amount of the prejudgment remedy was higher
than the amount alleged to have been transferred. On
February 22, 2010, the plaintiff filed a motion for reconsideration seeking a higher prejudgment remedy award.
On April 9, 2010, after previously denying most of the
other claims, the trial court issued a memorandum of
decision in which it agreed with the defendant that her
one-half interest in the marital property could not be
the subject of a fraudulent transfer and, accordingly,
reduced the amount of the prejudgment remedy to
$552,000. On April 16, 2010, the defendant filed an
amended appeal. Additional facts will be set forth as
necessary.
I
As a preliminary matter, we first address the plaintiff’s claim that this court lacks jurisdiction to consider
the defendant’s claim that the trial court improperly
denied her motion to dismiss. Specifically, the plaintiff
asserts that this court cannot consider issues related
to the denial of the defendant’s motion to dismiss
because it is not a final judgment, and this court only
has jurisdiction under General Statutes § 52-278l6 to
consider the decision of the trial court granting a prejudgment remedy. The defendant responds that,
because the granting of a prejudgment remedy is a final
judgment under § 52-278l, the court on appeal may also
review the denial of her motion to dismiss because
this subsidiary decision is necessarily encompassed by
review of the appeal. The defendant supports this argument with case law holding that, in an appeal from a
final judgment, any adverse interlocutory ruling may
be challenged.7 We agree with the defendant.
As a preliminary matter, we set forth the standard
of review. ‘‘The lack of a final judgment implicates the
subject matter jurisdiction of an appellate court to hear
an appeal. A determination regarding . . . subject matter jurisdiction is a question of law . . . [and, therefore] our review is plenary.’’ (Internal quotation marks
omitted.) Sweeney v. Sweeney, 271 Conn. 193, 207, 856
A.2d 997 (2004).
‘‘The jurisdiction of the appellate courts is restricted
to appeals from judgments that are final. General Statutes §§ 51-197a and 52-263; Practice Book § [61-1]
. . . . The policy concerns underlying the final judgment rule are to discourage piecemeal appeals and to
facilitate the speedy and orderly disposition of cases
at the trial court level. . . . The appellate courts have
a duty to dismiss, even on [their] own initiative, any
appeal that [they lack] jurisdiction to hear. . . . In
some instances, however, it is unclear whether an order
is an appealable final judgment. In the gray area
between judgments which are undoubtedly final and
others that are clearly interlocutory . . . this court has
adopted the following test, applicable to both criminal
and civil proceedings: An otherwise interlocutory order
is appealable in two circumstances: (1) where the order
or action terminates a separate and distinct proceeding,
or (2) where the order or action so concludes the rights
of the parties that further proceedings cannot affect
them. State v. Curcio, 191 Conn. 27, 31, 463 A.2d 566
(1983).’’ (Citations omitted; internal quotation marks
omitted.) Solomon v. Reiser, 212 Conn. 741, 745–46, 562
A.2d 524 (1989).
We agree with both parties that the motion to dismiss
in this case was directed to the complaint as opposed
to the prejudgment remedy. Section 52-278l (a) (1) provides in relevant part that ‘‘granting or denying a prejudgment remedy following a hearing . . . shall be
deemed a final judgment for purposes of appeal.’’ In
the present case, in granting the application for a prejudgment remedy, the court, Prescott, J., necessarily
had to consider the issue raised in the motion to dismiss,
namely, the plaintiff’s standing to bring a claim under
the act. In fact, in granting the prejudgment remedy,
that court explicitly agreed with and adopted the prior
decision of the court, Domnarski, J., denying the
motion to dismiss. Accordingly, we conclude that we
can review the defendant’s claim related to the motion
to dismiss because it is necessarily encompassed in
the issues presented by the prejudgment remedy.8 See
Marlin Broadcasting, LLC v. Law Office of Kent Avery,
LLC, 101 Conn. App. 638, 641–45, 922 A.2d 1131 (2007)
(addressing defendant’s claim that plaintiff lacked
standing to bring action in appeal brought pursuant to
§ 52-278l); see also Collins v. Anthem Health Plans,
Inc., 266 Conn. 12, 28–30, 836 A.2d 1124 (2003) (considering interlocutory orders on claims that were ‘‘inextricably intertwined’’ with issues that were considered
final judgments by virtue of statute).
