State of Connecticut v. Travelers Indemnity Company (2013)

MEMORANDUM OF DECISION

This case is an action for money damages for conversion by the plaintiff, State of Connecticut (State), against the defendant, Travelers Indemnity Company (Travelers).   The State alleges that Travelers paid out settlement proceeds in a workers' compensation claim despite the fact that the State had a valid lien on the proceeds for delinquent child support payments pursuant to General Statutes § 52–362d.   Travelers denied ever receiving notice of the lien.   For the following reasons, the court finds in favor of the State and awards damages in the amount of $16,000.00, plus costs, plus $1,112.67 in prejudgment interest and $350.00 in statutory attorneys fees.   The request for postjudgment interest is denied.

I

The case was tried to the court on April 23, 2013.   The court heard the testimony of the following witnesses:  Nicole McCann, State Bureau of Child Support Enforcement;  Lucille Evans, State Office Assistant;  Phillip Pion, State Mail Services Supervisor;  Susan Wilkon, Child Support Lien Investigator;  and John C. Steward, Jr., Travelers Claim Adjustor.   The court also admitted into evidence various Child Support Enforcement and Worker's Compensation records, correspondence and court pleadings documenting the events and claims.   The parties subsequently filed briefs and reply briefs in support of their respective positions.

The court finds the following facts.   In November 2005, Allan Tyson, Jr. was subject to a child support order of the Superior Court or a Family Support Magistrate and the order was payable through the State of Connecticut IV–D ¹ agency.   He was delinquent at the time in the amount of $19,211.48.   In November 2005, a Bureau of Child Support Enforcement investigator ran a routine network search and found that Mr. Tyson had a workers' compensation claim pending with the Travelers under the name Allen Tyson.   The search showed that John Stewart was the contact person at Travelers handling the claim.

The investigator prepared a Notice of Lien on Insurance Assets on November 30, 2005, for mailing to the Travelers addressed to “Travelers Indemnity Company, P.O. Box 5008, Hartford, CT 06102, Attn:  John Stewart—ABZ9266001.”   A similar Notice of Withholding of Your Insurance Assets was also prepared for mailing to Mr. Tyson, addressed to his home address.   It was the routine of the State Bureau of Child Support Enforcement, at the time, to put the mail into a mail basket at the State office located at 25 Sigourney Street, Hartford, CT. The mail in the basket would be picked up by an office assistant and brought to the mail room in the building.   There, it would be run through a postage meter machine to affix the postage, bundled into a tray and brought to the United States Post Office on Weston Street in Hartford.   The routine was followed on November 30, 2005.   Therefore, the court finds that the lien notice was mailed to the Travelers on November 30, 2005.

John C. Stewart, Jr. was a workers' compensation claims adjustor at the Travelers handling Mr. Tyson's claim in 2005.   It was the routine of his office at that time for lien letters from the State, addressed as the one in this case, to be received at the mailroom at his office, located at 300 Windsor Street in Hartford.   From there it would be sorted and routed to him.   Upon receipt, he would put notations in the file so that payment would be withheld, and he would put the actual lien letter in the claimant's physical file.   Therefore, the court finds that the lien notice was properly addressed for delivery and receipt.

The State made no follow-up inquiries for almost three years.   On October 20, 2008, the State sent an e-mail to Mr. Stewart asking for the status of its lien.   At that time, he checked the file and found no lien notice, and his file notes did not contain any entry about the lien from the State.   He did see that a final settlement had been approved on March 6, 2008.   A check dated March 7, 2008, in the amount of $20,000, had been issued to Mr. Tyson and his attorney.   He did not know if the lien notice had been received at his mail room.   He reported the situation to the State promptly.

Mr. Tyson's attorney retained $4,000.00 from the check issued by the Travelers and disbursed the remaining $16,000.00 to Mr. Tyson on March 11, 2008.

Other factual findings critical for resolving the issues are made below as needed.

