Maximizing and Securing your Judgment by Effective Use of Offer of Judgment and Prejudgment Remedy Procedures
PLAINTIFFS' OFFERS OF JUDGMENT
In Connecticut's state courts, and federal courts in Connecticut sitting in diversity, a plaintiff can recover 12% interest on the amount of a judgment, accruing from the filing of the complaint until the entry of judgment, if counsel for the plaintiff complies with Conn. Gen. Stat. 52-192a, and Practice Book 17-14 to 17-18, and the amount of the judgment equals or exceeds the amount of the offer of judgment.
For example, assume a $550,000 offer of judgment and $700,000 judgment. If the period between filing the complaint and the entry of judgment is three years, and the offer of judgment is filed six months before entry of judgment, offer of judgment interest is $42,000, for a total of $742,000. This amount is calculated based on 12% of $700,000 for a period of six months. Based on the same facts, but assuming that the offer of judgment is filed at any time within eighteen months of filing the complaint, offer of judgment interest is $252,000, for a total of $952,000. This amount is calculated based on 12% of $700,000 for a period of three years.
a. Conserve judicial resources by promoting settlements.
b. Save the time and expense of trial.
c. Encourage plaintiffs to make prompt offers to settle.
d. Penalize defendants that fail to accept reasonable settlement offers.
See, e.g., Blakeslee Arpaia Chapman, Inc. v. EI Constructors, Inc., 239 Conn. 708, 742, 761-762 (1997); Nunno v. Wixner, 257 Conn. 671, 686 (2001); and Flynn v. Kaumeyer, 67 Conn. App. 100, 107 (2001).
a. Offer of judgment procedures are available in any civil action seeking money damages, even if other relief is sought. Conn. Gen. Stat. 52-192a(a).
Practice Tip: Offer of judgment procedures are available to any plaintiff, and any counterclaiming or cross-claiming defendant. (As used herein, "plaintiff" refers to any party seeking money damages.)
b. The offer of judgment Practice Book rules and statutes are procedural, and therefore apply even if another state's law governs substantive issues. Paine Webber Jackson and Curtis, Inc. v. Winters, 22 Conn. App. 640, 649 (1990), cert. den., 216 Conn. 820 (1990).
c. The offer of judgment Practice Book rules and statutes do apply in federal court in diversity cases, because they create substantive rights in all civil plaintiffs to claim interest on responsible settlement offers formally made. Frenette v. Vickery, 522 F. Supp. 1098, 1100 (D. Conn. 1981). (The court in Paine Webber distinguishes Frenette. Paine Webber, 22 Conn. App. at 654-655.) L. Civ. R. 68, the local rule in this district applicable to offers of judgment, provides, inter alia, for the sealing of the offer of judgment.
d. The offer of judgment procedures do apply to tax appeals. Loomis Institute v. Windsor, 234 Conn. 169, 179-180 (1995).
e. The offer of judgment procedures do apply in actions against municipalities. Giannitti v. City of Stamford, 25 Conn. App. 67, 79 (1991).
f. The offer of judgment procedures do not apply in actions against the state. Struckman v. Burns, 205 Conn. 542, 556 (1987).
g. The offer of judgment procedures do not apply to court-mandated arbitration proceedings. Nunno v. Wixner, 257 Conn. 671, 677 (2001), although in Koepke v. Dandar, Inc., 19 Conn. L. Rptr. 582, 584 (1997), the court allowed offer of judgment interest in a civil action where the issues were decided by voluntary arbitration rather than by a hearing in damages.
3. Filing Offer of Judgment (Conn. Gen. Stat. 52-192a(a))
a. Timing: At any time after commencement of a civil action; not later than thirty days before trial.
Practice Tip: As discussed in 5(b) below, file the offer of judgment not later than eighteen months from filing the complaint.
b. Form: Written "offer of judgment" signed by plaintiff or plaintiff's attorney, directed to defendant or defendant's attorney offering to settle the claim underlying the action and to stipulate to a judgment for a sum certain.
