Janetty Racing Enterprises, Inc. v. LLC (2010)

MEMORANDUM OF DECISION RE DEFENDANTS' MOTION TO OPEN (# 166) AND TO SET ASIDE DEFAULT (# 169)

Defendants Site Development Technologies, LLC's (hereinafter “SDT”), its Manager, Stephen Savino, Jr., and its Vice-President, Sean Bingham, filed a Motion dated May 11, 2010 seeking to open a judgment entered upon default in the amount of $254,922.91, together with an attorneys fees award of $10,850.00 that entered after a hearing in damages on July 16, 2008.   By Motion of the same date, defendants also seek to set aside a default entered against them on May 15, 2008 for failure to attend a pretrial conference.   In addition, defendants seek an exemption to an execution on the judgment levied against the personal bank account of Stephen Savino.   On July 16, 2010, the parties participated in an evidentiary hearing on the Motions.

I

Findings of Fact

Based on the evidence presented at the hearing, together with the court record, the court finds the following facts by a preponderance of the evidence:

April 11, 2005:  Plaintiff files its complaint against the defendants.

April 1, 2008:  Defendants' original counsel Jack Miller files a Motion to Withdraw Appearance.   By letter to defendants of the same date, he informs them that the court has scheduled a May 15, 2008 pretrial in the matter.

May 12, 2008:  The court (Alvord, J.) grants Attorney Miller's Motion to Withdraw as defendant's counsel.

May 15, 2008:  The court (Agati, J.) enters a default against defendants for their failure to attend the scheduled pretrial.

July 16, 2008:  The court (Roche, J.), upon a hearing in damages after default, enters judgment against defendants in the amount of $254,922.91, together with an attorneys fees award of $10,850.00.

April 28, 2010:  Defendant Stephen Savino, Jr. receives a telephone call from his bank indicating that his personal checking account has been garnished by plaintiff's counsel in partial satisfaction of the aforementioned judgment.

May 12, 2010:  Defendants file a Motion to Open the May 15, 2008 default judgment and a Motion to Set Aside the default that entered upon their failure to attend the May 15, 2008 pretrial.

II

Discussion of Law

In support of their Motions to Open and Set Aside the defaults, defendants argue that they possess a good faith defense to the action and that they did not appear because they did not receive proper notice.  “ ‘Any judgment rendered ․, upon a default ․ may be set aside within four months succeeding the date on which notice was sent, and the case reinstated on the docket on such terms in respect to costs as the judicial authority deems reasonable, upon the written motion of any party or person prejudiced thereby ․’ Practice Book § 17-43;  see also General Statutes § 52-212.  ‘In order to set aside a judgment passed upon default, there must be a showing that (1) a good defense existed at the time judgment was rendered;  and (2) the party seeking to set aside the judgment was prevented from appearing because of mistake, accident, or other reasonable cause.’  (Internal quotation marks omitted.)  Costello v Hartford Institute of Accounting, Inc., 193 Conn. 160, 167 (1984).  ‘[I]n granting or refusing an application to open a judgment, the trial court is required to exercise a sound judicial discretion ․’ Pantlin & Chananie Development Corp. v. Hartford Cement & Building Supply Co., 196 Conn. 233, 235 (1985).”  Loesch v. The Peggy Willis Ballet Company, Docket No. CV07-50009755, Judicial District of Windham at Willimantic (December 29, 2008, Riley, J.) [47 Conn. L. Rptr. 2].

A

Were Defendants' Motions Timely Filed?

Defendants seek to open a judgment and set aside a default that entered over two years ago, long after the expiration of the four-month time limit set forth in Practice Book § 17-43.  “[T]he trial court lacks [authority] to open the judgment when a motion to open is not timely.”  Handy v. Minwax Co., 46 Conn.App. 54, 57, cert. denied, 243 Conn. 921 (1997).   Both individual defendants testified that they did not receive notice of the default judgment or the underlying default until April 28, 2010, when Mr. Savino received a call from his bank regarding plaintiff's execution, and that upon receiving such notice they immediately filed the Motions at issue.  “Where the defendants have not received notice of the default judgment ․ the time within which they may move to set aside the judgment is extended by the delay in notification.”   Habura v. Kochanowicz, 40 Conn.App. 590, 592 (1996).   As a result, should the court find that defendants did not receive notice of the default or the judgment until April 28, 2010, the Motions are not barred by the four-month time limitation contained in Practice Book § 17-43.

