Bernard Livingston v. Todd Frascarelli (2012)

MEMORANDUM OF DECISION RE APPLICATION FOR PREJUDGMENT REMEDY

I. Background

The plaintiff Bernard Livingston has commenced suit against the defendant Todd Frascarelli based on a note, dated May 2, 2005, in the amount of $300,000 with annual interest of five percent that Frascarelli signed payable to the order of Livingston's late wife, Constance.   Livingston has made application for a prejudgment remedy (PJR) in the amount of $400,000.   The application and the opposition thereto were heard on February 27, 2012, and the parties submitted additional briefs on March 7, 2012.

II. Standard of Review

General Statutes § 52–278(a)(1) authorizes the grant of a prejudgment remedy (PJR) when “there is probable cause that a judgment in the amount of the prejudgment remedy sought, or in the amount greater than the amount of prejudgment remedy sought, taking into account any defenses, counterclaims or set-offs, will be rendered in the matter in favor of the plaintiff ․” “Probable cause” has been regularly defined by Connecticut courts as “a bona fide belief in the existence of the facts essential under the law for the action, and as such as would warrant a man of ordinary caution, prudence and judgment, under the circumstances in entertaining it.”   See e.g. TES Franchising, LLC v. Feldman, 286 Conn. 132, 137 (2000);  Ledgebrook Condominium Association, Inc. v. Lusk Corporation, 172 Conn. 577, 584 (1977);  Wall v. Toomey, 52 Conn. 35, 36 (1884).   This rather distended definition has been held to mean that the burden of proof required for a PJR is less than proof by a preponderance of the evidence.  TES Franchising, supra, 286 Conn. 137;  CC Cromwell Ltd. Partnership v. Adames, 124 Conn.App. 191, 194 (2010).   Probable cause must be established both as to the merits of the case and the amount of the PJR. CC Cromwell, supra, 124 Conn.App. at 196 (quoting TES Franchising, emphasis in the original).

III. Discussion

Frascarelli testified that at one time he was engaged to Jennifer Livingston, the grandaughter of the plaintiff and Constance Livingston and that he signed the note in question, a copy of which is Exhibit I. Jennifer Livingston signed a similar note payable to Constance Livingston at the same time except that the amount of her note was $250,000.   Exhibit A. The terms of both notes called for payment “on demand, or if a mortgage is placed on premises 155 Winesap Road, Stamford, Connecticut or if these premises are sold.”   Frascarelli and Jennifer Livingston purchased real property on Winesap Road for a stated price of $692,000.   Exhibit B (undated deed).   They appear to have sold the same property in 2008 for $644,500.   Exhibit C.

According to Frascarelli Constance Livingston died about four years ago ¹ at a time when he and Jennifer Livingston were still living together.   He testified that he has not paid the note in full and that he had made some payments in increments of $750, including a few payments after January 2008.

Bernard Livingston testified that he was executor and “principal heir” under his late wife's will.   Exhibit F. As executor he assigned the Frascarelli note as well as the note signed by Jennifer Livingston to himself.   Exhibit D. He testified that he does not know where the original Frascarelli note is and that he has looked pretty much everywhere it might be.   Bernard Livingston also identified a record he kept in his handwriting of payments made by Frascarelli from July 2005 through 2009 totaling $23,250.   Exhibit E. On cross examination Bernard Livingston conceded he had not listed either the Frascarelli note or the Jennifer Livingston note on the “List of Assets–Inventory” that he signed, certified to be true, and filed with the New York State Surrogate's Court for the County of Westchester.²  The assignment of the Frascarelli note to the plaintiff took place after the inventory was filed with the Surrogate's Court.

Frascarelli has raised special defenses that the plaintiff is not a holder in due course;  that there was no consideration paid to Frascarelli for the note;  and that the note is payable to the order of Constance Livingston and plaintiff is not entitled to enforce it.   Frascarelli also contends that plaintiff has no standing to sue on the note.

