American Manufacturers Mutual Ins. Co. v. Stephanie Cotton (2011)

MEMORANDUM OF DECISION IN RE MOTION FOR SUMMARY JUDGMENT (# 107)

FACTS

On October 6, 2009, the plaintiff, American Manufacturers Mutual Insurance Company, filed a one-count complaint against the defendant, Stephanie Cotton.   In the complaint, the plaintiff alleges the following facts.   At the defendant's request, on or about December 12, 1996, the plaintiff posted a probate bond in the amount of $165,781.20, as surety, on behalf of the defendant as principal, in her role as trustee of a trust for the benefit of her son, Taylor Lymont Cotton.   On or about March 18, 2002, the defendant was removed as trustee by the Probate Court for failing to perform her duties and a successor trustee was appointed.   On or about September 3, 2008, the successor trustee filed an “Application to Recover on Probate Bond and Finding of Deficiency” against the defendant.   The application was based solely upon the defendant's failure to faithfully perform her duties as trustee.   On or about August 27, 2009, the Probate Court entered a decree on the application finding a deficiency as a result of the defendant's failure to faithfully perform her duties as trustee and holding the plaintiff liable for the damages.   The plaintiff, as surety, was required to make payments to the trust and to incur other expenses and costs.   Such expenses and costs included attorneys fees and investigator fees for the defense and investigation of the application.   The expenses and costs were incurred by the plaintiff as a result of issuing the bond on the defendant's behalf because the defendant failed to faithfully fulfill her duties as trustee.   The plaintiff suffered damages totaling $104,827.75.

On November 1, 2010, the plaintiff filed a motion for summary judgment, a memorandum of law in support of the motion and an affidavit in support of the motion.   On November 22, 2010, the matter was marked off the short calendar docket without prejudice.   On February 1, 2011, the plaintiff filed a revised motion for summary judgment, a memorandum of law in support of the motion and a sworn affidavit in support of the motion.   The defendant did not file an objection to the motion for summary judgment.   This court heard oral argument on February 22, 2011.

DISCUSSION

“Summary judgment is a method of resolving litigation when pleadings, affidavits, and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law ․ The motion for summary judgment is designed to eliminate the delay and expense of litigating an issue when there is no real issue to be tried.”  (Citations omitted.)  Wilson v. New Haven, 213 Conn. 277, 279, 567 A.2d 829 (1989).  “However, since litigants ordinarily have a constitutional right to have issues of fact decided by a jury ․ the moving party for summary judgment is held to a strict standard ․ of demonstrating his entitlement to summary judgment.”  (Citation omitted;  internal quotation marks omitted.)   Kakadelis v. DeFabritis, 191 Conn. 276, 282, 464 A.2d 57 (1983).   “Practice Book § 17–49 provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.   In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party.”  (Internal quotation marks omitted.)  Sherman v. Ronco, 294 Conn. 548, 553–54, 985 A.2d 1042 (2010).  “[S]ummary judgment is appropriate only if a fair and reasonable person could conclude only one way ․ [A] summary disposition ․ should be on evidence which a jury would not be at liberty to disbelieve and which would require a directed verdict for the moving party ․ [A] directed verdict may be rendered only where, on the evidence viewed in the light most favorable to the nonmovant, the trier of fact could not reasonably reach any other conclusion than that embodied in the verdict as directed.”  (Citations omitted;  emphasis in original;  internal quotation marks omitted.)  Dugan v. Mobile Medical Testing Service, Inc., 265 Conn. 791, 815, 830 A.2d 752 (2003).  “[T]he ‘genuine issue’ aspect of summary judgment requires the parties to bring forward before trial evidentiary facts, or substantial evidence outside the pleadings, from which the material facts alleged in the pleadings can warrantably be inferred ․ A material fact has been defined adequately and simply as a fact which will make a difference in the result of the case.”  (Citation omitted;  internal quotation marks omitted.)  Buell Industries, Inc. v. Greater New York Mutual Ins. Co., 259 Conn. 527, 556, 791 A.2d 489 (2002).  “In ruling on a motion for summary judgment, the court's function is not to decide issues of material fact, but rather to determine whether any such issues exist.”  Nolan v. Borkowski, 206 Conn. 495, 500, 538 A.2d 1031 (1988).

I

INDEMNIFICATION

In the revised motion for summary judgment, the plaintiff argues that it is entitled to judgment as a matter of law on its indemnity claim against the defendant.   The plaintiff submitted the affidavit of Ana M. Crespo, Surety Claim Analyst for the plaintiff, as proof of the amount owed as a result of the surety bond.

Under Connecticut law, a probate bond surety has a common-law right to indemnity for losses incurred as a result of having issued a bond on behalf of its principal.  Babcock v. Hubbard, 2 Conn. 536, 539 (1818).  “There is always at least an implied contract between the parties which obliges a principal to reimburse his surety when the latter has paid the debt;  he then becomes a creditor of the principal, and, the debt having matured and being due, is entitled to recover from the latter the amount so paid.”  (Internal quotation marks omitted.)  Johnson v. Mortenson, 110 Conn. 221, 228, 147 A. 705 (1929).

