Joshua Feldman v. Jutharat Feldman (2013)

MEMORANDUM OF DECISION ON DEFENDANT'S MOTION FOR CONTEMPT, No. 145

The present issue in this dissolution action is whether the plaintiff, Joshua Feldman, should be held in contempt because he allegedly transferred, moved, disposed of, or concealed jointly owed property without the consent of the defendant, Jutharat Feldman, in violation of a court order.   The plaintiff filed the complaint in this action on July 23, 2012, seeking a dissolution of his marriage to the defendant.   With the initiation of this action, automatic orders entered in the case pursuant to Practice Book § 25–5.   The automatic orders require that during the pendency of the dissolution action “[n]either party shall sell, transfer, exchange, assign, remove, or in any way dispose of ․ any property” unless it is with the written consent of the other party or by an order of a judicial authority.   On July 3, 2013, the defendant filed the present motion for contempt, claiming that the plaintiff has violated the court's order by removing property from the premises of a restaurant that the couple operated together during their marriage.   In order to properly resolve this issue, the court also granted the defendant's motion to cite in the third-party defendants Beryl Feldman and 4 Roosevelt, LLC, which currently maintain possession and use of the contested property and potentially have an ownership interest in it.   This matter was then set down for a hearing, which was conducted on August 2, August 6, and August 14, 2013, with testimony heard from several witnesses.   Both sides also filed briefs on August 19, 2013, arguing their respective positions.

Based on the testimony and evidence presented at the hearing, the court finds that the defendant has proven the following facts related to this motion.   The plaintiff and the defendant married on June 27, 1998.   From approximately May 2005 to February 2013, the plaintiff and defendant operated a Thai restaurant together, which was named Rice Spice Noodles and incorporated as Rice Spice Noodles, Inc.¹ During that time, the defendant was the president and sole shareholder of the corporation, and the plaintiff served as the corporate secretary, with the couple jointly running the restaurant.   The restaurant was operated out of a building owned by Berstev, LLC, an LLC formed by the plaintiff's parents, Steven and Beryl Feldman.   Berstev, LLC and Rice Spice Noodles, Inc. also entered into a lease agreement for the premises, which was executed by plaintiff's mother for the LLC and by plaintiff in his capacity as secretary of Rice Spice Noodles, Inc. Rent payments were never paid by Rice Spice Noodles, Inc. and never sought by Berstev, LLC during the period from 2005 until the initiation of this divorce.   This dissolution action was instituted by plaintiff on July 23, 2012.   Plaintiff's parents initiated eviction proceedings against Rice Spice Noodles shortly thereafter on the grounds of non-payment of rent although there had been no demand for rental payments nor any defaults asserted prior to the commencement of the dissolution.

Prior to the opening of the restaurant, Steven and Beryl Feldman purchased certain restaurant equipment for the plaintiff and defendant to use in the operation of their restaurant.   Rice Spice Noodles remained in operation until February 2013, when it was shut down by order of the Connecticut Department of Revenue Services for failure to pay its state sales tax.   Rice Spice Noodles, Inc. was also sued for eviction from the premises by Berstev, LLC. The corporation agreed to vacate the premises by March 7, 2013, but, prior to doing so, on March 1, 2013, the plaintiff and Steven and Beryl Feldman removed the restaurant equipment and all other property from the premises.   By early May 2013, Joshua Feldman had moved the equipment and property back into the premises and appeared to be preparing to open a restaurant.   Shortly thereafter, a Thai restaurant did open on the premises, which is currently named 4 Roosevelt Asian Bistro.   The restaurant is owned by the third-party defendant, 4 Roosevelt, LLC. That LLC is owned by Steven Feldman and the third-party defendant Beryl Feldman, and Joshua Feldman is a current employee.   The 4 Roosevelt Asian Bistro continues to utilize equipment that was previously used to operate Rice Spice Noodles.