II
We now turn to the defendant’s claims that the trial
court lacked jurisdiction over the plaintiff’s claims
because the plaintiff lacked standing. Specifically, the
defendant claims that the trial court lacked subject
matter jurisdiction over the plaintiff’s claims because:
(1) the plaintiff lacks standing to bring a claim under
the act because the distribution of marital assets in a
dissolution decree is not a transfer under the act; and
(2) the trial court’s determination that the plaintiff had
standing under the act because the dissolution was
undertaken with ‘‘actual intent to hinder, delay or
defraud Smith’s estate,’’ was clearly erroneous. We
disagree.
‘‘[S]tanding 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 which may affect the rights of others
are forged in hot controversy, with each view fairly
and vigorously represented.’’ (Internal quotation marks
omitted.) Fort Trumbull Conservancy, LLC v. Alves,
286 Conn. 264, 272 n.9, 943 A.2d 420 (2008). ‘‘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 decision, as opposed to a general interest
that all members of the community share. . . . Second,
the party must also show that the [party’s] decision has
specially and injuriously affected that specific personal
or legal interest. . . . Aggrievement does not demand
certainty, only the possibility of an adverse effect on a
legally protected interest. . . . Statutory aggrievement
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 pro-
tected by that legislation.’’ (Internal quotation marks
omitted.) Burton v. Commissioner of Environmental
Protection, 291 Conn. 789, 803, 970 A.2d 640 (2009).
‘‘Where a party is found to lack standing, the court
is consequently without subject matter jurisdiction to
determine the cause.’’ (Internal quotation marks omitted.) Monroe v. Horwitch, 215 Conn. 469, 473, 576 A.2d
1280 (1990). ‘‘We have long held that because [a] determination regarding a trial court’s subject matter jurisdiction is a question of law, our review is plenary.’’
(Internal quotation marks omitted.) State v. Tabone,
301 Conn. 708, 713–14, 23 A.3d 689 (2011). Whether
General
Statutes
§ 52-552e
grants
statutory
aggrievement is a question of statutory interpretation
over which our review is plenary. See C. R. Klewin
Northeast, LLC v. State, 299 Conn. 167, 175, 9 A.3d
326 (2010).
‘‘The process of statutory interpretation involves a
reasoned search for the intention of the legislature.
. . . In other words, we seek to determine, in a reasoned manner, the meaning of the statutory language
as applied to the facts of [the] case . . . .’’ (Internal
quotation marks omitted.) Wasko v. Manella, 269 Conn.
527, 534–35, 849 A.2d 777 (2004). ‘‘When construing a
statute, we first look to its text, as directed by General
Statutes § 1-2z, which provides: The meaning of a statute shall, in the first instance, be ascertained from the
text of the statute itself and its relationship to other
statutes. If, after examining such text and considering
such relationship, the meaning of such text is plain and
unambiguous and does not yield absurd or unworkable
results, extratextual evidence of the meaning of the
statute shall not be considered.’’ (Internal quotation
marks omitted.) Genesky v. East Lyme, 275 Conn. 246,
253–54, 881 A.2d 114 (2005). In the present case, we
conclude, following an examination of the language of
the act and its relationship to other statutes, that the
plaintiff had standing to bring a claim under the act.
First, we examine whether the distribution of property in a dissolution decree is a transfer under the act.
Section 52-552e provides in relevant part: ‘‘(a) A transfer
made or obligation incurred by a debtor is fraudulent
as to a creditor, if the creditor’s claim arose before the
transfer was made or the obligation was incurred and
if the debtor made the transfer or incurred the obligation: (1) With actual intent to hinder, delay or defraud
any creditor of the debtor . . . .’’ The term ‘‘ ‘[t]ransfer’ ’’ is defined by General Statutes § 52-552b (12) to
mean ‘‘every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with an asset or an interest in an asset, and includes
payment of money, release, lease and creation of a lien
or other encumbrance.’’ The use of the phrases ‘‘every
mode’’ and ‘‘voluntary or involuntary’’ supports the conclusion that the term transfer is defined very broadly
under the act. Therefore, the plain language of the act
supports the conclusion that distribution of property
in a dissolution decree is a transfer under the act.
Furthermore, the language of related statutes also
supports the conclusion that distribution of property
in a dissolution decree is a transfer under the act. Specifically, General Statutes § 46b-81, which governs the
assignment of property and conveyance of title in dissolution actions, provides in relevant part: ‘‘(a) At the
time of entering a decree annulling or dissolving a marriage or for legal separation pursuant to a complaint
under section 46b-45, the Superior Court may assign to
either the husband or wife all or any part of the estate
of the other. The court may pass title to real property
to either party or to a third person or may order the
sale of such real property, without any act by either
the husband or the wife, when in the judgment of the
court it is the proper mode to carry the decree into
effect.
