Valley National Bank v. Marcano , 174 Conn. App. 206 ( 2017 )

******************************************************
The ‘‘officially released’’ date that appears near the
beginning of each opinion is the date the opinion will
be published in the Connecticut Law Journal or the
date it was released as a slip opinion. The operative
date for the beginning of all time periods for filing
postopinion motions and petitions for certification is
the ‘‘officially released’’ date appearing in the opinion.
In no event will any such motions be accepted before
the ‘‘officially released’’ date.
All opinions are subject to modification and technical
correction prior to official publication in the Connecti-
cut Reports and Connecticut Appellate Reports. In the
event of discrepancies between the electronic version
of an opinion and the print version appearing in the
Connecticut Law Journal and subsequently in the Con-
necticut Reports or Connecticut Appellate Reports, the
latest print version is to be considered authoritative.
The syllabus and procedural history accompanying
the opinion as it appears on the Commission on Official
Legal Publications Electronic Bulletin Board Service
and in the Connecticut Law Journal and bound volumes
of official reports are copyrighted by the Secretary of
the State, State of Connecticut, and may not be repro-
duced and distributed without the express written per-
mission of the Commission on Official Legal
Publications, Judicial Branch, State of Connecticut.
******************************************************
VALLEY NATIONAL BANK v.
STEVEN MARCANO
(AC 38497)
DiPentima, C. J., and Sheldon and Harper, Js.
Argued February 16—officially released June 27, 2017
(Appeal from Superior Court, judicial district of New
Britain, Swienton, J.)
David L. Gussak, for the appellant (defendant).
Miguel A. Almodo´var, for the appellee (plaintiff).
Opinion
HARPER, J. The defendant, Steven Marcano, appeals
from the judgment rendered against him, after a court
trial, for breach of his obligation under a personal guar-
antee of a $250,000 line of credit extended to My Little
Star Baby Products, Inc. (My Little Star), by the plaintiff,
Valley National Bank, as successor in interest to Park
Avenue Bank (Valley National). The defendant chal-
lenges the trial court’s findings that (1) Valley National
established a proper chain of title regarding its owner-
ship of the promissory note originally executed and
personally guaranteed by the defendant to Park Avenue
Bank (Park Avenue), thereby giving Valley National
standing to bring an action on the guarantee of payment
of that note and (2) Valley National submitted sufficient
evidence to accurately establish the loan balance it
claimed was owed by the defendant.1 We affirm the
judgment of the trial court.
In its September 17, 2015 memorandum of decision,
the court found the following facts. ‘‘The defendant was
one of the founders of the entity known as [My Little
Star], and was the president of the company when it
applied for a business line of credit with [Park Avenue]
in New York. The loan application was approved, and
[the defendant] executed the business loan agreement,
commercial security agreement, corporate resolution
authorizing the borrowing, as well as the promissory
note and [personal] guarantee. . . . The promissory
note which secured the line of credit had a maturity
date of May 27, 2009, when all sums drawn upon the
line of credit along with interest were to be paid in full
without demand.
‘‘The personal guarantee signed by the defendant
secured My Little Star’s obligation to [Park Avenue].
After approval, My Little Star made drawdowns on the
line of credit through drawdown requests made by the
defendant. The total amount of the drawdowns was
$248,723.06.
‘‘At some point, [Park Avenue] was seized by the
[Federal Deposit Insurance Corporation (FDIC)], and
[Valley National] purchased the assets of [Park Avenue]
from the FDIC as receiver. [The plaintiff’s] Exhibit 9,
which is a Purchase and Assumption Agreement, indi-
cates that the FDIC transferred the defendant’s obliga-
tion to [Park Avenue] to [Valley National]. . . .
‘‘The defendant has made no payments on the obliga-
tion of My Little Star as a personal guarantor. The cur-
rent amount due as of July 22, 2015, is $328,009.28, of
which $248,723.06 is principal, and $79,286.22 is inter-
est, with a per diem of $36.27.’’ (Citation omitted; foot-
note omitted.) The plaintiff brought an action to enforce
the debt owed by the defendant as the personal guaran-
tor of the loan. The trial court found in favor of the
plaintiff and rendered judgment against the defendant
in the amount of $330,040.40, which represented a prin-
cipal balance of $248,723.06, and interest in the amount
of $81,317.34. This appeal followed. Additional facts
will be set forth as necessary.