The defendant argues that, as a result of the plaintiff's actions, the plaintiff has violated the court's automatic orders entered pursuant to Practice Book § 25–5, and that the plaintiff thus should be held in contempt.   Specifically, the defendant contends that the plaintiff transferred, moved, disposed of, or concealed jointly owned property that “included but was not limited to restaurant equipment, furniture, cooking equipment, flatware, dishes, glasses, food and beverage inventory and financial records pertaining to the restaurant operations.” ²

Practice Book § 25–5 requires courts to enter specific automatic orders at the initiation of a dissolution action.   Those orders provide, in relevant part, that “[n]either party shall sell, transfer, exchange, assign, remove, or in any way dispose of, without the consent of the other party in writing, or an order of a judicial authority, any property, except in the usual course of business or for customary and usual household expenses ․ [and][n]either party shall conceal any property.”   See Practice Book § 25–5(b).  “[T]he purpose of the automatic orders is to maintain the status quo of the assets within the marital estate for distribution at the time of the dissolution.   A violation of those orders without prior order of the court violates that fundamental purpose.   Failure to comply with the orders empowers the court to impose penalties, fines, and restoration of the assets.”   O'Callaghan v. Petano, Superior Court, judicial district of New Britain, Docket No. CV–09–6002940–S (February 8, 2012, Swienton, J.) (53 Conn. L. Rptr. 571).  “An order of the court must be obeyed until it has been modified or successfully challenged.”  (Internal quotation marks omitted.)  Parlato v. Parlato, 134 Conn.App. 848, 850, 41 A.3d 327 (2012).  “Civil contempt is committed when a person violates an order of court which requires that person in specific and definite language to do or refrain from doing an act or series of acts.”   (Emphasis omitted;  internal quotation marks omitted.)  In re Leah S., 284 Conn. 685, 695, 935 A.2d 1021 (2007).

Whether the evidence supports a finding of contempt is a question of fact for the trial court to determine.  Parlato v. Parlato, supra, 134 Conn.App. 850.  “In a civil contempt proceeding, the movant has the burden of establishing, by a preponderance of the evidence, the existence of a court order and noncompliance with that order.”  Statewide Grievance Committee v. Zadora, 62 Conn.App. 828, 832, 772 A.2d 681 (2001).  “[T]he contempt remedy is particularly harsh ․ and may be founded solely upon some clear and express direction of the court.”  (Emphasis omitted.)  In re Leah S., supra, 284 Conn. 695.   Furthermore, “[t]o constitute contempt, a party's conduct must be wilful ․ Noncompliance alone will not support a judgment of contempt.”   (Internal quotation marks omitted.)  Parlato v. Parlato, supra, 850.

As a preliminary matter, the court must address the issue of who owned the restaurant equipment and other property at the 4 Roosevelt Avenue premises when it was removed by the plaintiff and his parents on March 1, 2013.   The court cannot consider holding a plaintiff in contempt if the property that he helped move out of the premises did not belong to the marital estate, either as property of his own or the defendant or the corporation.   The plaintiff argues that the property and equipment used in Rice Spice Noodles was purchased by his parents, Steven and Beryl Feldman, and thus he did not violate the court's order when he removed that property from the 4 Roosevelt Avenue premises and prevented access to it by the defendant.   The defendant counters that much of the property and equipment was actually purchased by Rice Spice Noodles, Inc. and, to the extent that any equipment was purchased by the plaintiff's parents, such equipment was intended as a gift to the couple and, thus, would qualify as a marital asset to which § 25–5 would apply.

