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American First Federal, Inc. v. Gordon

Court of Appeals of Connecticut

June 6, 2017

AMERICAN FIRST FEDERAL, INC.
v.
SHELDON M. GORDON ET AL.

          Argued January 5, 2017

         Appeal from Superior Court, judicial district of Stamford-Norwalk, Complex Litigation Docket, Genuario, J.

          Patrick A. Linsey, with whom was Aaron A. Romney, for the appellants in AC 38217, appellees in AC 38365 (defendants).

          Jonathan P. Vuotto, pro hac vice, with whom were William N. Wright, and, on the brief, John F. Carberry, David T. Martin, Jeffrey B. Gardner, and Laura J. Petrie, for the appellee in AC 38217, appellant in AC 38365 (plaintiff).

          Lavine, Keller and Pellegrino, Js.

          OPINION

          KELLER, J.

         These consolidated appeals arise from an action brought by the plaintiff, American First Federal, Inc., against the defendants, Sheldon M. Gordon and Gordon Group Investments, LLC (GGI), to collect on a commercial loan. Following a trial to the court, judgment was rendered in favor of the plaintiff. In AC 38217, the defendants claim that the court erred by concluding that the plaintiff's predecessor in interest assigned its rights under the loan to the plaintiff. In AC 38365, the plaintiff claims that the court erred in its determination of attorney's fees and calculation of postjudgment interest. We disagree with the parties' claims. Accordingly, we affirm the judgment of the court.

         The following facts, as found by the court, undisputed evidence, and procedural history are relevant to the parties' claims. On or about September 18, 2006, Gordon and Sovereign Bank (Sovereign), which is not a party to these appeals, executed a business loan agreement. As part of the agreement, Gordon executed a promissory note (2006 note) in favor of Sovereign in the principal amount of $3, 000, 000 with a maturity date of December 1, 2006. GGI, through Gordon as its manager, guaranteed repayment of the loan. On or about November 21, 2008, Gordon executed a second promissory note (2008 note), amending and restating the terms of the 2006 note. The 2008 note evidenced the same debt as the 2006 note and had a maturity date of June 30, 2009.

         Sovereign, Gordon, and GGI subsequently executed two agreements relating to the loan. The first (2009 modification agreement) extended the maturity date of the 2008 note to December 31, 2009. Under the second agreement (2010 forbearance agreement), Sovereign promised to forbear from bringing an action to collect on the loan until September 30, 2010.

         On or about September 22, 2010, Sovereign and the plaintiff executed an asset sale agreement in which Sovereign agreed to sell, and the plaintiff agreed to purchase, Sovereign's interest in the loan[1] on a subsequent closing date. Prior to the execution of the agreement, however, Sovereign lost the original 2006 and 2008 notes. Those originals were never recovered. Nevertheless, copies of all operative loan documents, with the exception of the 2008 note, were transferred to the plaintiff on or about the closing date.[2]

         Sovereign and an agent for the plaintiff each informed Gordon via letter that Sovereign had transferred the loan to the plaintiff. Gordon made several loan payments to the plaintiff; however, he failed to make any after February 9, 2011.[3]

         The plaintiff commenced this action on May 27, 2011. In its operative complaint, dated December 12, 2014, the plaintiff alleged, inter alia, that Gordon was in breach of the business loan agreement and the 2008 note, or, in the alternative, the business loan agreement and the 2006 note, for unpaid principal, interest, and fees totaling $4, 238, 179.72. The plaintiff also sought attorney's fees and prejudgment and postjudgment interest under General Statutes § 37-3a.[4] Trial commenced on January 13, 2015, and concluded the following day.

         By way of a memorandum of decision dated May 26, 2015, the court rendered judgment for the plaintiff. The court concluded that Sovereign had assigned the loan to the plaintiff and, accordingly, that the plaintiff was entitled to collect on the debt.[5] The court awarded damages of $4, 325, 778.80, consisting of unpaid principal, interest, late charges, and other costs. The court reserved judgment as to attorney's fees and postjudgment interest to allow for a hearing on those matters. After that hearing, and by way of a memorandum of decision dated August 25, 2015, the court awarded the plaintiff attorney's fees and costs of $483, 451.86. The court further concluded that the plaintiff was entitled to postjudgment interest on the outstanding principal balance of the loan, which would continue to accrue until the loan was paid off. These appeals followed. Additional facts will be provided as necessary.

         I

         AC 38217

         The defendants claim that the court erred by concluding that Sovereign assigned the loan to the plaintiff. We disagree.