II

The plaintiff seeks damages in the amount of $16,000.00 on its cause of action for conversion, plus prejudgment interest, statutory attorneys fees, and postjudgment interest.   The issues are discussed seriatim.

A

The tort of conversion occurs when one, without authorization, assumes and exercises ownership over property belonging to another, to the exclusion of the owner's rights.  Sullivan v. Thorndike, 104 Conn.App. 297, 307, 934 A.2d 827 (2007), cert. denied, 285 Conn. 907, 942 A.2d 414, 285 Conn. 908, 942 A.2d 416 (2008).   To establish a prima facie case of conversion, the plaintiff had to demonstrate that (1) the property belonged to the plaintiff, (2) the defendant deprived the plaintiff of the property for an indefinite period of time, (3) the defendant's conduct was unauthorized and (4) the defendant's conduct harmed the plaintiff.  Id.

In the instant case, the State alleges that its property that was converted consisted of its lien on the proceeds of Mr. Tyson's workers' compensation claim pursuant to General Statutes § 52–362d(a).   That statute provides as follows:

(a) Whenever an order of the Superior Court or a family support magistrate for support of a minor child or children is issued and such payments have been ordered to be made to the state acting by and through the IV–D agency and the person against whom such support order was issued owes past-due support in the amount of five hundred dollars or more, the state shall have a lien on any property, real or personal, in which such person has an interest to enforce payment of such past-due support.   The lien for past-due child support shall be secured by the IV–D agency pursuant to procedures contained in the general statutes applicable to the type of property to be secured.   After securing the lien, the IV–D agency shall provide such person with notice of the lien and an opportunity for a hearing before a hearing officer of the Department of Social Services pursuant to section 17b–60 to contest the lien.   The IV–D agency shall file a release of such lien if a hearing officer determines that the conditions for the existence of a lien are not satisfied.   Any such lien on real property may, at any time during which the obligor owes the amount of past-due child support secured by such lien, be foreclosed in an action brought in a court of competent jurisdiction by the Commissioner of Social Services in a title IV–D case or by the person to whom the child support is due.   A lien for past-due support arising in any other state shall be given full faith and credit by this state provided such other state has complied with its procedural rules relating to recording or serving of liens.

General Statutes § 52–362d(a).

This statute provides a basis for a conversion action.  “A lien is [a] hold or a claim which one person has upon the property of another as a security for some debt or charge.   It is a qualified right which in certain cases may be exercised over the property of another.  (Internal quotation marks omitted.)   Interstate Fur Mfg. Co. v. Redevelopment Agency, 154 Conn. 600, 604, 227 A.2d 425 (1967);  accord Black's Law Dictionary (9th Ed.2009) (defining “lien” as “[a] legal right or interest that a creditor has in another's property, lasting [usually] until a debt or duty that it secures is satisfied”);  51 Am.Jur.2d 94, Liens § 1 (2011) (“[a] ‘lien’ is a security interest in property”).   Disbursement of proceeds in disregard of the state's lien gives rise to an action for conversion.   See Cordero v. University of Connecticut Health Center, 308 Conn. 215, 230–31, 61 A.3d 514 (2013);  State v. Angelo, 39 Conn.App. 709, 713, 667 A.2d 81 (1995), cert. denied, 236 Conn. 901, 670 A.2d 322 (1996);  State v. Blawie, 31 Conn.Sup. 552, 558, 334 A.2d 484 (App.Div.1974), cert. denied, 167 Conn. 693, 333 A.2d 70 (1975).

In the instant case, the court finds that the defendant disbursed, to the obligor (Mr. Tyson), $16,000.00 in proceeds, encumbered by the plaintiff's lien, without authorization.   Accordingly, it finds that the plaintiff has proven a prima facie case of conversion against the defendant, and the plaintiff has proven damages in the amount of $16,000.00.

