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Smith v. Marshview Fitness, LLC

Appellate Court of Connecticut

June 25, 2019

Brant SMITH
v.
MARSHVIEW FITNESS, LLC, et al.

         Argued March 11, 2019

         Appeal from the Superior Court, Julia L. Aurigemma, J.

Page 768

[Copyrighted Material Omitted]

Page 769

          Rowena A. Moffett, New Haven, for the appellant (plaintiff).

         Kenneth J. McDonnell, Essex, with whom, on the brief, was Michael L. McGlinchey, for the appellee (named defendant).

         Prescott, Elgo and Bishop, Js.

         OPINION

         PRESCOTT, J.

         [191 Conn.App. 3] In this commercial dispute relating to the sale of certain property belonging to two fitness centers, the plaintiff, Brant Smith, appeals from the summary judgment rendered in favor of the defendant Marshview Fitness, LLC.[1] The trial court concluded that the defendant was entitled to summary judgment because the transfer of certain property, in which the plaintiff claims to have had an economic interest, was not fraudulent, as a matter of law, under either the common law or the Uniform Fraudulent Transfer Act (UFTA), General Statutes § 52-552a et seq. In doing so, [191 Conn.App. 4] the trial court also rejected the plaintiff’s related claim under the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq.

         On appeal, the plaintiff claims, among other things,[2] that the trial court improperly (1) concluded that the transfer at issue was not fraudulent under the common law or UFTA because the property that was transferred did not constitute "assets," (2) rejected his CUTPA claim on the ground that it was based solely on his allegations of fraudulent transfer, and (3) denied his motion to reargue. We affirm the judgment of the trial court.

          The trial court set forth the following factual and procedural history. "The plaintiff was the owner of two fitness centers that had been operated as ‘Shoreline Health and Fitness’ in Clinton and Old Saybrook, Connecticut. On September 15,

Page 770

2010, the plaintiff and his former partners sold the businesses to Ryan Rothschild. Rothschild bought the businesses through two separate companies, SHF-Clinton, LLC, and SHF-Old Saybrook, LLC (SHF entities). The Rothschild/SHF entities’ purchase of the plaintiff’s fitness centers was financed by Wells Fargo Bank [Wells Fargo] under a program sponsored by the United States Small Business Administration [SBA]. The principal amount of the Wells Fargo loan at the time of the plaintiff’s sale to the SHF entities was $1.2 million. That loan was secured by a security interest in the assets of the SHF entities, which was prior in right to the security interest of the plaintiff.

         [191 Conn.App. 5] "As part consideration for the sale to Rothschild, the plaintiff took back a promissory note for $150,000 and another note for $300,000. Rothschild defaulted on the notes, and the plaintiff commenced [an action] against him titled Smith v. Rothschild, [Superior Court, judicial district of Middlesex, Docket No. CV-14-6012641-S] (Rothschild action). In that case, the plaintiff filed a motion for temporary injunction and court-ordered inspection of company records dated October 21, 2014. That motion sought to enjoin Rothschild from selling the interests or assets of the SHF entities and an order permitting the plaintiff to inspect and copy the books and records of the SHF entities. The plaintiff never sought a hearing or otherwise proceeded on the foregoing motion.

          "In connection with the motion for temporary injunction, the plaintiff signed an affidavit in which he averred that the $300,000 note referred to above was secured by a security agreement [that] gave the plaintiff ‘a continuing security interest in all of the assets of [the SHF entities].’ ... [The plaintiff] also averred that ‘I maintain that I am entitled to a right of first refusal with respect to any proposed sale of the [SHF entities].’ ...

          "While the plaintiff was litigating his claims against Rothschild, he was simultaneously negotiating with Rothschild to purchase the assets of the SHF entities. The plaintiff’s offer to purchase the assets of the SHF entities was accepted by Rothschild. However, Wells Fargo did not accept the offer because SBA regulations prohibited repurchase of the assets by the plaintiff, a former owner. At that time, Rothschild and the SHF entities owed Wells Fargo in excess of $800,000 on the SBA loan used to purchase the assets ...


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