         The following facts, as found by the court, and undisputed evidence are pertinent to this claim. As previously noted, Sovereign and the plaintiff executed an asset sale agreement in which Sovereign agreed to sell, and the plaintiff agreed to purchase, the Gordon debt on a subsequent closing date. The asset sale agreement provided that, on the closing date, the plaintiff would pay Sovereign the purchase price, and Sovereign would provide the plaintiff with any notes or lost note affidavits related to the Gordon loan, as well as a ‘‘Bill of Sale and Assignment'' (bill of sale) ‘‘selling, assigning, transferring and conveying to the [plaintiff] all rights, title and interests of [Sovereign]'' in the loan.[6] No bill of sale was produced at trial.

         In their posttrial brief, the defendants argued that the plaintiff was not an assignee of the loan, or was otherwise estopped from asserting that it was an assignee. Their argument was threefold. First, the defendants argued that the asset sale agreement did not, by itself, effectuate an assignment of the Gordon loan because the agreement merely bound Sovereign to assign the loan to the plaintiff in the future, i.e., on the closing date. See 3 Restatement (Second), Contracts § 330 (1), p. 49 (1981) (‘‘[a] contract to make a future assignment of a right . . . is not an assignment''). Thus, the defendants argued, the plaintiff was not an assignee of the loan, and accordingly was not entitled to collect under it.

         Second, and in the alternative to the first argument, the defendants argued that, to the extent that the plaintiff asserted that evidence other than the asset sale agreement demonstrated that an assignment occurred, the plaintiff was estopped from advancing such argument because the plaintiff's operative complaint specifically alleged that ‘‘[b]y an Asset Sale Agreement . . . Sovereign sold, assigned, transferred and conveyed all of its rights, title and interests'' in the debt to the plaintiff. (Emphasis added.) See A. V. Giordano Co. v. American Diamond Exchange, Inc., 31 Conn.App. 163, 166, 623 A.2d 1048 (1993) (‘‘[o]ur law provides that a plaintiff's recovery is limited to the allegations made in its complaint'').

         Third, and in the alternative to the second argument, the defendants argued that, even if evidence other than the asset sale agreement could be considered in determining whether an assignment occurred, such evidence was insufficient to show an assignment in the absence of the bill of sale.

         The court concluded that Sovereign did in fact effectuate an assignment of the loan to the plaintiff. The court first observed that, ‘‘[g]enerally, to constitute an assignment there must be a purpose to assign or transfer the whole or a part of some particular thing, debt, or chose in action, and the subject matter of the assignment must be described with such particularity as to render it capable of identification.'' (Internal quotation marks omitted.) The court concluded that the asset sale agreement ‘‘contains a clear purpose to assign or transfer the whole of the Gordon debt and documentation.'' The court also determined that the asset sale agreement, as well as other documents relating to the loan, identified the Gordon debt ‘‘with sufficient particularity.'' The court concluded that, despite the fact that the plaintiff did not produce the bill of sale at trial, there was ample other evidence demonstrating that the debt and related documents were ‘‘actually conveyed'' to the plaintiff. Such actual conveyance was evidenced, the court found, by the following: ‘‘First, the Asset Sale Agreement clearly establishes the intent to convey the documents and the debt in the broadest possible sense and identifies the documents and debt with sufficient particularity to render it capable of identification. Second, copies of all of the operative documents except the 2008 note were transferred to the plaintiff at or about the time of closing. Third, the Asset Sale Agreement calls for lost note affidavits in the event of lost notes and a lost note affidavit was executed by representatives of Sovereign and delivered to the plaintiff with regard to the 2006 note at or about the time of closing. Fourth, an allonge relating to the 2006 note was executed at or about the time of closing. Fifth, while the 2008 note was not discovered by the plaintiff or Sovereign until well after the closing, upon its discovery an allonge was executed by Sovereign and a lost note affidavit covering the 2008 note was executed by Sovereign, both of which were delivered to the plaintiff. Sixth, shortly after the closing Sovereign sent a letter to . . . Gordon stating that the loan had been transferred to the plaintiff. Similarly, representatives of the plaintiff sent a letter to the defendants utilizing the same account number as indicated in the Sovereign letter notifying the defendants that the loan had been transferred to the plaintiff. Seventh, Gordon made payments to the plaintiff and forwarded financial statements to the plaintiff subsequent to these letters, indicating his concurrence that the debt had been transferred to the plaintiff. Eighth and finally, the testimony of the various representatives of Sovereign and the plaintiff are all consistent with their intent and understanding that the documents and debt had been conveyed to Sovereign.''

         On appeal, the defendants make essentially the same three arguments previously described. We do not find ...


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