In the present case, the sworn affidavit of Ana Crespo provides that the plaintiff, at the request of the defendant, posted a probate bond as surety on behalf of the defendant as principal.   The affidavit further provides that the Probate Court entered a decree finding a deficiency;  that the Probate Court removed the defendant from the trust and appointed a successor trustee as a result of the defendant failing to perform her duties of trust;  and that the plaintiff tendered payment to the trust in accordance with the deficiency decree.   The affidavit then provides that the defendant has failed to indemnify the plaintiff for the losses and expenses the plaintiff incurred, including the payment for the deficiency.   Thus, the affidavit establishes that the relationship between the plaintiff and defendant is that of a surety and a principal.   Pursuant to the legal obligations of that relationship, the plaintiff has a common-law right to be indemnified by the defendant for the amount paid to the trust and its costs and expenses.   The costs and expenses incurred by the plaintiff includes investigator fees and attorneys fees for investigating and defending the successor trustee's application to recover the deficiency, which was caused by the defendant.   The affidavit establishes that the total amount due to the plaintiff is $104,827.75, which includes the plaintiff's costs and expenses in pursuing the indemnity claim against the defendant.   The defendant failed to offer any evidence that would raise an issue of material fact as to her liability for the debt or the amount of the debt owed.   Therefore, there is no genuine issue of material fact that the plaintiff is entitled to be indemnified by the defendant.   Thus, the plaintiff, as a matter of law, is entitled to indemnification from the defendant, in the amount of $104,827.75.

The plaintiff also argues that, as a matter of law, it is entitled to attorneys fees for defending the underlying claim.   The plaintiff's contention finds support in case law, which provides:  “that an indemnitee ․ may recover only those [attorneys] fees it incurred in defending the claim for which it is entitled to indemnification.”  Gino's Pizza of East Hartford, Inc. v. Kaplan, 193 Conn. 135, 140–41, 475 A.2d 305 (1984).   The affidavit establishes that the plaintiff incurred $22,959.24 in attorneys fees, which are included in the total amount due to the plaintiff above.   The court therefore awards the plaintiff attorneys fees in the amount requested.

II

INTEREST

The plaintiff argues that it is entitled to prejudgment and postjudgment interest on the indemnity amount.

General Statutes § 37–3a provides the statutory basis for both prejudgment and postjudgment interest awards.   See Hartford Steam Boiler Inspection & Ins. Co. Underwriters at Lloyd's & Cos. Collective, 121 Conn.App. 31, 62–63, 994 A.2d 262, cert. denied, 297 Conn. 918, 996 A.2d 277 (2010).  Section 37–3a provides in relevant part that:  “interest at the rate of ten percent a year, and no more, may be recovered and allowed in civil actions ․ as damages for the detention of money after it becomes payable.”  “Interest may be awarded at the statutory rate from the time the money becomes due.”  (Internal quotation marks omitted.)  Harris Calorific Sales Co. v. Manifold Systems, Inc., 18 Conn.App. 559, 566, 559 A.2d 241 (1989).   Interest should be awarded from the date of the original judgment that gives the plaintiff a legal entitlement to the amount due.   See Bower v. D'Onfro, 45 Conn.App. 543, 545, 696 A.2d 1285 (1997).  “Where it is undisputed that some amount was due and owing, and nothing in the record indicates that there was an abuse of discretion, it is not error to award interest.”  Simonetti v. Lovermi, 15 Conn.App. 722, 727–28, 546 A.2d 331 (1988).

“[Courts] have construed [§ 37–3a] to make the allowance of interest depend [on] whether the detention of money is or is not wrongful under the circumstances.”  (Internal quotation marks omitted.)  Sosin v. Sosin, 300 Conn. 205, 229 (2011), quoting LaSalla v. Doctor's Associates, Inc., 278 Conn. 578, 597, 898 A.2d 803 (2006).  “[W]rongful is not synonymous with bad faith conduct.   Rather, wrongful means simply that the act is performed without legal right to do so.”  (Internal quotation marks omitted.)  Id., 230, quoting Ferrato v. Webster Bank, 67 Conn.App. 588, 596, 789 A.2d 472, cert. denied, 259 Conn. 930, 793 A.2d 1084 (2002).   Furthermore, “even if [a plaintiff withholds money] on the basis of a good faith belief that he was entitled to that sum, the trial court [i]s not foreclosed from awarding interest pursuant to § 37–3a.”  Id. “[T]he primary purpose of § 37–3a [is] to compensate parties that have been deprived of the use of their money.”  Id.

In the present case, the sworn affidavit provides that the Probate Court entered the deficiency decree, as a result of the defendant's failure to account for all of the monies from the trust, for which it held the plaintiff liable as the surety.   The affidavit further provides that the amount due to the plaintiff became due on August 31, 2009, when the plaintiff made payment to the trust pursuant to the decree.   The affidavit also provides that the defendant has not indemnified the plaintiff as required by the legal obligations of the surety-principal relationship.   Even viewing the evidence in the light most favorable to the defendant, there is nothing in the record to demonstrate that the defendant has a legal right to withhold the monies due to the plaintiff pursuant to the plaintiff's indemnity claim.   Therefore, as a matter of law, there is no genuine issue of material fact that the defendant withheld the amount due to the plaintiff, despite her legal obligation to indemnify the plaintiff.   Thus, awarding prejudgment and postjudgment interest to the plaintiff is proper in this situation, at the statutory rate of ten percent per year.   Accordingly, the court awards the plaintiff prejudgment interest on the total amount due;  accruing from August 31, 2009, to the date of judgment;  and postjudgment interest on the total amount due.

CONCLUSION

Accordingly, for the foregoing reasons, there is no genuine issue of material fact that the plaintiff is entitled to be indemnified by the defendant for the amount of expenses and costs it incurred as a surety on behalf of the defendant as principal in her role as trustee.   The plaintiff is also entitled to attorneys fees and prejudgment and postjudgment interest as a matter of law and, therefore, the plaintiff's motion for summary judgment is granted.

Wilson, J.

Wilson, Robin L., J.