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Gladstein v. Goldfield

Appellate Court of Connecticut

March 8, 2016


         Argued October 15, 2015.

          Action seeking, inter alia, to invalidate a trust, brought to the Superior Court in the judicial district of Fairfield, where the court, Hartmere, J., denied the motion to substitute the party plaintiff and granted the defendants' motion to dismiss, and rendered judgment thereon, from which the plaintiff appealed to this court.

         Daniel J. Klau, with whom was Bradley K. Cooney, for the appellant (plaintiff).

         Louis B. Blumenfeld, with whom, on the brief, were Lorinda S. Coon and Lawrence J. Merly, for the appellees (defendants).

         Beach, Mullins and Bishop, Js. BISHOP, J. In this opinion the other judges concurred.


Page 61

          [163 Conn.App. 580] BISHOP, J.

          The plaintiff, Ruth Gladstein, appeals from the judgment of the trial court denying her motion to substitute the trustee of her bankruptcy estate as the proper plaintiff and thereafter dismissing her action for lack of subject matter jurisdiction on the ground that she lacked standing to bring the present action. On appeal, although the plaintiff claims that the court erred in denying her motion to substitute, she acknowledges that she lacked standing to bring this action in her individual name. Accordingly, she concedes that if the court properly denied her motion to substitute, the court's judgment of dismissal likewise would be proper. On appeal, therefore, we confine our review to the question of whether the court properly denied the plaintiff's motion to substitute. Concluding that the court acted correctly, we affirm the judgment.

         The following undisputed factual and procedural history is pertinent to our consideration of the issue presented in this appeal. In 1992, the plaintiff's mother executed a trust document in which the plaintiff was named as a 50 percent residual beneficiary. In 1997, the plaintiff's mother amended the trust document to reduce the plaintiff's interest to 10 percent. The action [163 Conn.App. 581] from which this appeal arises was brought by the plaintiff against her sister, Sarann Goldfield, and her brother-in-law, Alvin Goldfield, claiming a misuse of trust funds and also undue influence

Page 62

in regard to the 1997 amendment to the trust. The plaintiff also named Attorney Martin Wolf, of the law firm of Cohen and Wolf, P.C., as a defendant. Attorney Wolf drafted the trust and the 1997 amendment and serves, as well, as the trustee. It is also relevant to this appeal that in 2008, the plaintiff, then a resident of Nevada, filed a petition in bankruptcy in the United States Bankruptcy Court for the District of Nevada. Nowhere in her filings in conjunction with the bankruptcy did the plaintiff list her status as a residual beneficiary of the trust created by her mother; nowhere in her filings did she list, as a chose in action, her claims or potential claims against the defendants herein regarding her potential interest in the trust.

         That omission violated federal bankruptcy law which requires a debtor to disclose all assets, including interests in trusts and potential legal claims, as part of the bankruptcy estate. 11 U.S.C. § § 521 (a) (debtor must disclose " all legal or equitable interests of the debtor in property as of the commencement of the case" ) and 541 (a) (7) (duty to disclose is continuous); see also Burnes v. Pemco Aeroplex, Inc., 291 F.3d 1282, 1288 (11th Cir. 2002) (" [t]he success of [the] bankruptcy laws requires a debtor's full and honest disclosure" ).[1]

          [163 Conn.App. 582] In September, 2009, following her discharge in bankruptcy, the plaintiff then brought the present action against the defendants in her own name. The plaintiff alleged, inter alia, that Sarann Goldfield and her husband, Alvin Goldfield, committed forgery and exerted undue influence in connection with the trust's 1997 amendment. She also alleged that Attorney Wolf and his firm, Cohen and Wolf, P.C., breached their fiduciary duties to the trust by assisting the Goldfields in effectuating the amendment. However, once the plaintiff filed for bankruptcy, this claim belonged to the bankrupt estate and, therefore, to the trustee in bankruptcy and not the plaintiff. And, because this asset was not disclosed, it remained the property of the trustee. 11 U.S.C. § 554 (d) (property not disclosed during bankruptcy remains part of bankruptcy estate); Assn. Resources, Inc. v. Wall, 298 Conn. 145, 164-65, 2 A.3d 873 (2010) (undisclosed assets remain property of bankruptcy estate); see also Burnes v. Pemco Aeroplex, Inc., supra, 291 F.3d 1288 (" [a]llowing [the debtor] to back-up, re-open the bankruptcy case, and amend his bankruptcy filings, only after his omission has been challenged by an adversary, suggests that a debtor should consider disclosing personal assets only if he is caught concealing them" ).

         In sum, it is a fair reading of the procedural history of this matter that the plaintiff did not bring the existence of this claim to the attention of the bankruptcy court and the trustee appointed to oversee her assets. Instead, once she received a bankruptcy discharge in which ...

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