I
The defendant’s first claim is that the court improp-
erly found that Valley National had established a proper
chain of title regarding its ownership of the promissory
note, which was originally executed and personally
guaranteed by the defendant to Park Avenue, thereby
giving Valley National standing2 to bring an action on
the guarantee of payment of that note. Specifically, the
defendant argues that the plaintiff lacks standing to
bring an action to enforce the defendant’s personal
guarantee on the promissory note for the following
reasons: (1) none of the loan documents is endorsed,
either in blank or specially, from Park Avenue to Valley
National; (2) the plaintiff cannot prove that it is a non-
holder with the rights of a holder because the plaintiff’s
witness, Michael Robinson, was not an employee of the
plaintiff at the time that it acquired the assets of Park
Avenue, nor was he involved in the transaction between
the FDIC and the plaintiff; and (3) the purchase and
assumption agreement does not specifically identify the
My Little Star loan as an asset acquired by the plaintiff
from the FDIC. We disagree and conclude that the court
properly determined that Valley National had standing
to pursue its claim against the defendant for his per-
sonal guarantee on the line of credit.
We first set forth our standard of review. ‘‘The issue
of standing implicates [the] court’s subject matter juris-
diction. . . . Standing is the legal right to set judicial
machinery in motion. One cannot rightfully invoke the
jurisdiction of the court unless he [or she] has, in an
individual or representative capacity, some real interest
in the cause of action, or a legal or equitable right, title
or interest in the subject matter of the controversy.
. . . When standing is put in issue, the question is
whether the person whose standing is challenged is a
proper party to request an adjudication of the issue
. . . . Because standing implicates the court’s subject
matter jurisdiction, the plaintiff ultimately bears the
burden of establishing standing. . . .
‘‘Because a determination regarding the trial court’s
subject matter jurisdiction raises a question of law,
[the standard of] review is plenary. . . . Standing is
established by showing that the party claiming it is
authorized by statute to bring suit or is classically
aggrieved.’’ (Citations omitted; internal quotation marks
omitted.) JPMorgan Chase Bank, National Assn. v.
Simoulidis, 161 Conn. App. 133, 142, 126 A.3d 1098
(2015), cert. denied, 320 Conn. 913, 130 A.3d 266 (2016).
A
The defendant first argues that, because the note is
not specially endorsed to the plaintiff or endorsed in
blank, the plaintiff lacks standing to enforce its acquired
rights under the note and other loan documents. We
disagree.
In Connecticut, a party may enforce a note pursuant
to the Uniform Commercial Code (UCC), codified at
General Statutes § 42a-1-101 et seq. U.S. Bank, National
Assn. v. Schaeffer, 160 Conn. App. 138, 146, 125 A.3d 262
(2015). General Statutes § 42a-3-301 provides in relevant
part that a ‘‘[p]erson entitled to enforce an instrument
means . . . the holder of the instrument3 . . . [or] a
nonholder in possession of the instrument who has
the rights of a holder . . . .’’ (Footnote added; internal
quotation marks omitted.) ‘‘The UCC’s official comment
underscores that a person entitled to enforce an instru-
ment . . . is not limited to holders. . . . A nonholder
in possession of an instrument includes a person that
acquired rights of a holder . . . under [§ 42a-3-203 (a)].
. . . Under § 42a-3-203 (b), [t]ransfer of an instrument
. . . vests in the transferee any right of the transferor
to enforce the instrument . . . . An instrument is
transferred when it is delivered by a person other than
its issuer for the purpose of giving to the person receiv-
ing delivery the right to enforce the instrument. General
Statutes § 42a-3-203 (a). . . . Accordingly, a note that
is unendorsed still can be transferred to a third party.
Although that third party technically is not a holder of
the note, the third party nevertheless acquires the right
to enforce the note so long as that was the intent of
the transferor.’’ (Citation omitted; internal quotation
marks omitted.) Berkshire Bank v. Hartford Club, 158
Conn. App. 705, 712, 120 A.3d 544, cert. denied, 319
Conn. 925, 125 A.3d 200 (2015).