The court finds that the restaurant equipment and other property removed from 4 Roosevelt Avenue on March 1, 2013 by Steven Feldman, Beryl Feldman, and the plaintiff were owned by Rice Spice Noodles, Inc. at the time that they were removed.   To the extent that any of that equipment and other property was originally purchased by Steven and Beryl Feldman, the court finds that the parents' course of conduct was indicative of a gift.  “A gift is the transfer of property without consideration ․ To make a valid gift inter vivos, the donor must part with control of the property which is the subject of the gift with an intent that title shall pass immediately and irrevocably to the donee.”  (Internal quotation marks omitted.)  Wasniewski v. Quick & Reilly, Inc., 292 Conn. 98, 103, 971 A.2d 8 (2009).   Steven and Beryl Feldman admittedly enjoy an affluent financial situation, through which they have chosen to generously support their son, the plaintiff, throughout the years.   As an example, there are the generous arrangements that were made for Rice Spice Noodles, Inc.'s use of the 4 Roosevelt Avenue premises.   Although Berstev, LLC and Rice Spice Noodles, Inc. entered into a lease agreement for the premises in 2005, no evidence was presented to prove that the lease was anything but a sham.   In particular, it is noteworthy that not a single rent payment was ever sought by Berstev, LLC or paid by Rice Spice Noodles, Inc. after the signing of the lease.   See 1 Restatement (Second), Contracts § 18, comment (c) (1981) (no contract is formed “[w]here all the parties to what would otherwise be a bargain manifest an intention that the transaction is not to be taken seriously”).   Further, no renewal options were ever exercised and no written defaults were ever asserted.   The term of the lease and its renewal options expired in 2008.   There were never any renegotiations thereafter in spite of the lack of any rental payments and the fact that any renegotiation was to consider the cost of any equipment allegedly purchased by Berstev, LLC. Additionally, in 2011, the plaintiff and defendant purchased another Thai restaurant in Rhode Island and, after the plaintiff had already paid approximately $30,000 toward the purchase, Steven and Beryl Feldman supplied significant additional funds so that the purchase could be completed even though no rental payments had been received from Rice Spice Noodles.   The plaintiff was never required to repay said funds.   The conduct in both of these scenarios evidences that the parents intended the free rent and financial contributions to be gifts to the plaintiff and defendant so that they could successfully operate their business ventures.

Likewise, the parents' purchase of restaurant equipment for Rice Spice Noodles, Inc. is directly in line with their conduct in providing the other gifts and, thus, must be construed as the same.   The parents purchased the equipment so that the plaintiff and defendant could successfully operate Rice Spice Noodles and the couple used said equipment in the restaurant for over seven years.   All of the equipment invoices entered into evidence are in the name of Rice Spice Noodles, Inc. and the parents have not provided any receipts or other documents showing to what extent, if any, they purchased equipment for the restaurant.   In addition, there is no evidence or testimony, besides the plaintiff's and Steven Feldman's self-serving denials, to indicate that the parents ever retained title to the equipment or intended that it be returned to them or remain on the premises after its use by Rice Spice Noodles, Inc. Instead, as described, the evidence supports the conclusion that the equipment was a gift.   Therefore, the court concludes that the restaurant equipment or other property removed from 4 Roosevelt Avenue in March 2013 and currently being used by 4 Roosevelt, LLC are marital assets of which the defendant is presently being deprived.   The value of the aforesaid marital assets will have to be determined and apportioned in the dissolution action pending in this court, along with any other tangible and intangible assets that are determined to belong to Rice Spice Noodles, Inc.³

On the issue of contempt, however, the court recognizes that there was a dispute as to the ownership of the assets at 4 Roosevelt Avenue, and consequently finds that the defendant has not met its burden of showing that the removal of the property and equipment from the premises of Rice Spice Noodles was a wilful violation of the automatic orders in this dissolution action.   Contempt is a harsh remedy and, thus, will not be found if the movant cannot prove that the other party's conduct constitutes an intentional violation—accordingly, no finding of contempt will be entered here.   In addition, because the defendant indicated at the hearing that she no longer objects to the continued operation of the 4 Roosevelt Asian Bistro, the subject equipment and other property shall continue to remain at the 4 Roosevelt Avenue premises during the pendency of this dissolution action.   Nonetheless, this ruling does not preclude Beryl Feldman, 4 Roosevelt, LLC, and the plaintiff from being required to compensate the defendant for their use and the value of the property owned by Rice Spice Noodles, Inc. Additionally, the court notes that, in order to maintain compliance with the automatic orders, the plaintiff must hereafter permit the defendant to have access to any records of Rice Spice Noodles, Inc. that are presently in the possession of the plaintiff or at the premises of 4 Roosevelt Avenue.   Lastly, because no finding of contempt shall enter in this case, the defendant is not entitled to any of its additional requested relief associated with this motion, including its request for the appointment of a court monitor to oversee the new restaurant or the awarding of attorneys fees for litigating this motion.

