Alpha Beta Capital Partners, L.P. v. Pursuit Investment Management, LLC

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ALPHA BETA CAPITAL PARTNERS,
L.P. v. PURSUIT INVESTMENT
MANAGEMENT, LLC, ET AL.
(AC 39388)
Lavine, Bright and Bishop, Js.
Syllabus
The plaintiff company sought to recover damages from the defendants for,
inter alia, breach of contract for their failure to remit to the plaintiff
its proportionate share of certain proceeds secured by a settlement
agreement. The defendants S and C are individuals who, together,
formed, operated, and controlled the defendant companies, O Co., F
Co., C Co., M Co., P Co., I Co. and N Co. In approximately 2007, the
plaintiff invested in both O Co. and C Co. and, as a result, acquired
limited partnership interests in those companies. In 2007, F Co. and
M Co. had purchased certain securities known as collateralized debt
obligations from U Co. and, in 2008, after the value of the collateralized
debt obligations precipitously dropped, P Co. and I Co. commenced a
civil action alleging fraud against U Co. In April, 2009, the plaintiff
executed a limited partnership agreement for C Co., which contained
certain provisions for withdrawals by and distributions to limited part-
ners. In September, 2009, the plaintiff redeemed its investment in O
Co., which extinguished its interest in that company except for certain
holdbacks to indemnify potential future expenses of O Co. In 2010, the
plaintiff commenced a civil action in the Supreme Court of the state of
New York against I Co., S, and C, and filed a separate arbitration proceed-
ing against O Co. and C Co. In April, 2011, the plaintiff, I Co., S, C, O
Co., C Co., and A Co., the former general partner of C Co., executed a
confidential settlement agreement to resolve the 2010 New York action
and the arbitration proceeding. As consideration for the plaintiff’s with-
drawal and release, § 3 of the settlement agreement required I Co. to
pay the plaintiff a settlement payment, as well as a redemption payment,
which represented the plaintiff’s pro rata share, approximately 32.083612
percent, of the net asset value in C Co. as of February 28, 2011, minus
a holdback of $250,000 for the purpose of funding costs associated with
the ongoing 2008 action against U Co., and minus an additional holdback
of $200,000 to pay legal fees and expenses. In addition, § 4 of the settle-
ment agreement secured the plaintiff’s interest in two of C Co.’s contin-
gent assets by providing that nothing in the settlement agreement shall
affect the plaintiff’s pro rata share in C Co.’s proportionate interest in
the U Co. litigation proceeds or in C Co.’s interest in a claim against L
Co. Shortly after the settlement agreement was signed, the L Co. claim
was sold for $9,334,141.55, but no portion of the L Co. claim proceeds
were remitted to the plaintiff until October, 2011, when the plaintiff
received $1,022,022.36. In 2013, the plaintiff commenced a civil action
in the Supreme Court of the state of New York against I Co., C Co., O Co.,
and A Co., alleging that those defendants had breached the settlement
agreement by, inter alia, failing to pay the plaintiff its pro rata portion
of the L Co. claim proceeds. Soon after the commencement of the 2013
New York action, certain of the defendants transferred to the plaintiff
approximately $700,000 in additional proceeds from the L Co. claim,
for a total distribution of $1,722,022.36. In 2015, P Co. settled the U Co.
litigation for a total of $36 million, but the defendants have not provided
the plaintiff with any portion of the settlement proceeds. The plaintiff
then brought the present action against the defendants seeking damages
for their failure to remit to the plaintiff its proportionate share of the
U Co. litigation proceeds as secured by § 4 of the settlement agreement.
The plaintiff filed an application for a prejudgment remedy, and the
plaintiff’s operative amended substitute complaint alleged, inter alia,
breach of contract, breach of the implied covenant of good faith and
fair dealing, conversion, statutory theft (§ 52-564), and violation of the
Connecticut Unfair Trade Practices Act (CUTPA) (§ 42-110a et seq.).
Subsequently, the defendants filed a motion to strike the plaintiff’s
complaint, which the court granted only as to the claims of statutory
theft and a CUTPA violation. The court also granted the plaintiff’s appli-
cation for a prejudgment remedy, and the plaintiff thereafter secured the
full attachment amount. In October, 2016, the court rendered judgment
partially in favor of the plaintiff as to certain defendants on its complaint
and in favor of the plaintiff on a counterclaim filed by the defendants.
In particular, the court concluded that the defendants that were parties
to the settlement agreement, namely, C Co., O Co., I Co., S, and C, as
well as N Co., the general partner of C Co. at the time the U Co. litigation
proceeds were realized, were liable for breach of contract and breach
of the implied covenant of good faith and fair dealing for their intentional
failure to remit to the plaintiff its proportionate share of the U Co.
litigation proceeds as secured by the settlement agreement. The defen-
dants appealed and the plaintiff cross appealed to this court. During
the pendency of this appeal, the plaintiff, pursuant to statute (§ 52-278k),
filed a motion with the trial court seeking modification of the previously
secured prejudgment remedy attachment amount to secure from C Co.,
O Co., I Co., S, C, and N Co., an additional $947,731 that it anticipated
would accrue during the pendency of this appeal. The plaintiff also filed
a motion with the court seeking supplemental asset disclosure from
those defendants to assist with the securing of the additional attachment
pursued by the motion to modify. Subsequently, the trial court granted
those two motions, and the defendants filed an amended appeal with
this court. Held:
1. The defendants could not prevail on their claim that the trial court improp-
erly interpreted the agreements between the parties when it concluded
that the plaintiff prevailed on its breach of contract claim, which alleged
that the defendants had failed to pay the plaintiff its proportionate share
of the proceeds from the U Co. litigation, as the court properly held
that the plaintiff proved a breach of contract because the defendants
settled the U Co. litigation for $36 million, and the plaintiff has not
received its portion of those proceeds in contravention of the settlement
agreement and the limited partnership agreement: the defendants’ claim
that they could not be held liable for breach of the settlement agreement
because, pursuant to § 4 of that agreement, the distribution of the pro-
ceeds from the contingent assets was governed by all of provisions of
the limited partnership agreement, which afforded the general partner
discretion to withhold or reduce payment of the contingent interests,
was unavailing, as the trial court correctly determined that the execution
of the settlement agreement constituted a withdrawal of the plaintiff as
a limited partner from C Co. and properly concluded, in light of that
withdrawal, that the payment of the contingent assets was to be governed
by the specific withdrawal provision of the limited partnership agree-
ment, and the court’s interpretation of both the settlement agreement
and the limited partnership agreement together was further bolstered
by the relevant portion of the withdrawal provision of the limited partner-
ship agreement, which provides that a withdrawal was subject to certain
restrictions and reserves for contingent or undetermined liabilities of
C Co., as the parties specifically identified those restrictions and reserves
in the settlement agreement’s holdback provisions, and it was logical
for the court to conclude that, following C Co.’s receipt of proceeds
from the realization of a contingent asset, the plaintiff, pursuant to
§ 4 of the settlement agreement and § 5.01 of the limited partnership
agreement, was entitled to its pro rata share of those proceeds in cash
as soon as practicable following the effective date of the withdrawal;
accordingly, the trial court properly considered the language of § 4 of
the settlement agreement in conjunction with the other provisions of the
settlement agreement, the limited partnership agreement, the relation
of the parties, and the circumstances under which it was executed.
2. The defendants’ claim that the trial court improperly rejected their breach
of contract counterclaim, which alleged that they were relieved of their
obligation to remit the U Co. litigation proceeds because the plaintiff
had breached the settlement agreement, was unavailing:
a. The defendants could not prevail on their claim that the trial court
erroneously found that the plaintiff had not materially breached the
settlement agreement by violating § 7 when it requested that R Co., the
plaintiff’s law firm, contact the United States Securities and Exchange
Commission regarding an ongoing investigation, by commencing the
2013 New York action seeking an injunction to prevent C Co. from
utilizing the U Co. litigation holdback, and by colluding with S Co.; that
court’s finding that the plaintiff’s actions did not constitute a material
breach of the settlement agreement, the essential purpose of which was
to resolve the then existing disputes among the parties, was not clearly
erroneous and was supported by the evidence that § 7 was not central
to the settlement agreement, that the plaintiff sought information from
the United States Securities and Exchange Commission regarding an
ongoing investigation in which the plaintiff’s interests were potentially
involved, that the plaintiff filed an action in New York alleging that the
defendants had breached the settlement agreement, and that the plaintiff
had communicated with S Co. after it already had been advised of the
settlement agreement, as those actions were taken by the plaintiff to
enforce its rights that were at the core of the settlement agreement.
b. The defendants could not prevail on their claim that the trial court
erroneously found that their prior partial delayed payment of the L Co.
claim to the plaintiff relieved the plaintiff from its obligations under the
confidentiality provision, as the court’s finding that any claimed breach
by the plaintiff was excused by the defendant’s prior breach of the
settlement agreement was not clearly erroneous; the evidence demon-
strated that the settlement agreement, read in conjunction with the
limited partnership agreement, obligated the payment of the contingent
assets, including the pro rata share of the proceeds of the L Co. claim,
approximately $2,994,729.76, to the plaintiff in cash as soon as practica-
ble following the effective date of the withdrawal on June 1, 2011, and
that no portion of the L Co. claim proceeds were remitted to the plaintiff
until October, 2011, when the plaintiff received $1,022,022.36, and, even
if the defendants’ calculation as to the plaintiff’s proportionate share
of the L Co. claim was correct, the evidence that, prior to any of the
contested communications, the plaintiff received less than one half of
what the defendants had calculated was the plaintiff’s entitlement, more
than four months after the funds had been received by C Co. without
sufficient justification, supported the court’s finding that the defendants
had materially breached the settlement agreement.
3. The trial court properly concluded that the plaintiff prevailed on its breach
of the implied covenant of good faith and fair dealing claim; that court
found that the signatory defendants, I Co., O Co., C Co., S, and C,
deprived the plaintiff of its right to receive the benefits under the settle-
ment agreement, under which they had a clear obligation to remit the
U Co. litigation proceeds to the plaintiff, and the trial court’s conclusion
that at least some of the defendants breached the implied covenant of
good faith and fair dealing was supported by its findings that the defen-
dants failed to remit the U Co. litigation proceeds to the plaintiff, wilfully
attempted to thwart the plaintiff’s ability to receive those proceeds,
raised unsupported claims and counterclaims that alleged misconduct
by the plaintiff, maintained control over the proceeds so as to retain
them for as long as possible for their own benefit, continued to prolong
the litigation and cause excessive expenses, and failed, until ordered
by the court, to provide information to the plaintiff that could have
resolved some of the issues in advance of this litigation.
4. The plaintiff’s claim on cross appeal that the trial court improperly con-
cluded that the plaintiff could not prevail on its conversion claim was
unavailing, as the court properly concluded that the plaintiff could not
prevail on its conversion claim because it merely was a recasting of its
breach of contract claim; the plaintiff’s conversion claim sought the
same damages as its breach of contract claim, namely, its proportionate
share of the U Co. litigation proceeds, the plaintiff’s conversion claim
alleged the same breach of duty, namely, the defendants’ obligation
pursuant to the settlement agreement and the limited partnership agree-
ment to remit the U Co. litigation proceeds to the plaintiff, and the
plaintiff’s conversion claim was based on the exact same allegations as
its breach of contract claim because the plaintiff’s complaint entirely
incorporated the breach of contract allegations into its count alleging
conversion.
5. The plaintiff could not prevail on its claim that the trial court improperly
granted the defendants’ motion to strike its Connecticut statutory causes
of action for statutory theft and a violation of CUTPA on the ground
that those claims were barred by § 12 of the settlement agreement,
which provides in relevant part that any disputes or litigation arising
out of that agreement ‘‘shall be governed by New York law’’; the relevant
language in § 12 of the settlement agreement is broad and does not
apply only to breach of contract causes of action, and the plaintiff’s
statutory causes of action arose out of the settlement agreement because
the basis for both claims stemmed from the settlement agreement, as
the statutory theft claim alleged that the defendants withheld and utilized
for themselves the U Co. litigation proceeds, and the CUTPA claim
alleged that the defendants breached the settlement agreement and
failed to provide the plaintiff its share of the U Co. litigation proceeds.
6. The plaintiff could not prevail on its claim that all of the defendants
should be held liable for the plaintiff’s claims of breach of contract and
breach of the implied covenant of good faith and fair dealing pursuant
to a piercing the corporate veil or alter ego theory, and that the trial
court improperly declined to consider those theories despite the fact
that they had been pleaded and briefed; when construing the trial court’s
judgment as a whole, it was apparent that although the court recognized
that the plaintiff had not separately pleaded its piercing the corporate
veil and alter ego theories, and although the court did not engage in a
discussion of each and every element of the plaintiff’s theories, it consid-
ered and rejected those theories.
7. The trial court improperly interpreted the settlement agreement to con-
clude that all of the defendants who were signatories to the settlement
agreement, I Co., O Co., C Co., S, and C, as well as N Co. as successor
general partner of C Co., were liable for nonpayment of the U Co.
litigation proceeds, as only I Co., C Co., and N Co. were liable: although
that court correctly concluded that there was no express limitation in § 4
of the settlement agreement as to which defendants had the obligation to
remit the U Co. litigation proceeds, the court erred in literally interpreting
certain language in the settlement agreement to hold all of the signatory
defendants liable for each and every obligation in the settlement agree-
ment, and it improperly failed to consider the limited partnership agree-
ment or the circumstances under which the settlement agreement was
executed, as O Co. could not be held liable pursuant to § 4 of the
settlement agreement because it was unable to remit the U Co. litigation
proceeds to the plaintiff, and S and C could not be held individually
liable in the absence of an express agreement by them to undertake an
individual obligation in either the settlement agreement or the limited
partnership agreement to remit the U Co. litigation proceeds as soon
as practicable; moreover, the defendants could not prevail on their claim
that the proper interpretation of the limited partnership agreement and
the settlement agreement required that only N Co. be held liable for
nonpayment of the U Co. litigation proceeds, as the defendants that are
liable for nonpayment are those that both undertook an obligation and
had the ability to pay the U Co. litigation proceeds, namely, C Co., as
owner of the interest in the U Co. litigation proceeds at issue, N Co.,
as general partner of C Co., and I Co., which had remitted both the
settlement payment and redemption payment on behalf of the defen-
dants, including C Co., pursuant to the settlement agreement.
8. The defendants could not prevail on their claim that the trial court errone-
ously awarded damages because it failed to reduce C Co.’s share of the
U Co. litigation proceeds by 10 percent to account for M Co.’s other
investor, H Co., which is another entity controlled by S and C: the trial
court’s finding that C Co. was the sole investor in M Co. and, thus, that
C Co. was entitled to all of M Co.’s share of the proceeds from the
settlement of the U Co. litigation, was supported by the court’s findings
regarding the lack of credibility of the defendants’ position regarding
$1.1 million that S and C had deposited into an account of M Co.,
the defendants’ failure to comply fully with discovery, and the lack of
credibility of the testimony of S, and that the investment was withdrawn
prior to the execution of the settlement agreement, as well as evidence
that S and C, through H Co., made their investment in M Co. after the
collateralized debt obligations had been purchased, after the collateral-
ized debt obligations had lost value, and after the U Co. litigation had
been commenced; moreover, the defendants could not prevail on their
claim that the trial court erroneously awarded damages because it failed
to account for a performance fee reduction from the U Co. litigation
proceeds, which was based on their claim that the limited partnership
agreement provides that the general partner of C Co., N Co. at the time,
was entitled to a 20 percent performance fee for net economic profit,
as the limited partnership agreement definitively provides that losses
incurred by a limited partner prior to the execution of the limited partner-
ship agreement are to be taken into account when determining cumula-
tive fiscal period net economic profit and, thus, the trial court correctly
concluded that the U Co. litigation proceeds did not constitute a net
profit because those proceeds only partially recouped prior substantial
losses incurred in connection with the collateralized debt obligations.
9. The plaintiff could not prevail on its claim that the trial court erroneously
awarded damages because it improperly permitted the defendants to
retain the remainder of the U Co. litigation holdback, which was based
on the plaintiff’s claim that the court, having found that the $250,000
holdback designated by the settlement agreement to cover expenses
incurred in connection with the U Co. litigation had not been exhausted,
erroneously failed to award damages for the remainder of the unused
U Co. litigation holdback: that court definitively concluded that there
was insufficient evidence to conclude that the U Co. litigation holdback
had been exhausted, and did not conclude, as claimed by the plaintiff,
that the evidence demonstrated that the holdback had not been
exhausted, and the plaintiff’s claim that the trial court erroneously found
the division of the U Co. litigation proceeds to be 52.8 percent to M Co.
and 47.2 percent to F Co., and that the court should have drawn an
adverse inference against the defendants for their failure to comply fully
with discovery was unavailing, as the trial court specifically rejected
the plaintiff’s credibility challenge to the position taken by the defen-
dants, this court could not second-guess that credibility assessment,
and the testimony and evidence cited by the court were sufficient to
support its conclusion; accordingly, the court’s finding as to the division
of the net proceeds of the U Co. litigation was not clearly erroneous,
and the court properly determined the amount of damages.
10. The defendants could not prevail on their claim that the trial court
improperly granted the plaintiff’s motion to increase the amount of the
prejudgment remedy, which was based on their claim that the filing of
an appeal, without more, did not constitute a sufficient basis for the
court to modify, pursuant to § 52-278k, the existing prejudgment remedy;
it was not clear error for the trial court to have increased the amount
of the prejudgment remedy, as the court made its probable cause deter-
mination on the basis of the amount of the judgment rendered against
the defendants, the court’s award of postjudgment interest, the fact that
the defendants took an amended appeal, and the average pendency of
similar civil cases before this court.
This court declined to review the defendants’ unpreserved claim that the
trial court improperly granted the plaintiff’s motion for postjudgment
discovery in connection with the court’s upward modification of the
prejudgment remedy amount, the defendants having failed to preserve
properly their claim that the trial court lacked authority to grant the
plaintiff’s supplemental motion for disclosure of assets.