Defendant, nevertheless, argues that the lien is not enforceable in this case because, based on the provisions of the statute, the State is required to provide the obligor with notice of the lien and an opportunity for a hearing before a hearing officer of the Department of Social Services to contest the lien, citing Jarmon v. Commissioner of Social Services, 47 Conn.Sup. 492, 504, 807 A.2d 1109 (2002) [32 Conn. L. Rptr. 350].   It argues that the State did not submit proof, by a fair preponderance of the evidence, that Mr. Tyson received notice and was given the opportunity for a hearing.   The court is not persuaded.   A copy of the lien letter to Mr. Tyson was admitted into evidence.   It clearly provided notice of the hearing available under the statute to him.   Mr. Tyson did not testify that he did not receive the notice.   He was not a party and was not called by either party as a witness.   He did not testify at all.   Travelers cannot raise speculative issues on his behalf.   In general, a party does not have standing to raise rights belonging to another.  Stamford Hospital v. Vega, 936 Conn. 646, 657, 674 A.2d 821 (1996);  Dello v. Earth Garden Florist, Inc., 28 Conn.App. 73, 77, 609 A.2d 1057 (1992).

Alternatively, Travelers argues that, in order to enforce the provisions of the statute against it, the State must prove that Travelers received notice of the lien.   It argues that the evidence in this case does not show the required receipt.   In support of its argument that receipt is required, the Travelers cites to subsection (d) of the lien statute, which provided, in 2008, as follows:

(d) Whenever an order of the Superior Court or a family support magistrate of this state, or an order of another state that has been registered in this state, for support of a minor child or children is issued and such payments have been ordered through the IV–D agency, and the obligor against whom such support order was issued owes overdue support under such order in the amount of five hundred dollars or more, the IV–D agency, as defined in subdivision (12) of subsection (b) of section 46b–231, or Support Enforcement Services of the Superior Court may notify (1) any state or local agency with authority to distribute benefits to such obligor including, but not limited to, unemployment compensation and workers' compensation, (2) any person having or expecting to have custody or control of or authority to distribute any amounts due such obligor under any judgment or settlement, (3) any financial institution holding assets of such obligor, and (4) any public or private entity administering a public or private retirement fund in which such obligor has an interest that such obligor owes overdue support in a IV–D support case.   Upon receipt of such notice, such agency, person, institution or entity shall withhold delivery or distribution of any such benefits, amounts, assets or funds until receipt of further notice from the IV–D agency.

General Statutes § 52–362d(d).  (Emphasis added.)

Whether this statute requires receipt is a matter of statutory interpretation.  “The principles that govern statutory construction are well established.   When construing a statute, [o]ur fundamental objective is to ascertain and give effect to the apparent intent of the legislature ․ In other words, we seek to determine, in a reasoned manner, the meaning of the statutory language as applied to the facts of [the] case, including the question of whether the language actually does apply ․ In seeking to determine that meaning, General Statutes § 1–2z directs us first to consider the text of the statute itself and its relationship to other statutes.   If after examining such text and considering such relationship, the meaning of such text is plain and unambiguous and does not yield absurd or unworkable results, extratextual evidence of the meaning of the statute shall not be considered ․ When a statute is not plain and unambiguous, we also look for interpretive guidance to the legislative history and circumstances surrounding its enactment, to the legislative policy it was designed to implement, and to its relationship to existing legislation and common law principles governing the same general subject matter ․” (Citations omitted;  internal quotation marks omitted.)  Grady v. Somers, 294 Conn. 324, 333, 984 A.2d 684 (2009).   This statute is unambiguous.   The court agrees with the defendant that the obligation to withhold disbursement in the instances described in the statute is triggered upon “receipt of such notice.”  General Statutes § 52–362d(d).  Receipt of any form of notice will suffice.  “Section 52–362d(d) requires that a party notified of a claimant's child support arrearage to withhold payment to that claimant.   Although the statute provides that a IV–D agency may notify any person having authority to distribute amounts to a support obligor to withhold distribution of such amounts, it does not prohibit payors from acquiring this information through alternative means.”  Torres v. Kunze, 106 Conn.App. 802, 808, 945 A.2d 472 (2008).   This is not an extraordinary requirement.   Ordinarily, statutes that require that notice be given to a party implicitly require proof of delivery and actual receipt.   See Rivera v. Meriden, 72 Conn.App. 766, 772, 806 A.2d 585 (2002).