In this case, the plaintiff presented the court with
the loan documents and the purchase and assumption
agreement. Section 3.1 of that agreement states in rele-
vant part: ‘‘[The plaintiff] hereby purchases from the
[FDIC], and the [FDIC] hereby sells, assigns, transfers,
conveys, and delivers to the [plaintiff], all right, title
and interest of the [FDIC] in and to all of the assets
(real, personal and mixed, wherever located and how-
ever acquired) including all subsidiaries, joint ventures,
partnerships, and any and all other business combina-
tions or arrangements, whether active, inactive, dis-
solved or terminated, of [Park Avenue] whether or not
reflected on the books of [Park Avenue] as of Bank
Closing.’’ (Emphasis added.) The court, in its findings
of fact, found that the purchase and assumption
agreement indicated that the ‘‘FDIC transferred the
defendant’s obligation to [Park Avenue] to [Valley
National].’’ We agree with the court that, by virtue of
the express language in Section 3.1 of the March 12,
2010 purchase and assumption agreement, the plaintiff
received from the FDIC, on behalf of Park Avenue, ‘‘all
right, title and interest . . . in and to all of the assets
. . . whether or not reflected on the books of [Park
Avenue] as of Bank Closing.’’4 We also conclude that
when the FDIC transferred to it ‘‘all’’ of Park Avenue’s
assets, the plaintiff became a nonholder with the rights
of a holder.
Our decision in Berkshire Bank makes clear that an
unendorsed note can still be transferred and enforced,
and that although a third party technically is not a holder
of the note, that third party nevertheless acquires the
right to enforce the note so long as that was the intent
of the transferor. Berkshire Bank v. Hartford Club,
supra, 158 Conn. App. 712. Therefore, the defendant’s
first argument, that the note is unenforceable because
it is not specially endorsed to the plaintiff or endorsed
in blank, fails because the note was not rendered unen-
forceable by the lack of such endorsements.
B
Similarly, the defendant’s second argument that the
plaintiff could not prove that it was a nonholder that
had acquired the rights of a holder fails because,
although the plaintiff is not technically a holder of the
note by virtue of its third-party status, it demonstrated
that it acquired the right to enforce that note by way
of the purchase and assumption agreement. That
agreement evidenced the intent of the FDIC to transfer
to the plaintiff Park Avenue’s assets. The defendant
also argues that the plaintiff cannot prove that it is
a nonholder with the rights of a holder because the
plaintiff’s witness, Robinson, was not an employee of
the plaintiff at the time that the plaintiff acquired the
assets of Park Avenue, nor was he involved in the trans-
action between the FDIC and the plaintiff. This argu-
ment fails because Robinson’s testimony was not
offered to authenticate the loan documents and the
purchase and assumption agreement as business
records. Those exhibits already had been admitted.
Rather, Robinson testified as to what information he
relied on to reach the total sum owed under the defen-
dant’s contractual obligation with Park Avenue. See
part II of this opinion. Moreover, a custodian or supervi-
sor of business records, such as Robinson, need not
always have made the record or seen it made in order
to testify to its authenticity. Therefore, the defendant’s
argument that Robinson lacked personal knowledge of
the documents at issue cannot succeed. See First
Union National Bank v. Woermer, 92 Conn. App. 696,
708, 887 A.2d 893 (2005), cert. denied, 277 Conn. 914,
895 A.2d 788 (2006).
C
The defendant’s final argument is that the plaintiff
could not prove chain of title because the purchase and
assumption agreement does not specifically identify the
My Little Star loan as an acquired asset. Specifically,
he argues that Robinson mistakenly relied on Section
3.1 of the purchase and assumption agreement to sup-
port his contention that the My Little Star loan was
transferred to the plaintiff because nowhere in the
agreement is there a ‘‘listing, identification, enumera-
tion, or description as to what the [Park Avenue] assets
consist of, and whether or not they include the [My
Little Star] loan.’’ Schedule 3.1 of the purchase and
assumption agreement provides, inter alia, that the list
of assets acquired ‘‘may not include all loans and assets’’
and that ‘‘[t]he list may be replaced with a more accurate
list post closing.’’ Paragraph (d) of Schedule 3.2, entitled
‘‘Purchase Price of Assets or assets,’’ reads ‘‘Loans:
Book Value.’’ The agreement defines ‘‘loans,’’ in relevant
part, to mean ‘‘revolving commercial lines of credit,’’
such as the loan at issue.