Argued November 27, 2018—officially released October 8, 2019
Procedural History
Action to recover damages for, inter alia, breach of
contract, and for other relief, brought to the Superior
Court in the judicial district of Stamford-Norwalk and
transferred to the Complex Litigation Docket, where the
defendants filed a counterclaim; thereafter, the court,
Genuario, J., granted the plaintiff’s application for a
prejudgment remedy; subsequently, the court granted
in part the defendants’ motion to strike; thereafter, the
court denied the defendants’ motion to reargue and
for reconsideration, and the named defendant et al.
appealed to this court; subsequently, the matter was
tried to the court, Genuario, J.; thereafter, the court,
Genuario, J., denied the motion to modify the prejudg-
ment remedy filed by the defendant Pursuit Partners,
LLC, et al.; judgment in part for the plaintiff on the
complaint and for the plaintiff on the counterclaim,
from which the named defendant et al. appealed and
the plaintiff cross appealed to this court; subsequently,
the court, Genuario, J., granted the plaintiff’s motion
to modify the prejudgment remedy attachment and the
plaintiff’s motion for disclosure of assets, and the
named defendant et al. filed an amended appeal with
this court; thereafter, the court, Genuario, J., denied
the motion to open the judgment and to modify the
interest rate filed by the named defendant et al., and
the named defendant et al. filed a second amended
appeal with this court. Reversed in part; judgment
directed.
Michael S. Taylor, with whom were Brendon P. Lev-
esque and, on the brief, James P. Sexton and Megan L.
Wade, for the appellants-cross appellees (named defen-
dant et al.).
Edward P. Dolido, pro hac vice, with whom were
James C. Graham and, on the brief, Anthony C. Famig-
lietti, Bijan Amini, and Kelly McCullough, for the
appellee-cross appellant (plaintiff).
Opinion
BRIGHT, J. This appeal arises out of a dispute
between the plaintiff, Alpha Beta Capital Partners, L.P.,
and the defendants Pursuit Opportunity Fund I, L.P.
(POF), Pursuit Opportunity Fund I Master Ltd. (POF
Master), Pursuit Capital Management Fund I, L.P.
(PCM), Pursuit Capital Master (Cayman) Ltd. (PCM
Master), Pursuit Partners, LLC (Pursuit Partners),1 Pur-
suit Investment Management, LLC (PIM), Northeast
Capital Management, LLC (Northeast), Anthony
Schepis, and Frank Canelas, Jr. The central issue of
this appeal is the defendants’ claim that the court
improperly interpreted the agreements between the par-
ties to hold that certain defendants were liable for their
failure to distribute to the plaintiff its share of a substan-
tial contingent asset in which it had an interest.
The defendants appeal, and the plaintiff cross
appeals, from the judgment of the trial court, rendered
after a bench trial, partially in favor of the plaintiff as
to certain defendants on its complaint and in favor
of the plaintiff on the defendants’ counterclaim.2 The
defendants also appeal from the orders of the trial court
granting the plaintiff’s postjudgment motion to increase
the amount of a previously secured prejudgment rem-
edy, and granting the plaintiff’s motion for discovery to
secure the additional prejudgment remedy attachment.
Addressing the parties’ various contentions, we con-
clude that (1) the court properly interpreted the agree-
ments between the parties in concluding that the plain-
tiff prevailed on its breach of contract claim, (2) the
court properly rejected the defendants’ breach of con-
tract counterclaim, (3) the court properly concluded
that the plaintiff prevailed on its breach of the implied
covenant of good faith and fair dealing claim, (4) the
court properly concluded that the plaintiff could not
prevail on its conversion claim, (5) the court properly
struck the plaintiff’s Connecticut statutory causes of
action, (6) the court improperly concluded that all of
the defendants who had signed the settlement agree-
ment were liable for breach of contract and for breach
of the implied covenant of good faith and fair dealing,
(7) the court properly determined the amount of dam-
ages awarded to the plaintiff, (8) the court properly
granted the plaintiff’s motion to increase the amount
of the prejudgment remedy, and (9) the defendants’
claim that the court improperly granted the plaintiff’s
motion for postjudgment discovery was not properly
preserved, and, thus, we decline to review it. Accord-
ingly, we affirm in part and reverse in part the judgment
of the trial court.
The following facts, as found by the trial court, and
procedural history are relevant to our resolution of this
appeal. The plaintiff is a limited partnership organized
under the laws of the state of Delaware. POF and PCM
are both hedge funds3 that were formed as Delaware
limited partnerships. POF Master and PCM Master are
both hedge funds that were formed as Cayman Islands
limited liability companies. The vast majority of invest-
ments in POF Master were made by POF, and, likewise,
the vast majority of investments in PCM Master were
made by PCM. Pursuit Partners4 and PIM are Delaware
limited liability companies, each with a principal place
of business in Greenwich, Connecticut. PIM provided
advisory and investment management services to POF,
PCM, POF Master, and PCM Master. Northeast is a
limited liability company that became the general part-
ner of PCM on February 17, 2014, which was after the
prior general partner, Pursuit Capital Management, LLC
(Pursuit Management), had filed for bankruptcy.
Schepis and Canelas are individuals who reside in
Greenwich, Connecticut, and who, together, formed,
operated, and controlled all of the other defendants. At
one point in time, the defendants cumulatively managed
assets in excess of $600 million. During all relevant
times, the plaintiff was represented by the law firm
Reed Smith, and the defendants were represented by
the law firm DLA Piper.
In approximately 2007, the plaintiff invested in both
POF and PCM.5 In return, the plaintiff acquired limited
partnership interests in POF and PCM, and became a
signatory to both the POF and PCM limited partnership
agreements. Also invested in POF and PCM at that time
was the Schneider Group, which was comprised of vari-
ous persons and entities, including Leslie Schneider,
Lillian Schneider, Claridge Associates, LLC, and Jamus
Scott, LLC. In 2007 and 2008, all of the defendants were
experiencing significant financial difficulties as a result
of the volatility of the global securities market. More
specifically, in 2007, POF Master and PCM Master had
purchased certain securities known as collateralized
debt obligations (CDOs)6 from UBS AG, or its affiliate,
for substantial sums of money. Shortly thereafter, the
value of the CDOs precipitously dropped and, in 2008,
Pursuit Partners and PIM commenced a civil action in
the Connecticut Superior Court against UBS AG and
Moody’s Corporation (UBS litigation), alleging ‘‘a fraud
. . . committed by [UBS AG and UBS Securities, LLC],
upon [POF Master and PCM Master] in connection with
[those entities’] purchase of CDOs from [UBS AG and
UBS Securities, LLC].’’ Pursuit Partners, LLC v. UBS
AG, Superior Court, judicial district of Stamford-Nor-
walk, Complex Litigation Docket, Docket No. CV-08-
4013452-S (September 8, 2009) (48 Conn. L. Rptr. 557,
558). POF Master and PCM Master were not parties to
that action even though they were the actual purchasers
of the CDOs from UBS AG and UBS Securities, LLC.
In 2009, the investors in POF and PCM were provided
an opportunity to redeem their investments and to with-
draw their partnership interests from POF and PCM. A
majority of the investors chose to redeem. In Septem-
ber, 2009, the plaintiff redeemed its investment in POF,
which extinguished its interest in POF except for cer-
tain holdbacks7 to indemnify potential future expenses
of POF. Nevertheless, the plaintiff, as well as the Schnei-
der Group, chose to remain invested in PCM and, as a
result, between them, they cumulatively held approxi-
mately two thirds of the equitable interest in PCM.
On or about April 1, 2009, the plaintiff executed the
‘‘Amended and Restated Limited Partnership Agree-
ment’’ (LPA) for PCM, which was drafted by one or
more of the defendants under the supervision of Schepis
and Canelas. The LPA did not require or contemplate
any new investment; rather, the plaintiff retained its
interest in PCM consistent with the terms of the LPA
on the basis of its previous investment in PCM. The
LPA contained certain provisions for withdrawals by
and distributions to limited partners.
In 2010, the plaintiff commenced a civil action in the
Supreme Court of the state of New York (2010 New York
action) against PIM, Schepis, and Canelas. Therein, the
plaintiff alleged that PIM, Schepis, and Canelas were
liable for substantial damages caused by their ‘‘tortious
conduct involving the management of its investments
in the hedge funds.’’ Contemporaneously, the plaintiff
filed a separate arbitration proceeding against POF and
PCM, claiming similar losses for similar tortious con-
duct. In that proceeding, the plaintiff alleged, among
other things, that one or more of the defendants had
paid themselves compensation on the basis of a highly
inflated value of the CDOs, notwithstanding their
knowledge that the CDOs had little or no value.8
On or about April 8, 2011, the plaintiff, PIM, Schepis,
Canelas, Pursuit Management, POF, and PCM executed
the ‘‘Confidential Settlement Agreement and Mutual
Release’’ (CSA) to resolve the 2010 New York action
and the arbitration proceeding. The CSA was comprised
of fifteen sections and provided at the outset that ‘‘the
[p]arties hereby agree as follows . . . .’’ In §§ 1, 2, 5,
and 6, the CSA provided that the plaintiff was to execute
a dismissal with prejudice as to both the 2010 New York
action and the parallel arbitration proceeding, and that
the plaintiff agreed to a mutual release with PIM,
Schepis, Canelas, Pursuit Management, POF, and PCM
of all claims that were, or could have been, raised
therein.
As consideration for the plaintiff’s withdrawal and
release, § 3 of the CSA required PIM to pay the plaintiff
a settlement payment of $2.2 million and a redemption
payment of $1,418,033. Pursuant to § 3 (b) (i) and (iii)
of the CSA, the amount of the redemption payment
represented the plaintiff’s pro rata share, approximately
32.083612 percent, of the net asset value (NAV) in PCM
as of February 28, 2011,9 minus a holdback of ‘‘$250,000
for the purpose of funding necessary costs . . . associ-
ated with the ongoing [UBS litigation]’’ and minus ‘‘an
additional holdback in the amount [of] $200,000 to pay
legal fees and expenses with respect to which PCM has
an obligation to indemnify.’’ Section 3 (b) (ii) of the CSA
provided detailed mandates regarding these holdbacks,
including that PIM shall not use any prior holdbacks
in connection with the UBS litigation, that the plaintiff
shall ‘‘be entitled to periodic updates on the status of
the holdbacks,’’ and that the plaintiff ‘‘will be provided
with the opportunity to pay additional expenses neces-
sary for the UBS [l]itigation’’ if the UBS litigation hold-
back was insufficient.
In addition, § 4 of the CSA secured the plaintiff’s
interest in two of PCM’s contingent assets. Section 4
of the CSA provided in relevant part that ‘‘PCM owns
certain contingent assets that were valued at zero . . .
for purposes of calculating PCM’s NAV. These contin-
gent assets include (a) PCM’s proportionate interest in
the UBS [l]itigation; and (b) PCM’s interest in a claim
against Lehman Brothers International (Europe) . . .
in the amount of approximately $14,000,000 [(LBIE
claim)]. Nothing herein . . . shall affect in any way
[the plaintiff’s] pro rata share . . . of the contingent
assets as of February 28, 2011. It is further understood
that [the plaintiff’s] continued interest in the contingent
assets shall be governed by the [LPA] . . . .’’
Section 7 of the CSA was a confidentiality provision
in which the parties agreed, among other things, ‘‘to
maintain in the strictest confidence and not disclose
. . . the contents and terms of [the CSA] . . . [and]
not to use or provide any information relating to any
claim arising out of an investment in the [f]unds to any
other person in connection with the initiation of any
lawsuit, claim, arbitration or action related to or con-
cerning any investment in PCM, POF or any other
investment vehicle managed by PIM.’’ Section 12 of the
CSA was a choice of law provision that provided: ‘‘This
[a]greement shall be construed and interpreted in accor-
dance with the laws of the [s]tate of New York. Any
disputes or litigation arising out of this [a]greement
shall be governed by New York law.’’
On or about April 28, 2011, PIM sent a letter to the
remaining investors in PCM, notifying them that the
plaintiff’s claims against PCM had been settled, that
PIM was effecting a ‘‘ ‘mandatory withdrawal’ ’’ of the
plaintiff’s limited partnership interest, and that the
plaintiff would maintain its proportionate interest in
the two contingent assets. On or about April 30, 2011,
Schepis, in his capacity as the managing member of the
general partner of PCM, acting on behalf of the limited
partners, executed ‘‘Amendment No. 1’’ to the LPA.
That amendment set forth certain terms governing the
withdrawn investors’ continued interest in the contin-
gent assets, the right of the general partner to be paid
an incentive fee, and the right of the general partner
to withhold reserves, costs, and expenses from any
distribution of the proceeds of the contingent assets.
Shortly after the CSA was signed, the LBIE claim was
sold for $9,334,141.55, and, on June 1, 2011, those funds
were received in PCM Master’s account. Nevertheless,
no portion of the LBIE claim proceeds were remitted
to the plaintiff until October, 2011, when the plaintiff
received $1,022,022.36. Thereafter, a series of communi-
cations occurred between Reed Smith and DLA Piper
regarding the distribution of the LBIE claim proceeds
to the plaintiff.
On November 9, 2011, DLA Piper sent an explanation
to Reed Smith, stating that the plaintiff’s contingent
interest in the LBIE claim was worth $2,691,641, which
amount represented 32.08 percent of PCM’s 90 percent
interest in the LBIE claim owned by PCM Master, and
that a performance fee also would be subtracted from
that amount. On November 16, 2011, Reed Smith sent
a letter in response, asserting that the defendants had
provided no documentation to support their valuation
of the plaintiff’s proportionate interest in the LBIE
claim, that Reed Smith had been in contact with the
Schneider Group and their related entities, and that the
Schneider Group was supporting the plaintiff’s
demands. On November 26, 2011, DLA Piper sent
another explanation to Reed Smith, stating that the
plaintiff’s interest in the LBIE claim was reduced to
$2,132,559 to account for the performance fee due to
the defendants, and that the plaintiff’s ‘‘reserve balance
in May, 2011, was adjusted upward in that amount.’’
Neither of DLA Piper’s communications provided an
explanation as to the basis for the performance fee
or the balance reserve, nor the reason for which the
defendants had remitted less than 48 percent of the total
amount that they finally had calculated the plaintiff’s
interest in the LBIE claim to be worth. The defendants
did not remit any further amount of the LBIE claim at
that time.
On November 6, 2012, the court dismissed the UBS
litigation for lack of subject matter jurisdiction on the
ground that Pursuit Partners and PIM lacked standing
to proceed against UBS AG and Moody’s Corporation.
On December 4, 2012, lead counsel for Pursuit Partners
in the UBS litigation sent a letter to the investors, includ-
ing the plaintiff, explaining that the case had been dis-
missed, that he disagreed with the decision, that he had
filed a motion to reargue, that the investors should not
take any action that would interfere with the process,
and that he was confident that they ultimately would
prevail.
In March, 2013, after having received no further com-
munication regarding the LBIE claim and concerned
about the status of its holdbacks, the plaintiff com-
menced a civil action in the Supreme Court of the state
of New York against PIM, PCM, POF, and Pursuit Man-
agement (2013 New York action).10 In that action, the
plaintiff alleged that those defendants had breached the
CSA by failing to pay the plaintiff its pro rata portion
of the LBIE claim proceeds, and by failing to provide
the plaintiff with periodic updates on the status of its
holdbacks and contingent assets. Accordingly, the 2013
New York action did not seek the UBS litigation pro-
ceeds, as the UBS litigation had not yet been resolved;
rather, the plaintiff sought an accounting and an injunc-
tion to prevent those defendants from accessing or uti-
lizing the plaintiff’s holdbacks.
Soon after the commencement of the 2013 New York
action, the defendants, or some of them, transferred
to the plaintiff approximately $700,000 in additional
proceeds from the LBIE claim, for a total distribution
of $1,722,022.36, which was approximately 81 percent
of the total amount that the defendants finally had calcu-
lated the plaintiff’s interest in the LBIE claim to be
worth. The transmittal of the $700,000 was not accom-
panied by any explanation or accounting as to how the
amount was calculated, the balance of the LBIE claim
proceeds, or the status of the holdbacks. Even though
it mandatorily had withdrawn the plaintiff as a member
of PCM in April, 2011, when the CSA was executed, on
April 22, 2013, Pursuit Management sent the plaintiff a
letter executing its purported right, pursuant to the LPA,
to ‘‘ ‘mandatorily withdraw’ ’’ the plaintiff from PCM,11
which allegedly terminated any interest the plaintiff had
in the contingent assets. The purported basis for this
second mandatory withdrawal was the initiation of the
2013 New York action.
On July 3, 2014, the court in the UBS litigation, after
reconsideration, vacated the judgment dismissing the
UBS litigation and held that Pursuit Partners and PIM
had standing on the basis of the unique and unitary
relationship between the various entities that make up
and control the hedge fund structure. In August and
September, 2015, Pursuit Partners settled the UBS litiga-
tion for a total of $36 million; however, the defendants
have not provided the plaintiff with any portion of the
settlement proceeds.
The plaintiff then brought the present action against
the defendants seeking damages for their failure to
remit to the plaintiff its proportionate share of the UBS
litigation proceeds as secured under § 4 of the CSA.12
On September 11, 2015, the plaintiff filed an application
for a prejudgment remedy and a proposed summons
and complaint against the defendants. The plaintiff’s
operative amended substitute complaint, dated May 6,
2016, is comprised of seven counts: (1) breach of con-
tract, (2) breach of the covenant of good faith and
fair dealing, (3) unjust enrichment, (4) conversion, (5)
statutory theft under General Statutes § 52-564, (6) vio-
lation of the Connecticut Unfair Trade Practices Act
(CUTPA), General Statutes § 42-110a et seq., and (7)
civil conspiracy.