Nevertheless, the court finds that this statute has been satisfied in this case.   That is because Connecticut subscribes to the “mailbox rule.”   Echavarria v. National Grange Mutual Insurance Company, 275 Conn. 408, 418, 880 A.2d 882 (2005);  but see, Rapid Motor Line v. Cox, 134 Conn. 235, 239, 56 A.2d 519 (1947) (not applicable to defective highway statute).   This rule “provides that a properly stamped and addressed letter that is placed into a mailbox or handed over to the United States Postal Service raises a rebuttable presumption that it will be received.”  (Citations omitted.)  Echavarria v. National Grange Mutual Insurance Company, supra, 275 Conn. 418.  “Pursuant to the mailbox rule, the burden then shifts to the [challenger] to present evidence that rebuts this presumption.”  Id. “The mailing ․ raises a presumption that notice was sent and received in the absence of a finding to the contrary.”  (Emphasis in original;  citations omitted;  internal quotation marks omitted.)  Tyler F. Lyman, Inc. v. Lodrini, 63 Conn.App. 739, 747, 780 A.2d 932 (2001), cert. denied, 258 Conn. 902, 782 A.2d 137 (2001);  see also Henriquez v. Allegre, 68 Conn.App. 238, 247, 789 A.2d 1142 (2002).

The court finds that the plaintiff handed over to the United States Postal Service a properly stamped and addressed notice in this case.   Receipt is presumed.   On the other hand, the defendant has failed to rebut the presumption that it was received.   All the defendant has proven is that it cannot find it.   Accordingly, the court finds that this statute was complied with.   This finding resolves the issue.  Echavarria v. National Grange Mutual Insurance Company, supra, 275 Conn. 418.   Defendant's citations to authorities to the contrary are inapposite.

Accordingly, the court finds in favor of the plaintiff and against the defendant on the conversion cause of action, and awards $16,000.00 in damages, as requested.

B

With regard to the plaintiff's request for prejudgment interest, plaintiff's claim on this point is based on the allegations that it filed an offer of compromise in this case on July 23, 2012 in the amount of $16,000.00, and that if judgment enters in its favor in an amount equal to or in excess of that amount, it is eligible to prejudgment interest at the rate of 8 percent per annum on the judgment pursuant to General Statutes § 52–192a(c) ² and Practice Book § 17–18.³  The court finds from the record that this case was filed on July 23, 2009.   The plaintiff filed an offer of compromise on July 23, 2012 in the amount of $16,000.00.   The plaintiff has recovered an amount equal to the sum certain specified in the plaintiff's offer of compromise.   Calculating the interest on the judgment from the date of the filing of the offer to the date of judgment, in accordance with the formula prescribed by the statute, the court finds that the plaintiff is eligible for, and the court so awards, prejudgment interest in the amount of $1,112.67 ($3.51 per diem x 317 days).

Plaintiff also requests attorneys fees in the amount of $350.00.   In cases where prejudgment interest is awarded under the offer of compromise statute, the plaintiff is also eligible for an award of reasonable attorneys fees in an amount not to exceed three hundred fifty dollars.  General Statutes § 52–192a(c).  The court finds that amount to be reasonable in this case, so, it awards $350.00 in attorneys fees to the plaintiff accordingly.

Finally, plaintiff seeks postjudgment interest.   Postjudgment interest is primarily an equitable determination and a matter lying within the discretion of the trial court.   Its purpose is to compensate plaintiffs who have been deprived of the use of money wrongfully withheld by defendants.   See General Statutes §§ 37–3a and 52–350f;  Urich v. Fish, 112 Conn.App. 837, 843–44, 965 A.2d 567, cert. denied, 292 Conn. 905, 973 A.2d 109 (2009);  Paulus v. LaSala, 56 Conn.App. 139, 151, 742 A.2d 379 (1999), cert. denied, 252 Conn. 928, 746 A.2d 789 (2000).   Postjudgment interest is awarded at a rate not to exceed 10 percent per annum.  General Statutes § 37–3a.

