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JPMorgan Chase Bank, N.A. v. Herman

Court of Appeals of Connecticut

August 22, 2017

JPMORGAN CHASE BANK, N.A.
v.
J. MAURICE HERMAN

          Argued February 15, 2017.

         Procedural History

         Application for execution and order in aid of a foreign judgment, brought to the Superior Court in the judicial district of Stamford-Norwalk and tried to the court, Heller, J.; judgment for the plaintiff, from which the defendant appealed to this court. Affirmed.

          Jack Kallus, with whom were Shivani Desai and, on the brief, John W. Cannavino, Jr., for the appellant (defendant).

          Matthew Triggs, with whom were Kelley Franco Throop and, on the brief, Lisa Markofsky, for the appellee (plaintiff).

          Lavine, Keller and Bishop, Js.

         Syllabus

         The plaintiff bank, which previously had obtained a judgment against the defendant in Florida that remained unsatisfied, filed an application for an order in aid of execution of the foreign judgment. The plaintiff had served interrogatories on the defendant in aid of execution under Florida law, seeking information concerning any trusts in which the defendant held an interest, and a hearing thereon was held in Florida. Thereafter, the plaintiff registered its Florida judgment in Connecticut pursuant to the Uniform Enforcement of Foreign Judgments Act (§ 52-604 et seq.), and submitted an application for a turnover order to the trial court, in which it alleged that the defendant held an interest in a certain trust and that the trust's assets were held in a brokerage account located in Stamford, Connecticut. The application also identified UBS Financial Services, Inc., as the garnishee. The plaintiff then requested the trial court to issue an order compelling the defendant and the broker from UBS to transfer to the levying officer, inter alia, the defendant's marketable securities held by UBS, including without limitation, the assets in the trust. The defendant filed an objection to the plaintiff's application, asserting that the court lacked personal jurisdiction over the matter because UBS did not have physical possession of the certificates of the securities held by the trust as they were in the possession of a depository company in New York and, therefore, the plaintiff was not entitled to execute on those assets. In response, the plaintiff asserted that the court had in rem jurisdiction because, pursuant to the statutory provision (§ 42a-8-112 [c]) of the Uniform Commercial Code, the location of the broker rather than the location of the securities certificates determines the situs of the assets. At the hearing on the application for a turnover order, the court admitted an account statement for the trust that listed a Connecticut address for the broker, and the undisputed evidence presented at the hearing identified the broker's Stamford office as UBS. At the conclusion of the hearing, the court orally granted the application and, thereafter, issued a written turnover order, directing UBS, to transfer the defendant's marketable securities to the levying officer. The defendant then filed an appeal with this court.

         Held:

         1. The defendant could not prevail on his claim that the trial court improperly exercised personal jurisdiction over him because he had no significant contacts with Connecticut and the mere presence of his broker in the state was insufficient to confer jurisdiction, as the certificates of the subject securities were physically located in New York: under the circumstances of this case, the court's exercise of personal jurisdiction over the defendant was fair because the merits of the underlying action were fully and fairly litigated in Florida and thus the plaintiff was the holder of a valid money judgment, and because the trust account was managed by a financial officer in UBS's Connecticut office, it was reasonable to conclude that the office would readily exercise control over the defendant's assets, it would have been fruitless to direct the turnover order directly to the depository company in New York, and it was the defendant's decision to evade the judgment debt for several years and to employ the services of a Connecticut broker with control over the subject securities; moreover, this court was not persuaded by the defendant's arguments that the plaintiff's evidence showing that a Connecticut broker managed the subject account was stale and that the trial court improperly excluded from evidence an affidavit offered by the defendant to demonstrate the court's jurisdiction, as the defendant had offered no admissible evidence that, at the time the application for a turnover order was submitted, the account was no longer managed by a Connecticut broker, and the court did not abuse its discretion in failing to consider the defendant's affidavit, as the defendant offered no rationale why his affidavit was not hearsay or why it fell within a hearsay exception.

         2. This court found unpersuasive the defendant's claim that the trial court's turnover order improperly deviated from its oral ruling granting the plaintiff's application for the order because the order should have been directed to UBS's Stamford office instead of to UBS ingeneral and should have expressly limited execution to the assets in the trust account; the trial court's turnover order, directing UBS to transfer the defendant's marketable securities was appropriate, as the plaintiff's application identified UBS as the garnishee, the undisputed evidence presented at the hearing on the application identified the broker's Stamford office as UBS, and there was no indication that the broker's office in Stamford was its own corporation or other legally distinct entity, and the court's order in its oral ruling, that service of process be directed to the broker's Stamford office was not inconsistent with the turnover order because the order did not address how and where process was to be served; moreover, although the court's oral ruling directing the broker to transfer the defendant's marketable securities, ‘‘including without limitation'' those in the trust, was ambiguous, any ambiguity was resolved by the court's written order, which directed UBS to transfer cash and marketable securities.

