CAVOLICK v. DESIMONE, No. X03 CV99 0501611 S (Sep. 1, 2005)

ROBERT E. BEACH, JUDGE.

Following a judgment in favor of the plaintiff, in which some but by no means all of the requested relief was granted, the plaintiff appealed to the Appellate Court. The defendants cross-appealed. The Appellate Court affirmed the judgment entered by the trial court. The defendants subsequently filed a motion in this court (#236) seeking to avoid paying some or all of the 10% interest ordinarily paid on judgments.

I have reviewed the material presented by the parties as well as other documents in the file, and the following background may be useful. The plaintiff was a limited partner and the defendants acted as the general partners in a limited partnership. The gravamen of the plaintiff's claims was that the defendants paid excessive amounts of money to themselves instead of distributing funds to the limited partners. The theory was that the general partner has a fiduciary duty to limited partners, and thus has the burden to show the legitimacy of payments by clear and convincing evidence. The trial court, Aurigemma, J., found that some of the payments indeed were not so justified. Significantly, she awarded pretrial interest closely approximating 10% on the amounts she found due, and the total judgment entered was in the amount of approximately $194,000.

The plaintiff appealed to the Appellate Court and claimed that the trial court erred in evidential and other rulings which, in the plaintiff's estimation, resulted in a lower than appropriate amount of damages. The defendant cross-appealed, claiming that there could be no breach of a fiduciary duty when a party did not "place trust" in the other party prior to entering into the partnership agreement. The Appellate Court affirmed the judgment in its entirety, and made quite short shrift of the defendants' claim. Cavolick v. DeSimone, 88 Conn.App. 638, 655-56 (2005). CT Page 12001

The defendants' motion seeking to avoid or to decrease the amount of post-judgment interest is based on the following argument. An underlying premise is that the plaintiff's investment was but $100 to begin with, so that equity ought not demand a large quasi-punitive payment. More specifically, the defendant cites authority to the effect that the award of postjudgment interest lies within the discretion of the court. In this instance, the plaintiff took the appeal, so that any delay in payment was caused by the plaintiff. And even if interest should be awarded, it should be awarded in an amount less that 10%, because conservative rates of return on money are now considerably less than 10%. A rate of 10% is, then, punitive to a degree. The plaintiff submitted two memoranda in opposition to the motion.

I agree with the authority submitted by the defendants to the effect that post-judgments awards of interest are discretionary rather than mandatory. The language of § 37-3a of the General Statutes is couched in terms of "may"; see also Bower v. D'Onfro, 45 Conn.App. 543 (1997); Maluszewski v. Allstate Insurance Co., 34 Conn.App. 27, 38 (1991); Mack v. LaValley, 2000 Ct. Super. 1679 (L.P. Sullivan, J.) (2000). I also agree with the position, held to different degrees by both parties, that ordinarily interest of 10% would more or less routinely be awarded as interest on judgments. Certainly after a judgment the money is due. Any uncertainty extant prior to the entry of judgment has been removed by the judgment. Although 10% reflects an amount greater than that generated in the present time by conservative investment, it is also less than the interest charged on other sorts of debt, such as unsecured credit cards. An amount greater than that generated by conservative investments may well provide some incentive to pay a judgment. In short, I believe a court is perfectly justified in awarding 10% interest on a judgment without knowing much more than that a judgment has entered. In contrast to prejudgment interest, as to which there is no presumptive way to know if the detention is wrongful, a judgment creates its own presumption that nonpayment constitutes wrongful detention for the purpose of § 37-3a. See also Ceci Brothers, Inc. v. Five Twenty One Corp., 81 Conn.App. 419, 427 (2004).

In the instant case there are competing considerations. It is of course true that it is the plaintiff who initially filed the appeal. Compare § 37-3b of the General Statutes. In their initial statement of issues, the defendants suggested that they were reserving their right to argue that little or no post-judgment interest should be awarded. The plaintiff responded to that suggestion by letter. He pointed out that he was not contesting the portion of the judgment which awarded the $194,000 and that if the plaintiff wanted to avoid paying the interest, he could simply pay that portion of the judgment. There was no response by the CT Page 12002 defendants, to my knowledge, to that letter.

The defendants did indeed contest, by cross appeal, the judgment which was entered by the trial court. The thrust of the argument was that there could be no breach of fiduciary duty because the plaintiff had not in fact reposed trust in the defendants prior to entering into the partnership agreement. The Appellate Court disposed of the defendants' arguments in approximately one page, and stated that the argument was "dubious at best." Cavolick, supra, 656. It does not appear, then, that the defendants were precluded from making the payment by the fact of the plaintiff's taking the appeal, and, in contrast to some of the authority cited above, it does not appear that the defendant's cross appeal raised significant or novel issues.

Perhaps most importantly, we are not dealing with a case in which the claim for interest pursuant to § 37-3a is based only on the judgment. Here, Judge Aurigemma held in her memorandum of decision, dated July 28, 2003, that prejudgment interest should be awarded because of wrongful detention. In this case, then, the events triggering the award of interest are not only the judgment but also the conduct dating back a number of years. Judge Aurigemma's conclusion regarding prejudgment interest was not overturned on appeal in any way. She found that detention was wrongful not because of the judgment, obviously, but because of the defendants' conduct since 1999. Memorandum of decision, p. 29. This consideration strongly militates toward continuing to give effect to the judgment of Judge Aurigemma.

The circumstances of this case, then, compel me to overrule the defendants' motion and to award post-judgment interest in the amount of 10%.

Beach, J.