On February 17, 2016, the defendants, in response,
filed an application for a prejudgment remedy and a
counterclaim against the plaintiff alleging, among other
things, that the plaintiff is liable to the defendants for
breach of contract and is not entitled to any portion of
the UBS litigation proceeds. In particular, the defen-
dants alleged that the November, 2011 letter from Reed
Smith to DLA Piper referencing the plaintiff’s communi-
cation with the Schneider Group, as well as the com-
mencement of the 2013 New York action, had breached
certain provisions of both the CSA and the LPA. The
defendants’ operative amended counterclaim, dated
June 7, 2016, contained two counts that respectively
alleged breach of the CSA and fraud.
On May 17, 2016, the defendants filed a motion to
strike all seven counts of the plaintiff’s complaint. The
defendants argued in their memorandum of law in sup-
port, in relevant part, that counts five and six of the
complaint, which alleged Connecticut statutory causes
of action sounding in statutory theft and CUTPA, are
barred by the choice of law provision in § 12 of the
CSA, which provided that ‘‘[a]ny disputes or litigation
arising out of this [a]greement shall be governed by
New York law.’’ On June 8, 2016, the plaintiff filed a
memorandum of law in opposition to the defendants’
motion to strike in which it argued, among other things,
that the choice of law provision was not broad enough
to preclude the Connecticut statutory causes of action.
On June 16, 2016, after an eight day hearing,13 the
court issued a thorough memorandum of decision in
which it concurrently granted the plaintiff’s application
for a prejudgment remedy and denied the defendants’
application for a prejudgment remedy. The court found
that there was ‘‘probable cause that the plaintiff will
obtain a judgment in the amount of $4,929,582 plus
interest in the amount of $492,000, for a total prejudg-
ment remedy in the amount of $5,421,582.’’ The defen-
dants then filed a motion for reconsideration, and cer-
tain defendants also filed a motion to modify the
prejudgment remedy, which were both summarily
denied by the court. The plaintiff thereafter secured
the full attachment amount.
On June 20, 2016, the court issued an oral ruling
granting the defendants’ motion to strike as to counts
five and six, and denying the motion as to the remainder
of the counts. The court held that although the choice
of law provision in § 12 of the CSA ‘‘is not quite as
broad’’ as compared to other similar cases, ‘‘it is still
quite broad. It is difficult to see how the specific claims
alleged in counts five and six being litigated in this case
do not arise out of the [CSA]. Those counts have as the
center of the alleged wrongful conduct of the defen-
dants various wrongful [conduct] and schemes that
would further their efforts to withhold from the [plain-
tiff] the amount the [plaintiff] claim[s] [is] due under
the CSA. As such, while those counts do not rest on
the validity, construction, and enforcement of the agree-
ment, they do arise out of the obligations of the defen-
dants that emanate from that agreement.’’
On October 14, 2016, after seven additional days of
evidence, the court issued an extensive memorandum
of decision in which it rendered judgment partially in
favor of the plaintiff as to certain defendants on its
complaint and in favor of the plaintiff on the defendants’
counterclaim.14 In particular, the court concluded that
the defendants that were parties to the CSA—PCM,
POF, PIM, Schepis, and Canelas—as well as the general
partner of PCM at the time the UBS litigation proceeds
were realized, Northeast, were liable for breach of con-
tract and breach of the covenant of good faith and
fair dealing for their intentional failure to remit to the
plaintiff its proportionate share of the UBS litigation
proceeds as secured by the CSA. The court also con-
cluded that the remaining claims in the plaintiff’s com-
plaint, the defendants’ special defenses, and the defen-
dants’ counterclaim had not been proven.
Consequently, the court rendered judgment in favor of
the plaintiff against PCM, POF, PIM, Schepis, Canelas,
and Northeast in the total amount of ‘‘$4,929,582 plus
prejudgment interest at the rate of 10 percent per year
from October 16, 2015, the date that the plaintiff’s inter-
est in the UBS [litigation] proceeds should have been
remitted to the plaintiff, until October 16, 2016, in the
amount of $492,958, for a total of $5,422,540.’’ The court
also rendered judgment in favor of Pursuit Partners,
PCM Master, and POF Master on counts one and two
of the complaint, in favor of all the defendants on counts
three through seven of the complaint, and in favor of
the plaintiff on the counterclaim. This appeal and cross
appeal followed.
On November 8, 2016, during the pendency of this
appeal, the plaintiff, pursuant to General Statutes § 52-
278k, filed a motion with the trial court seeking modifi-
cation of the previously secured prejudgment remedy
attachment amount to secure from PCM, POF, PIM,
Schepis, Canelas, and Northeast an additional $947,731
that it anticipated would accrue during the pendency
of this appeal. On the same date, the plaintiff, pursuant
to Practice Book § 13-13, filed a motion with the trial
court seeking supplemental asset disclosure from those
defendants to assist with the securing of the additional
attachment pursued by the motion to modify. On
December 16, 2016, the defendants filed an opposition
to the plaintiff’s motion to increase the prejudgment
remedy in which they argued, among other things, that
§ 52-278k does not permit the upward modification of
a prejudgment remedy in the present circumstances.
On January 4, 2017, after a hearing, the court granted
the plaintiff’s motion to increase the prejudgment rem-
edy amount by $947,731 to a total of $6,369,313, holding
that § 52-278k permits the modification of a prejudg-
ment remedy ‘‘ ‘at any time,’ ’’ and that the ‘‘evidence
at trial and the circumstances of the pending appeal’’
constituted probable cause warranting an increased
modification. On the same date, the court granted the
plaintiff’s motion for disclosure of assets to assist with
the securing of the additional amount. The defendants
thereafter filed an amended appeal to challenge these
rulings. Additional facts will be set forth as necessary.
On appeal, the defendants present a myriad of claims,
which principally challenge the court’s interpretation
of the CSA and the LPA. In particular, the defendants
argue that the court improperly determined that certain
defendants breached the CSA and the covenant of good
faith and fair dealing, improperly rejected their breach
of contract counterclaim, improperly held all of the
defendants that had signed the CSA liable for the breach
found by the court of a single provision thereof, and
improperly determined the amount of damages. The
defendants also claim that the court improperly granted
the plaintiff’s motion to increase the amount of the
prejudgment remedy and the plaintiff’s motion for dis-
covery to assist it with securing the additional prejudg-
ment remedy attachment. In its cross appeal, the plain-
tiff claims that the court improperly determined that
the defendants that had not signed the CSA were not
liable, improperly granted the defendants’ motion to
strike its Connecticut statutory causes of action,
improperly determined that the plaintiff could not pre-
vail on its conversion claim, and improperly determined
the amount of damages. We now turn to each of the
parties’ claims.
I
The defendants first claim that the court improperly
interpreted the agreements between the parties when
it concluded that the plaintiff prevailed on its breach
of contract claim, which alleged that the defendants
had failed to pay the plaintiff its proportionate share
of the proceeds from the UBS litigation. The defendants
first argue that none of them could be held liable for
breach of the CSA because the distribution of the pro-
ceeds from the contingent assets was governed by the
LPA, which they contend afforded the general partner
discretion to withhold or reduce payment of the contin-
gent interests. They argue that the court misinterpreted
the agreements to obligate them to remit the proceeds
of the contingent assets to the plaintiff as soon as practi-
cable. We disagree.
We begin by setting forth the standard of review and
legal principles relevant to this claim. ‘‘The standard
of review for the interpretation of a contract is well
established. Although ordinarily the question of con-
tract interpretation, being a question of the parties’
intent, is a question of fact [subject to the clearly errone-
ous standard of review] . . . [when] there is definitive
contract language, the determination of what the parties
intended by their . . . commitments is a question of
law [over which our review is plenary].’’ (Internal quota-
tion marks omitted.) Joseph General Contracting, Inc.
v. Couto, 317 Conn. 565, 575, 119 A.3d 570 (2015). In
light of the fact that the defendants’ claim is directed
at the court’s interpretation of the agreements, as
opposed to the court’s factual findings, ‘‘our review is
plenary and we must decide whether its conclusions
are legally and logically correct and find support in the
facts that appear in the record.’’ (Internal quotation
marks omitted.) Sun Val, LLC v. Commissioner of
Transportation, 330 Conn. 316, 325–26, 193 A.3d
1192 (2018).
In interpreting contracts pursuant to New York law,15
‘‘the intention of the parties should control. To discern
the parties’ intentions, the court should construe the
agreements so as to give full meaning and effect to the
material provisions . . . .’’ (Citations omitted.) Excess
Ins. Co. Ltd. v. Factory Mutual Ins. Co., 3 N.Y.3d 577,
582, 822 N.E.2d 768, 789 N.Y.S.2d 461 (2004). ‘‘Where
. . . a literal construction defeats and contravenes the
purpose of the agreement, it should not be so construed
. . . .’’ (Citation omitted; internal quotation marks
omitted.) Currier, McCabe & Associates, Inc. v. Maher,
75 A.D. 3d 889, 892, 906 N.Y.S.2d 129 (2010). ‘‘In
making these determinations, [t]he court should exam-
ine the entire contract and consider the relation of
the parties and the circumstances under which it was
executed. Particular words should be considered, not
as if isolated from the context, but in the light of the
obligation as a whole and the intention of the parties
as manifested thereby. Form should not prevail over
substance and a sensible meaning of words should be
sought . . . .’’ (Citations omitted; internal quotation
marks omitted.) Id., 890–91.16
We begin our analysis with the plain language of the
provision at issue. Section 4 of the CSA provided in
relevant part: ‘‘PCM owns certain contingent assets that
were valued at zero . . . for purposes of calculating
PCM’s NAV. These contingent assets include (a) PCM’s
proportionate interest in the UBS [l]itigation; and (b)
PCM’s interest in [the LBIE claim]. Nothing herein . . .
shall affect in any way [the plaintiff’s] pro rata share
. . . of the contingent assets as of February 28, 2011.
It is further understood that [the plaintiff’s] continued
interest in the contingent assets shall be governed by
the [LPA] . . . .’’
The definitive language of this section demonstrates
that the parties intended to preserve the plaintiff’s then
existing right to receive its share of proceeds that might
be realized from certain contingent assets. Prior to the
execution of the CSA, these contingent assets were the
property of PCM, and, thus, at the time the CSA was
executed, the parties carved out these contingent assets
from the redemption payment and agreed that the plain-
tiff would be entitled to its share of these assets if they
were realized.
There is no dispute among the parties regarding the
foregoing interpretation; rather, the parties’ views
diverge as to the intended meaning of the final relevant
sentence of § 4 of the CSA, which directs that the LPA
governs the continued interest in the contingent assets.
The defendants argue that the parties intended that all
of the provisions of the LPA continued to govern the
contingent interests. They maintain that the contingent
interests were subject to the distribution and with-
drawal provisions of the LPA, which they argue granted
the general partner of PCM broad discretion to reduce,
reinvest, or retain a portion of the contingent assets
once realized. The plaintiff argues that, because the
execution of the CSA constituted a withdrawal of the
plaintiff from PCM, the court properly determined that
the parties intended that the payment of the contingent
assets was to be governed by a specific portion of the
LPA withdrawal provision. We agree with the plaintiff.
In the present case, the court properly considered
the language of § 4 of the CSA in conjunction with the
other provisions of the CSA, the LPA, the relation of
the parties, and the circumstances under which it was
executed. The court first determined that the execution
of the CSA had the effect of withdrawing the plaintiff as
a limited partner from PCM. The court then determined
that, because the plaintiff had been withdrawn from
PCM, the parties intended that the payment of the con-
tingent assets secured by the CSA was to be governed
by § 5.01 (c) of the LPA, which mandated that ‘‘[a]
withdrawal shall be effective on the applicable [w]ith-
drawal [d]ate. In the case of any [l]imited [p]artner who
withdraws all or any portion of its [l]imited [p]artner-
ship [i]nterest, such withdrawing [l]imited [p]artner
shall be paid the amount of its withdrawal in cash as
soon as practicable following the effective date of the
withdrawal, subject to certain restrictions and reserves
for contingent or undetermined liabilities of [PCM].’’
We conclude that the court’s interpretation is legally
and logically correct and supported by the facts in
the record.
The purpose of the CSA, as a whole, was to resolve
the then existing disputes between the parties, and the
execution of the CSA had the effect of vitiating any
remaining investment the plaintiff had in PCM. The CSA
provided that, in exchange for the releases of claims,
PIM was to pay the plaintiff a settlement payment, as
well as a redemption payment, which represented the
plaintiff’s pro rata share of the NAV remaining in PCM
at that time. Thus, the only financial connections
between the plaintiff and PCM that existed after the
execution of the CSA were the certain holdbacks and
the contingent interests. The limited nature of the ongo-
ing relationship was confirmed by PIM’s letter to the
other investors in PCM, sent twenty days after the CSA
was executed, informing the investors that the plain-
tiff’s claims had been settled and that the plaintiff had
been mandatorily withdrawn as a limited partner in
PCM. Consequently, although the CSA did not expressly
state that the plaintiff had been withdrawn from PCM,
these facts support the court’s determination that the
execution of the CSA constituted a withdrawal of the
plaintiff from PCM. Thus, in light of this withdrawal, it
was logical for the court to conclude that the contingent
assets were to be governed by the specific withdrawal
provision of § 5.01 (c) of the LPA.17
The court’s interpretation of both the CSA and the
LPA together18 is further bolstered by the relevant por-
tion of § 5.01 (c) of the LPA that provides that a with-
drawal was ‘‘subject to certain restrictions and reserves
for contingent or undetermined liabilities of [PCM].’’
The parties specifically identified these restrictions and
reserves in the CSA holdback provisions, pursuant to
which $250,000 was subtracted from the plaintiff’s
redemption payment ‘‘for the purpose of funding neces-
sary costs . . . associated with the ongoing [UBS liti-
gation] . . . .’’ As a result, it is apparent that the parties
anticipated that further expenditure was required to
pursue the contingent assets, and, thus, they specifically
assented to the potential reduction of that amount in
the CSA. This reduction is in conformance with the
foregoing language of the LPA.
The fatal problem with the defendants’ proffered
interpretation is that it fails to consider the pertinent
language of the CSA in conjunction with the LPA and
the circumstances in which the CSA was executed. The
court properly determined that the defendants’ position
is untenable because, in view of the fact that the plaintiff
no longer was a limited partner in PCM, it would contra-
vene the purpose of the CSA to permit the defendants
to retain or reinvest the contingent assets once they
were realized. We agree that it would be illogical to
conclude that, after the withdrawal of the entire NAV
of the plaintiff’s investment, the realization of the con-
tingent assets would constitute a reinvestment of the
plaintiff back into PCM, and the defendants could then
utilize those funds however they wished. This myopic
interpretation contravenes the purposes of the CSA.
Instead, it was logical for the court to conclude that,
following PCM’s receipt of proceeds from the realiza-
tion of a contingent asset, the plaintiff, pursuant to § 4
of the CSA and § 5.01 (c) of the LPA, was entitled to
its pro rata share of those proceeds ‘‘in cash as soon
as practicable following the effective date of the with-
drawal . . . .’’ Accordingly, we conclude that the
court’s interpretation was logically and legally correct
and was supported by the facts in the record.
Consequently, we conclude that the court properly
held that the plaintiff proved a breach of contract
because it is uncontroverted that the defendants settled
the UBS litigation for $36 million, and the plaintiff has
not received its portion of those proceeds in contraven-
tion of the CSA and the LPA.
II
The defendants next claim that the court improperly
rejected their breach of contract counterclaim, which
alleged that they were relieved of their obligation to
remit the UBS litigation proceeds because the plaintiff
had breached the CSA. The defendants argue that the
court erroneously found that (1) the plaintiff had not
materially breached the CSA, and (2) the defendants’
prior partial delayed payment of the LBIE claim to the
plaintiff relieved the plaintiff from its obligations under
the confidentiality provision. We disagree.
We begin by setting forth the standard of review and
legal principles relevant to this claim. ‘‘The determina-
tion of whether a contract has been materially breached
is a question of fact that is subject to the clearly errone-
ous standard of review. . . . A finding of fact is clearly
erroneous when there is no evidence in the record to
support it . . . or when although there is evidence to
support it, the reviewing court on the entire evidence
is left with the definite and firm conviction that a mis-
take has been committed.’’ (Citations omitted; internal
quotation marks omitted.) Efthimiou v. Smith, 268
Conn. 487, 493–94, 846 A.2d 216 (2004).
Under New York law, ‘‘[t]he elements of a cause of
action for breach of contract are (1) formation of a
contract between plaintiff and defendant; (2) perfor-
mance by plaintiff; (3) defendant’s failure to perform;
and (4) resulting damage . . . .’’ (Citation omitted;
internal quotation marks omitted.) Clearmont Property,
LLC v. Eisner, 58 A.D. 3d 1052, 1055, 872 N.Y.S.2d
725 (2009). A party’s prior material breach relieves the
nonbreaching party from performing its remaining obli-
gations under the contract. U.W. Marx, Inc. v. Koko
Contracting, Inc., 124 A.D. 3d 1121, 1122, 2
N.Y.S.3d 276, appeal denied, 25 N.Y.3d 904, 30 N.E.3d
167, 7 N.Y.S.3d 276 (2015); N450JE, LLC v. Priority 1
Aviation, Inc., 102 A.D. 3d 631, 632, 959 N.Y.S.2d
156 (2013).
‘‘[A] ‘material breach’ is a failure to do something
that is so fundamental to a contract that the failure to
perform that obligation defeats the essential purpose
of the contract or makes it impossible for the other
party to perform under the contract. In other words,
for a breach of contract to be material, it must ‘go to
the root’ or ‘essence’ of the agreement between the
parties, or be one which touches the fundamental pur-
pose of the contract and defeats the object of the parties
in entering into the contract, or affect the purpose of
the contract in an important or vital way. A breach is
‘material’ if a party fails to perform a substantial part
of the contract or one or more of its essential terms or
conditions, the breach substantially defeats the con-
tract’s purpose, or the breach is such that upon a reason-
able interpretation of the contract, the parties consid-
ered the breach as vital to the existence of the contract.
