LLC v. LLC (2013)

ORDER RE APPLICATION FOR PREJUDGMENT REMEDY (# 103)

The plaintiff, Fun Wheels, LLC, seeks a prejudgment remedy against defendant, Rochsamibr, LLC (Roschambler), and two individual guarantors, Christopher Caldarola and Robin Case, to secure payment on a promissory note.   Rochsamibr purchased from the plaintiff a business entity known as Custom Coach for $175,000 and executed a promissory note pursuant to which it agreed to pay the purchase price to Fun Wheels over a five-year period, with interest, in monthly installments of $3,333.34.   The individual defendants guaranteed the note.

On March 6, 2013, the plaintiff applied for an ex parte prejudgment remedy in the amount of $93,333.12.   The application was denied by the court, and the matter was scheduled for a hearing on May 1, 2013.   On or about March 26, 2013, the plaintiff filed a motion for prejudgment attachment.   After an evidentiary hearing at which the plaintiff and the defendants appeared and were fully heard, and upon consideration of the memoranda of law submitted by the parties and the oral argument of their counsel, the court finds that the plaintiff has failed to establish that there is probable cause to sustain the validity of its claim or the amount of the remedy it seeks.

General Statutes § 52–278d(a) requires that a trial court make a probable cause determination as to both the validity of the plaintiff's claim and the amount of the remedy sought.  Kosiorek v. Smigelski, 112 Conn.App. 315, 322, 962 A.2d 880, cert. denied, 291 Conn. 903, 967 A.2d 113 (2009).  “In other words, to justify the issuance of a prejudgment remedy, probable cause must be established both as to the merits of the cause of action and as to the amount of the requested attachment ․ Therefore, the party seeking the prejudgment remedy must present evidence that is sufficient to enable the court to determine the probable amount of the damages involved.”  (Emphasis in original;  internal citations omitted.)  Id., 322–23.  “[I]t is well settled that, in determining whether to grant a prejudgment remedy, the trial court must evaluate both parties' evidence as well as any defenses, counterclaims and setoffs ․ Such consideration is significant because a valid defense has the ability to defeat a finding of probable cause.”  TES Franchising, LLC v. Feldman, supra, 286 Conn. 132, 145, 943 A.2d 406 (2008) (citations and internal quotes omitted.)

As to the merits of the cause of action, the court finds that the plaintiff failed to meet its burden of establishing probable cause that it properly sent notice of default and acceleration to the defendant in accordance with the terms of the note.   The court rejects the plaintiff's argument that institution of this action on the note alone is sufficient to trigger the acceleration provision of the note and to provide sufficient notice of default to the defendants.   The cases cited by the plaintiff for the proposition it advances are either not binding on this court or involve inapposite foreclosure actions with different note and mortgage provisions and do not address the issue in relation to an application for prejudgment remedies.

As to the amount of the requested attachment, the court finds that the plaintiff failed to meet its burden of establishing probable cause that a judgment will be rendered in its favor against the defendants in any particular amount.   Both prior to and during the hearing, the amount of the requested attachment and the plaintiff's theory as to how the amount should be calculated were moving targets.   In its original ex parte application for a prejudgment remedy and accompanying affidavit, the amount of the requested attachment was $93,333.12.   At the beginning of the hearing on the application, the plaintiff reported that it sought a prejudgment attachment in the amount of $88,719.74.   Later in the hearing, the plaintiff asserted that the appropriate prejudgment remedy amount was $81,630.39.   The thrust of the plaintiff's proof at the hearing was that the probable amount of damages would be $88,719.74.   This amount was arrived at by subtracting payments made on the note by the defendants since May 2010 from a starting figure of $200,000.   According to the plaintiff, the $200,000 figure is the amount that the defendants would have paid to the plaintiff at the end of the five-year term of the note provided all monthly payments had been timely made.   There is nothing in the note that would support such a calculation of damages upon default and acceleration.

At the conclusion of the hearing and in its post-trial brief, the plaintiff claimed that the outstanding principal amount of the debt is $81,719.74, based on the outstanding principal on the note.   The court finds that the plaintiff failed to prove this amount of its claimed damages.   The plaintiff's business manager testified that she would have to obtain information regarding the outstanding principal balance of the loan from the plaintiff's accountant.   The plaintiff's accountant did not testify and the document introduced as an exhibit, an amortization schedule, was prepared three years ago by a person who did not testify at the hearing.   Such evidence is insufficient to establish the amount of the alleged outstanding principal balance of the note with reasonable probability.   See TES Franchising, LLC v. Feldman, supra, 286 Conn. 132, 145, 943 A.2d 406 (2008) (Although the likely amount of damages need not be determined with mathematical precision ․ the plaintiff bears the burden of presenting evidence that affords a reasonable basis for measuring its loss).

Accordingly, the court denies the plaintiff's application for a prejudgment remedy.

Cobb, J.

Cobb, Susan Quinn, J.