Connecticut

Warning: The following opinion is provided for purposes of discussion only. We have not Shepardized™ this opinion, and do not know the subsequent disposition of this case nor whether the effect of the opinion has been overruled or superceded by other law.

Collard & Roe, PC v. Arthur O. Klein et al.,
No. CV980164463S (Conn. 08/20/2003)

CV980164463S

SUPERIOR COURT OF CONNECTICUT, JUDICIAL DISTRICT OF STAMFORD-NORWALK AT STAMFORD

August 20, 2003, Decided

August 20, 2003, Filed

NOTICE: [*1] THIS DECISION IS UNREPORTED AND MAY BE SUBJECT TO FURTHER APPELLATE REVIEW. COUNSEL IS CAUTIONED TO MAKE AN INDEPENDENT DETERMINATION OF THE STATUS OF THIS CASE.

JUDGES: GROGGINS, J.T.R.

OPINIONBY: Grogins

OPINION: MEMORANDUM OF DECISION

I.

Collard & Roe commenced this lawsuit by complaint dated April 14, 1998 and as amended on February 4, 1999, to set aside two transfers of real property owned by Arthur Klein to his wife Diane Klein as fraudulent transfers pursuant to the Uniform Fraudulent Transfer Act, Conn. Gen. Statutes § 52-552a et seq. The defendants, Arthur and Diane Klein, filed their amended answer dated March 27, 1999, together with a special defense alleging that the judgment had been declared invalid by a decision of the Statewide Grievance Committee and a six-count counterclaim in which the defendants are seeking damages for intentional infliction of emotional distress and restitution for sums collected by Collard & Roe. The second matter also heard by the court involved an interpleader action filed by Charles Rockwell and Michael A. Laux (Escrow Agents) for the monies ($ 150,000) deposited into court arising out of an escrow agreement between [*2] Nicole Straight, Kirk Straight, the Kleins and First American Title Insurance Company dated November 16, 1998.

Mr. Klein is a former principal in the firm of Klein & Vibber, which firm merged with Collard & Roe (hereinafter C&R) and the merger later dissolved over differences regarding distribution of fees and profits by the merged parties. On February 28, 1997, C&R obtained a judgment vs. Mr. Klein in New York for the sum of $ 97,921 and this judgment was domesticated in Connecticut on June 11, 1997, pursuant to Conn. Gen. Statutes § 52-604. On or about February 12, 1998, Mr. Klein by quitclaim deed attempted a transfer of his interest in the property known as 391 North Main Street, Westport, Connecticut to his wife, the defendant, Diane L. Klein as well as the property at 7 Half Mile Common. Subsequently, on March 13, 1998, C&R recorded their judgment lien on the land records in Westport on this property (Exhibit 4). On November 16, 1998, the Kleins together with counsel, Charles Rockwell attempted to close on this property (391 North Main) to the Straights at the office of Attorney Michael Laux in Westport. The record reflects that due to the aforementioned [*3] lien on the 391 North Main Sweet property, the Kleins were unable to convey clear title to the Straights. A lengthy closing ensued and in order to facilitate the closing of this property, First American agreed to insure over the title, without exception to this lien, on the condition and in consideration of the Kleins agreeing to indemnify and hold harmless First American against loss, changes and attorneys fees which may result from the foreclosure of the lien and farther the sum of $ 150,000 from the sale proceeds to be held in escrow to secure this agreement. As a result, the Kleins executed an Indemnification & Escrow Agreement dated November 16, 1998, which agreement was executed by the escrow agents and the Kleins, and the aforementioned funds were deposited in escrow with the escrow agents, Lain & Rockwell. (Exbibit 1.) This agreement in part provided that First American could demand a payout of the funds to any claimant if the Kleins failed to obtain a removal or release of the lien or where the holder of the lien obtains a final judgment in favor of the holder of the liens. On January 20, 1999, C&R instituted a foreclosure action on this lien against the Straights. Because [*4] the Straights had been previously informed of this prior C&R lien, no defense of this foreclosure action was interposed and a judgment of strict foreclosure was entered on May 24, 1999 in favor of C&R. (Exhibit 8.) First American then requested the escrow agents to disburse the funds to C&R. (Exhibits 6 & 7.) The escrow agents refused this demand for payment and thereafter filed an interpleader Action on June 15, 1999 and the funds were deposited into the court for its ruling or distribution of these funds.

II. Findings Of Fact

This court finds the following facts as proven by the parties.

1. First American is a title insurance company with a principal place of business in Hartford, Connecticut.

2. The Straights are individuals residing in Connecticut with their residence in Westport.

3. The Kleins are individuals residing in Connecticut at 7 Half Mile Common, Westport.

4. C&R commenced an action in the Superior Court for the State of New York against Mr. Klein and Klein & Vibber, P.C. and obtained a judgment in the amount of $ 97,921. On February 28, 1997 this judgment was domesticated in Connecticut and filed on the land records of the Town of Westport on March 12, 1998. (Exhibit [*5] 4.)

5. By quitclaim dated February 12, 1998 (Exhibit 2), Mr. Klein purported to transfer his one-half interest in the property at 391 North Main Street, Westport to his wife, Diane Klein.