Other courts have defined a breach of contract as ‘mate-
rial’ if the promisee receives something substantially
less or different from that for which the promisee bar-
gained. In many cases, a material breach of contract
is proved by the established amount of the monetary
damages flowing from the breach; however, proof of a
specific amount of monetary damages is not required
when the evidence establishes that the breach was so
central to the parties’ agreement that it defeated the
essential purpose of the contract. Conversely, where a
breach causes no damages or prejudice to the other
party, it may be deemed not to be ‘material.’ ’’ (Foot-
notes omitted.) 23 R. Lord, Williston on Contracts (4th
Ed. 2018) § 63:3, pp. 482–84; see Robert Cohn Associ-
ates, Inc. v. Kosich, 63 A.D. 3d 1388, 1389, 881
N.Y.S.2d 235 (2009) (‘‘a party’s obligation to perform
under a contract is only excused where the other party’s
breach of the contract is so substantial that it defeats the
object of the parties in making the contract’’ [internal
quotation marks omitted]); Metropolitan National
Bank v. Adelphi Academy, Docket No. 7389/08, 2009
N.Y. Misc. LEXIS 1261, *10 (N.Y. Sup. May 27, 2009)
(decision without published opinion, 886 N.Y.S.2d 68
[N.Y. Sup. 2009]) (‘‘for a breach to be material it must
be so substantial that it defeats the object of the parties
in making the contract; the breach must go to the root
of the agreement between the parties’’).
Section 7 of the CSA was a confidentiality provision
in which the parties agreed, among other things, ‘‘to
maintain in the strictest confidence and not disclose
. . . the contents and terms of [the CSA] . . . [and]
not to use or provide any information relating to any
claim arising out of an investment in the [f]unds to any
other person in connection with the initiation of any
lawsuit, claim, arbitration or action related to or con-
cerning any investment in PCM, POF or any other
investment vehicle managed by PIM.’’ There is no dis-
pute among the parties with respect to the interpreta-
tion of this provision.
A
The defendants first argue that the court erroneously
found that the plaintiff had not materially breached the
CSA19 by violating § 7 when it requested that Reed Smith
contact the SEC regarding the investigation, com-
menced the 2013 New York action seeking an injunction
to prevent PCM from utilizing the UBS litigation hold-
back, and colluded with the Schneider Group. We con-
clude that the court’s finding was not clearly erroneous.
In the present case, as indicated previously in this
opinion, the purpose of the CSA was to settle and
resolve the disputes among the parties. At the outset
of the CSA, it is acknowledged that the parties ‘‘wish[ed]
to resolve any and all disputes . . . between them,’’
and that the ‘‘sole purposes’’ of the CSA were to end
‘‘the [2010] New York [a]ction and the [a]rbitration
. . . .’’ The objective of the CSA, therefore, was the
resolution of the pending claims, which entailed the
plaintiff’s withdrawal and release of claims and the
defendants’ distribution of certain payments to the
plaintiff. Thus, the court’s finding that the plaintiff’s
actions did not constitute a material breach of the CSA
is supported by the evidence that § 7 was not central
to the CSA.
Moreover, the court’s finding is supported by the
evidence regarding the circumstances in which these
communications were made. Philip Chapman, the man-
aging member of the general partner of the plaintiff,
testified that the then ongoing SEC investigation was
viewed as an impediment to the return of the plaintiff’s
holdbacks, and that the communications were intended
to stop the legal fees from draining those holdbacks.
Thus, the plaintiff’s communications to the SEC were
made regarding an ongoing investigation in which the
plaintiff’s interests were potentially involved. Further,
there was evidence presented that the 2013 New York
action was filed by the plaintiff to obtain an accounting
and an injunction that would enjoin the defendants from
accessing or utilizing the plaintiff’s holdbacks, which
were secured by the CSA, because the defendants had
failed to provide the plaintiff with periodic updates as
required by the CSA. Essentially, the plaintiff com-
menced the 2013 New York action in response to the
defendants’ purported breaches of the CSA. In addition,
there was evidence that PIM, prior to the November
16, 2011 letter from Reed Smith, already had disclosed
to PCM’s investors, including the Schneider Group, that
the claims brought by the plaintiff against PCM had
been resolved by the CSA.
This evidence supports the court’s findings that the
plaintiff, by engaging in these communications, did not
materially breach the essential purpose of the CSA,
which was to resolve the then existing disputes among
the parties. The evidence that the plaintiff sought infor-
mation from the SEC regarding an investigation that
may affect the plaintiff’s interest, filed an action that
alleged that the defendants had breached the CSA, and
communicated with the Schneider Group after it
already had been advised of the CSA supports the
court’s finding. In fact, each of these actions were taken
to enforce the plaintiff’s rights that were at the core of
the CSA. The defendants’ argument would lead to the
absurd result that the defendants could act contrary to
the CSA and the plaintiff could do nothing about it
because disclosing the defendants’ actions would vio-
late the CSA’s confidentiality provision. The court was
not required to conclude that the parties intended such
an outcome. See Davis v. Nyack Hospital, 130 Ohio App.
Div. 3d 455, 455–56, 13 N.Y.S.3d 371 (2015) (party per-
mitted to disclose terms of confidential settlement
agreement in order to enforce agreement); Osowski v.
AMEC Construction Management, Inc., 69 A.D.
3d 99, 106, 887 N.Y.S.2d 11 (2009) (‘‘disclosure of the
terms of a settlement agreement by a settling party
to a nonsettling party may be appropriate, despite the
presence of a confidentiality clause in the agreement,
where the terms of the agreement are ‘material and
necessary’ to the nonsettling party’s case’’). Conse-
quently, we conclude that the court’s finding that the
plaintiff had not materially breached the CSA was not
clearly erroneous.
B
We now turn to the defendants’ second claim that
the court erroneously found that the defendants’ prior
partial delayed payment of the LBIE claim to the plain-
tiff relieved the plaintiff from its obligations under the
confidentiality provision.20 The defendants reassert
their argument, which we rejected in part I of this opin-
ion, that the payment of the LBIE claim proceeds, as
a contingent asset, was subject to reduction and rein-
vestment pursuant to the LPA.21 Although we need not
reach this issue given our conclusion in part II A of this
opinion that the plaintiff’s disclosures did not constitute
a material breach of the CSA, we, nonetheless, conclude
that the court’s finding that any claimed breach by the
plaintiff was excused by the defendants’ prior breach
of the CSA was not clearly erroneous.
In the present case, there was an abundance of evi-
dence to support the court’s finding. First, the language
of the agreements, as outlined previously in part I of
this opinion, supports the court’s conclusion that the
CSA, read in conjunction with the LPA, obligated the
payment of the contingent assets, including the pro rata
share of the proceeds of the LBIE claim, to the plaintiff
‘‘in cash as soon as practicable following the effective
date of the withdrawal . . . .’’ As the contingent assets
could not have been remitted on the date of the execu-
tion of the CSA because they had not yet been realized,
‘‘as soon as practicable following the effective date of
the withdrawal,’’ effectively was the date on which the
proceeds from the LBIE claim were received by PCM.
Here, shortly after the CSA was signed, the LBIE claim
was sold for $9,334,141.55, and, on June 1, 2011, those
funds were received in PCM Master’s account. Accord-
ingly, the plaintiff was entitled to receive its pro rata
share of those proceeds; see footnote 9 of this opinion;
approximately $2,994,729.76, as soon as practicable
after June 1, 2011.
Nevertheless, the evidence demonstrated that no por-
tion of the LBIE claim proceeds were remitted to the
plaintiff until October, 2011, when the plaintiff received
$1,022,022.36. In response to requests from Reed Smith
as to the valuation of this amount, DLA Piper stated
that it had calculated that the plaintiff’s share of the
LBIE claim was worth $2,132,559, which amount repre-
sented 32.08 percent of PCM’s 90 percent interest in
the LBIE claim owned by PCM Master, minus a perfor-
mance fee. Neither of DLA Piper’s communications,
however, provided an explanation as to the basis for
the reduction for the performance fee or the balance
reserve, nor the reason for which the defendants had
remitted less than 48 percent of the total amount that
they had calculated the plaintiff’s interest in the LBIE
claim to be worth. Two years later, shortly after the
commencement of the 2013 New York action, the plain-
tiff received the second and final partial distribution of
approximately $700,000 in additional proceeds from the
LBIE claim, for a total distribution of $1,722,022.36,
which was approximately 81 percent of the total amount
that the defendants had calculated the plaintiff’s inter-
est in the LBIE claim to be worth.
The foregoing evidence supports the court’s finding
that the defendants were in material breach of their
obligations under the CSA in October and November,
2011, which was prior to any of the plaintiff’s aforemen-
tioned communications. Even if we assume that the
defendants’ calculation as to the plaintiff’s proportion-
ate share of the LBIE claim was correct, the evidence
that, prior to any of the contested communications,
the plaintiff received less than one half of what the
defendants had calculated was the plaintiff’s entitle-
ment, more than four months after the funds had been
received by PCM without sufficient justification, sup-
ports the court’s finding that the defendants had materi-
ally breached the CSA. On the basis of the foregoing,
we conclude that the court’s finding that the defendants
materially had breached the CSA prior to the plaintiff’s
purported breach was not clearly erroneous. Therefore,
we conclude that the court properly rejected the defen-
dants’ breach of contract counterclaim.
III
The defendants also claim that the court improperly
concluded that the plaintiff prevailed on its breach of
the implied covenant of good faith and fair dealing
claim. In support, the defendants reassert their argu-
ment, which we rejected in parts I and II of this opinion,
that neither the LPA nor the CSA mandate that they
remit the entirety of the plaintiff’s proportionate share
of the UBS litigation proceeds. They argue that, in the
absence of such a mandate, the court erroneously found
them liable for breach of the implied covenant of good
faith and fair dealing.22 We disagree.
We begin by setting forth the standard of review and
legal principles relevant to this claim. The question of
whether certain conduct breached the duty of good
faith and fair dealing is a question of fact subject to the
clearly erroneous standard of review. See Renaissance
Management Co. v. Connecticut Housing Finance
Authority, 281 Conn. 227, 240, 915 A.2d 290 (2007); see
also Landry v. Spitz, 102 Conn. App. 34, 47, 925 A.2d
334 (2007).
Under New York law, ‘‘[i]mplicit in all contracts is a
covenant of good faith and fair dealing in the course
of contract performance. . . . This embraces a pledge
that neither party shall do anything which will have the
effect of destroying or injuring the right of the other
party to receive the fruits of the contract. . . . Where
the contract contemplates the exercise of discretion,
this pledge includes a promise not to act arbitrarily or
irrationally in exercising that discretion . . . . The
implied covenant of good faith and fair dealing is
breached when a party to a contract acts in a manner
that, although not expressly forbidden by any contrac-
tual provision, would deprive the other party of the
right to receive the benefits under their agreement
. . . . The implied covenant of good faith encompasses
any promises which a reasonable person in the position
of the promisee would be justified in understanding
were included in the agreement, and prohibits either
party from doing anything which will have the effect
of destroying or injuring the right of the other party to
receive the fruits of the contract . . . .’’ (Citations
omitted; internal quotation marks omitted.) Atlas Eleva-
tor Corp. v. United Elevator Group, Inc., 77 A.D.
3d 859, 861, 910 N.Y.S.2d 476 (2010).
In the present case, the court found that the signatory
defendants, PIM, POF, PCM, Schepis, and Canelas,
deprived the plaintiff of its right to receive the benefits
under the CSA. In particular, the court found: ‘‘The
signatory defendants had a clear obligation under the
CSA to provide the plaintiff with 32.08 percent of PCM’s
interest in the UBS [Litigation] proceeds as soon as
practicable after receipt. The defendants have done
everything but that. The defendants have conducted
themselves in a manner in which they have wilfully
attempted to thwart the plaintiff’s ability to receive the
benefits of the CSA. Rather than provide the plaintiff
with 32.08 percent of PCM’s interest in the UBS [Litiga-
tion] proceeds, they have raised claims and counter-
claims that arise out of alleged conduct of the plaintiff,
which conduct was justified based upon their prior
breaches of the CSA with regard . . . to the LBIE
[claim] proceeds. At every step of the process, the
defendants have conducted themselves not in a way to
provide the plaintiff with [its] contractual benefit, but
rather to maintain control, use, and possession of as
much of the mon[eys] that the plaintiff had a contractual
right to for as long as possible in order to maintain the
benefit of those mon[eys] for themselves. Accordingly,
the court finds that the signatory defendants are all
liable for the breach of the covenant of good faith and
fair dealing contained in the CSA. Indeed, it is remark-
able that [al]though the plaintiff executed the CSA with
the intent of resolving its issues and ending litigation
and disputes with the defendants, the defendants’ wilful
conduct in failing to comply with the CSA has been the
primary reason for the continued litigation and exces-
sive expenses incurred by the parties since 2011. The
defendants’ failure to provide information to the plain-
tiff until ordered by the court, which might have
resolved some of the issues in advance of the litigation,
is indicative of their breach of this covenant. The non-
signatory defendants, not having a contractual obliga-
tion to the plaintiff, can have no liability under the
covenant implied by that contractual relationship.’’
We conclude that these subsidiary factual findings
support the court’s finding that at least some of the
defendants breached the implied covenant of good faith
and fair dealing. At the outset, we reject, for the reasons
outlined in parts I and II of this opinion, the defendants’
contention that they had no obligation under the CSA
to remit the UBS litigation proceeds to the plaintiff.
Consequently, the court’s findings that the defendants
failed to remit those proceeds, wilfully attempted to
thwart the plaintiff’s ability to receive those proceeds,
raised unsupported claims and counterclaims that
alleged misconduct by the plaintiff, maintained control
over the proceeds so as to retain them as long as possi-
ble for their own benefit, continued to prolong the litiga-
tion and cause excessive expenses, and failed, until
ordered by the trial court, to provide information to
the plaintiff that could have resolved some of the issues
in advance of this litigation, all support the court’s find-
ing. Therefore, we conclude that the court properly
concluded that the plaintiff prevailed on its implied
covenant of good faith and fair dealing claim.
IV
Because it relates to the extent of the defendants’
liability, we next address the plaintiff’s claim in its cross
appeal that the court improperly concluded that the
plaintiff could not prevail on its conversion claim. The
defendants argue that the court properly concluded that
a breach of contract claim, alone, cannot support a
claim for conversion. The plaintiff argues that the UBS
litigation proceeds were a specifically identifiable thing
controlled by the plaintiff. We conclude that the court
properly concluded that the plaintiff could not prevail
on its conversion claim because it merely was a
recasting of its breach of contract claim.
We begin by setting forth the standard of review
and legal principles relevant to this claim. This claim
requires us to interpret the plaintiff’s pleadings, which
is a question of law subject to plenary review. See Byrne
v. Avery Center for Obstetrics & Gynecology, P.C., 314
Conn. 433, 462, 102 A.3d 32 (2014). Under New York
law,23 ‘‘[i]n order to succeed on a cause of action to
recover damages for conversion, a plaintiff must show
(1) legal ownership or an immediate right of possession
to a specific identifiable thing and (2) that the defendant
exercised an unauthorized dominion over the thing in
question to the exclusion of the plaintiff’s right . . . .’’
(Citations omitted.) Giardini v. Settanni, 159 A.D.
3d 874, 875, 70 N.Y.S.3d 57 (2018). ‘‘The mere right to
payment cannot be the basis for a cause of action alleg-
ing conversion . . . .’’ (Citations omitted; internal quo-
tation marks omitted.) Zendler Construction Co. v.
First Adjustment Group, Inc., 59 A.D. 3d 439, 440,
873 N.Y.S.2d 134 (2009).
‘‘It is a well-established principle that a simple breach
of contract is not to be considered a tort unless a legal
duty independent of the contract itself has been violated
. . . . Put another way, where the damages alleged
were clearly within the contemplation of the written
agreement . . . [m]erely charging a breach of a duty
of due care, employing language familiar to tort law,
does not, without more, transform a simple breach of
contract into a tort claim . . . .’’ (Citations omitted;
internal quotation marks omitted.) Dormitory Author-
ity v. Samson Construction Co., 30 N.Y.3d 704, 711, 94
N.E.3d 456, 70 N.Y.S.3d 893 (2018).
‘‘To determine whether a tort claim lies, we have
also evaluated the nature of the injury, how the injury
occurred and the harm it caused . . . . However, we
have made clear that where [the] plaintiff is essentially
seeking enforcement of the bargain, the action should
proceed under a contract theory . . . .’’ (Citations
omitted; internal quotation marks omitted.) Id. ‘‘Gener-
ally, a tort cause of action that is based upon the same
facts underlying a contract claim will be dismissed as
a mere duplication of the contract cause of action . . .
particularly where . . . both seek identical damages
. . . .’’ (Citations omitted.) Duane Reade v. SL Green
Operating Partnership, L.P., 30 A.D. 3d 189, 190,
817 N.Y.S.2d 230 (2006).
‘‘While a cause of action alleging conversion cannot
be predicated upon a mere breach of contract, the con-
tracting party may also be held liable in tort where the
conduct which constitutes a breach of contract also
constitutes a breach of a duty distinct from, or indepen-
dent of, the breach of contract . . . .’’ (Citations omit-
ted.) Connecticut New York Lighting Co. v. Manos
Business Management Co., 171 A.D. 3d 698, 699,
98 N.Y.S.3d 101 (2019); see New York v. Shellbank Res-
taurant Corp., 169 A.D. 3d 581, 582, 95 N.Y.S.3d
60 (conversion claim duplicative of breach of contract
claim because ‘‘there were no facts pleaded beyond
those that support the contract claim or that would
support the existence of a duty separate from the par-
ties’ agreement’’), appeal dismissed, 33 N.Y.3d 1061, 127
N.E.3d 312, 103 N.Y.S.3d 354 (2019); Greater Bright
Light Home Care Services, Inc. v. Jeffries-El, 151 Ohio App.
Div. 3d 818, 824, 58 N.Y.S.3d 68 (2017) (‘‘cause of action
alleging conversion cannot be predicated on a mere
breach of contract’’ [internal quotation marks omitted]).