‘‘(b) A conveyance made pursuant to the decree shall
vest title in the purchaser, and shall bind all persons
entitled to life estates and remainder interests in the
same manner as a sale ordered by the court pursuant
to the provisions of section 52-500. When the decree is
recorded on the land records in the town where the
real property is situated, it shall effect the transfer of
the title of such real property as if it were a deed of
the party or parties. . . .’’ The use of the terms ‘‘assign,’’
‘‘pass title,’’ ‘‘conveyance’’ and ‘‘vest title’’ in § 46b-81
supports the conclusion that the distribution of property in a dissolution decree would fit within the broad
definition of transfer under the act.
We are further persuaded by the fact that many states
that have considered this question have determined that
a dissolution judgment may constitute a transfer of
assets under the act. In re Hoyt, 97 B.R. 730 (Bankr.
D. Conn. 1989) (treating contested dissolution judgment
as fraudulent transfer for purpose of resolving whether
constructive fraud allegation was foreclosed by collateral estoppel in motion for summary judgment); Estes
v. Titus, 481 Mich. 573, 580–81, 751 N.W.2d 493 (2008)
(concluding that property settlement agreement incorporated into dissolution judgment is transfer for purposes of act); Dowell v. Dennis, 998 P.2d 206, 212–13
(Okla. Civ. App.) (2000) (concluding that property distribution in dissolution decree can be challenged in
claim under act); Greeninger v. Cromwell, 140 Or. App.
241, 246, 915 P.2d 479 (same), cert. denied, 323 Or. 690,
920 P.2d 549 (1996); see also A. Barkey, ‘‘The Application of Constructive Fraud to Divorce Property Settlements: What’s Fraud Got to Do with It,’’ 52 Wayne L.
Rev. 221 (2006).
In addition, our conclusion that a distribution of marital assets in a dissolution decree is a transfer for purposes of the act is bolstered by the fact that courts
consider such a distribution to be a ‘‘transfer’’ for pur-
poses of the federal Bankruptcy Code. The definition
of ‘‘transfer’’ in the Bankruptcy Code is similar to that
in the act. Specifically, 11 U.S.C. § 101 (54) (D) (2006)
defines transfer as ‘‘each mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with–(i) property; or (ii) an interest
in property.’’ In 1999, the Bankruptcy Court for the
District of Columbia recognized that ‘‘it is now well
settled that a transfer of property pursuant to a collusive
divorce decree or property settlement intended to hinder, delay or defraud creditors (or pursuant to a divorce
decree or property settlement for inadequate consideration, leaving the debtor insolvent) constitutes a ‘transfer’ as defined under § 101 (54) of the Bankruptcy
Code.’’ In re Hope, 231 B.R. 403, 415 (Bankr. D.D.C.
1999); see also Britt v. Damson, 334 F.2d 896, 901–902
(9th Cir. 1964) (deciding challenge to dissolution decree
under bankruptcy act), cert. denied, 379 U.S. 966, 85 S.
Ct. 661, 13 L. Ed. 2d 560 (1965); In re Clausen, 44 B.R.
41 (Bankr. D. Minn. 1984) (same).
The conclusion that distribution of marital property
in a dissolution decree should be subject to attack in
a claim under the act is also supported by 49 C.J.S. 546,
Judgments § 452 (2009), which allows for the collateral
attack of a judgment by a creditor whose rights will be
affected by the enforcement of that judgment on the
ground that the judgment is fraudulent as to the creditor. In order to collaterally attack the judgment, § 452
requires the creditor to prove both that there was fraud
designed to injure the creditor, and that the creditor’s
rights must have accrued before the judgment was
entered. In the present case, the plaintiff had a ‘‘claim’’
against Otto prior to the transfer of assets from Otto
to the defendant. Pursuant to the act, a ‘‘ ‘[c]laim’ means
a right to payment, whether or not the right is reduced
to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured.’’ General Statutes § 52552b (3). The ‘‘legislature chose to adopt a very broad
definition of the term ‘claim’ . . . [and therefore] a
plaintiff’s claim [arises] on the date of the injury in the
underlying action.’’ Davenport v. Quinn, 53 Conn. App.
282, 304, 730 A.2d 1184 (1999). Thus, we agree with the
trial court that ‘‘the plaintiff’s . . . claim [under the
act] arose on the date Smith was murdered, which was
prior to both Otto transferring his land in Massachusetts
and to the defendant filing for divorce against Otto.’’