          OPINION

          KELLER, J.

         The defendant, J. Maurice Herman, appeals following the trial court's issuance of a turnover order pursuant to General Statutes § 52-356b. The plaintiff, JPMorgan Chase Bank, N.A., applied for the order. The defendant claims that (1) the court improperly exercised personal jurisdiction over him, and (2) the order improperly deviated from the court's prior oral ruling granting the plaintiff's application.[1] We disagree. Accordingly, we affirm the judgment of the trial court.

         On the basis of the evidence presented and the parties' representations, the following facts are not in dispute. The plaintiff was the defendant's broker. Some years ago, that relationship soured, and the parties became embroiled in an action in Florida. The record discloses neither the date of commencement nor the precise nature of the litigation. On April 28, 2011, the Florida court rendered judgment in favor of the plaintiff, and later awarded the plaintiff attorney's fees and costs totaling $259, 539.96, with interest continuing to accrue. The defendant thereafter exhausted his appeals in the Florida courts.

         On March 26, 2014, while the judgment was still unsatisfied, the plaintiff served on the defendant interrogatories in aid of execution under Florida law. The interrogatories directed the defendant to provide, inter alia, information concerning any trusts in which he held an interest. In his answers to the interrogatories, the defendant indicated that he held an interest in a ‘‘bilateral trust'' (trust) in which he was settlor, trustee, and beneficiary. He further stated that the trust ‘‘[d]oes business under the fictitious name Marstack & Co., '' ‘‘[the trust's] [a]ssets are owned by Marstack & Co. and are located in Connecticut, '' and ‘‘[t]he broker is David Wat-kins from UBS [Financial Services, Inc. (UBS)] in West-port, Connecticut.''

         On October 17, 2014, a proceeding in aid of execution was held in Florida Circuit Court. At the hearing, the defendant testified under oath that the trust held assets worth approximately $120 million, and that those assets were still being held in the Connecticut UBS account. The defendant further testified: ‘‘I cannot tell you with absolute certainty where [the] securities are registered, but it is a Connecticut account. If you were to look at the [Depository Trust Company], [2] all of their assets are held in New York, and that's where all securities-or virtually all securities are held by the member banks. So, I can't speak to the legal logistics as to how securities are held, but it's Connecticut or-and/or New York.''

         On February 13, 2015, the plaintiff registered its Florida judgment in Connecticut pursuant to the Uniform Enforcement of Foreign Judgments Act, General Statutes § 52-604 et seq. On May 6, 2015, the plaintiff submitted its application for a turnover order (order) to the trial court. General Statutes § 52-356b, the turnover statute, sets forth a post judgment procedure permitting a judgment creditor to ‘‘(a) . . . apply to the court for an execution and an order in aid of the execution directing the judgment debtor, or any third person, to transfer to the levying officer[3] either or both of the following: (1) Possession of specified personal property that is sought to be levied on; or (2) possession of documentary evidence of title to property of, or a debt owed to, the judgment debtor that is sought to be levied on.'' ‘‘The court may issue a turnover order pursuant to [this section], after notice and hearing . . . on a showing of need for the order.'' General Statutes § 52-356b (b). In its application for the order, the plaintiff asserted that the defendant held an interest in the trust and that the trust's assets were held in a UBS brokerage account located in Connecticut. The plaintiff therefore requested that the court issue an order compelling the defendant and UBS to ‘‘transfer to the levying officer cash or marketable securities held by UBS in the name of or for the benefit of [the defendant], including without limitation, the assets in the [trust] . . . sufficient to satisfy [the plaintiff's] judgment . . . .''

         The defendant filed an objection to the application in which he asserted that the court lacked personal jurisdiction in the matter because UBS's Connecticut branch did not have physical possession of the certificates of the securities held by the trust. The defendant claimed that those certificates were in the possession of the aforementioned Depository Trust Company (Depository Trust); see footnote 2 of this opinion; in New York. He, therefore, argued that the securities had a New York situs[4] and, accordingly, that the plaintiff was not entitled to execute on those assets in Connecticut.

         The plaintiff countered that the court had in rem jurisdiction[5] because, under article 8 of the Uniform Commercial Code (UCC); General Statutes ยง 42a-8-101 et seq.; the location of the broker-in this case, Connecticut-rather than the location of the securities ...


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