In count four of its complaint, the plaintiff incorpo-
rated the prior three counts, including the breach of
contract count, and alleged, in one paragraph, that the
defendants engaged in conversion because ‘‘[the plain-
tiff], being the owner and entitled to the possession
and payment of its share of the settlement funds from
the UBS litigation and the sums advanced by [the plain-
tiff] in connection with the UBS litigation, made demand
for payment of the sums to which it is entitled, and the
defendants . . . including . . . Schepis and Canelas,
have refused and neglected to return and pay over to
[the plaintiff] the sums to which it is entitled and, with-
out authority from [the plaintiff], converted the same
to their own use.’’ The court rejected the plaintiff’s
conversion claim and rendered judgment on that count
in favor of the defendants because, in relevant part:
‘‘The plaintiff had a contractual right to be paid certain
sums of money pursuant to the CSA. It had neither
ownership nor possession of the money itself. . . .
Here, the property was neither specific nor did the
plaintiff have possession or control of the settlement
of proceeds prior to the defendants’ conduct. The plain-
tiff has ple[aded] and proven a breach of contract claim;
without more, that claim does not establish conver-
sion.’’ (Citations omitted.)
We need not decide whether the court properly deter-
mined that the plaintiff failed to prove conversion on
the basis that the UBS litigation proceeds were a specifi-
cally identifiable interest because we agree with the
court that the plaintiff’s conversion claim is merely a
recasting of its breach of contract claim. The plaintiff’s
conversion claim seeks the same damages as the breach
of contract claim, namely, its proportionate share of
the UBS litigation proceeds. The plaintiff’s conversion
claim also alleges the same breach of duty, essentially,
the defendants’ obligation pursuant to the CSA and the
LPA to remit the UBS litigation proceeds to the plaintiff.
Accordingly, the plaintiff seeks to enforce the mandates
of the CSA and the LPA that the defendants remit its
share of the UBS litigation proceeds. In addition, the
plaintiff’s conversion claim is based on the exact allega-
tions as its breach of contract claim because the plain-
tiff’s complaint entirely incorporates the breach of con-
tract allegations into its count alleging conversion.
Indeed, on appeal, the plaintiff does not dispute the
court’s holding that its conversion claim was simply a
breach of contract claim. Therefore, we conclude that
the court properly determined that the plaintiff could
not prevail on its conversion claim.
V
The plaintiff also claims that the court improperly
granted the defendants’ motion to strike its Connecticut
statutory causes of action on the ground that those
claims are barred by § 12 of the CSA, which provides
in relevant part that ‘‘[a]ny disputes or litigation arising
out of this [a]greement shall be governed by New York
law.’’ The plaintiff argues that the court improperly
interpreted the plain language of § 12 of the CSA to
conclude that New York law applies so as to bar its
Connecticut statutory causes of action.24 We disagree.
The following additional facts and procedural history
are relevant to our resolution of this claim. On May 17,
2016, the defendants filed a motion to strike all seven
counts of the plaintiff’s complaint. The defendants
argued in their memorandum of law in support, in rele-
vant part, that counts five and six of the complaint,
which alleged Connecticut statutory causes of action
sounding in statutory theft and CUTPA, are barred by
the choice of law provision in § 12 of the CSA, which
provides in relevant part: ‘‘Any disputes or litigation
arising out of this [a]greement shall be governed by
New York law.’’ On June 8, 2016, the plaintiff filed a
memorandum of law in opposition to the defendants’
motion to strike in which it argued that the choice of
law provision was not broad enough to preclude the
Connecticut statutory causes of action.
On June 20, 2016, a hearing was held on the defen-
dants’ motion to strike, at which the parties advanced
arguments consistent with their written memoranda.
At the conclusion of the hearing, the court issued an
oral ruling granting the defendants’ motion to strike as
to counts five and six, and denying the motion as to
the remainder of the counts. The court compared and
contrasted several decisions cited by the parties and
concluded that although § 12 of the CSA, the choice of
law provision ‘‘is not quite as broad’’ as compared to
other similar cases, ‘‘it is still quite broad. It is difficult
to see how the specific claims alleged in counts five
and six being litigated in this case do not arise out of
the [CSA]. Those counts have as the center of the alleged
wrongful conduct of the defendants various wrongful
[conduct] and schemes that would further their efforts
to withhold from the [plaintiff] the amount the [plaintiff]
claim[s] [is] due under the CSA. As such, while those
counts do not rest on the validity, construction, and
enforcement of the agreement, they do arise out of the
obligations of the defendants that emanate from that
agreement. Sophisticated parties advised by sophisti-
cated counsel chose to have all such disputes governed
by New York law.’’ The court, thus, determined that the
plaintiff could not bring Connecticut statutory actions
against the defendants because, pursuant to § 12 of
the CSA, New York law applied to the dispute among
the parties.
We next set forth the standard of review and legal
principles relevant to this claim. We afford plenary
review to this claim because it stems from the court’s
decision granting a motion to strike; Levin v. State, 329
Conn. 701, 706, 189 A.3d 572 (2018); and requires us
to interpret definitive contract language; see Joseph
General Contracting, Inc. v. Couto, supra, 317 Conn.
575. We incorporate the New York principles of contract
interpretation as outlined in part I of this opinion.25
Pursuant to New York law, the applicability of a
choice of law clause to a particular claim is entirely
dependent on the exact language of the clause and the
nature of the claim. For instance, ‘‘[u]nder New York
law . . . tort claims are outside the scope of contrac-
tual choice-of-law provisions that specify what law gov-
erns construction of the terms of the contract . . . .’’
(Citation omitted; internal quotation marks omitted.)
Coco Investments, LLC v. Zamir Manager River Ter-
race, LLC, Docket No. 600137-2008, 2010 WL 761237,
*5 n.1 (N.Y. Sup. March 3, 2010) (decision without pub-
lished opinion, 907 N.Y.S.2d 99 [N.Y. Sup. 2010]); see,
e.g., Twinlab Corp. v. Paulson, 283 A.D. 2d 570,
571, 724 N.Y.S.2d 496 (2001) (choice of law clause appli-
cable to ‘‘validity, interpretation, construction and per-
formance’’ of consulting agreement did not apply to
‘‘tort cause of action [that] was based on the appellant’s
alleged criminal activities, which were unrelated to his
duties as a consultant’’ [internal quotation marks
omitted]).
On the other hand, ‘‘the use of ‘arising out of’ language
in a contract is considered unambiguous and viewed
as reasonably supporting only a broad reading. For
example, in the arbitration context, the language ‘aris-
ing out of’ a specified contract is considered ‘broadly
worded, and hence, encompasses [a plaintiff’s] claims
of fraudulent inducement directed at the agreement
itself.’ ’’ Nycal Corp. v. Inoco PLC, Docket No. 98-7058,
1998 WL 870192, *2 (2d Cir. December 9, 1998) (decision
without published opinion, 166 F.3d 1201 [2d Cir. 1998]).
‘‘The same analysis of the phrase ‘arising out of’ is found
in insurance law cases.’’ Id., *3; see, e.g., Turtur v.
Rothschild Registry International, Inc., 26 F.3d 304,
309–10 (2d Cir. 1994) (choice of law clause applicable
to ‘‘any controversy or claim arising out of or relating
to this contract or breach thereof’’ was ‘‘sufficiently
broad to cover tort claims as well as contract claims’’
[emphasis omitted]); Capital Z Financial Services
Fund II, L.P. v. Health Net, Inc., 43 A.D. 3d 100,
105, 109, 840 N.Y.S.2d 16 (2007) (choice of law clause
applicable to ‘‘ ‘all issues’ concerning ‘enforcement of
the rights and duties of the parties’ ’’ was broad enough
to cover tort claims).
In count five of its complaint, the plaintiff alleged,
among other things, that the CSA secured its legal own-
ership in the proceeds of the UBS litigation and that
the defendants, without any valid basis, permanently
deprived the plaintiff of those proceeds. The plaintiff
further alleged that the defendants used the UBS litiga-
tion proceeds for themselves and, thus, the defendants’
conduct constituted theft under Connecticut’s statutory
theft statute, § 52-564. In count six of its complaint, the
plaintiff alleged that the defendants repeatedly
breached the CSA, misappropriated the plaintiff’s share
of the UBS litigation proceeds, and commenced vexa-
tious and frivolous litigation and arbitration against the
plaintiff. The plaintiff alleged that the defendants’ con-
duct constituted unfair and deceptive trade practices
in violation of Connecticut’s CUTPA statute, General
Statutes § 42-110b (a).
We conclude that the relevant language of § 12 of the
CSA that ‘‘[a]ny disputes or litigation arising out of
this [a]greement shall be governed by New York law,’’
barred the plaintiff’s statutory theft and CUTPA causes
of action. The language ‘‘[a]ny disputes or litigation
arising out of this [a]greement’’ is broad. (Emphasis
added.) The language of this section does not apply
only to breach of contract causes of action, and we
decline to read it to give it that effect. If the parties
intended § 12 to apply only to a claim of breach of the
CSA, they could have included such language. Instead,
the parties agreed that New York law would apply to
any disputes or litigation arising out of the CSA.
In the present case, the plaintiff’s extracontractual
statutory causes of action arise out of the CSA because
the basis for both claims stems from the CSA. In count
five, the plaintiff alleged that the defendants withheld
and utilized for themselves the UBS litigation proceeds.
In count six, the plaintiff alleged that the defendants
breached the CSA and failed to provide the plaintiff its
share of the UBS litigation proceeds. The foundation
for both of these claims is the CSA and the defendants’
failure to remit the plaintiff’s share of the proceeds of
the UBS litigation secured thereby. Accordingly, both
of these counts constitute a dispute or litigation that
arises from the CSA and, thus, are barred by the parties’
agreement in § 12 of the CSA that New York law would
apply to such claims. Therefore, we conclude that the
court properly granted the defendants’ motion to strike
counts five and six of the plaintiff’s complaint.
VI
Having addressed the court’s conclusions as to the
viability of each of the plaintiff’s claims in its complaint
that are challenged on appeal, we now turn to the ques-
tion of which of the defendants are liable to the plaintiff
for its claims of breach of contract and the implied
covenant of good faith and fair dealing. The defendants
claim that the court improperly interpreted the CSA to
conclude that all of the defendants that were signatories
to the CSA—PIM, POF, PCM, Schepis, and Canelas—
were jointly and severally liable for nonpayment of the
UBS litigation. The defendants argue that, because pay-
ment of the UBS litigation was governed by the LPA,
not the CSA, only Northeast, as the general partner of
PCM at the time the UBS litigation was resolved, had
the obligation to remit the UBS litigation. The plaintiff
argues that the court’s conclusion was proper, yet, in
its cross appeal, it claims that all of the defendants
should be held liable pursuant to a piercing the corpo-
rate veil or alter ego theory, and that the court improp-
erly declined to consider these theories despite the fact
that they had been pleaded and briefed. We reject the
plaintiff’s piercing and alter ego claims, and we agree
with the defendants that the court improperly con-
cluded that all of the defendant signatories to the CSA
are liable. We, however, conclude that PIM, PCM, and
Northeast are liable for the nonpayment of the UBS
litigation proceeds.
A
The plaintiff claims that the court improperly
declined to consider its piercing the corporate veil and
alter ego theories. It argues that, if the court had consid-
ered these theories, it would have determined that all
of the defendants were liable for nonpayment of the
UBS litigation proceeds. We disagree with the plaintiff’s
interpretation of the trial court’s judgment.
‘‘The interpretation of a trial court’s judgment pre-
sents a question of law over which our review is plenary.
. . . As a general rule, judgments are to be construed
in the same fashion as other written instruments. . . .
The determinative factor is the intention of the court
as gathered from all parts of the judgment. . . . Effect
must be given to that which is clearly implied as well
as to that which is expressed. . . . The judgment
should admit of a consistent construction as a whole.’’
(Internal quotation marks omitted.) Olson v. Moham-
madu, 310 Conn. 665, 682, 81 A.3d 215 (2013). ‘‘[A]
trial court opinion must be read as a whole, without
particular portions read in isolation, to discern the
parameters of its holding.’’ (Internal quotation marks
omitted.) In re Jacob W., 330 Conn. 744, 782, 200 A.3d
1091 (2019) (D’Auria, J., dissenting).
The following additional procedural history is rele-
vant to this issue. In its complaint, the plaintiff alleged,
in describing the relevant parties, that ‘‘[t]he defendant
entities are all owned or controlled by the defendants
Schepis and Canelas’’; that ‘‘[a]ll of the defendant enti-
ties, and nonparty Pursuit Management, are part of the
Pursuit Hedge Fund Group, a self-described ‘unitary
enterprise’ under the exclusive control of two individu-
als . . . Schepis and Canelas’’; that ‘‘[t]he Pursuit
Hedge Fund Group includes Pursuit Partners and PIM—
both of which are wholly owned and controlled by
Schepis and Canelas’’; that ‘‘[a]t all relevant times . . .
Schepis and Canelas controlled and continue to control
each of the corporate defendants, and Schepis and
Canelas are alter egos of each of the entities they con-
trol’’; that ‘‘Schepis and Canelas have stated in court
filings, including in the UBS litigation, that the Pursuit
entities operate as a ‘unitary enterprise’ and are oper-
ated as a single entity’’; and that ‘‘[t]he structure of the
Pursuit entities is completely integrated.’’
In its memorandum of decision in which it rendered
judgment partially in favor of the plaintiff, the court
held that ‘‘[t]he nonsignatory defendants, other than
Northeast, cannot be held liable to the plaintiff for
breach of a contract or an implied covenant in that
contract to which they are not a party. Notably, the
plaintiff did not plead a count against any of these
defendants sounding in a piercing of the corporate veil
or alter ego [theory]. The plaintiff seems to rely upon
the finding by the court in the UBS litigation; [Pursuit
Partners, LLC v. UBS AG, Superior Court, judicial dis-
trict of Stamford-Norwalk, Complex Litigation Docket,
Docket No. CV-XX-XXXXXXX-S (July 3, 2014) (58 Conn. L.
Rptr. 501)]; concerning the interrelationship and unitary
nature of the various Pursuit hedge fund entities, but
the determination of the court in its decision to recon-
sider its prior ruling dismissing the action was a deter-
mination that related to the standing of the plaintiff[s]
[in that action]. Nothing in that decision implies or
suggests that the same concepts are applicable or con-
trol the decision of whether or not nonsignatory defen-
dants are liable for the conduct of the signatory defen-
dants. Indeed, the standards discussed by the court in
its memorandum of decision are quite foreign to the
traditional standards applied in New York and Connecti-
cut with regard to piercing a corporate veil.’’ Neverthe-
less, the court utilized the plaintiff’s unitary enterprise
theory to conclude that all of the defendants that had
signed the CSA were liable. The court held that ‘‘[t]he
evidence is clear that all of the Pursuit entities were
controlled by Schepis and Canelas in a variety of capaci-
ties. Indeed, in the UBS litigation, [the plaintiffs] took
the position that the Pursuit entities were, and the UBS
court found that, the various Pursuit entities constituted
a ‘unitary set of tightly related entities all working for
a common purpose . . . .’ [Pursuit Partners, LLC v.
UBS AG, supra, 502]. The evidence before this court is
consistent with that finding.’’
In the present case, construing the court’s judgment
as a whole, it is apparent that the court, although recog-
nizing that the plaintiff had not separately pleaded these
theories, had considered and rejected the plaintiff’s
piercing the corporate veil and alter ego theories. The
court rejected the plaintiff’s theories on the ground
that the plaintiff’s reliance on the holding of Pursuit
Partners, LLC v. UBS AG, supra, 58 Conn. L. Rptr. 501,
was inapposite. In that decision, the Superior Court,
after reconsideration, vacated its prior dismissal of the
UBS litigation and held that Pursuit Partners and PIM
had standing to pursue a claim against the defendants
in that action because the ‘‘unitary interest as described
by [the testimony presented] concerning fees and per-
centages based upon the funds would support a color-
able claim of direct injury to the plaintiff[s] in an individ-
ual or representative capacity.’’ Id., 506. In the present
case, the court determined that the issue of whether
Pursuit Partners and PIM had standing to pursue an
action against the defendants in the UBS litigation is
distinct and does not provide a basis for an alter ego or
piercing the corporate veil claim against the defendants
who had not signed the CSA.
Although the court did not engage in a discussion of
each and every element of the plaintiff’s theories, as
the plaintiff maintains it should have done, there is
no question that it considered and rejected them. We
recognize that ‘‘[t]rial court judges operate under tre-
mendous time pressure and without the resources avail-
able to [our Supreme Court] and the Appellate Court.’’
In re Jacob W., supra, 330 Conn. 782 (D’Auria, J., dis-
senting). This is especially true in cases, as in the pres-
ent, which involve complicated factual scenarios and
a multitude of legal theories asserted by both sides.
Therefore, we conclude that the court had considered
and rejected the plaintiff’s piercing the corporate veil
and alter ego theories.
B
The defendants claim that the court improperly inter-
preted the CSA to conclude that the defendants who
were signatories to the CSA—PIM, POF, PCM, Schepis,
and Canelas—as well as Northeast, as the successor
general partner of PCM, were liable for nonpayment of
the UBS litigation. They argue that, because payment
of the UBS litigation was governed by the LPA, not the
CSA, only Northeast had the obligation to remit the
UBS litigation. We agree that the court’s conclusion
was incorrect, but disagree with the defendants that
the proper interpretation of the LPA and CSA requires
that only Northeast be held liable for nonpayment of
the UBS litigation. For the following reasons, we con-
clude that PIM, PCM, and Northeast are liable for non-
payment of the UBS litigation.
We afford plenary review to this claim because it
requires us to interpret definitive contract language;
see Joseph General Contracting, Inc. v. Couto, supra,
317 Conn. 575; and we incorporate the New York princi-
ples of contract interpretation as outlined in part I of
this opinion.