See 50 C.J.S. 65, Judgments § 511, (2006) (‘‘[a creditor],
whose rights or claims would be injuriously affected by
enforcement of a judgment against [his] debtor, [may]
impeach its validity on the ground that it is fraudulent’’).
Accordingly, 49 C.J.S., supra, p. 546, also supports our
conclusion that the plaintiff has standing to bring her
claim under the act.
The defendant claims that distributions of marital
property as part of a dissolution judgment are not
‘‘transfers’’ subject to the act, but rather are equitable
determinations as to which portion of the marital estate
each party is entitled. ‘‘[T]he purpose of property division is to unscramble the ownership of property giving
to each spouse what is equitably his.’’ (Internal quotation marks omitted.) Werblood v. Birnbach, 41 Conn.
App. 728, 735, 678 A.2d 1 (1996). On the basis of this
reasoning, the defendant claims that the plaintiff should
not be allowed to bring her claim under the act because
it would disturb the distribution that was carefully
crafted by the trial court in the dissolution action and
would create further complications for distributing marital property. The California Supreme Court rejected
this concern in Mejia v. Reed, 31 Cal. 4th 657, 669, 74
P.3d 166, 3 Cal. Rptr. 3d 390 (2003) recognizing that
‘‘the parties’ debts, and how to pay them, are matters
that should be considered in marital settlement negotiations even if, like pension plans and income tax consequences, they make the process of reaching an
agreement more complex.’’ Furthermore, in concluding
that the distribution of marital assets is a transfer under
the act, the California Supreme Court also relied on the
fact that, ‘‘[i]n view of this overall policy of protecting
creditors, it is unlikely that the [l]egislature intended
to grant married couples a one-time-only opportunity
to defraud creditors by including the fraudulent transfer
in [a marital separation agreement].’’ Id., 668. We agree
with the reasoning of the California Supreme Court
and conclude that policy considerations support our
conclusion that the distribution of assets in a dissolution decree is a transfer under the act.
The defendant further asserts that the distribution of
marital property can only be considered a transfer for
purposes of the act when it arose from a settlement
agreement as opposed to a contested hearing. The rationale for the defendant’s position is, undoubtedly, that
there is more opportunity for fraud or collusion in the
event of a settlement agreement as compared to a case
that is fully tried on the merits. Even in the case of a
settlement agreement, however, a court must approve
the agreement and incorporate the agreement into the
judgment. Further, the defendant’s position does not
consider the fact that the likelihood for abuse exists
both in the parties’ agreement regarding a disposal of
assets, and in a trial when one party intentionally does
not fully contest the claims of the other. We note that
in the dissolution action in the present case, the defendant’s attorney submitted a set of ‘‘proposed orders’’
to the trial court. Namely, the defendant proposed the
transfer of all of Otto’s assets to her, and suggested
that she retain all assets in her name. The trial court
granted all of the defendant’s requests, except a proposal for $12,500 of the retirement funds to be paid to
Otto’s attorney. Therefore, we see no reason to preclude
the plaintiff from bringing a claim under the act in the
present case merely because the division of marital
assets happened after a trial, rather than as a result of
an agreement between the parties.
We next address the defendant’s claim that the plaintiff did not have standing because the trial court’s finding that the dissolution action was undertaken with
‘‘actual intent to hinder, delay or defraud’’ the plaintiff
was clearly erroneous. Specifically, the defendant
argues that there was no evidence in the record to
support the trial court’s finding that the dissolution
action was undertaken with the intent to defraud the
plaintiff. The defendant contends that both in denying
the motion to dismiss and in granting the prejudgment
remedy, the trial courts, Domnarski and Prescott, Js.,
improperly relied on testimony given by the defendant
at the dissolution trial that she was aware that she may
still need to litigate an action brought by the plaintiff
under the act before she could own the assets distributed to her through the dissolution action. The defendant argues that this reliance was misplaced and
undermines the trial court’s finding that the dissolution
action was commenced with actual intent to hinder,
delay or defraud. The plaintiff claims that there was
ample evidence in light of the numerous factors set
forth in § 52- 552e (b),9 which the court may consider
in determining ‘‘actual intent’’ to fraudulently transfer.10
We agree with the plaintiff.
As we previously have indicated, the standard of
review ‘‘of the granting of a prejudgment remedy is very
circumscribed. . . . In its determination of probable
cause, the trial court is vested with broad discretion
which is not to be overruled in the absence of clear
error.’’ (Citation omitted; internal quotation marks omitted.) TES Franchising, LLC v. Feldman, 286 Conn. 132,
137, 943 A.2d 406 (2008). We are further cautioned by
the fact that the trial court in a hearing on an application
for a prejudgment remedy need only make a finding
of probable cause, as opposed to a more heightened
standard that may prevail during the trial of the cause
of action. It is with this probable cause standard in
mind that we evaluate the court’s finding of probable
cause in the present case.