Practice Tip: Discuss with your client the advantages (12% interest on the amount of the judgment if the offer exceeds that amount) and consequence (if the offer is accepted, judgment enters for that amount) of filing an offer of judgment. If your client authorizes you to file an offer of judgment, send your client a letter confirming your authority before filing it, making explicit that, if accepted, judgment will enter in that amount. If your client does not authorize you to file an offer of judgment, send your client a letter confirming your explanation of the advantages and consequences of filing an offer of judgment and your client's decision not to authorize you to do so. For the reasons set forth in 5(b) below, explain the offer of judgment procedure to your client before the expiration of eighteen months from the filing of the complaint.
c. Procedure: File the offer of judgment with the clerk and give notice of the offer of judgment to defendant's attorney, or, if defendant is not represented by an attorney, to defendant.
Practice Tip: Obtain a file-stamped copy of the offer of judgment filed with the court clerk and send your offer of judgment to defendant by certified mail, return receipt requested. In federal court actions, send a letter of transmittal to the court clerk regarding the sealing of your offer of judgment, as provided in L. Civ. R. 68.
d. Frequency: A plaintiff may file only one offer of judgment as to each defendant. Shawhan v. Langley, 249 Conn. 339, 346 (1999) (overturning prior law). But see section 6 below for modifications of this holding.
4. Acceptance or Rejection of Offer of Judgment
a. A defendant has sixty days after receiving notice (but prior to jury verdict or court award) to file with the court clerk a written "acceptance of offer of judgment" agreeing to stipulation for judgment as contained in the offer of judgment. Judgment then enters accordingly. Conn. Gen. Stat. 52-192a(a).
b. If a defendant does not accept the offer within sixty days, the offer is considered rejected and not subject to acceptance unless refiled in the same amount. Conn. Gen. Stat. 52-192a(a).
c. Some courts have extended the time for accepting an offer of judgment, until plaintiff responded to defendant's discovery requests. See, e.g., Daniel Quinn, et al. v. Collins, 1 CSCR 239, 239 (1986); Ahern v. O'Connell, 4 CSCR 185, 186 (1989), and McManus-Pesce v. Miller, 29 Conn. L. Rptr. 304, 305-306 (2001). But in Cohen v. Bridgeport Hospital, 17 Conn. L. Rptr. 181, 181, 1996 WL 367737 (1996), the court denied the defendant's objection to the plaintiff's offer of judgment where the defendant based its objection on the fact that discovery was not complete when the offer was made.
Practice Tip: If you represent a defendant and you receive an offer of judgment, inform your client in writing immediately of the amount of the offer, advise your client of the offer of judgment procedure, and discuss whether to accept the offer. If you require further discovery to respond to the offer, file a motion to extend the time for accepting it, but obtain a ruling on your motion within sixty days of the filing of the offer of judgment, or your time for acceptance will expire.
5. Calculation of Interest if Offer of Judgment is Rejected
a. If a plaintiff recovers an amount equal to or greater then the sum certain stated in the offer of judgment, the court shall add to the amount so recovered 12% annual interest on the amount recovered. Conn. Gen. Stat. 52-192a(b). This interest is not compounded.
1) The amount recovered can include pre-judgment interest for the wrongful detention of money pursuant to Conn. Gen. Stat. 37-3a at 10%, attorney's fees, and multiple damages. See, e.g., Crowther v. Gerber Garment Technology, Inc., 8 Conn. App. 254, 267 (1986); Edward Denike Tree Co. v. Butler, 21 Conn. App. 366, 369 (1990); Gillis v. Gillis, 21 Conn. App. 549, 554-556 (1990), cert. den., 215 Conn. 815 (1990); Patron v. Konover, 43 Conn. App. 645, 648-650, 653 (1996), cert. den. 240 Conn. 911 (1997); Aubin v. Miller, 64 Conn. App. 781, 798 (2001); and Flynn v. Kaumeyer, 67 Conn. App. 100, 105-106 (2001).
Practice Tip: In determining the amount of the offer of judgment, take into consideration the likelihood of recovering pre-judgment interest, attorney's fees, and multiple damages.