The trial court first observed that § 4 of the CSA,26
which secured the contingent assets, ‘‘does not identify
which of the parties to the agreement is obligated to
make the payments required thereunder or in [any] way
suggest the rights and obligations set forth in [§] 4 are
rights and obligations that are in any way limited to
less than all of the parties to the CSA.’’ The court then
relied on the language of an opening paragraph to the
CSA, which provided: ‘‘NOW, THEREFORE, without
admission of fault or liability and for the sole purposes
of ending the New York [a]ction and the [a]rbitration
and resolving the claims that have been, or could have
been, asserted between and among the [p]arties, and
any other claims between them, in consideration of the
mutual promises made herein, the sufficiency of which
is hereby acknowledged, the [p]arties hereby agree as
follows . . . .’’ (Emphasis added.)
The court then reasoned that ‘‘[a]ll of the parties
understood the close working relationship between the
entities and that Schepis and Canelas controlled all the
entities. The CSA was executed as a way to settle claims
brought in a lawsuit and arbitration proceedings against
the individual parties to the CSA, which claims included
claims brought against Schepis and Canelas personally.
The court must conclude that all of the signatories were
undertaking the obligation to protect and ultimately pay
the plaintiff [its] interest in the contingent assets. Given
the lack of a specific obligor in [§] 4, the interrelation-
ship between the funds and the prior litigation/arbitra-
tion, the court concludes that the parties intended that
all of the defendants be obliged to perform the various
obligations contained therein. More importantly, that
is what the express language of the CSA says. . . .
‘‘All the parties made the mutual promises to each
other, and the plaintiff was releasing all of the defen-
dants for prior acts. It is simply an incorrect reading
of the language ‘the parties hereby agree’ as suggesting
that only some of the parties agree to the benefits and
obligations contained therein, particularly when there
is no specific language [in § 4]27 . . . that identifies a
particular party who is to perform a particular obli-
gation.
‘‘While [§] 4 of the CSA identifies PCM, as it must,
as the owner of the certain contingent assets, it does
not limit the obligation to comply with the terms of the
agreement to PCM. The parties were aware that PCM
and the other Pursuit entities could only act with the
consent of its general partner and, therefore, with the
consent of Schepis and Canelas, who controlled and
managed the general partner. In the absence of such
an express limitation, there is no reason to conclude
that the parties intended to limit the particular persons
or entities that were obliged to perform in a manner
that is contradictory to the broad and inclusive language
contained in the introductory paragraph. To suggest
otherwise is an unwarranted and tortured reading of
the CSA.’’ (Footnote added.)
We agree with the court that there was no express
limitation in § 4 of the CSA as to which of the defendants
had the obligation to remit the UBS litigation proceeds.
We disagree, however, with the court’s literal interpreta-
tion of ‘‘the [p]arties hereby agree as follows’’ language,
to hold all of the signatory defendants liable for each
and every obligation in the CSA. In accordance with
part I of this opinion, the proper interpretation of § 4
of the CSA is in consideration of the other provisions
of the CSA, the LPA, and the circumstances under which
the CSA was executed. Conversely, the court, in inter-
preting the same provision of the CSA to determine
which of the defendants were liable for the same non-
payment, failed to consider the LPA or the circum-
stances under which the CSA was executed. Although
not expressly provided for in the CSA, considering the
obligations set forth therein in the context of the LPA
and the relevant circumstances, the CSA imposes an
implied limitation as to which of the defendants were
liable for nonpayment of the UBS litigation.
First, under the circumstances, POF cannot be held
liable pursuant to § 4 of the CSA because POF was
unable to remit the UBS litigation proceeds to the plain-
tiff. In September, 2009, the plaintiff redeemed its
investment in POF, which extinguished its interest in
POF except for certain holdbacks to indemnify poten-
tial future expenses of POF. When the CSA was exe-
cuted, on or about April 8, 2011, the plaintiff had no
contingent interest in POF and, thus, the CSA did not
secure any interest. Rather, § 4 of the CSA secured the
plaintiff’s contingent interests in two assets that were
owned by PCM, not POF. POF, as a distinct hedge
fund from PCM, could not have paid the plaintiff the
proceeds of the UBS litigation because it had no interest
in PCM’s portion of the claim. Further, POF was not
a signatory to the LPA, which specifically mandated
payment as soon as practicable. Therefore, we disagree
with the court that POF is liable.
Likewise, we disagree with the court that Schepis
and Canelas are individually liable for nonpayment of
the UBS litigation proceeds. Although the court found
that Schepis and Canelas controlled all of the defendant
entities, it previously had rejected the plaintiff’s pierc-
ing the corporate veil and alter ego theories. See part
VI A of this opinion. Thus, pursuant to New York law,
Schepis and Canelas would be liable for nonpayment
of the UBS litigation proceeds only if they expressly
agreed to be individually liable. See J.N.K. Machine
Corp. v. TBW, Ltd., 155 A.D. 3d 1611, 1612, 65
N.Y.S.3d 382 (2017) (‘‘[a]ccording to the well settled
general rule, individual officers or directors are not
personally liable on contracts entered into on behalf of
a corporation if they do not purport to bind themselves
individually’’ [internal quotation marks omitted]); New
York Assn. for Retarded Children, Inc., Montgomery
County Chapter v. Keator, 199 A.D. 2d 921, 923,
606 N.Y.S.2d 784 (1993) (‘‘[i]t is well established that an
agent of a disclosed principal does not, absent express
agreement, become liable individually on a contract
relating to the agency’’); American Media Concepts,
Inc. v. Atkins Pictures, Inc., 179 A.D. 2d 446, 448,
578 N.Y.S.2d 193 (1992) (‘‘[i]n modern times most com-
mercial business is done between corporations, every-
one in business knows that an individual stockholder
or officer is not liable for his corporation’s engagements
unless he signs individually, and where individual
responsibility is demanded the nearly universal practice
is that the officer signs twice—once as an officer and
again as an individual’’ [internal quotation marks
omitted]).
Here, Schepis and Canelas signed the CSA in their
personal capacities and on behalf of the corporate sig-
natory defendants. Schepis and Canelas signed the CSA
individually because that agreement was executed to
resolve the 2010 New York action filed against them.
As the court recognized, there is no express provision
that obligated Schepis and Canelas to be responsible
to remit the UBS litigation proceeds, and, thus, they
cannot be held individually liable under that agreement.
Furthermore, the fact that Schepis and Canelas signed
the CSA in their individual capacities, alone, does not
support the imposition of individual liability because
the CSA does not mandate payment. Instead, it is the
CSA read in conjunction with the LPA that obligated
payment. Schepis and Canelas had not entered into the
LPA in their individual capacities; instead, they exe-
cuted the agreement as managing members of Pursuit
Management,28 which was the general partner of PCM
at the time the LPA was executed. There is no express
provision in the LPA that mandates that Schepis and
Canelas make payments as soon as practicable in their
individual capacities; rather, the withdrawal provision
at issue obligates the general partner of PCM to remit
withdrawals. In the absence of an express agreement
by Schepis and Canelas to undertake an individual obli-
gation in either the CSA or the LPA to remit the UBS
litigation proceeds as soon as practicable, they cannot
be held individually liable.
Consistent with the foregoing, the language of both
agreements, viewed under the circumstances, demon-
strates that the defendants that are liable for nonpay-
ment are those that both undertook an obligation, and
had the ability, to pay the UBS litigation proceeds.
Those defendants are PCM, PIM, and Northeast. Under
both the CSA and the LPA, PCM, as the owner of the
interest in the UBS litigation at issue, and Northeast,
as the general partner of PCM, undertook an obligation
to remit the proceeds as soon as practicable after they
were realized. On receipt of these proceeds, both PCM
and Northeast had the ability to remit to the plaintiff
its share as soon as practicable. Furthermore, PIM had
an ability to pay the UBS litigation proceeds because
it had remitted both the settlement payment and the
redemption payment on behalf of the defendants,
including PCM, pursuant to the CSA. Indeed, this ability
is evinced by the April 28, 2011 letter in which PIM
informed the remaining investors in PCM that it was
effectuating a mandatory withdrawal of the plaintiff
pursuant to the recent execution of the CSA. There is
no finding suggesting that PIM no longer had the ability
or authority to remit payments to the plaintiff on behalf
of PCM. Therefore, we conclude that PCM, PIM, and
Northeast are liable for their failure to remit to the
plaintiff its proportionate share of the UBS litigation
proceeds.
VII
The seventh issue presented is whether the court
properly determined the amount of damages. The plain-
tiff and the defendants respectively advance a two-
prong challenge to the court’s damages award. The
defendants claim that the court erroneously awarded
damages because it (1) failed to reduce PCM’s share
of the UBS litigation proceeds by 10 percent to account
for PCM Master’s other investor, which the parties and
the court referred to as PCM offshore, and (2) failed
to account for a performance fee reduction from the
UBS litigation proceeds. The plaintiff claims that the
court erroneously awarded damages because it improp-
erly permitted the defendants to retain the remainder
of the UBS litigation holdback, and erroneously found
that the division of the UBS litigation proceeds to be
52.8 percent to PCM Master and 47.2 percent to POF
Master. We reject all of the parties’ claims and conclude
that the court properly determined the amount of
damages.
Before reaching the parties’ claims, we first set forth
the court’s calculation of damages. As set forth pre-
viously, the gross UBS litigation settlement amount was
$36 million. After deducting $6.9 million for attorney’s
fees incurred in pursuing the UBS litigation, the net
proceeds from the UBS litigation were $29.1 million.
The $29.1 million was then divided between PCM Mas-
ter and POF Master because both hedge funds had
purchased the CDOs from UBS. The court determined
that PCM Master was entitled to 52.8 percent and POF
Master was entitled to 47.2 percent of those net
proceeds.
The court determined, however, that the plaintiff was
entitled to only a portion of PCM Master’s percentage
because the plaintiff was invested in PCM, which was
invested in PCM Master, and § 4 of the CSA explicitly
applied to PCM’s share of the UBS litigation proceeds.
The court calculated PCM Master’s portion of the net
proceeds, 52.8 percent of the $29.1 million net proceeds,
to equal $15,364,800. The court further determined that
PCM was the sole investor and owned 100 percent of
PCM Master and, thus, PCM owned the entirety of the
$15,364,800 owned by PCM Master. Accordingly,
because the plaintiff’s pro rata share of PCM was
32.083612 percent, the court calculated the plaintiff’s
interest in the UBS litigation proceeds to be $4,929,582.
We next set forth the standard of review applicable
to all four of the parties’ damages related claims. ‘‘The
trial court’s findings are binding upon this court unless
they are clearly erroneous in light of the evidence and
the pleadings in the record as a whole . . . . A finding
of fact is clearly erroneous when there is no evidence
in the record to support it . . . or when although there
is evidence to support it, the reviewing court on the
entire evidence is left with the definite and firm convic-
tion that a mistake has been committed. . . .
‘‘In applying the clearly erroneous standard of review,
[a]ppellate courts do not examine the record to deter-
mine whether the trier of fact could have reached a
different conclusion. Instead, we examine the trial
court’s conclusion in order to determine whether it
was legally correct and factually supported. . . . This
distinction accords with our duty as an appellate tribu-
nal to review, and not to retry, the proceedings of the
trial court. . . .
‘‘[I]n a case tried before a court, the trial judge is the
sole arbiter of the credibility of the witnesses and the
weight to be given specific testimony. . . . The credi-
bility and the weight of expert testimony is judged by
the same standard, and the trial court is privileged to
adopt whatever testimony [it] reasonably believes to
be credible. . . . On appeal, we do not retry the facts or
pass on the credibility of witnesses.’’ (Citations omitted;
internal quotation marks omitted.) FirstLight Hydro
Generating Co. v. Stewart, 328 Conn. 668, 679–80, 182
A.3d 67 (2018). Finally, to the extent that we are required
to interpret the court’s judgment, our review is plenary.
See Joseph General Contracting, Inc. v. Couto, supra,
317 Conn. 575.
A
The defendants first claim that the court failed to
reduce PCM’s share of the UBS litigation proceeds by
10 percent to account for PCM Master’s other investor,
PCM offshore. The defendants argue that the court erro-
neously found that PCM owned 100 percent of PCM
Master, when the evidence demonstrated that PCM off-
shore, which is another entity controlled by Schepis
and Canelas, owned 10 percent of PCM Master. The
defendants contend that the damages award should be
reduced because PCM owned only 90 percent of the
net UBS litigation proceeds owned by PCM Master.
We disagree.
In the present case, the trial court rejected the defen-
dants’ 10 percent claim, reasoning that: ‘‘By April, 2010,
all of the investors of PCM Master other than PCM
had redeemed. On May 6, 2009, Schepis and Canelas
deposited $1,100,000 into the PCM Master account. This
arguably became the only other investment in PCM
Master other than PCM. It is this deposit which forms
the basis for the defendants’ claim that PCM is entitled
only to 90 percent interest in the proceeds to which
PCM Master is entitled. There are several problems with
the claim of the defendants. First, the deposit was made
after all other investors in PCM Master other than PCM
had redeemed; second, the deposit was made after the
CDOs had been purchased and after [the UBS litigation]
had been instituted; and third, the deposit amounted
to little more than parking cash, which Schepis and
Canelas retained complete control over in order to
assert a claim for a percentage of the UBS [litigation]
proceeds. This is verified by the fact that in excess of
$1,100,000 was withdrawn from the PCM Master
account by August, 2010 (eight months before the CSA
had been signed). Essentially, the defendants claim that
Schepis and Canelas could gain an interest in a valuable
claim (which other investors were pledging substantial
assets to prosecute) by parking cash in an account after
the fact, which cash could be withdrawn or moved
without any risk, or at least without risk comparable
to that involved in the CDO transactions which gave
rise to the UBS litigation. The claim strains credibility.
It was an investment after the initial risk had been taken
and was withdrawn before the CSA had been executed.
It was managed independent of any risk participated
in by the PCM investors. To the extent that PCM Master
chose to make investments utilizing the cash, any such
returns were not shared by the PCM investors. The
second problem with the defendants’ position is that
the defendants had not been forthcoming in their com-
pliance with the court’s discovery orders, both in terms
of the timeliness of that compliance and in terms of
the completeness of that compliance, which hampers
their credibility as to this issue. The records and the
testimony are simply not supportive of the defen-
dants’ position.
‘‘Finally, Schepis’ testimony as to this issue is not
particularly credible either. His explanations were not
complete. They were inconsistent and varied from his
earlier testimony during the [prejudgment remedy] pro-
ceedings.’’
In short, the court rejected the defendants’ argument
on the basis of its findings regarding the lack of credibil-
ity of the defendants’ position regarding the $1.1 million
deposit, their failure to comply fully with discovery,
and the lack of credibility of Schepis’ testimony. The
court specifically cited evidence that Schepis and
Canelas, through PCM offshore, made their investment
in PCM Master after the CDOs had been purchased,
after the CDOs had lost value, and after the UBS litiga-
tion had been commenced. Most significantly, the court
found, on the basis of the evidence, that the investment
was withdrawn prior to the execution of the CSA. All
of this evidence supports the court’s finding that PCM
was the sole investor in PCM Master and, thus, PCM
was entitled to all of PCM Master’s share of the proceeds
from the settlement of the UBS litigation. Further, to
the extent that the court’s decision is founded on its
credibility determinations, we cannot second-guess
those determinations on appeal. See FirstLight Hydro
Generating Co. v. Stewart, supra, 328 Conn. 679–80.
Therefore, we conclude that the court’s finding that the
defendants’ 10 percent claim failed was not clearly
erroneous.
B
The defendants next claim that the court failed to
account for a performance fee reduction from the UBS
litigation proceeds. The defendants’ argument on
appeal is the same one that they made before the trial
court: the LPA provides that the general partner of PCM,
Northeast at the time, was entitled to a 20 percent
performance fee for net economic profit. They argue
that, because the LPA governed the UBS litigation and
the UBS litigation proceeds were net economic profit,
Northeast was entitled to 20 percent of those proceeds.
The plaintiff’s argument before us is also the same one
as it made before the trial court: the UBS litigation
proceeds did not constitute net economic profit
because those proceeds only partially recouped prior
substantial losses incurred in connection with the
CDOs.
The court agreed with the plaintiff. It concluded that
the UBS litigation proceeds did not represent a net
economic profit but merely were a return of part of
PCM’s investment. Consequently, the court determined
that Northeast was not entitled to a performance fee.
We agree with the court.
Because the defendants do not challenge the court’s
factual finding that the UBS litigation proceeds consti-
tuted a net loss, we exercise plenary review over the
defendants’ claim because it requires us to interpret
the definitive language of the LPA, which is a pure
question of law. See Joseph General Contracting, Inc.
v. Couto, supra, 317 Conn. 575.
Section 4.02 of the LPA, titled ‘‘Allocation of Net
Income,’’ governs the allocation of net profits and
losses. Section 4.02 (a) provides in relevant part:
‘‘[T]here shall be a provisional allocation of net profits
. . . or net losses . . . for each calendar year (or other
accounting period), to all [p]artners in proportion to
the [c]apital [a]ccounts as of the beginning of such
period: then, at the end of the calendar year or upon a
withdrawal of a limited partner, 20 [percent] of the
[l]imited [p]artner’s [s]hare of [c]umulative [f]iscal
[p]eriod [n]et [e]conomic [p]rofit . . . provisionally
allocated to each [l]imited [p]artner for the calendar
year . . . allocated to such [l]imited [p]artner’s [c]api-
tal [a]ccount since the last reallocation of net profits
. . . shall be reallocated to the [g]eneral [p]artner.’’
