Mary Margaret Farren v. J. Michael Farren (2011)

MEMORANDUM OF DECISION MOTION TO MODIFY PREJUDGMENT REMEDY # 165

FACTUAL BACKGROUND

The plaintiff, Mary Margaret Farren (Mrs. Farren), commenced an action in two counts against John Michael Farren on January 20, 2010 by way of a writ, summons, complaint and application for a prejudgment remedy alleging that the defendant, J. Michael Farren (Mr. Farren), assaulted her and caused an intentional infliction of emotional distress.   The plaintiff filed an application for a prejudgment remedy which was returned to the court on January 6, 2010 requesting relief in the amount of $30,000,000.   The court, Adams, J., entered an ex parte prejudgment remedy for $15,000,000.   The plaintiff filed an amended complaint on March 17, 2010.   Thereafter, a three-day hearing was conducted before this court and a memorandum of decision was entered on April 7, 2010 ordering a prejudgment remedy in the amount of $4,100,000.   The court order for prejudgment provided:  “The court orders an attachment for the sum of $4,100,000 of sufficient property and assets of the defendant J. Michael Farren, to secure such sum including but not limited to all real estate, bank accounts, treasury bonds or holdings, investment accounts, mutual funds, money market accounts;  said attachment shall be subject to the family trial court's equitable distribution of the marital estate at the time of distribution.”

The defendant has filed several motions addressing the issue of the prejudgment attachment of a pension plan from Xerox Corporation.   The defendant had filed several motions to modify the original $15,000,000 prejudgment remedy entered by the court in January because the defendant was in need of funds to post or secure a bond.   These motions filed on February 7, 2010, March 5, 2010, and March 22, 2010 did not raise the issue of an exemption.   On April 1, 2010, the defendant filed a brief that for the first time raised the issue of the Xerox pension funds.¹  This brief did not include any exhibits that defined the pension at issue.   Again on April 9, 2010 the defendant raised the issue in a request for articulation but did not provide supporting documentation.   On May 10, 2010, the defendant submitted a motion that requested in part a modification related to the pension funds.   On June 1, 2010 the court entered an order related to the defendant's motion for modification.   The court determined that the defendant did not define the nature and extent of the pension with Xerox that was referred to in the request to modify and exempt the pension funds from the prejudgment remedy order entered by the court.   However, the court noted that the defendant had produced some financial information but not that which would support the claim of exemption.   The court denied the motion without prejudice to give the defendant an opportunity to submit evidence to satisfy the claim that the pension fund known as SERP was earnings that permitted exemption from the prejudgment garnishment.   The court also entered a clarification on June 3, 2010 in which it referred to this June 1, 2010 order.   On June 24, 2010 the defendant submitted a motion for a hearing to modify the prejudgment remedy for the pension.   The plaintiff submitted an objection on January 25, 2011.   The matter was scheduled for a hearing on the motion to modify the prejudgment remedy on April 15, 2011 which was continued until May 2, 2011 at the request of the plaintiff.   The court heard argument of counsel on this date.   The defendant submitted exhibits at the argument but did not provide any testimony.   The plaintiff submitted an amended objection dated April 19, 2011.   The defendant submitted a reply memorandum dated May 5, 2011.

DISCUSSION

“ ‘Prejudgment remedy’ means any remedy or combination of remedies that enables a person by way of attachment, foreign attachment, garnishment or replevin to deprive the defendant in a civil action of, or affect the use, possession or enjoyment by such defendant of his property prior to final judgment but shall not include a temporary restraining order.”  General Statutes § 52–278a(d).  Prejudgment remedies are statutory devices designed to bring the defendant's assets into custody as security for the satisfaction of the judgment the plaintiff may recover.   Pursuant to § 52–278d(a), the prejudgment remedy hearing is limited to a determination of:  “(1) whether or not there is probable cause that a judgment in the amount of the prejudgment remedy sought, taking into account any defenses, counterclaims or set-offs, will be rendered in the matter in favor of the plaintiff.”

The court made a finding of probable cause after a hearing to issue a prejudgment remedy with an attachment in the amount of $4,100,000.   The court order permitted an attachment which included but was not limited to all real estate, bank accounts, treasury bonds or holdings, investment accounts, mutual funds, and money market accounts.   The defendant attached as an exhibit, the pension plan that he received through his past employment with Xerox corporation.   The defendant contends that the prejudgment attachment of his Xerox pension is improper because it is earnings that are exempt from a prejudgment attachment pursuant to § 52–278b.   The question now before the court is whether this pension with Xerox classified as a Supplemental Executive Retirement Pension (SERP) is exempt from prejudgment garnishment pursuant to C.G.S. § 52–278b.