2) In determining the amount recovered for purposes of awarding offer of judgment interest, a defendant is entitled to a credit for settlement payments the plaintiff received from other defendants and collateral source benefits. See, e.g., Civiello v. Owens-Corning Fiberglass Corporation, 208 Conn. 82, 89-90 (1988) and Pajor v. Town of Wallingford, 47 Conn. App. 365, 379-382 (1997).
b. Interest at 12% begins from the date the complaint was filed with the court if the offer of judgment is filed not later than eighteen months from filing the complaint. Conn. Gen. Stat. 52-192a(b).
Practice Tip: In your tickler system, note a date well before the expiration of eighteen months from filing the complaint. Discuss with your client the option of filing an offer of judgment and the consequences of such filing. File your offer of judgment before the expiration of this time period.
c. Interest at 12% begins from the date the offer of judgment was filed if filed later than eighteen months from the filing of the complaint. Conn. Gen. Stat. 52-192a(b).
d. Interest at 12% runs through the date judgment enters. After the date judgment enters, interest runs at the rate of 10%, pursuant to Conn. Gen. Stat. 37-3a.
e. The award of offer of judgment interest is mandatory. See, e.g., Blakeslee Arpaia Chapman, Inc. v. EI Constructors, Inc. 239 Conn. 708, 752 (1997) and Lutynski v. B. B. and J. Trucking, Inc., 31 Conn. App. 806, 809, 811-812, aff'd, 229 Conn. 525 (1994).
f. Since the award of offer of judgment interest is punitive and mandatory, an insurer must pay offer of judgment interest if awarded, even if the insurance policy does not provide for such payment. Accettullo v. Worcester Ins. Co., 256 Conn. 667, 672-673 (2001).
Practice Tip: If the defendant has insurance, make sure the insurance adjuster is aware that, if the offer of judgment is not accepted, the insurer is liable for offer of judgment interest if the offer is not accepted and judgment enters for an amount equal to or in excess of that offer.
6. Multiple Offers of Judgment
a. A plaintiff can file only one offer of judgment as to each defendant. See Shawhan v. Langley, 249 Conn. 339, 346-347 (1999).
Practice Tip: Be aware that, prior to Shawhan v. Langley, some Connecticut trial courts authorized a plaintiff to file more than one offer of judgment as to each defendant. Those decisions are no longer good law.
b. A plaintiff may file either a unified offer of judgment against multiple defendants or a separate offer of judgment against each defendant. Blakeslee Arpaia Chapman, Inc. v. EI Constructors, Inc., 239 Conn. 708, 743 (1997).
Practice Tip: In a jury case in an action against more than one defendant, prepare interrogatories to be submitted to the jury, seeking an itemization of the amount of the award as to each defendant individually, as provided in Practice Book 16-18.
c. If a plaintiff files a unified offer of judgment as to multiple defendants, each defendant is liable for offer of judgment interest only if the recovery against that defendant exceeds the amount of the unified offer. See, e.g., Blakeslee Arpaia Chapman, Inc. v. EI Constructors, Inc., 239 Conn. 708, 740-745 (1997).
d. An amended offer of judgment is permissible when the offer is for the same amount as the original, but breaks down the original offer among defendants. See, e.g., Nelson v. Armstrong, 1 Conn. Law Rptr. 278, 279, 5 CSCR 168 (1990).
a. Whether the trial court properly awarded offer of judgment interest presents an issue of law, subject to de novo review on appeal. Willow Springs Condominium Association, Inc. v. Seventh BRT Development Corp., 245 Conn. 1, 53-54 (1998).
b. The appeal must be filed within twenty days of the date notice of the judgment is given. Practice Book 63-1.
In Connecticut's state courts, and federal courts in Connecticut sitting in diversity, a litigant can obtain, upon establishing the requisite probable cause, security for a judgment prior to commencement of or during the pendency of an action, and an order compelling disclosure of assets sufficient to secure a judgment.
a. Prejudgment Remedy
A prejudgment remedy ("PJR") is any remedy or combination of remedies enabling a plaintiff by way of attachment, foreign attachment, garnishment or replevin to deprive the defendant in a civil action of, or affect the use, possession or enjoyment by that party of, his property prior to final judgment, not including a temporary restraining order. Conn. Gen. Stat. 52-278a(d). As used herein, "plaintiff" refers to the party applying for a PJR. Any defendant, upon filing a set-off or counterclaim containing a claim for money damages, may file a PJR application at any time. Conn. Gen. Stat. 52-278i. Presumably, this section applies to a defendant filing a cross-claim.