Section 1.01 (ab) of the LPA defines ‘‘[s]hare of
[c]umulative [f]iscal [p]eriod [n]et [e]conomic [p]rofit’’
to mean, in relevant part, ‘‘with respect to each [l]imited
[p]artner, an amount determined as of the end of any
[a]ccounting [p]eriod including the end of the [f]iscal
[y]ear . . . equal to the sum of the amounts (positive
or negative) of [n]et [i]ncome or [n]et [l]oss allocable
to such [l]imited [p]artner . . . subject to the following
modifications. If a [l]imited [p]artner’s [s]hare of
[c]umulative [f]iscal [p]eriod [n]et [e]conomic [p]rofit
for any [a]ccounting [p]eriod shall be a loss—(i.e., nega-
tive amount), then such loss shall carry forward into
the next [a]ccounting [p]eriod (and. if necessary, into
succeeding [a]ccounting [p]eriods) and will reduce such
[l]imited [p]artner’s [s]hare of [c]umulative [f]iscal
[p]eriod [n]et [e]conomic [p]rofit i[f] any, in such next
(or succeeding) [a]ccounting [p]eriod.’’ (Internal quota-
tion marks omitted.)
The court interpreted the foregoing language to mean
that ‘‘the limited partner’s share of cumulative fiscal
period net economic profits pursuant to the express
terms of the LPA must include prior losses that are
carried forward into the next accounting period.’’ The
court then reasoned that the profits and losses incurred
by the plaintiff as a limited partner in PCM prior to the
execution of the LPA on April 1, 2009, including the
profits and losses associated with the CDOs purchased
from UBS, carried forward. The court relied on § 2.01
of the LPA, which provides that the parties agreed ‘‘to
form and continue the [p]artnership as a limited part-
nership . . . .’’ (Emphasis added.) The court also relied
on § 3.09 of the LPA, which provides in relevant part:
‘‘Each [p]artner’s [c]apital [a]ccount shall consist ini-
tially of the amount of cash and agreed net fair market
value of any other property which it has contributed
to the [p]artnership as a [c]apital [c]ontribution upon
its admission to the partnership . . . .’’ (Emphasis
added.)
The court then held that, ‘‘[i]n effect, the [plaintiff]
experienced a substantial loss in [its] PCM investment
as a result of the defendants’ decision to purchase the
UBS CDOs (through PCM Master). The settlement of
the UBS litigation did not result in a net economic profit;
rather it represented a recoupment of part of the loss
that PCM had earlier experienced. [Northeast] is not
entitled to a performance fee based upon profit because
it managed to recoup some of the value that it had
previously lost. The language of the LPA does not so
provide and actually states the opposite.’’ (Footnote
omitted.)
We conclude that the court’s interpretation is legally
and logically correct. Sections 4.02 (a) and 1.01 (ab) of
the LPA, when read together, provide that a limited
partner’s share of cumulative fiscal period net economic
profit of PCM includes past losses that were incurred
by PCM. Sections 2.01 and 3.09 of the LPA contemplate
that these past losses were carried forward from prior
to the execution of the LPA. Thus, the LPA definitively
provides that losses incurred by a limited partner prior
to the execution of the LPA are to be taken into account
when determining cumulative fiscal period net eco-
nomic profit.
In accordance with the foregoing, the court held that
the UBS litigation proceeds represented a recoupment
of part of the loss that PCM previously had experienced.
In essence, the court determined that the UBS litigation
proceeds did not constitute a net profit because those
proceeds failed to exceed the losses incurred as a result
of the purchase and subsequent devaluation of the
CDOs. Consequently, because the UBS litigation pro-
ceeds constituted a partial recoupment of prior losses,
not a net profit, Northeast was not entitled to deduct
a performance fee therefrom. Therefore, we conclude
that the court properly rejected the defendants’ perfor-
mance fee claim.
C
The plaintiff claims that the court improperly permit-
ted the defendants to retain the remainder of the UBS
litigation holdback. The plaintiff maintains that the
court found that the $250,000 holdback designated by
the CSA to cover expenses incurred in connection with
the UBS litigation had not been exhausted. Conse-
quently, the plaintiff argues that the court erroneously
failed to award damages for the remainder of the unused
UBS litigation holdback. We disagree.
It is undisputed that, pursuant to § 3 of the CSA, the
plaintiff was entitled to any unused portion of the UBS
litigation holdback. Section 3 (b) (i) of the CSA provides
that the redemption payment owed to the plaintiff was
‘‘less a holdback in the amount of $250,000 for the
purpose of funding necessary costs (other than plaintiff
counsel’s attorneys fees through trial) associated with
the ongoing [UBS litigation] . . . .’’ Section 3 (b) (ii)
provides that ‘‘PIM represents and warrants that the
holdbacks referenced in [§] 3 (b) (i) reflect [the plain-
tiff’s] pro rata share of the holdbacks that will be
assessed with respect to current investors in PCM as of
February 28, 2011, and further represents and warrants
that use of the holdbacks will be limited to the purposes
set forth in [§] 3 (b) (i) and that no part of any prior
holdback presently maintained by either of the [f]unds
. . . shall be used in connection with the UBS [l]itiga-
tion.’’ Section 3 (b) (ii) further provides that ‘‘[the plain-
tiff] shall . . . be entitled to periodic updates on the
status of the holdbacks,’’ that the plaintiff will be pro-
vided with the opportunity to pay for additional
expenses if the holdback is insufficient, and that the
plaintiff’s interest in the UBS litigation would be extin-
guished if it failed to pay for such additional expenses.
The court did not address separately whether the
plaintiff was entitled to a portion, if any, of the
remaining UBS litigation holdback. The court’s dam-
ages award also did not include any additional funds
that could be attributed to a portion of the UBS litigation
holdback. As set forth previously, the entirety of the
court’s damages award equaled the sum of the plaintiff’s
pro rata share of PCM’s interest in the net proceeds of
the UBS litigation, plus interest.
Nevertheless, the court, in a different part of its deci-
sion, rejected the defendants’ argument that they were
permitted to deduct post-CSA expenses from the UBS
litigation proceeds. It held, in relevant part: ‘‘The plain-
tiff’s obligation to pay post-CSA expenses for the UBS
litigation was limited to $250,000, as [its] proportionate
share of those expenses. The plaintiff was not obligated
to contribute anymore for expenses unless [it], along
with other investors, [was] given the voluntary opportu-
nity under the express language of the CSA. The plaintiff
was never asked to contribute more to those additional
expenses. Moreover, there is insufficient evidence for
the court to conclude that the $250,000 holdback specif-
ically earmarked for UBS [litigation] expenses was
insufficient to satisfy the plaintiff’s obligation for those
expenses. The post-CSA expenses incurred as a result
of the UBS litigation would have to have exceeded
approximately $1,500,000 in order for the plaintiff’s
$250,000 holdback to be insufficient to cover its propor-
tionate share of expenses. The evidence does not indi-
cate that the post-CSA expenses exceeded that
amount.’’ (Footnote omitted.)
The plaintiff argues that the court concluded that the
UBS litigation holdback had not been exhausted and,
thus, it erroneously failed to award it damages equal
to the remainder. We disagree with the plaintiff’s inter-
pretation of the court’s judgment.
The court definitively concluded that there was
insufficient evidence to conclude that the UBS litiga-
tion holdback had been exhausted. This is critically
different from the inverse conclusion that the plaintiff
draws, namely, that there was sufficient evidence to
establish that the UBS litigation had not been
exhausted. In short, the court concluded that it was
unable to determine whether the holdback had been
exhausted, not that the evidence demonstrated that the
holdback had not been exhausted. Indeed, the plaintiff
recognized this point in its principal appellate brief: ‘‘If
the trial court intentionally omitted the holdback from
the judgment, it could have only been for one reason:
it was impossible to quantify how much [the plaintiff]
was entitled to receive back because [the court] found
that ‘there is insufficient evidence’ before it to conclude
how much of the holdback had been legitimately
used.’’29
In light of the court’s conclusion that there was
insufficient evidence to establish whether the holdback
had been exhausted, and in the absence of any discus-
sion by the court as to whether the plaintiff was entitled
to a portion of the UBS litigation holdback, we reject
the plaintiff’s claim.
D
The plaintiff also claims that the court erroneously
found the division of the net UBS litigation proceeds
to be 52.8 percent to PCM Master and 47.2 percent to
POF Master. The plaintiff argues that the court’s finding
as to the division of those proceeds between PCM Mas-
ter and POF Master was erroneous because the court
relied on the defendants’ calculation, which allegedly
was incomplete as a result of the defendants’ purported
failure to comply fully with discovery regarding this
issue. The plaintiff contends that the trial court should
have drawn an adverse inference against the defendants
for their discovery misconduct, and held that the proper
division of the net UBS litigation proceeds should have
been 56.23 percent to PCM Master and 43.77 percent
to POF Master. We disagree.
The court made its division of the UBS litigation
between PCM Master and POF Master on the basis of
the following findings. ‘‘The defendants . . . claim that
the net proceeds need to be divided 52.8 percent to
PCM Master and 47.2 percent to POF Master. The court
agrees with the defendants in this regard. The CSA
clearly indicated that the plaintiff was only entitled to
PCM’s interest. (PCM, of course, had no interest in
POF Master). The plaintiff had earlier withdrawn and
redeemed its interest in POF and the CSA contains a
broad release concerning any claims arising out of the
redemption of the plaintiff’s interest in POF. At the time
the plaintiff executed the CSA, the UBS litigation had
already begun and the amended complaints in that case
expressly claimed that both PCM Master and POF Mas-
ter had purchased the troubled CDOs from UBS. The
evidence presented to this court established that the
ratio of those purchases between PCM Master and POF
Master are consistent with the defendants’ claims. That
evidence consisted [of] testimony from Berg Simpson,
[which was a Colorado law firm that pursued the UBS
litigation on behalf of Pursuit Partners and PIM], con-
cerning the nature of the claims made in the UBS litiga-
tion, the actual trade tickets evidencing the transac-
tions, the amended complaints in the UBS [litigation],
which set forth the transactions by which both PCM
Master and POF Master acquired the CDOs. The evi-
dence also demonstrated that the expenses that were
incurred in pursuing the UBS litigation were borne in
relatively equal amounts by both PCM Master and POF
Master. While the [plaintiff] assert[s] that the defen-
dants lack credibility in this regard because Schepis
and Canelas have an interest in moving as large a per-
centage to POF Master as possible because they have
a significantly greater interest in POF Master than PCM
Master, the court finds the evidence presented suffi-
cient to sustain its finding. Accordingly, the court finds
that PCM Master’s interest in the net settlement pro-
ceeds was 52.8 percent, or $15,364,800.’’
On appeal, the plaintiff asks this court to override
the court’s credibility assessments and its weighing of
the evidence, which we cannot do. See FirstLight
Hydro Generating Co. v. Stewart, supra, 328 Conn.
679–80. The court specifically rejected the plaintiff’s
credibility challenge to the position taken by the defen-
dants; on appeal, we cannot second-guess such an
assessment. Likewise, to the extent that the plaintiff
challenges the court’s reliance on the evidence specifi-
cally credited in support of its findings, we cannot dis-
credit that evidence on appeal. Further, after review
of the evidence cited by the court in support of its
conclusion, we conclude that such testimony and exhib-
its were sufficient to support the court’s conclusion.
Moreover, the plaintiff requests that this court
reverse the trial court’s decision with respect to the
division of the UBS litigation proceeds because it failed
to impose a negative inference against the defendants
for their failure to comply fully with discovery on this
issue. See Glinski v. Glinski, 26 Conn. App. 617, 623, 602
A.2d 1070 (1992) (‘‘[w]hile the trial court may certainly
draw adverse inferences from the failure of a party to
submit the required financial information, it is under
no obligation to do so’’ [emphasis added]); see also
Szegda v. Szegda, 97 Conn. App. 426, 430, 904 A.2d
1266, cert. denied, 280 Conn. 932, 909 A.2d 959 (2006).
The plaintiff made the exact same argument to the trial
court and it necessarily was rejected because the court
did not draw such an inference. While the trial court
was permitted to draw such an inference, we decline
to reverse that discretionary judgment on appeal. The
trial court was in the best position to assess the extent
to which the defendants produced credible evidence
on this issue, and it clearly concluded that the evidence
produced by the defendants was sufficient to support
its conclusion. Therefore, we conclude that the court’s
finding as to the division of the net proceeds of the
UBS litigation was not clearly erroneous.
In sum, we conclude that the court properly deter-
mined the amount of damages.
VIII
The defendants next claim that the court improperly
granted the plaintiff’s motion to increase the amount
of the prejudgment remedy. The defendants argue that
the filing of an appeal, without more, did not constitute
a sufficient basis for the court to modify, pursuant to
§ 52-278k, the existing prejudgment remedy. We
disagree.
The following additional procedural history is rele-
vant to our resolution of this claim. On June 16, 2016,
the court granted the plaintiff’s application for a pre-
judgment remedy in the total amount of $5,421,582. On
October 14, 2016, the court rendered judgment partially
in favor of the plaintiff against certain defendants in
the total amount of $5,422,540, plus 10 percent postjudg-
ment interest per annum. The defendants appealed from
that judgment.
On November 8, 2016, during the pendency of this
appeal, the plaintiff, pursuant to § 52-278k, filed a
motion with the trial court seeking modification of the
previously secured prejudgment remedy attachment
amount, seeking to secure from PCM, POF, PIM,
Schepis, Canelas, and Northeast an additional $947,731
that it anticipated would accrue during the pendency
of this appeal. The plaintiff calculated the $947,731
accrual of interest by multiplying the per diem interest
on the judgment, which the plaintiff determined on the
basis of the court’s award of 10 percent interest per
annum on its award of $5,422,540 in damages, by 564.3,
the plaintiff’s estimation of the average duration of the
pendency of similar civil cases before this court, and
then adding the probable additional costs associated
with levy and execution. In support of its calculation,
the plaintiff’s attorney submitted an affidavit and attach-
ments that detailed the duration of several recent Appel-
late Court cases. On December 16, 2016, the defendants
filed an opposition to the plaintiff’s motion to increase
the prejudgment remedy in which they argued, among
other things, that § 52-278k does not permit the upward
modification of a prejudgment remedy in the present
circumstances.
On January 4, 2017, after a hearing, the court granted
the plaintiff’s motion to increase the prejudgment rem-
edy amount by $947,731, to a total of $6,369,313. The
court held that ‘‘§ 52-278k provides that the court may
modify a prejudgment remedy ‘at any time’ ‘as may be
warranted by the circumstances.’ It is well established
that the prejudgment remedy statutes apply and are
applicable subsequent to the rendering of a judgment
in the trial court, which trial court judgment is pending
appeal. Gagne v. Vaccaro, 80 Conn. App. 436, 451–54,
[835 A.2d 491 (2003), cert. denied, 268 Conn. 920, 846
A.2d 881 (2004)]. Based upon the evidence at trial and
the circumstances of the pending appeal, the court finds
probable cause that the plaintiff will ultimately obtain
a final judgment against those parties against whom
the court has rendered judgment in the amount of
$6,369,313, which amount includes interest at the rate
of 10 percent per annum for the likely period of appeal
and probable execution fees. Of course, this is without
prejudice to the defendants’ right to request a down-
ward modification should they prevail on their pending
motion . . . which seeks adjustment of the previously
ordered interest rate, and the right of either party to
seek further modification ‘as may be warranted by the
circumstances.’ ’’ The defendants thereafter filed an
amended appeal to challenge this ruling.
We next set forth the standard of review and legal
principles relevant to this claim. ‘‘A prejudgment rem-
edy means any remedy or combination of remedies
that enables a person by way of attachment, foreign
attachment, garnishment or replevin to deprive the
defendant in a civil action of, or affect the use, posses-
sion or enjoyment by such defendant of, his property
prior to final judgment . . . . General Statutes § 52-
278a (d).’’ (Internal quotation marks omitted.) ASPIC,
LLC v. Poitier, 179 Conn. App. 631, 639, 181 A.3d 593
(2018). ‘‘A prejudgment remedy is available upon a find-
ing by the court that there is probable cause that a
judgment in the amount of the prejudgment remedy
sought, or in an amount greater than the amount of the
prejudgment remedy sought, taking into account any
defenses, counterclaims or set-offs, will be rendered in
the matter in favor of the plaintiff . . . . General Stat-
utes § 52-278d (a) (1). . . . Proof of probable cause as
a condition of obtaining a prejudgment remedy is not
as demanding as proof by a fair preponderance of the
evidence. . . . When reviewing a trial court’s order on
a motion for a prejudgment remedy, our role is fairly
limited. . . . We will not upset a prejudgment remedy
order in the absence of clear error . . . viewing the
evidence in the light most favorable to the plaintiff.’’
(Citations omitted; internal quotation marks omitted.)
J.E. Robert Co. v. Signature Properties, LLC, 309 Conn.
307, 338–39, 71 A.3d 492 (2013).
The authority for a court to modify an existing pre-
judgment remedy is afforded by § 52-278k, which pro-
vides: ‘‘The court may, upon any application for prejudg-
ment remedy under section 52-278c, 52-278e, 52-278h
or 52-278i, modify the prejudgment remedy requested
as may be warranted by the circumstances. The court
may, upon motion and after hearing, at any time modify
or vacate any prejudgment remedy granted or issued
under this chapter upon the presentation of evidence
which would have justified such court in modifying or
denying such prejudgment remedy under the standards
applicable at an initial hearing.’’
The defendants recognize that a prejudgment remedy
may be granted while the case is on appeal. See Gagne
v. Vaccaro, supra, 80 Conn. App. 454 (‘‘a prejudgment
remedy is available to a party who has prevailed at the
trial level and whose case is on appeal’’); Tadros v.
Tripodi, 87 Conn. App. 321, 335 n.9, 866 A.2d 610 (2005)
(‘‘[d]espite the apparent contradiction in terms, a pre-
judgment remedy may be granted after the entry of
judgment but before appellate disposition in order to
protect assets to satisfy the judgment’’). Instead, the
defendants argue, without citing any legal authority in
support, that the fact that they took ‘‘an appeal, without
more, [does not] constitute a sufficient basis to amend
an existing [prejudgment remedy].’’