‘‘The legal idea of probable cause is a bona fide belief
in the existence of the facts essential under the law for
the action and such as would warrant a man of ordinary
caution, prudence and judgment, under the circumstances, in entertaining it. . . . Probable cause is a
flexible common sense standard. It does not demand
that a belief be correct or more likely true than false.
. . . The hearing in probable cause for the issuance of
a prejudgment remedy is not contemplated to be a full
scale trial on the merits of the plaintiff’s claim. The
plaintiff does not have to establish that he will prevail,
only that there is probable cause to sustain the validity
of the claim. . . . The court’s role in such a hearing is
to determine probable success by weighing probabili-
ties. . . . In this process the trial court is vested with
broad discretion which is not to be overruled in the
absence of clear error.’’ (Citations omitted; internal quotation marks omitted.) Three S. Development Co. v.
Santore, 193 Conn. 174, 175–76, 474 A.2d 795 (1984).
The intent to defraud almost always is proven by circumstantial evidence. A person’s intent is to be inferred
from his conduct under the surrounding circumstances,
and is an issue for the trier of fact to decide. State v.
Nosik, 245 Conn. 196, 208, 715 A.2d 673, cert. denied,
525 U.S. 1026, 119 S. Ct. 547, 142 L. Ed. 2d 455 (1998).
In its memorandum of decision on the application
for prejudgment relief, the court, Prescott, J., focused
on Otto’s intent in entering into the dissolution. In making its decision, the court reasoned that, ‘‘[a]lthough
the transfer of the Ellington and Stafford real property,
as well as cash and other personal property, have been
ordered by Judge Schuman, [this] court concludes that
the appropriate inquiry regarding intent must center
upon Otto’s actions with respect to the overall divorce
proceeding. In other words, although [the defendant],
at least in theory, had ample and even compelling justifications to seek a divorce from Otto, it is Otto’s intent
with respect to the divorce that is ultimately dispositive.’’ That court further found that, ‘‘[b]ased upon the
factual findings set forth [in this memorandum of decision], there is probable cause to believe that [Otto]
encouraged and facilitated [the defendant] to institute
a divorce action against him, and then did not seriously
contest the case in order to ensure that most or all of
his assets could not be reached by the estate of [Smith]
in the wrongful death action.’’ We conclude that the
trial court’s finding of probable cause was not an abuse
of its discretion.
Section 52-552e (b) provides: ‘‘In determining actual
intent under subdivision (1) of subsection (a) of this
section, consideration may be given, among other factors, to whether: (1) The transfer or obligation was to
an insider, (2) the debtor retained possession or control
of the property transferred after the transfer, (3) the
transfer or obligation was disclosed or concealed, (4)
before the transfer was made or obligation was
incurred, the debtor had been sued or threatened with a
suit, (5) the transfer was of substantially all the debtor’s
assets, (6) the debtor absconded, (7) the debtor
removed or concealed assets, (8) the value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount
of the obligation incurred, (9) the debtor was insolvent
or became insolvent shortly after the transfer was made
or the obligation was incurred, (10) the transfer
occurred shortly before or shortly after a substantial
debt was incurred, and (11) the debtor transferred the
essential assets of the business to a lienor who transferred the assets to an insider of the debtor.’’
Relying on the factors in § 52-552e (b), we conclude
that there is sufficient evidence in the record to support
a probable cause finding that Otto commenced the dissolution action with actual intent to fraudulently transfer his assets to the defendant. First, the transfer of his
property to the defendant—his former wife with whom
he continued to reside—constituted transfers to an
insider. Second, Otto continued to retain control of the
assets after the transfer. Specifically, Otto continued
to enjoy the use of the Ellington Road property and
other assets until his incarceration. Third, the transfers
left Otto totally without assets. The $12,500 awarded
to him was for the purpose of paying his attorney. Otto
did not receive any consideration for any of the transfers, and became insolvent shortly after the transfers.
Fourth, the dissolution proceedings were instituted
shortly after the police began investigating Otto in connection with Smith’s murder and shortly after they
searched his property as part of that investigation. The
transfers occurred shortly after Smith’s body was found
on his property. As the foregoing demonstrates, the
evidence in the record supported a finding of probable
cause that many of the factors set forth in § 52-552e
(b) had been met. Accordingly, we conclude that the
trial court properly determined that probable cause
existed that Otto commenced the dissolution action
with actual intent to hinder, delay or defraud the
plaintiff.