Practice Tip: If you are aware of an asset a defendant is about to convey, seek a temporary restraining order as to that asset when filing your PJR application. For the procedure to obtain a temporary restraining order, see Conn. Gen. Stat. 52-278c(c), Conn. Gen. Stat. 52-471, et seq., and Practice Book 4-5.
Property includes any present or future interest in real or personal property, goods, chattels or choses in action, whether vested or contingent. Conn. Gen. Stat. 52-278a(e). To be subject to the PJR statute, the property must be located in Connecticut. However, the court has the power to issue an order directing the defendant to surrender to the court clerk stock certificates of publicly and privately traded securities located outside Connecticut for purposes of a PJR. See, e.g., Inter-Regional Financial Group, Inc. v. Hashemi, 562 F.2d 152, 153-55 (2d Cir. 1977); Hamma and Tenex Corporation v. Gradco Systems, Inc., 1992 U.S. Dist. LEXIS 17601, *8-10 (D. Conn. 1992); and Lyons Hollis Associates, Inc. v. New Technology Partners, Inc., 2003 U.S. Dist. LEXIS 14580, *28-30 (D. Conn. 2003).
Practice Tip: Before filing an application for PJR, do an asset search and list specific assets in the PJR application sufficient to satisfy your judgment, as well as generally described assets. If, prior to securing those assets, the defendant conveys those assets, take advantage of Connecticut's fraudulent transfer statutes, as appropriate. See Conn. Gen. Stat. 52-552 to 52-552l.
Practice Tip: If your case affects in any manner title to or interest in real property, you should file a notice of lis pendens at the commencement of the action, in addition to seeking a PJR to secure any monetary judgment. See Conn. Gen. Stat. 52-325.
Practice Tip: In an appropriate case, when filing an application for PJR, include an application for an order compelling the defendant to surrender stock certificates to the court clerk even if those certificates are located outside Connecticut.
c. Consumer Transaction
This is a transaction in which a natural person obligates himself to pay for goods sold or leased, services rendered or moneys loaned for personal, family or household purposes. Conn. Gen. Stat. 52-278a(b).
d. Commercial Transaction
This is a transaction that is not a consumer transaction. Conn. Gen. Stat. 52-278a(a).
2. Availability of Prejudgment Remedy
a. Statutory Compliance
A PJR is available only if the party seeking the PJR complies with Conn. Gen. Stat. 52-278a to 52-278g, except in a commercial transaction where a defendant has executed a waiver as provided in Conn. Gen. Stat. 52-278f or for garnishment of earnings, as defined in Conn. Gen. Stat. 52-350a(5).
b. Federal Actions
A PJR is available in federal actions where the court sits in diversity, as well as in state court actions. See, e.g., Inter-Regional Financial Group, Inc., supra, 562 F.2d at 153; Foreign Exchange Trade Associates, Inc. v. Oncetur, S.A., 591 F. Supp. 1496, 1497 (S.D.N.Y. 1984); Bergesen d.y. v. Lindholm, 760 F. Supp. 976, 989 (D. Conn. 1991); and Fed. R. Civ. P. 64, which contemplates and endorses use of prejudgment remedies available under state law where the federal court sits in diversity. See also L. Civ. R. 4(c), the local rule applicable in this district, which provides, inter alia, that "a party may secure a pre-judgment remedy, as permitted by, and in accordance with, the law of the State of Connecticut."
c. Actions Brought in Other States
There is authority to support the filing of an application for prejudgment remedy in Connecticut even if the underlying action is filed in another state. In Cahaly v. Benistar Property Exchange Trust Company, Inc., 73 Conn. App. 267 (2002), a case on appeal to the Connecticut Supreme Court, the appellate court held that a plaintiff in a Massachusetts action can utilize Connecticut's PJR procedures to secure a future judgment in that action by attaching Connecticut assets of defendants while the Massachusetts action was pending. Cahaly, 73 Conn. App. at 276-77.