Viewing the evidence before the court in the light
most favorable to the plaintiff, we conclude that it was
not clear error for the court to have increased the
amount of the prejudgment remedy. The court made
its probable cause determination ‘‘[b]ased upon the evi-
dence at trial and the circumstances of the pending
appeal . . . .’’ The evidence at trial established that
certain defendants were liable to the plaintiff for a total
of $5,422,540, and the court awarded the plaintiff 10
percent postjudgment interest per annum. The court
also considered the fact that the defendants took an
amended appeal from the October 14, 2016 judgment.
Further, the court credited the plaintiff’s calculation as
to the amount of interest that it estimated would accrue
on appeal. The plaintiff’s calculation, as supported by
an affidavit, was made in part on the basis of the average
duration of the pendency of similar cases before this
court. Accordingly, the court made its decision on the
basis of the amount of the judgment rendered against
the defendants, the court’s award of postjudgment inter-
est, the fact that the defendants took an amended
appeal, and the average pendency of similar civil cases
before this court. Viewing these facts in the light most
favorable to the plaintiff, it was not clear error for the
court to have increased the amount of the prejudg-
ment remedy.30
IX
The defendants’ final claim is that the court improp-
erly granted the plaintiff’s motion for postjudgment dis-
covery in connection with the court’s upward modifica-
tion of the prejudgment remedy amount. We conclude
that this claim was not preserved properly, and, thus,
we decline to review it.
We begin by setting forth the legal principles relevant
to whether a claim properly was preserved for appellate
review. ‘‘It is well settled that [o]ur case law and rules
of practice generally limit [an appellate] court’s review
to issues that are distinctly raised at trial. . . . [O]nly
in [the] most exceptional circumstances can and will
this court consider a claim, constitutional or otherwise,
that has not been raised and decided in the trial court.
. . . The reason for the rule is obvious: to permit a
party to raise a claim on appeal that has not been raised
at trial—after it is too late for the trial court or the
opposing party to address the claim—would encourage
trial by ambuscade, which is unfair to both the trial
court and the opposing party.’’ (Internal quotation
marks omitted.) Chief Disciplinary Counsel v. Roz-
bicki, 326 Conn. 686, 695, 167 A.3d 351 (2017), cert.
denied, U.S. , 138 S. Ct. 2583, 201 L. Ed. 2d 295
(2018); see also Practice Book § 60-5 (‘‘court shall not
be bound to consider a claim unless it was distinctly
raised at the trial or arose subsequent to the trial’’).
‘‘[T]he determination of whether a claim has been prop-
erly preserved will depend on a careful review of the
record to ascertain whether the claim on appeal was
articulated below with sufficient clarity to place the
trial court [and the opposing party] on reasonable notice
of that very same claim.’’ (Internal quotation marks
omitted.) Eubanks v. Commissioner of Correction, 329
Conn. 584, 598, 188 A.3d 702 (2018).
The following additional procedural history is rele-
vant to this claim. On November 8, 2016, during the
pendency of this appeal, the plaintiff, pursuant to Prac-
tice Book § 13-13, filed a motion with the trial court
seeking supplemental asset disclosure from the defen-
dants against which judgment had been rendered, seek-
ing to secure the additional attachment pursued by its
motion to modify the amount of the prejudgment rem-
edy. On December 16, 2016, the defendants filed an
opposition to the plaintiff’s motion to increase the pre-
judgment remedy, but they did not file a written objec-
tion to the plaintiff’s motion seeking supplemental asset
disclosure. Furthermore, in their objection to the
motion to modify, the defendants did not advance any
counterargument to the plaintiff’s motion for supple-
mental asset disclosure.
At the hearing held on December 22, 2016, regarding
the plaintiff’s motions, the defendants’ counsel con-
ceded that there was no written objection filed to the
plaintiff’s motion for supplemental asset disclosure.
Indeed, the defendants’ counsel, when asked whether
he had a comment on the motion for disclosure of
assets, provided the following response: ‘‘Well . . . the
reason I didn’t object [was] because I have to imagine,
without prejudice again, that if the [c]ourt increased
the [prejudgment remedy] . . . the [c]ourt was going
to grant . . . I haven’t seen—you know, and I call it
pretty fair—I haven’t seen a [prejudgment remedy]
where the [c]ourt said, well, now I’ve granted a [prejudg-
ment remedy], but I’m not going to let you . . . disclose
the assets. I don’t think though that given that the disclo-
sure was who’s claiming what, I happen to agree that
as long as the gross amount has been attached, that’s
what counts. I don’t think you get each . . . defendant
doesn’t have to put up that . . . the entire amount.’’
On the basis of the foregoing, we conclude that the
defendants failed to preserve properly their claim that
the court lacked authority to grant the plaintiff’s supple-
mental motion for disclosure of assets. The defendants
did not file a written objection and they did not make
a written counterargument. When asked whether they
had any comment on the motion, the defendants’ coun-
sel acknowledged that he was not aware of any court
that denied a motion for disclosure after it had granted
a prejudgment remedy. The defendants’ counsel took
the position that it was a rare occurrence that a court
actually would deny such a motion under the circum-
stances. Therefore, we decline to review this claim
because it was not properly preserved.
The judgment is reversed in part as to counts one
and two of the plaintiff’s complaint and the case is
remanded with direction to render judgment in favor
of POF, Schepis, and Canelas on those counts; the judg-
ment is affirmed in all other respects.
In this opinion the other judges concurred.
1
Pursuit Partners did not appeal from the judgment of the trial court and
is not involved in this appeal. Our references to the defendants do not
include Pursuit Partners.
2
As set forth subsequently in this opinion, the court rendered judgment
in favor of the plaintiff against PCM, POF, PIM, Schepis, Canelas, and North-
east on two of the seven counts of the complaint, in favor of all of the
defendants on the remaining counts of the complaint, and in favor of the
plaintiff on the defendants’ counterclaim.
3
A ‘‘hedge fund’’ is ‘‘[a] specialized investment group—[usually] organized
as a limited partnership or offshore investment company—that offers the
possibility of high returns through risky techniques such as selling short or
buying derivatives.’’ Black’s Law Dictionary (9th Ed. 2009).
4
The court did not make any factual findings as to the role of Pursuit
Partners in the hedge fund structure.
5
The plaintiff did not invest directly in POF Master or PCM Master.
6
According to Wikipedia, a popular encyclopedia website, which is acces-
sible to the public free of charge and updated collaboratively by the site’s
visitors, a CDO is ‘‘a type of structured asset-backed security . . . . Origi-
nally developed as instruments for the corporate debt markets, after 2002
CDOs became vehicles for refinancing mortgage-backed securities . . . .
Like other private label securities backed by assets, a CDO can be thought
of as a promise to pay investors in a prescribed sequence, based on the
cash flow the CDO collects from the pool of bonds or other assets it owns.’’
(Footnotes omitted.) Wikipedia, the free encyclopedia, ‘‘Collateralized debt
obligation,’’ (last modified September 16, 2019), available at https://en.wik-
ipedia.org/wiki/Collateralized debt obligation (last visited September 26,
2019).
7
A ‘‘holdback’’ is ‘‘[a]n amount withheld from the full payment of a contract
pending the other party’s completion of some obligation . . . .’’ Black’s
Law Dictionary, supra.
8
Approximately during the same time, the United States Securities and
Exchange Commission (SEC) began an investigation of the defendants. After
receiving a letter from DLA Piper indicating that the SEC proceeding could
cost as much as $10 million, the defendants notified the investors, including
the plaintiff, of the SEC investigation, but not the estimate of costs. On
receipt of this letter, and pursuant to the plaintiff’s request, Reed Smith
contacted the SEC in 2010, 2011, and 2012, to learn more about the investiga-
tion. Ultimately, the SEC investigation was resolved without penalty or
sanction.
9
Specifically, § 3 (b) (iii) of the CSA defined the total NAV in PCM as of
February 28, 2011, to be $5,822,390, and the plaintiff’s pro rata share of the
NAV in PCM as of February 28, 2011, to be $1,868,033. Consequently, the
court found that the CSA defined the plaintiff’s percentage of the pro rata
share of the NAV in PCM as of February 28, 2011, to be approximately
32.083612 percent ($1,868,033 divided by $5,822,390).
10
As of the date of oral argument before this court, the 2013 New York
action was still pending before the New York Supreme Court. See Alpha
Beta Capital Partners, L.P. v. Pursuit Investment Management, LLC, New
York Supreme Court, County of New York, Index No. 152104/2013.
11
The court inconsistently found that this letter was sent on April 22,
2013, and April 22, 2014. This discrepancy is immaterial to our decision.
12
The plaintiff does not seek the remaining portion of the LBIE claim, as
that claim is the subject of the 2013 New York action.
13
The parties stipulated that the evidence introduced at the prejudgment
remedy proceeding would constitute evidence in the subsequent full trial
on the merits.
14
On appeal, the defendants only challenge the court’s judgment in favor
of the plaintiff on the breach of contract count in the counterclaim, and do
not challenge the court’s judgment in favor of the plaintiff on its fraud count
in the counterclaim.
15
The parties on appeal are in agreement that New York substantive law
governs this claim because of the choice of law provision in § 12 of the
CSA, which provides in relevant part: ‘‘This [a]greement shall be construed
and interpreted in accordance with the laws of the [s]tate of New York.’’
16
Ordinarily, under New York law, the first determination to be made is
whether the contract, under the circumstances, is ambiguous or unambigu-
ous. See In re Estate of Wilson, 138 A.D. 3d 1441, 1442, 31 N.Y.S.3d
331 (2016); see also Ellington v. EMI Music, Inc., 24 N.Y.3d 239, 244, 21
N.E.3d 1000, 997 N.Y.S.2d 339 (2014). Nevertheless, because neither the trial
court nor the parties frame the issue in that manner, we likewise decline
to take that approach.
17
This conclusion also disposes of the defendants’ alternative argument
that the plaintiff is not entitled to any of the proceeds from the UBS litigation
because Pursuit Management exercised its right under the LPA on April 22,
2013 to ‘‘mandatorily withdraw’’ the plaintiff as a limited partner of PCM
and, at that time, the UBS litigation had no value because it had been
dismissed. Because the plaintiff was withdrawn as a limited partner when
the CSA was executed, it could not be withdrawn a second time. Further-
more, the defendants’ argument that the UBS litigation had no value when
it was dismissed in 2012 is disingenuous in light of their counsel’s December
4, 2012 letter to the limited partners, including the plaintiff, telling them that
despite the dismissal, counsel expected ultimately to prevail in the litigation.
18
We disagree with the defendants’ interpretation of the court’s decision
as concluding only that they had breached the CSA; rather, the court con-
cluded that certain defendants had breached both the CSA and the LPA
when they failed to remit the contingent assets as soon as practicable. See
In re James O., 322 Conn. 636, 649, 142 A.3d 1147 (2016) (interpretation of
court’s decision presents question of law).
19
The court, without extensive elaboration, specifically concluded that
the plaintiff’s actions constituted a partial breach that caused the defendants
to suffer no damages.
20
We emphasize that the payment of the LBIE claim proceeds is the
subject of the pending 2013 New York action; see footnote 10 of this opinion;
and those proceeds are only indirectly implicated here as part of the defen-
dants’ counterclaim in which they alleged that they were excused from
remitting the proceeds from the UBS litigation.
21
The gravamen of the defendants’ argument on this point is founded
in anticipatory repudiation, which requires ‘‘proof of a definite and final
communication by [the] plaintiff of its intention not to perform . . . .’’
(Citation omitted.) 1625 Market Corp. v. 49 Farm Market, Inc., 165 Ohio App.
Div. 3d 426, 426, 84 N.Y.S.3d 142 (2018). This argument is inapposite because
there is no allegation that the plaintiff communicated to the defendants that
it intended to avoid its obligations under the agreement prior to engaging
in the contested communications, or at any time.
22
The defendants also argue that the plaintiff cannot prevail on its breach
of the implied covenant of good faith and fair dealing claim because it is
merely a recast breach of contract claim. This argument, unlike the defen-
dants’ similar claim asserted in part IV of this opinion, was not raised before
the trial court and, therefore, it is not properly preserved. See Eubanks v.
Commissioner of Correction, 329 Conn. 584, 598, 188 A.3d 702 (2018) (claim
is properly preserved if ‘‘articulated below with sufficient clarity’’ [internal
quotation marks omitted]); Chief Disciplinary Counsel v. Rozbicki, 326
Conn. 686, 695, 167 A.3d 351 (2017) (claim is not reviewable if raised for
first time on appeal), cert. denied, U.S. , 138 S. Ct. 2583, 201 L. Ed.
2d 295 (2018); see also Practice Book § 60-5 (‘‘[t]he court shall not be bound
to consider a claim unless it was distinctly raised at the trial or arose
subsequent to the trial’’).
23
The plaintiff argues in one sentence, incorporating its contentions
advanced in part V of this opinion, that the court improperly determined
that New York law, as opposed to Connecticut law, applies to the plaintiff’s
conversion claim. We decline to review this claim because the plaintiff offers
no independent analysis with respect to the applicability of § 12 of the CSA
to its conversion claim. See Estate of Rock v. University of Connecticut,
323 Conn. 26, 33, 144 A.3d 420 (2016) (‘‘Claims are inadequately briefed
when they are merely mentioned and not briefed beyond a bare assertion.
. . . Claims are also inadequately briefed when they . . . consist of conclu-
sory assertions . . . with no mention of relevant authority and minimal or
no citations from the record . . . .’’ [Internal quotation marks omitted.]);
see also Commission on Human Rights & Opportunities ex rel. Arnold v.
Forvil, 302 Conn. 263, 268 n.6, 25 A.3d 632 (2011) (disavowing multiplicity
of claims approach).
24
On appeal, the plaintiff also argues that § 12 of the CSA did not bar its
Connecticut statutory causes of action because public policy mandates that
Connecticut law apply. We decline to review this claim because it is raised
for the first time on appeal and, therefore, is not properly preserved. See
Eubanks v. Commissioner of Correction, 329 Conn. 584, 598, 188 A.3d 702
(2018) (claim is properly preserved if ‘‘articulated below with sufficient
clarity’’ [internal quotation marks omitted]); Chief Disciplinary Counsel v.
Rozbicki, 326 Conn. 686, 695, 167 A.3d 351 (2017) (claim is not reviewable
if raised for first time on appeal), cert. denied, U.S. , 138 S. Ct. 2583,
201 L. Ed. 2d 295 (2018). In its written opposition to the defendants’ motion
to strike, the plaintiff did not argue that § 12 of the CSA was violative of
the public policy of Connecticut. At oral argument on the defendants’ motion
to strike, although the plaintiff’s counsel argued in one sentence that Con-
necticut has an interest in the resolution of this dispute, the plaintiff’s
counsel did not advance an oral argument that § 12 of the CSA violated the
public policy of Connecticut, that New York had no substantial relationship
to the parties or transaction, or that New York law is contrary to the funda-
mental policy of Connecticut. See Elgar v. Elgar, 238 Conn. 839, 850, 679
A.2d 937 (1996) (concluding that Connecticut law favors choice of law
provisions unless application of foreign state law violated Connecticut public
policy). To entertain this argument for the first time on appeal would consti-
tute an ambush of the trial judge and the defendants. See Forgione v.
Forgione, 186 Conn. App. 525, 530, 200 A.3d 190 (2018).
25
On appeal, the plaintiff acknowledges that New York contractual inter-
pretation principles apply to determine whether the language of § 12 of the
CSA bars its Connecticut statutory causes of action, yet, it also argues
that Connecticut law leads to the same result. Likewise, the defendants
inconsistently argue that the contractual interpretation principles of both
states apply. We apply the contract interpretation principles of New York,
not Connecticut, because that is the law the parties, in the sentence prior
to the one at issue, specifically agreed applied to the interpretation of the
CSA: ‘‘This [a]greement shall be construed and interpreted in accordance
with the laws of the [s]tate of New York.’’
26
As outlined previously in this opinion, § 4 of the CSA provided in relevant
part that ‘‘PCM owns certain contingent assets that were valued at zero
. . . for purposes of calculating PCM’s NAV. These contingent assets include
(a) PCM’s proportionate interest in the UBS [l]itigation; and (b) PCM’s
interest in [the LBIE claim]. Nothing herein . . . shall affect in any way
[the plaintiff’s] pro rata share . . . of the contingent assets as of February
28, 2011. It is further understood that [the plaintiff’s] continued interest in
the contingent assets shall be governed by the [LPA] . . . .’’
27
As set forth previously in this opinion, § 3 of the CSA mandated that
PIM pay the plaintiff the settlement payment and the redemption payment.
28
The version of the LPA entered into evidence and included in the defen-
dants’ appendix on appeal is unsigned. Nevertheless, typed names below
the signature lines contained in the LPA support this interpretation.
29
The plaintiff additionally argues on appeal that it ‘‘satisfied its burden
to prove that [the] defendants held $250,000 of its money as a UBS litigation
holdback that was now due to be returned; only [the] defendants could
prove how much of that legitimately remained and, having failed to do so
or to produce the relevant records, the court should have awarded the full
$250,000 to [the plaintiff].’’ Nevertheless, the plaintiff did not make this
argument before the trial court and, thus, it is not properly preserved. See
Eubanks v. Commissioner of Correction, 329 Conn. 584, 598, 188 A.3d 702
(2018) (claim is properly preserved if ‘‘articulated below with sufficient
clarity’’ [internal quotation marks omitted]); Chief Disciplinary Counsel v.
Rozbicki, 326 Conn. 686, 695, 167 A.3d 351 (2017) (claim is not reviewable
if raised for first time on appeal), cert. denied, U.S. , 138 S. Ct. 2583,
201 L. Ed. 2d 295 (2018).
30
We recognize that the effect of our conclusion that the court properly
increased the prejudgment remedy, which was entered against PCM, POF,
PIM, Schepis, Canelas, and Northeast, is limited by our determination that
only PCM, PIM, and Northeast are liable to the plaintiff on its complaint.
See part VI of this opinion. The defendants, however, do not argue that the
court improperly increased the amount of the prejudgment remedy against
only certain parties. Therefore, we do not reach that issue.