Because the issue of standing can implicate a court's subject matter jurisdiction (even though no motion to dismiss has been made in this case) the court will turn to that issue first.   Frascarelli's argument relies, in part, on the failure of the plaintiff to include the note in the inventory listing the assets of his wife's estate, noting that as executor he was required by law to account for all the assets for the purposes of distribution and ascertaining taxes.   Although not explicitly referencing the concept, it appears Frascarelli is arguing that the doctrine of judicial estoppel should bar the plaintiff's enforcement of the note.   Judicial estoppel prevents a party in a legal proceeding from taking a position contrary to a position taken in an earlier legal proceeding.   The doctrine has recently been recognized by the Connecticut Supreme Court under certain circumstances;  Dougan v. Dougan, 301 Conn. 361, 372 (2011);  Association Resources Inc. v. Wall, 298 Conn. 145, 169 (2010);  although it was not a stranger in prior Connecticut law.   See Achim Deitsch Textiles v. Deitsch, Superior Court, judicial district of Stamford/Norwalk at Stamford, X05 CV 04–4009299, complex litigation docket (December 3, 2007, Adams, J.) (44 Conn. L. Rptr. 636).   Judicial estoppel can apply when;  (1) a party's later position is clearly inconsistent with its earlier position, (2) the former position was adopted in some way by the court, and (3) the party asserting the two positions would gain an unfair advantage over the party seeking estoppel.   Additionally, if the first position is the result of a good faith mistake or unintentional error, the doctrine may not be applied.   Dougan, supra, 301 Conn. 372–73.

Bernard Livingston testified that an accountant and attorney prepared the inventory and his wife's estate tax return, and that he did not notice that the note at issue was not included as an asset in the Surrogate's Court inventory.   He also testified, without further explanation, that the failure to include the note did not affect the amount of taxes due.   While this testimony was conclusory and without confirmatory detail, there was no evidence of any kind opposing it, and the court is not inclined at this early stage to apply the doctrine of judicial estoppel.

The other part of Frascarelli's lack of standing argument relies on the failure of the plaintiff to locate and produce the original note and the propriety of the assignment of the note from the Estate to Bernard Livingston.   In addition, Frascarelli raises the possibility in his memorandum that Constance Livingston may have forgiven or destroyed the note.   These arguments are not persuasive.   There is ample legal authority supporting enforcement of a note when the original cannot be located, and Frascarelli conceded he signed the note and has not paid it back in full.   Nor does there appear to be a viable argument that the assignment was invalid.   As cited by the plaintiff, under New York law which applies to the note in this case (See Exhibit I) an assignee has standing to enforce the note.  Carlin v. Jamal, 68 A.D. 655, 891 N.Y.S.2d 391 (1st Dep't.2009).   Finally, while not implausible that Constance Livingston forgave the note—at the time of her death Jennifer Livingston and Frascarelli were still living together—there is not an iota of evidence to that effect, just speculation.   Therefore, the court rejects the lack of standing argument.

As to the merits of the PJR application the defendant has scarcely briefed his special defense arguments while the plaintiff discusses these defenses at length.   Bernard Livingston concedes he is not a holder in due course.   Nevertheless the evidence sufficiently indicates that he is an assignee of the note payable to Constance Livingston.   The plaintiff may be subject to certain defenses as an assignee, but the defendant must present evidence in support of them.   In the case of the defense of lack of consideration Frascarelli did not offer any evidence to support the defense, and an inference can be drawn against the defense by the admitted fact that he did make payments against the note.

The court determines that, while there may be much more to this case than what is presently evidenced in the record, the plaintiff has met the rather low burden of proof necessary to obtain a PJR, given that Frascarelli admits signing the note and has not contested the plaintiff's calculation as to how much is owed thereon ($300,000, plus $98,753.41 of interest, less $23,250 of payments=$375,503.41).   Since the note calls for payment of attorneys fees incurred in collection activities, the court grants the application for a PJR up to the amount of $390,000.

BY THE COURT

TAGGART D. ADAMS

JUDGE TRIAL REFEREE

FOOTNOTES

FN1. Bernard Livingston confirmed his wife died in January 2008..  FN1. Bernard Livingston confirmed his wife died in January 2008.

FN2. Constance Livingston was a resident of New York State..  FN2. Constance Livingston was a resident of New York State.

Adams, Taggart D., J.T.R.