6. This quitclaim deed was defective as it lacked the signatures of two witnesses. The court finds that the Kleins reliance on our Validating Act, § 47-36aa serves no purpose in their favor as said act provides in part: ". . . unless an action challenging the validity of that instrument is commenced . . . within two years after the instrument is recorded . . ." Such action was commenced by C&R.

7. This transfer was without consideration and left Mr. Klein without other assets and insolvent and was fraudulent in fact.

8. At the closing between the Straights and the Kleins on November 16, 1998, the Straights were unable to purchase this property without the First American writing over the lien by C&R and issuing a title policy in their favor.

9. In order to proceed with the closing and to induce First American to issue its policy free and clear of the aforementioned lien, the Kleins jointly and severally executed the escrow agreement and agreed to indemnify and to hold harmless First American [*6] for any loss resulting from said encumbrance or from any action relating thereto.

10. This court finds that the closing for this property consumed approximately four hours and that there were considerable negotiations between the parties and that all of the parties were represented and counseled by their attorneys.

11. This court also finds that Mr. Klein himself was formerly an attorney engaged in patent law and admitted to practice in Connecticut before his suspension.

12. This court finds that the lien represented by the alleged transfer by deed from Mr. Klein to Mrs. Klein was an encumbrance on the North Main Sweet property and that the C&R judgment was a valid lien on this property.

13. Pursuant to the signed agreement, the Kleins agreed to take immediate steps to discharge or remove the aforementioned lien.

14. In consideration of the executed indemnity agreement, the sum of $ 150,000 was placed in escrow with Attorneys Laux and Rockwell.

15. As a further result of the indemnity agreement and escrowed funds of $ 150,000, the closing took place and the property was conveyed by the Kleins to the Straights by warranty deed.

16. Subsequently, on January 20, 1999, C&R brought [*7] an action seeking to foreclose the lien against Nicole J. Straight and Kirk J. Straight, which action was instituted in the Superior Court at Stamford, DN CV 99 0170357S.

17. Despite several demands by letter by First American to the Kleins requesting removal of the lien, the Kleins have not had such lien removed from the subject premises.

18. On May 20, 1999, First American and the Straights wrote to the escrow agents directing them to pay over money held by the said escrow agents to any claimant under the lien in order to remove or discharge the aforementioned lien. The escrow agents did not pay over these funds as directed.

19. On May 4, 1999, the Honorable William Hickey, in the foreclosure action entered a judgment of strict foreclosure on the C&R action with a law day of October 26, 1999.

20. The judgment of strict foreclosure entered by the court on May 24, 1999 was affirmed on appeal, with the law days reopened and to allow C&R (the plaintiff) to seek additional legal fees. The law day(s) aforementioned have been stayed.

21. Subsequent to the entry of a strict foreclosure, demand was again made upon the escrow agents to pay over the aforementioned $ 150,000 to satisfy [*8] the lien which was the subject of escrow agreement. The escrow agents did not comply with this request.

22. To date, the lien on the Westport Land records remains an encumbrance on the property conveyed by the Kleins to the Straights.

23. The court is satisfied that the Kleins special defenses and counterclaims have not been proven. The court finds that the testimony of the Kleins especially by Mr. Klein is totally unsupported by the evidence. In fact, the testimony of Mr. Klein was incredulous and totally unbelievable. Thus, the court makes short shrift of his testimony.

24. The Kleins also request this court to find a violation of our "Unfair Practices' Statutes, to wit CUPTA and CUIPA. The former, § 42-110b(a) reads in part: "no person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." The court finds that the Klein's produced no evidence of any such unfair or deceptive acts or practices in their dealings with First American, C&R or the Straights.

25. The Kleins also have pled the CUIPA statute which in part reads: "no person shall engage . . . in any trade practice . . . or unfair or deceptive act [*9] or practice in the business of insurance." The Kleins have pointed to no act or practice or introduced any evidence to support this purported violation and the court finds none.

Accordingly, this court finds that the escrow agreement entered into between the Kleins and First American is an enforceable agreement which is valid and binding on the parties. The Kleins have failed to prove any coercion or fraud in the execution of this document. The court further finds the Agreement to be clear and unambiguous. "Where the language of the contract is clear and unambiguous, the contract is to be given effect according to its terms." Issler v. Issler, 250 Conn. 226, 235, 737 A.2d 383 (1999). The court also finds the quitclaim deed from Mr. Klein to Mrs. Klein to be defective and to represent no impediment to the instant actions. The court finds and orders the remaining balance of the $ 150,000 shall be paid over and used first to satisfy the C&R judgment including interest on said sum and for any attorneys fees hereinafter approved by the court and any remaining sums from the escrowed finds to be used in satisfaction of fees and costs of First American Title Insurance Company. [*10]

Accordingly, the court finds in favor of Collard & Roe and enters judgment in its favor and orders payment from the escrowed funds to this plaintiff. The court will reserve jurisdiction of this matter to determine the award of attorney fees to the said plaintiff. The court enters judgment in favor of the plaintiff C&R on the counterclaim, filed by the defendants Arthur & Diane Klein. The court also orders the previously entered judgment of strict foreclosure in favor of First American as a valid and outstanding judgment and the stay of law days is lifted and orders a new law day of November 20, 2003. The court also reserves jurisdiction to determine attorneys fees in favor of First American Title Insurance Company. The court also orders that the two quitclaim deeds executed by Arthur Klein to Diane Klein are null and void.

Judgment may enter as recited above.

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