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Deutsche Bank AG v. Sebastian Holdings, Inc.

Court of Appeals of Connecticut

July 18, 2017

DEUTSCHE BANK AG
v.
SEBASTIAN HOLDINGS, INC., ET AL.

          Argued February 2, 2017

Procedural History

         Action to pierce the corporate veil of the named defendant and to hold the defendant Alexander Vik liable for an unsatisfied foreign judgment, and for other relief, brought to the Superior Court in the judicial district of Stamford-Norwalk, Complex Litigation Docket, where the court, Genuario, J., denied the defendants' motion to dismiss; thereafter, the court denied the defendants' motion to strike; subsequently, the court denied the plaintiff's motion for summary judgment and denied the defendants' motion for summary judgment, and the plaintiff and the defendants filed separate appeals in this court; thereafter, this court granted in part the defendants' motion to dismiss the plaintiff's appeal. Affirmed.

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

          Richard M. Zaroff, with whom were Thomas P. O'Connor, Wyatt R. Jansen, and, on the brief, Charles W. Pieterse and Ira S. Zaroff, for the appellants in AC 38515 and appellees in AC 38516 (defendants).

          David G. Januszewski, with whom were Thomas D. Goldberg, and, on the brief, Bryan J. Orticelli, Sheila C. Ramesh, and Erin R. McAlister, for the appellee in AC 38515 and appellant in AC 38516 (plaintiff).

          Alvord, Bentivegna and Pellegrino, Js.

         Syllabus

         The plaintiff bank sought to pierce the corporate veil of the defendant corporation, S Co., and to enforce an English court's judgment against the individual defendant, V, the sole shareholder and director of S Co. The plaintiff had commenced an action in England against S Co., seeking damages for moneys owed to it in connection with various trading losses incurred by S Co. in relation to accounts that it had opened and operated through the plaintiff. In response, S Co. filed a counterclaim, alleging, inter alia, that the plaintiff had breached certain contractual duties that it had owed to S Co., which resulted in the depletion of funds that S Co. could have used to mitigate its losses. The English court denied S Co.'s counterclaim, finding that the plaintiff had not breached its duties to S Co. and that V had control over S Co. such that any alleged breach of duty should not have interfered with V's ability to transfer funds to or from S Co. The English court rendered judgment for the plaintiff, awarding it damages plus interest. Thereafter, the plaintiff filed a non-party costs application with the English court, seeking to hold V personally liable for certain of the plaintiff's court costs in its action against S Co. The English court granted the costs application, concluding that V was liable for the costs incurred by the plaintiff due to his extensive involvement in the action against S Co. In response to S Co.'s failure to make payments in accordance with the judgment, the plaintiff commenced the present action. Thereafter, the defendants filed a motion for summary judgment, claiming that the doctrine of res judicata barred the plaintiff's corporate veil piercing claim because it should have been raised in the action in the English court. The plaintiff filed a separate motion for summary judgment, arguing that all questions of material fact with respect to its corporate veil piercing claim previously had been decided by the English court and that V was collaterally estopped from denying that he was the alter ego of S Co. and personally liable for the judgment in the English action. The trial court denied the parties' motions, concluding that the plaintiff's corporate veil piercing claim was not barred by res judicata because that claim was sufficiently different in nature from the breach of contract claims in the English action, and that V was not collaterally estopped from denying liability for S Co.'s debt because the issue was not actually or necessarily decided in the English action. From the trial court's judgment, the parties filed separate appeals with this court.

         Held:

         2. There was no merit to the plaintiff's claim that the trial court improperly denied its motion for summary judgment on the ground that the issue of whether V was the alter ego of S Co. previously had been decided by the English court and, thus, the doctrine of collateral estoppel precluded the defendants from relitigating that issue: the facts relevant to the issues in the English action and those in the present action were not identical for purposes of issue preclusion, and the issues pertaining to V's control of S Co., as found by the English court, were not essential to the English action because the English court's finding that the plaintiff did not breach any duties it owed to S Co. was essential only to the English court's resolution of S Co.'s counterclaim; moreover, although the English court made factual findings relating to V's dominion and control of S Co. when it awarded costs against V, the sole purpose of the costs judgment was to determine whether V, as a nonparty, could be held liable for costs and attorney's fees incurred during the litigation of the English action, and the costs proceeding was a summary process proceeding that did not afford the parties basic procedural safeguards, including the presentation and cross-examination of witnesses, and the English court explicitly noted that the issues in determining a nonparty costs order were not the same as a corporate veil piercing claim.

          OPINION

          PELLEGRINO, J.

         These appeals arise from an action to recover an approximately $243 million judgment (English judgment) rendered by the Queen's Bench Division of the High Court of Justice of England and Wales (English court) in an action captioned Deutsche Bank AG v. Sebastian Holdings, Inc. (English action) in which the trial court rendered judgment in favor of the plaintiff, Deutsche Bank AG, against the corporate defendant, Sebastian Holdings, Inc. (Sebastian). In the present action, the plaintiff sought to pierce Sebastian's corporate veil and to enforce the English judgment against the individual defendant, Alexander Vik. The defendants and the plaintiff moved for summary judgment based on the doctrines of res judicata and collateral estoppel, respectively. On appeal, the parties claim that the trial court improperly denied their respective motions for summary judgment.[1] We affirm the judgment of the trial court.

         The trial court found the following facts. On January 1, 2009, the plaintiff commenced the English action against Sebastian, a corporation organized under the laws of the Turks and Caicos Islands, seeking damages for moneys that it was allegedly owed in connection with various trading losses incurred by Sebastian through accounts that it had opened and operated through the plaintiff. Sebastian incurred various debts owed to the plaintiff through unpaid margin calls and closeouts of its accounts with the plaintiff. Following a forty-five day trial, the English court rendered judgment in favor of the plaintiff in the amount of $243, 023, 089 plus interest.

         Subsequent to the English judgment, the plaintiff filed a nonparty costs application with the English court, seeking to hold Vik, the sole shareholder and director of Sebastian, personally liable for portions of the plaintiff's court costs. On June 24, 2014, the English court issued its decision (English costs judgment) in which it concluded that Vik was personally liable for the costs incurred by the plaintiff due to his extensive involvement with the English action.[2] It therefore granted the costs application.

         On December 13, 2013, the plaintiff commenced the present action to enforce the English judgment against Vik following Sebastian's failure to make payments on the English judgment. Specifically, the plaintiff sought (1) a declaratory judgment seeking to pierce Sebastian's corporate veil and to hold Vik personally liable for the amounts due under the English judgment, and (2) to enforce the English judgment against Vik under the Uniform Foreign Money Judgments Recognition Act, as adopted in Connecticut.[3]

         Following a period of discovery, on August 21, 2015, the defendants and the plaintiff both moved for sum- mary judgment. In their motion, the defendants argued that res judicata barred the present action because the plaintiff's claim seeking to pierce the corporate veil should have been raised in the English action. The plaintiff, by contrast, argued in its motion that all questions of material fact with respect to its veil piercing claim previously had been decided by the English court and that Vik was collaterally estopped from denying that he is the ‘‘alter ego'' of Sebastian and personally liable for the English judgment. On October 22, 2015, by way of written memorandum of decision, the trial court denied both parties' motions for summary judgment.

         With respect to the defendants' motion for summary judgment, the court concluded that the plaintiff's veil piercing claim was not barred by the doctrine of res judicata because that claim was sufficiently different in nature from the breach of contract claims in the English action. With respect to the plaintiff's motion for summary judgment, the court concluded that Vik was not collaterally estopped from denying liability for Sebastian's debt because the ...


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