“[T]he decision of whether to grant interest under § 37–3a is primarily an equitable determination and a matter lying within the discretion of the trial court ․ In determining whether the trial court has abused its discretion, we must make every reasonable presumption in favor of the correctness of its action ․ The court's determination regarding the award of interest should be made in view of the demands of justice rather than through the application of any arbitrary rule ․ Whether interest may be awarded depends on whether the money involved is payable ․ and whether the detention of the money is or is not wrongful under the circumstances ․” (Citations omitted;  internal quotation marks omitted.)  Gianetti v. Norwalk Hospital, 304 Conn. 754, 813, 43 A.3d 567 (2012).   A trial court's decision to award postjudgment interest is subject to review for an abuse of discretion.  Bower v. D'Onfro, 45 Conn.App. 543, 551, 696 A.2d 1285 (1997).  General Statutes § 37–3a(a) provides in relevant part:  “Except as provided in sections 37–3b, 37–3c and 52–192a, interest at the rate of ten per cent a year, and no more, may be recovered and allowed in civil actions or arbitration proceedings under chapter 909, including actions to recover money loaned at a greater rate, as damages for the detention of money after it becomes payable ․” “Because § 37–3a provides that interest may be recovered (emphasis added);  it is clear that the statute does not require an award of interest in every case in which money has been detained after it has become payable.   Rather, an award of interest is discretionary.”  (Citation omitted;  internal quotation marks omitted.)  Sosin v. Sosin, 300 Conn. 205, 228, 14 A.3d 307 (2011).   “Although bad faith is one factor that the court may look at when deciding whether to award interest under § 37–3a ․ in the context of the statute, wrongful is not synonymous with bad faith conduct.   Rather, wrongful means simply that the act is performed without the legal right to do so ․ [This is] consistent with the primary purpose of § 37–3a, which is not to punish persons who have detained money owed to others in bad faith but, rather, to compensate parties that have been deprived of the use of their money.”   (Citation omitted;  internal quotation marks omitted.)  Id., 229–30;  accord, Salace v. Wolczek, 141 Conn.App. 528, 537–38, 61 A.3d 1177 (2013).

In the instant case, considering the fact that the conversion of the State's lien was merely the result of a missing document, and considering the fact that the State failed to follow up on the status of its lien for over three years, the court declines to find that the State's money was wrongfully detained.   Accordingly, the request for postjudgment interest is denied.

III

For all of the foregoing reasons, the court finds in favor of the plaintiff and against the defendant and awards damages in the amount of $16,000.00, plus costs, plus $1,112.67 in prejudgment interest and $350.00 in statutory attorneys fees.   The request for postjudgment interest is denied.   Judgment shall enter in favor of the plaintiff and against the defendant accordingly.

Robert F. Vacchelli

Judge, Superior Court

FOOTNOTES

FN1. General Statutes § 46b–231(b)(12) provides that “ ‘IV–D agency’ means the Bureau of Child Support Enforcement within the Department of Social Services, established pursuant to Section 17b–179 and authorized to administer the child support program mandated by Title IV–D of the Social Security Act.”.  FN1. General Statutes § 46b–231(b)(12) provides that “ ‘IV–D agency’ means the Bureau of Child Support Enforcement within the Department of Social Services, established pursuant to Section 17b–179 and authorized to administer the child support program mandated by Title IV–D of the Social Security Act.”