In Cahaly, the plaintiff, who had filed a Massachusetts action seeking more than $1,000,000 in damages, sought a prejudgment remedy securing defendants' Connecticut assets to prevent their dissipation before the final adjudication in Massachusetts. The Massachusetts court had already determined that there was probable cause that the plaintiff would succeed on the merits in a prejudgment attachment hearing, and had granted an application to attach assets, but the defendants had insufficient assets in Massachusetts to fully secure the plaintiff's claim.
Based on these facts, the Connecticut court held that Connecticut's prejudgment remedy procedures can be applied to secure assets of defendants, even though ancillary to a Massachusetts action, and that there is no prerequisite that a final judgment enter in the foreign action before applying these procedures. The Cahaly court reasoned that plaintiffs must have the ability to secure assets in anticipation of enforcing future foreign judgments under the Uniform Enforcement of Foreign Judgments Act.
This decision is important because whenever a defendant over whom there is long arm jurisdiction in Connecticut has assets in this state, even if the principal action is brought elsewhere (at least in states having prejudgment remedy procedures), plaintiff's counsel can seek to secure a future judgment by taking advantage of Connecticut's PJR procedures. Cahaly arguably applies even where the forum state does not have a prejudgment remedy statute.
3. Documents Required (in duplicate)
Conn. Gen. Stat. 52-278c(a)(1) sets forth the form of the application. The application must be accompanied by a notice and claim form as set forth in Conn. Gen. Stat. 52-278c(e) and 52-278c(f).
Practice Tip: You must use the notice and claim form that is a court form, JD-CV-53.
Practice Tip: Include in your application specific reference to assets of the defendant you know about (such as identified bank accounts), as well as more generally described assets (such as any real or personal property of the defendant).
Practice Tip: For the amount of the PJR you seek, consider the factors in section 3(b) below.
The affidavit must be sworn to by the plaintiff or any competent affiant, setting forth a statement of facts sufficient to show that there is probable cause that a judgment in the amount of the prejudgment remedy sought, or in an amount greater than that amount, taking into account any known defenses, counterclaims or set-offs, will be rendered in the matter in favor of the party seeking the prejudgment remedy. Conn. Gen. Stat. 52-278c(a)(2).
Practice Tip: In preparing the affidavit, information should be on personal knowledge. Where applicable, the amount of the PJR requested in the affidavit should include, in addition to amounts already due, projected amounts that will be due as of the time of the judgment, such as accrued interest, and if there is a basis to claim them, attorney's fees and multiple damages.
Practice Tip: If you have filed an offer of judgment that has not been accepted within sixty days, consider including in your PJR application, or seeking a supplemental PJR, for the projected amount of the offer of judgment interest.
c. Order for Hearing
This is an order that a hearing be held to determine whether the requested prejudgment remedy should be granted and that notice of such hearing be given. Conn. Gen. Stat. 52-278c(a)(3).
This is a summons commanding a proper officer to serve, at least four days before the date of the hearing, the application, a true and attested copy of the writ, summons and complaint, affidavit and order and notice of hearing. Conn. Gen. Stat. 52-278c(a)(4).
Practice Tip: If you commence the action by serving a proposed unsigned complaint, you must manuscript the summons rather than using a court form. See Practice Book 8-1(b).
e. Proposed Unsigned writ, Summons and complaint
If the PJR application is filed before the commencement of the action, the proposed unsigned writ, summons and complaint must be included with the application, affidavit, order and summons.
Practice Tip: If you seek a PJR prior to the commencement of the action, the action is not commenced for statute of limitations purposes. See, e.g., Howard v. Robertson, 27 Conn. App. 621, 625-27 (1992) and Raynor v. Hickock Realty Corporation, 61 Conn. App. 234, 239-240, 242 (2000). Furthermore, you cannot seek discovery (with certain limited exceptions discussed in section 6 below) or proceed to close the pleadings. It is usually preferable to commence the action before filing a prejudgment remedy application, as provided in Conn. Gen. Stat. 52-278h. In that instance, personal service is not required where the party against whom you seek a PJR has filed an appearance, unless ordered by the court. Conn. Gen. Stat. 52-278m.
f. Entry Fee
The current entry fee is $325 if the PJR application is filed with the proposed unsigned complaint, and $100 if the PJR application is filed after filing the complaint. (The fee for filing a complaint is $225.)