III
Finally, we address the defendant’s claim that the
trial court lacked jurisdiction over this case because it
cannot afford the plaintiff practical relief. Specifically,
the defendant asserts that the plaintiff’s claim under
the act is an improper collateral attack on the trial
court’s judgment in the dissolution action. The defendant also claims that the property distributions of the
trial court in that action cannot be disturbed because
of this court’s understanding of financial orders in a
dissolution case ‘‘as resembling a mosaic, in which all
the various financial components are carefully interwoven with one another . . . .’’ (Internal quotation
marks omitted.) The defendant also asserts that the
plaintiff is improperly attempting to obtain modification
of a property distribution, which is forbidden by General Statutes §§ 46b-81 and 46b-86.11 In response, the
plaintiff asserts that her claim under the act is a challenge to the transfer of assets, not a collateral attack
on the dissolution decree. The plaintiff also asserts that
the mosaic rule does not apply to a third party creditor.
Finally, the plaintiff claims that the prohibition against
modification of marital property distribution set forth
in §§ 46b-81 and 46b-86 does not apply to her claim
under the act. We agree with the plaintiff.
‘‘Justiciability requires (1) that there be an actual
controversy between or among the parties to the dis-
pute . . . (2) that the interests of the parties be adverse
. . . (3) that the matter in controversy be capable of
being adjudicated by judicial power . . . and (4) that
the determination of the controversy will result in practical relief to the complainant.’’ (Internal quotation
marks omitted.) State v. McElveen, 261 Conn. 198, 217,
802 A.2d 74 (2002).
First, as we explained in part I of this opinion, we
have long recognized an exception to the rule against
collateral attacks for the benefit of strangers to a judgment who did not have an opportunity to litigate their
claim in the previous action. 50 C.J.S., supra, p. 65 (‘‘[a
creditor], whose rights or claims would be injuriously
affected by the enforcement of a judgment against [his]
debtor, may impeach its validity on the ground that it
is fraudulent’’). In the present case, the plaintiff
attempted to intervene in the dissolution proceeding,
but was denied intervention, from which she appealed
to the Appellate Court. The Appellate Court dismissed
the appeals for the lack of a final judgment.12 Therefore,
the plaintiff was not a party to the dissolution action
and, accordingly, was unable to litigate her claim under
the act in the context of the dissolution proceeding.
Thus, the plaintiff was a stranger to the previous litigation. Further, we note that the plaintiff is not seeking
to set aside the dissolution decree. Rather, the plaintiff
is seeking to attach certain assets that were transferred
to the defendant as the result of that decree. We agree
with the trial court that providing the plaintiff relief
under the act ‘‘would not require the court here to set
aside the judgment dissolving the Ottos’ marriage, but
instead would only bring to fruition a result that [the
defendant] was made aware of during the divorce proceeding, i.e., that she may not ultimately retain some
of these assets that were to be distributed to her as
part of the divorce.’’ Therefore, in view of the fact that
the plaintiff did not have the opportunity to litigate this
issue in the context of the dissolution action, and is
not attempting to set aside the dissolution judgment,
we conclude that the trial court properly determined
that this action does not constitute an impermissible
collateral attack on the judgment of the trial court.
Second, the defendant asserts that the manner in
which this court views financial orders in dissolution
cases bars the plaintiff’s claim under the act. This court
has previously stated that ‘‘[t]he power to act equitably
is the keystone to the court’s ability to fashion relief
in the infinite variety of circumstances which arise out
of the dissolution of marriage.’’ (Internal quotation
marks omitted.) Loughlin v. Loughlin, 280 Conn. 632,
641, 910 A.2d 963 (2006). ‘‘[I]ssues involving financial
orders are entirely interwoven. The rendering of a judgment in a complicated dissolution case is a carefully
crafted mosaic, each element of which may be dependent on the other.’’ (Internal quotation marks omitted.)
Misthopoulos v. Misthopoulos, 297 Conn. 358, 378, 999
A.2d 721 (2010). Recently, this court has stated, however, that ‘‘[a] financial order is severable when it is
not in any way interdependent with other orders and
is not improperly based on a factor that is linked to other
factors. . . . In other words, an order is severable if
its impropriety does not place the correctness of the
other orders in question.’’ (Citation omitted; internal
quotation marks omitted.) Maturo v. Maturo, 296 Conn.