FN2. General Statutes § 52–192(a)(c) provides:(c) After trial the court shall examine the record to determine whether the plaintiff made an offer of compromise which the defendant failed to accept.   If the court ascertains from the record that the plaintiff has recovered an amount equal to or greater than the sum certain specified in the plaintiff's offer of compromise, the court shall add to the amount so recovered eight percent annual interest on said amount, except in the case of a counterclaim plaintiff under section 8–132, the court shall add to the amount so recovered eight percent annual interest on the difference between the amount so recovered and the sum certain specified in the counterclaim plaintiff's offer of compromise.   The interest shall be computed from the date the complaint in the civil action or application under section 8–132 was filed with the court if the offer of compromise was filed not later than eighteen months from the filing of such complaint or application.   If such offer was filed later than eighteen months from the date of filing of the complaint or application, the interest shall be computed from the date the offer of compromise was filed.   The court may award reasonable attorneys fees in an amount not to exceed three hundred fifty dollars, and shall render judgment accordingly.   This section shall not be interpreted to abrogate the contractual rights of any party concerning the recovery of attorneys fees in accordance with the provisions of any written contract between the parties to the action..  FN2. General Statutes § 52–192(a)(c) provides:(c) After trial the court shall examine the record to determine whether the plaintiff made an offer of compromise which the defendant failed to accept.   If the court ascertains from the record that the plaintiff has recovered an amount equal to or greater than the sum certain specified in the plaintiff's offer of compromise, the court shall add to the amount so recovered eight percent annual interest on said amount, except in the case of a counterclaim plaintiff under section 8–132, the court shall add to the amount so recovered eight percent annual interest on the difference between the amount so recovered and the sum certain specified in the counterclaim plaintiff's offer of compromise.   The interest shall be computed from the date the complaint in the civil action or application under section 8–132 was filed with the court if the offer of compromise was filed not later than eighteen months from the filing of such complaint or application.   If such offer was filed later than eighteen months from the date of filing of the complaint or application, the interest shall be computed from the date the offer of compromise was filed.   The court may award reasonable attorneys fees in an amount not to exceed three hundred fifty dollars, and shall render judgment accordingly.   This section shall not be interpreted to abrogate the contractual rights of any party concerning the recovery of attorneys fees in accordance with the provisions of any written contract between the parties to the action.

FN3. Practice Book § 17–18 provides:After trial the judicial authority shall examine the record to determine whether the plaintiff made an offer of compromise which the defendant failed to accept.   If the judicial authority ascertains from the record that the plaintiff has recovered an amount equal to or greater than the sum certain specified in that plaintiff's offer of compromise, the judicial authority shall add to the amount so recovered 8 percent annual interest on said amount.   In the case of a counterclaim plaintiff under General Statutes § 8–132, the judicial authority shall add to the amount so recovered 8 percent annual interest on the difference between the amount so recovered and the sum certain specified in the counterclaim plaintiff's offer of compromise.   Any such interest shall be computed as provided in General Statutes § 52–192a.   The judicial authority may award reasonable attorneys fees in an amount not to exceed $350 and shall render judgment accordingly.   Nothing in this section shall be interpreted to abrogate the contractual rights of any party concerning the recovery of attorneys fees in accordance with the provisions of any written contract between the parties to the action..  FN3. Practice Book § 17–18 provides:After trial the judicial authority shall examine the record to determine whether the plaintiff made an offer of compromise which the defendant failed to accept.   If the judicial authority ascertains from the record that the plaintiff has recovered an amount equal to or greater than the sum certain specified in that plaintiff's offer of compromise, the judicial authority shall add to the amount so recovered 8 percent annual interest on said amount.   In the case of a counterclaim plaintiff under General Statutes § 8–132, the judicial authority shall add to the amount so recovered 8 percent annual interest on the difference between the amount so recovered and the sum certain specified in the counterclaim plaintiff's offer of compromise.   Any such interest shall be computed as provided in General Statutes § 52–192a.   The judicial authority may award reasonable attorneys fees in an amount not to exceed $350 and shall render judgment accordingly.   Nothing in this section shall be interpreted to abrogate the contractual rights of any party concerning the recovery of attorneys fees in accordance with the provisions of any written contract between the parties to the action.

Vacchelli, Robert F., J.