On the basis of this evidence, we agree with the
court’s conclusion that the plaintiff had ‘‘provided the
necessary documentation to establish that [Valley
National] is the successor in interest’’ to the FDIC as
receiver for Park Avenue and, thus, had standing to
prosecute the present action. Accordingly, we reject
the defendant’s first claim.
II
The defendant’s second claim is that the trial court
erred when it determined that Valley National had sub-
mitted sufficient evidence from which the outstanding
loan balance could be accurately established. Specifi-
cally, the defendant argues that he did not create some
of the exhibits entered by the plaintiff to establish the
debt owed, and that the testimony of Robinson was not
sufficient to establish an accurate calculation of the
outstanding debt. We disagree and conclude that the
trial court’s findings as to damages are supported by
sufficient evidence and, thus, are not clearly erroneous.
The following additional facts are relevant to our
resolution of the defendant’s claim. At trial, the defen-
dant testified that his signature was on all of the loan
documents, and admitted that his signature and a loan
number matching the same loan number on the promis-
sory note was on most of the drawdown requests, listed
as plaintiff’s exhibits ten through eighteen.5 The plaintiff
presented testimony from Robinson, a loan workout
officer employed by Valley National, to establish the
total debt owed. Robinson testified that, as the loan
officer assigned to the loan at issue, he was familiar
with the file and that Valley National was the current
holder of the loan. He also testified that Valley National
became holder of the loan when it purchased, by way
of a purchase and assumption agreement, the assets of
Park Avenue from the FDIC as receiver. In addition to
the note and other loan documents, Robinson was
asked to identify and testify about documents that had
been admitted into evidence, over the defendant’s
objections, as plaintiff’s exhibits ten through eighteen.
Robinson testified that these exhibits were internal
transfer memoranda that documented requested and
transferred funds from Park Avenue to My Little Star.
Robinson testified that when he calculated the balance
of the loan, he relied on the Park Avenue loan history,
admitted as the plaintiff’s exhibit twenty-one, and not
the internal transfer memoranda. According to Rob-
inson, the loan history showed a principal balance in
the amount of $248,723.06, and that, as of July 22, 2015,
the total interest that had accrued on the principal bal-
ance was $79,286.22. He further testified that the per
diem amount, under the terms of the note, was $36.27
under the note rate of 5.25 percent.
On the basis of such evidence, the trial court found
that the defendant had made no payments on the loan
obligation as the personal guarantor. It further found
that the plaintiff had met its burden of establishing the
sum of its alleged debts, and entered judgment against
the defendant in the amount of $330,040.40, which rep-
resented a principal balance of $248,723.06 and interest
as of September 17, 2015, in the amount of $81,317.34.
‘‘With regard to the trial court’s factual findings, the
clearly erroneous standard of review is appropriate.
. . . A factual finding is clearly erroneous when it is
not supported by any evidence in the record or when
there is evidence to support it, but the reviewing court
is left with the definite and firm conviction that a mis-
take has been made. . . . Simply put, we give great
deference to the findings of the trial court because of
its function to weigh and interpret the evidence before
it and to pass upon the credibility of witnesses. . . .’’
(Internal quotation marks omitted.) Miller v. Guimar-
aes, 78 Conn. App. 760, 766–67, 829 A.2d 422 (2003).
‘‘It is well established that damages are a necessary
element for a breach of contract action. . . . The trial
court has broad discretion in determining damages.
. . . The determination of damages involves a question
of fact that will not be overturned unless it is clearly
erroneous. . . . Damages are recoverable only to the
extent that the evidence affords a sufficient basis for
estimating their amount in money with reasonable cer-
tainty. . . . Thus, [t]he court must have evidence by
which it can calculate the damages, which is not merely
subjective or speculative, but which allows for some
objective ascertainment of the amount.’’ (Citation omit-
ted; internal quotation marks omitted.) Milford Bank
v. Phoenix Contracting Group, Inc., 143 Conn. App.