80, 124–25, 995 A.2d 1 (2010). Accordingly, we conclude
that the general principle that financial orders in dissolution cases are interwoven does not bar the plaintiff
from bringing her claim under the act.
Furthermore, because the plaintiff was not a party
to the dissolution action, she cannot be bound by that
judgment and the provisions of §§ 46b-81 and 46b-86
do not apply to her. Those statutory provisions clearly
only apply to parties to a dissolution proceeding. Additionally, the matter is clearly justiciable. The practical
relief sought is the retransfer of alleged fraudulently
transferred assets, or the monetary equivalent of those
assets at the time of the fraudulent transfer. We can
see no reason to bar the plaintiff from availing herself
of the remedies available under the act, particularly
where, as here, there is probable cause to believe that
Otto invoked the trial court’s jurisdiction in an effort
to hinder, delay or defraud the plaintiff. Accordingly,
we conclude that the trial court properly granted the
plaintiff’s application for a prejudgment remedy.
The judgment is affirmed.
In this opinion the other justices concurred.
1
The defendant appealed from the judgment of the trial court to the
Appellate Court, and we transferred the appeal to this court pursuant to
General Statutes § 51-199 (c) and Practice Book § 65-1.
2
The plaintiff also asserts that the portion of the defendant’s appeal
challenging the trial court’s denial of her motion to dismiss should be dismissed for lack of a final judgment. As we explain in part I of this opinion,
we disagree.
3
We note that the appeal involves the decisions of two trial courts. The
trial court, Domnarski, J., ruled on the motion to dismiss. The trial court,
Prescott, J., ruled on the prejudgment remedy. As discussed later in this
opinion, however, in view of the fact that the trial court, Prescott, J.,
expressly considered and approved of the earlier decision of the court,
Domnarski, J., we refer herein to the trial court ruling in the singular,
referring to the decision of the trial court, Prescott, J., for the sake of clarity.
4
General Statutes § 52-552e provides in relevant part: ‘‘(a) A transfer made
or obligation incurred by a debtor is fraudulent as to a creditor, if the
creditor’s claim arose before the transfer was made or the obligation was
incurred and if the debtor made the transfer or incurred the obligation: (1)
With actual intent to hinder, delay or defraud any creditor of the debtor
. . . .’’
5
The plaintiff in the wrongful death action was identified as the ‘‘estate
of Shamaia L. Smith,’’ while the plaintiff in the present action is ‘‘Regina
Canty, administratrix of the estate of Shamaia L. Smith.’’ For clarity, references to the plaintiff in this opinion refer to both the estate of Smith and
Canty in her capacity as administratrix of that estate.
6
General Statutes § 52-278l provides: ‘‘(a) An order (1) granting or denying
a prejudgment remedy following a hearing under section 52-278d or (2)
granting or denying a motion to dissolve or modify a prejudgment remedy
under section 52-278e or (3) granting or denying a motion to preserve an
existing prejudgment remedy under section 52-278g shall be deemed a final
judgment for purposes of appeal.
rendering of the order from which the appeal is to be taken.
‘‘(c) No such order shall be stayed by the taking of an appeal except upon
the order of the judge who made such order, and any such stay shall be
granted only if the party taking the appeal posts a bond, with surety, in a
sum determined by such judge to be sufficient to indemnify the adverse
party for any damages which may accrue as a result of such stay.
‘‘(d) If a motion to discharge such prejudgment remedy is brought by the
defendant, the property affected by such remedy may be restored to the
use of the defendant, if the defendant posts a bond with surety in an amount
determined by such judge to be sufficient to indemnify the plaintiff for
any damages which may accrue by the defendant’s continued use of such
property, until such time as such motion is decided.’’
7
The defendant relies on State v. Assuntino, 180 Conn. 345, 349, 429 A.2d
900 (1980), which stands for the proposition that, in an appeal taken from
a final judgment that disposes of the entire action, the appellant may challenge any adverse interlocutory ruling that led to judgment being rendered
against him. See also Blue Cross/Blue Shield of Connecticut, Inc. v. Gurski,
49 Conn. App. 731, 733–34, 715 A.2d 819, cert. denied, 247 Conn. 920, 722
A.2d 809 (1998). We reject this argument because Assuntino does not have
any applicability to a situation, such as the situation in the present case,
wherein an appeal is taken from an interlocutory order—here, an order
granting a prejudgment remedy—that is final because a statute mandates
the finality of the order.