In accordance with the foregoing, the defendant's motion for contempt is denied.

Goldberg, JTR

FOOTNOTES

FN1. In addition to this dissolution action, there is also a pending civil action filed by Jutharat Feldman and Rice Spice Noodles, Inc., to which Joshua Feldman is one of the defendants.   The civil action is captioned Rice Spice Noodles, Inc. v. Feldman, Superior Court, judicial district of New London, Docket No. CV–13–5014594–S, and it involves, among other things, allegations that Joshua Feldman engaged in conversion of assets and misappropriation of trade secrets belonging to the plaintiffs in that case.   Although this case and the civil action are separate, a number of issues in them are being litigated together for the purposes of judicial economy, particularly because Rice Spice Noodles, Inc. is the most significant marital asset for Joshua and Jutharat Feldman..  FN1. In addition to this dissolution action, there is also a pending civil action filed by Jutharat Feldman and Rice Spice Noodles, Inc., to which Joshua Feldman is one of the defendants.   The civil action is captioned Rice Spice Noodles, Inc. v. Feldman, Superior Court, judicial district of New London, Docket No. CV–13–5014594–S, and it involves, among other things, allegations that Joshua Feldman engaged in conversion of assets and misappropriation of trade secrets belonging to the plaintiffs in that case.   Although this case and the civil action are separate, a number of issues in them are being litigated together for the purposes of judicial economy, particularly because Rice Spice Noodles, Inc. is the most significant marital asset for Joshua and Jutharat Feldman.

FN2. The defendant's motion also claims that the plaintiff violated the automatic orders by continuing to run the Rice Spice Noodles restaurant under a new name for his sole benefit, using and profiting from Thai recipes developed by the defendant, and breaching a fiduciary duty the plaintiff allegedly owes to Rice Spice Noodles, Inc. However, the automatic orders entered under § 25–5 apply primarily to the improper transfer, disposal, or concealment of tangible property, and, although certain aspects of § 25–5 may apply loosely to some of these claims, the court is of the opinion that the civil action is the more appropriate venue to litigate the merits of these claims.   See footnote 1. For the purposes of this motion, the court concludes that, even assuming the defendant's allegations are true, it would not be appropriate to hold the plaintiff in contempt for these actions, based on the reasoning discussed later in this decision..  FN2. The defendant's motion also claims that the plaintiff violated the automatic orders by continuing to run the Rice Spice Noodles restaurant under a new name for his sole benefit, using and profiting from Thai recipes developed by the defendant, and breaching a fiduciary duty the plaintiff allegedly owes to Rice Spice Noodles, Inc. However, the automatic orders entered under § 25–5 apply primarily to the improper transfer, disposal, or concealment of tangible property, and, although certain aspects of § 25–5 may apply loosely to some of these claims, the court is of the opinion that the civil action is the more appropriate venue to litigate the merits of these claims.   See footnote 1. For the purposes of this motion, the court concludes that, even assuming the defendant's allegations are true, it would not be appropriate to hold the plaintiff in contempt for these actions, based on the reasoning discussed later in this decision.

FN3. In the plaintiff's opposition memorandum, he argues that the court cannot make any determinations at this time regarding the ownership of property because such determinations are restricted until the dissolution is finalized.   It is true that the court may not distribute marital assets until the time that the marriage is dissolved;  see Rosato v. Rosato, 77 Conn.App. 9, 14, 822 A.2d 974 (2003);  but that has not occurred here.   Rather, the court is only determining who presently owns the property in order to resolve this motion..  FN3. In the plaintiff's opposition memorandum, he argues that the court cannot make any determinations at this time regarding the ownership of property because such determinations are restricted until the dissolution is finalized.   It is true that the court may not distribute marital assets until the time that the marriage is dissolved;  see Rosato v. Rosato, 77 Conn.App. 9, 14, 822 A.2d 974 (2003);  but that has not occurred here.   Rather, the court is only determining who presently owns the property in order to resolve this motion.

Goldberg, Joseph H., J.T.R.