519, 524–25, 72 A.3d 55 (2013).
In the present case, the trial court’s award of damages
is consistent with the figures provided in exhibit twenty-
one and as testified to by Robinson, with the exception
of the accrued interest to date, which was updated to
reflect the current payoff amount. Although Robinson
testified that he did not rely on the drawdown requests,
marked as the plaintiff’s exhibits ten through eighteen,
in arriving at his conclusion as to the total amount
owed, such testimony did not undermine Robinson’s
testimony that exhibit twenty-one, the Park Avenue
loan history, accurately reflected the financial transac-
tions between Park Avenue and My Little Star. Further,
although the defendant testified that he did not autho-
rize the amounts in the drawdown requests, he pre-
sented no evidence from which the court reasonably
could have concluded that the amounts at issue had
not been disbursed to My Little Star. The Park Avenue
loan history reflected in exhibit twenty-one, the defen-
dant’s testimony admitting to his signatures on each of
the loan documents, and the testimony of Robinson,
provided sufficient evidence of the debt owed by My
Little Star to the plaintiff at the time of trial, and there-
fore of the amount owed by the defendant as the per-
sonal guarantor of My Little Star’s debt. The award of
damages is fully supported by the record before us, and,
thus, the court’s finding that the plaintiff had submitted
sufficient evidence from which the outstanding loan
balance could be accurately established is not clearly
erroneous.
The judgment is affirmed.
In this opinion the other judges concurred.
1
Although the defendant raises in his brief a third claim that the trial
court erred ‘‘in entering judgment against’’ him, this claim is, in substance,
a reiteration of the first two claims. The resolution of the defendant’s first
two claims renders his third claim meritless, and thus, we need not address
it here.
2
The defendant contends in his brief: ‘‘[The] plaintiff, based upon the
evidence offered, lacked standing to maintain its claim.’’ The plaintiff argues
that, because the trial court made a factual finding as to Valley National’s
ownership of the loan documents, we must review the defendant’s claim
under the clearly erroneous standard. In substance, however, the defendant’s
first claim challenges Valley National’s standing, and, therefore, the standard
of review is plenary. See JPMorgan Chase Bank, National Assn. v. Simou-
lidis, 161 Conn. App. 133, 142, 126 A.3d 1098 (2015), cert. denied, 320 Conn.
913, 130 A.3d 266 (2016).
3
‘‘ ‘Holder’ means: (A) The person in possession of a negotiable instrument
that is payable either to bearer or to an identified person that is the person
in possession; (B) The person in possession of a negotiable tangible docu-
ment of title if the goods are deliverable either to bearer or to the order of
the person in possession; or (C) The person in control of a negotiable
electronic document of title.’’ General Statutes § 42a-1-201 (b) (21).
4
The defendant challenges the transfer of the loan from Park Avenue to
the FDIC. The court found that ‘‘[a]t some point, [Park Avenue] was seized
by the FDIC.’’ The record supports this finding, and therefore we also
conclude that Park Avenue’s assets, including the defendant’s loan, were
transferred to the FDIC as receiver. Moreover, the defendant testified that
Park Avenue went out of business and that it was seized by the FDIC. The
defendant’s challenge to that transfer fails.
5
The defendant objected to the admission of the plaintiff’s exhibit four-
teen, a drawdown request dated July 23, 2008, because he could not confirm
a signature. He did confirm, however, that the loan number contained on the
drawdown request was the same loan number as contained in the promissory
note. The defendant also testified that he believed the total amount drawn
down on the loan at issue was $40,000 to $50,000, and that his accounting
firm also had authority to request funds from the loan’s line of credit. The
court ultimately overruled the defendant’s objection. In its memorandum
of decision, the court determined that ‘‘[a]lthough [the defendant] testified
that his accountants had [the] authority to make these drawdowns, and
therefore he was unaware of the drawdowns, there was no credible evidence
to support this claim.’’