1. Was Defendants' Motion to Open the Default Judgment Timely Filed?

The answer to the question of whether defendants received notice of the July 16, 2008 Default Judgment is not clear-cut.   While the Judgment Worksheet that emanated from the Hearing in Damages indicates that notice was sent, it does not specifically list the defendants as recipients.   Ashleigh Doherty, the Temporary Assistant listed on the Judgment Worksheet as having sent notice, testified at the hearing that it was the practice of the Clerk's Office to send the Worksheet to non-appearing defendants and that she was sure that she sent notice to the defendants in this particular case.

While the foregoing evidence leads the court to the conclusion that it more likely than not that the Judgment Worksheet was sent, the critical issue is not whether the Worksheet was sent, but rather whether defendants received it.   “In Habura v. Kochanowicz, 40 Conn.App. 590, 592 (1996), this court stated:  ‘Where the defendants have not received notice of the default judgment ․ the time within which they may move to set aside the judgment is extended by the delay in notification.’  (Emphasis added.)   While it is true, as the plaintiff claims, that the mailing of the default judgment to the defendants raised a presumption of its receipt, the plaintiff ignores the fact that that presumption is rebuttable.   The mailing of the decision ‘raises a presumption that notice was sent and received in the absence of a finding to the contrary.’  (Emphasis in original;  internal quotation marks omitted.)   Id., 594, quoting Morelli v. Manpower, Inc., 34 Conn.App. 419, 423 (1994).”  Lyman v. Lodrini, 63 Conn.App. 739, 746-47, cert. denied, 258 Conn. 902 (2001).

Defendants' assertions that they did not receive the Worksheet are not sufficient, standing alone, to overcome the presumption of receipt.   In many situations, it is perfectly plausible that a defendant would review such a document and ignore it;  adopting the posture of an ostrich with its head in the sand.   See, e.g., Hearth Kitchen Products, Inc. v. Leathem Stearn, Docket Nos. X05-CV01-0184294S, X05-CV02-0187840S, Judicial District of Stamford-Norwalk at Stamford (February 1, 2006, Shay, J.);  Statewide Grievance Committee v. Kenney, Docket No. 130072, Judicial District of Waterbury (May 7, 1996, Pellegrino, J.).   However, Mr. Savino and Mr. Bingham, both of whom testified at the hearing, impressed the court as sophisticated business people, each of whom would have easily recognized the potentially catastrophic consequences of ignoring a court notice that a judgment in excess of a quarter of a million dollars had entered against them.¹  Based on the foregoing, the court finds that defendants successfully rebutted the presumption that they received notice of the default judgment sent by the Clerk's Office and, as a result, their Motion to Open the Default Judgment was timely filed.²

2. Was Defendants' Motion to Set Aside the Default Timely Filed?

Defendants maintain that they did not receive notice of the May 15, 2008 Order defaulting them for failure to attend the pretrial conference in this matter.   A review of the court file reveals that while the notice of default indicates it was sent, it does not specifically list defendants as recipients.   In addition, the notice was issued three days after the court granted Attorney Miller's Motion to Withdraw, which raises the distinct possibility that defendants' status as non-appearing parties had not yet been entered into the file.   The foregoing evidence, when coupled with defendants' assertions that they did not receive notice, leads the court to the conclusion, by a preponderance of the evidence, that defendants did not receive notice of the May 15, 2008 Order defaulting them for failure to attend the pretrial.   As a result, they did not have notice of the default until April 28, 2010, when they learned that about the bank execution, and have filed their Motion to Set Aside the Default in a timely fashion.

B

Should Defendants' Motion to Open the Default Judgment be Granted?

Defendants maintain that they possess a good faith defense to this action and that they were barred from appearing at the Hearing in Damages based on lack of notice.  “In order to set aside a judgment passed upon default, there must be a showing that (1) a good defense existed at the time judgment was rendered;  and (2) the party seeking to set aside the judgment was prevented from appearing because of mistake, accident, or other reasonable cause.”   Costello v. Hartford Institute of Accounting, Inc., supra.  Practice Book § 17-43.