4. Hearing Issues
Practice Tip: Before filing a PJR application, determine the procedures applicable in the judicial district in which you will file it. Different judicial districts apply idiosyncratic procedures. For example, in the Judicial Districts of Litchfield and Hartford, no hearing is held the first time the application appears on the court calendar, and the parties must comply with standard orders prior to the PJR hearing. You will find these procedures in the court calendar, but for advance notice, call the court clerk.
a. Probable Cause
The standard for issuance of a PJR is whether there is probable cause that a judgment in the amount of the prejudgment remedy sought, or a greater amount, taking into account any defenses, counterclaims or set-offs, will be rendered in favor of the plaintiff. Conn. Gen. Stat. 52-278d(a)(1).
Probable cause is a bona fide belief in the existence of the facts essential under the law for the action such as would warrant a person of ordinary caution, prudence and judgment, under the circumstances, in entertaining it. Probable cause is a flexible common sense standard that does not demand that such belief be correct or more likely true than false. See, e.g., Three S. Development Co. v. Santore, 193 Conn. 174, 175-176 (1984); Doe v. Rapoport, et al., 80 Conn. App. 111, 115-116 (2003); and Cahaly v. Benistar Property Exchange Trust Company, Inc., et al., 73 Conn. App. 267, 278 (2002).
Practice Tip: This standard was changed by amendment to the PJR statutes in 1993. Accordingly, be wary of citation of cases decided under the old standard, which was "probable cause to sustain the validity of the plaintiff's claim."
Practice Tip: When defending a PJR application, be prepared to present at the PJR hearing evidence of your defenses, counterclaims and set-offs, to reduce the amount of the PJR, or possibly persuade the court to deny the application.
The court must consider whether the payment of any judgment that may be rendered against the defendant is adequately secured by insurance. Conn. Gen. Stat. 52-278(d)(a)(2).
Practice Tip: Practice Book 13-12 provides that in any civil action, the existence, contents and policy limits of any insurance policy under which any insurer may be liable to satisfy part or all of a judgment which may be rendered in the action against any party or to indemnify or reimburse any defendant for payments made to satisfy the judgment is subject to discovery by interrogatory or request for production.
Practice Tip: When representing the defendant, determine whether your client has insurance covering the claim. If so, be prepared to present evidence of that insurance at the PJR hearing, and consider informing plaintiff's counsel of that insurance to obviate the hearing.
Whether the property sought to be subjected to the PJR is exempt from execution. Conn. Gen. Stat. 52-278d(a)(3). For property exempt from execution, and therefore not subject to a PJR, see Conn. Gen. Stat. 52-352b. The most significant exemption is $75,000 of equity in a homestead. See Conn. Gen. Stat. 52-325b(t).
The court must consider whether, if the court grants the PJR, the plaintiff should be required to post a bond to secure the defendant against damages that may result from the PJR or whether the defendant should be allowed to substitute a bond for the PJR. Conn. Gen. Stat. 52-278(a)(4). At any time after granting a PJR, the defendant may request that the plaintiff post a bond, with surety, in an amount sufficient to reasonably protect the defendant's interest in the property that is subject to the PJR against damages that may be caused by the PJR. If the court grants the defendant's request, the bond shall provide that if judgment is rendered for the defendant, or if the PJR is dismissed or dissolved, the plaintiff will pay the defendant damages directly caused by the PJR. Conn. Gen. Stat. 52-278d(d). In determining whether to grant a bond request and, if granted, the amount of the bond, the court shall consider the nature of the property subject to the PJR, the methods of retention or storage of the property and the potential harm to the defendant's interest in the property that the PJR remedy might cause. Conn. Gen. Stat. 52-278d(e).
Practice Tip: When opposing a PJR application, be prepared