General Stat. § 52–278b provides in part:  “Nothwithstanding any provision of the general statutes to the contrary, no prejudgment remedy shall be available to a person in any action at law or equity ․ (2) for the garnishment of earnings as defined in subdivision (5) of section 52–350a.”   The defendant argues that this provision exempts the pension he receives pursuant to his employment with Xerox.   The plaintiff argues that the pension does not satisfy the definition of earnings in C.G.S. § 52–350(a)(5).  “Earnings” are defined by Conn. Gen.Stat. § 52–350a(5) as “any debt accruing by reason of personal services, including any compensation payable by an employer to an employee for such personal services, whether denominated as wages, salary, commission, bonus or otherwise.”   The plaintiff argues that the payments are not earnings and that, if anything, are deferred compensation that is unfunded.   The defendant argues that because it is unfunded the court should not consider this fund as earnings.

The key to determining whether the exemption is applicable is the finding as to whether the earnings are a payment accrued by reason of performance of personal services.  Board of Education of the Town of East Hartford v. Booth, 232 Conn. 216, 654 A.2d 717 (1995).   Earnings are not limited to wages.  Board of Education, supra, 221 n.10. Earnings encompass a much broader application than the terminology wages.   The definition of earnings can include sick time or commissions or a number of other methods of payment for personal services.   The decision as to what is earnings pursuant to the exemption is a case by case determination.  Id. n.11. The Board of Education v. Booth case made it clear that the legislators intended the exemption to apply to earnings before a judgment.   The intention, language and facts of the instant action lead this court to a broad application of the term “earnings.”   The defendant's Exhibit A outlines the pension that is part of the defendant's “Pay investment by Xerox.”   This exhibit contains a synopsis of the total pay which includes a number of areas in which Xerox compensates its employees.   The defendant argues that because the pension is unfunded, it does not satisfy the definition of earnings.   However, the plaintiff does not provide the court with legal support for this argument.   If the court accepts this argument it is ignoring what is commonly known about many pension funds, that is, they are underfunded.   Many employers do not have separate funding accounts to pay for sick time or commissions or a bonus but that does not exclude these forms of payment from the definition of earnings.   If this were the standard the court would be inundated with such claims on all types of pensions which are underfunded or unfunded.²  This is not the test.   The court has viewed Exhibit A which sets forth the breakdown of “total pay investment.”   This summary by Xerox provides a very broad base for earnings to employees of Xerox.   The monies at issue are monthly payments much the same as any other pension.   The payments are made to the defendant only because and as part of the payment for personal services.   Exhibit A describes the SERP payments as retirement benefits and states that the formula is “the benefit you have earned to date.”   The personal plan as to the defendant summarizes the payments with the years the defendant has worked and states it “represents the total service time at Xerox less leaves of absences, periods of terminated service, and adjustments for part-time employment.”   This is a breakdown for services rendered and thus satisfies the definition of earnings which would exempt this pension from a prejudgment remedy garnishment.

These findings as well as the statutory scheme noted in Board of Education v. Booth, supra., 232 Conn. 222 n.14, which rejects the seizure of wages in a Draconian measure which denies a person access to his income flow to pay for his ongoing necessities warrants a modification of the prejudgment remedy to exempt the pension funds the defendant is receiving from the Xerox SERP plan.

CONCLUSION

Pursuant to C.G.S. § 52–278k, the court grants the motion to modify the April 7, 2010 prejudgment remedy entered by this court to exempt from prejudgment garnishment, the pension funds received by the defendant J. Michael Farren from the Xerox Supplemental Executive Retirement Plan. Based upon the evidence and argument of counsel, the court finds that the funds are earnings pursuant to 52–350a and thus exempt pursuant to 52–278b(2).

THE COURT

Brazzel–Massaro, J.

FOOTNOTES

FN1. At the hearing on the prejudgment remedy the defendant did not provide any evidence or testimony regarding the Xerox pension plan to the court although the defendant included a cursory argument in his April 1, 2010 brief..  FN1. At the hearing on the prejudgment remedy the defendant did not provide any evidence or testimony regarding the Xerox pension plan to the court although the defendant included a cursory argument in his April 1, 2010 brief.

FN2. The court in Bender v. Bender, 258 Conn. 733, 739 (2001), found that pension benefits represent a form of deferred compensation for services rendered and as such the court said they are conceptually similar to wages..  FN2. The court in Bender v. Bender, 258 Conn. 733, 739 (2001), found that pension benefits represent a form of deferred compensation for services rendered and as such the court said they are conceptually similar to wages.

Brazzel–Massaro, Barbara, J.