8
The court, Prescott, J., distinguished between assets that were transferred before the institution of the divorce action, and those that were
transferred as the result of the dissolution judgment. It appears that Judge
Prescott believed that the standing claims raised by the defendant related
to only the transfer of assets that took place as the result of the dissolution
judgment. In light of that fact, it is questionable whether the defendant
would be entitled to a dismissal of the entire case even if she prevailed on
her standing claims.
9
General Statutes § 52-552e (b) provides: ‘‘In determining actual intent
under subdivision (1) of subsection (a) of this section, consideration may
be given, among other factors, to whether: (1) The transfer or obligation
was to an insider, (2) the debtor retained possession or control of the
property transferred after the transfer, (3) the transfer or obligation was
disclosed or concealed, (4) before the transfer was made or obligation was
incurred, the debtor had been sued or threatened with a suit, (5) the transfer
was of substantially all the debtor’s assets, (6) the debtor absconded, (7)
the debtor removed or concealed assets, (8) the value of the consideration
received by the debtor was reasonably equivalent to the value of the asset
transferred or the amount of the obligation incurred, (9) the debtor was
insolvent or became insolvent shortly after the transfer was made or the
obligation was incurred, (10) the transfer occurred shortly before or shortly
after a substantial debt was incurred, and (11) the debtor transferred the
essential assets of the business to a lienor who transferred the assets to an
insider of the debtor.’’
10
To the extent that the defendant asserts that the court, Domnarski, J.,
improperly denied her motion to dismiss the plaintiff’s claims because it
improperly concluded that the complaint alleged sufficient facts to state a
claim under the act for fraud, we disagree. In ruling on the motion to dismiss,
the issue before the court was whether, taking all of the facts alleged in
the complaint as true, they would support a conclusion ‘‘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.’’ (Internal
quotation marks omitted.) Certain Underwriters at Lloyd’s, London v. Cooperman, 289 Conn. 383, 394, 957 A.2d 836 (2008). In the present case, the
plaintiff alleged both that Otto’s initial conveyance of the Massachusetts
property by quitclaim deed to the defendant and the Ottos’ entire divorce
proceeding was undertaken with the intent to shelter various assets from
the plaintiff. The plaintiff further asserted that the timing of these transfers,
occurring so quickly after Otto became a suspect in Smith’s murder—and
well before Otto was convicted of a crime—offers a reasonable inference
of fraudulent intent. In ruling on the motion to dismiss, the court found
that ‘‘the plaintiff has alleged both that Otto’s initial conveyance of the
Massachusetts property by quitclaim deed to the defendant and that the
Ottos’ entire divorce proceeding was undertaken with the intent to shelter
various assets form the plaintiff. Moreover, the plaintiff asserts that the
timing of these transfers, occurring so quickly after Otto became a suspect
in Smith’s murder and well before Otto was convicted of that crime, offers
a reasonable inference of fraudulent intent. Taken together, these facts
support a claim of actual fraud because they support a conclusion that Otto
and the defendant acted with ‘actual intent to hinder, delay or defraud’ the
plaintiff, to whom Otto is a debtor.’’ As we previously have indicated, the
trial court was entitled to accept all allegations in the complaint as true.
We agree that the facts alleged in the complaint support a claim of actual
fraud because they support a conclusion that Otto and the defendant acted
with ‘‘actual intent to hinder, delay or defraud’’ the plaintiff, to whom Otto
is the debtor. General Statutes § 52-552e (a) (1). Accordingly, we conclude
that the trial court properly determined that the plaintiff had alleged sufficient facts to support a claim of fraudulent transfer and, therefore, properly
denied the defendant’s motion to dismiss.
11
Although the defendant cites General Statutes § 46b-1 in her brief, we
understand her claim to be a claim that the plaintiff’s action is barred under
§§ 46b-81 and 46b-86. We have held that, ‘‘[b]y its terms [§ 46b-81] deprives
the Superior Court of continuing jurisdiction over that portion of a dissolution judgment providing for the assignment of property of one party to the
other party under . . . § 46b-81.’’ Bunche v. Bunche, 180 Conn. 285, 289,
429 A.2d 874 (1980). We also note that § 46b-86 does preclude a trial court
in a dissolution proceeding from modifying assignments of assets transferred
under § 46b-81.
12
The defendant suggests that the plaintiff should have filed a writ of
error, however, this court previously has held that the proper method for
an aggrieved nonparty to challenge the denial of a motion to intervene is
by filing an appeal, not a writ of error. Hennessey v. Bristol Hospital, 225
Conn. 700, 626 A.2d 702 (1993); In re Baby Girl B., 224 Conn. 263, 618 A.2d
1 (1992).
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