1. Do Defendants Possess a Good Faith Defense to this Action?

The underlying action involves a claim of breach of contract involving the construction of a building, the contract at issue being between plaintiff as the owner and defendant SDT as the contractor.   Stephen Savino and Sean Bingham were named as defendants as individuals in an attempt by plaintiff to pierce SDT's corporate veil.   At the hearing of this matter, Mr. Bingham indicated that issues arose on the project regarding unforeseen subsurface conditions that rendered the project more costly than originally intended and that these issues, among others, serve as a defense to plaintiff's action.   Plaintiff presented no evidence to rebut Mr. Bingham's statements.   As a result the court finds that defendants possess a good faith defense to this action.³

2. Were Defendants Prevented by Reasonable Cause from Attending the Hearing in Damages?

The court's review of the file indicates that once defendants were defaulted for their failure to attend the pretrial, they received no notice of the Hearing in Damages.   No evidence was presented nor argument made to the contrary at the hearing on this matter.   Based on the court's earlier finding that the evidence demonstrated that defendants did not receive notice that they were defaulted for failure to attend the pretrial, the court finds that reasonable cause, specifically a lack of notice, prevented them from appearing at the Hearing in Damages.

Based on the foregoing, the court finds that defendants have demonstrated that they have a good faith defense in this action and that they were prevented by reasonable cause from appearing at the Hearing in Damages.   As a result, defendants' Motion to Open the Default Judgment rendered on July 16, 2010 is hereby granted.

C

Should Defendants' Motion to Set Aside the Defaultfor Failure to Appear at the Pretrial Be Granted?

Given the court's decision to open the Judgment of Default in this matter, defendants' Motion to Set Aside the Default that entered on May 15, 2008 when they failed to attend the pretrial is governed by Practice Book § 17-42:  “A motion to set aside a default where no judgment has been rendered may be granted by the judicial authority for good cause shown upon such terms as it may impose.”   The record clearly demonstrates that the only notice defendants received of the May 15, 2008 pretrial was Attorney Miller's certified letter informing them of his intention to seek leave to withdraw as their counsel.   Attorney Miller mentions the pretrial on the second page of his letter and it is understandable defendants may have overlooked it or simply did not realize what a pretrial was or that they had to attend.   This is particularly plausible in light of the evidence that the letter was sent as a result of a deteriorated relationship between defendants and Attorney Miller.   As a result, the court finds that good cause existed for defendants' failure to attend the pretrial and the default entered on May 15, 2008 is hereby set aside.

III

Conclusion

1) Defendants' Motion to Open the Default Judgment entered on July 16, 2010 is hereby granted;

2) Defendants' Motion to Set Aside the Default that entered on May 15, 2010 is hereby granted;

3) Plaintiff's bank execution is hereby declared null and void;

4) Defendants' Objection to plaintiff's Bill of Costs is hereby sustained;  and

5) The matter is ordered restored to the jury docket.

James W. Abrams, Judge

FOOTNOTES

FN1. In view of this finding, the court is mystified why neither Mr. Savino nor Mr. Bingham took any steps to protect their interests in the nearly two year period that elapsed between Attorney Miller withdrawing from the case and plaintiff's execution on Mr. Savino's bank account.   While the court accepts the fact that neither gentleman had notice that a judgment had entered against them in this matter, it should have been clear to both that there was still a lawsuit pending against them..  FN1. In view of this finding, the court is mystified why neither Mr. Savino nor Mr. Bingham took any steps to protect their interests in the nearly two year period that elapsed between Attorney Miller withdrawing from the case and plaintiff's execution on Mr. Savino's bank account.   While the court accepts the fact that neither gentleman had notice that a judgment had entered against them in this matter, it should have been clear to both that there was still a lawsuit pending against them.

FN2. This finding makes it unnecessary for the court to consider whether plaintiff's counsel was required to send a notice of judgment to defendants pursuant to Practice Book § 17-22 and, if so, whether the provision of such notice was “a condition precedent to the judgment becoming final.”   McLaughlin v. Smoron, 62 Conn.App. 367, 370-71 (2001)..  FN2. This finding makes it unnecessary for the court to consider whether plaintiff's counsel was required to send a notice of judgment to defendants pursuant to Practice Book § 17-22 and, if so, whether the provision of such notice was “a condition precedent to the judgment becoming final.”   McLaughlin v. Smoron, 62 Conn.App. 367, 370-71 (2001).

FN3. This finding is for the purposes of the resolution of these Motions only and is not to be considered in any way as “the law of the case” as it relates to the legal or factual validity of defendants' claims..  FN3. This finding is for the purposes of the resolution of these Motions only and is not to be considered in any way as “the law of the case” as it relates to the legal or factual validity of defendants' claims.

Abrams, James W., J.