14‐3404‐cv
Cadle Co. v. Fletcher
In the
United States Court of Appeals
for the Second Circuit
AUGUST TERM 2015
No. 14‐3404‐cv
THE CADLE COMPANY,
Plaintiff‐Appellee,
v.
MARGUERITE FLETCHER AND TERRY B. FLETCHER,
Defendants‐Appellants.
On Appeal from the United States District Court
for the District of Connecticut
ARGUED: SEPTEMBER 25, 2015
DECIDED: OCTOBER 14, 2015
Before: CABRANES and POOLER, Circuit Judges, and GARDEPHE,
District Judge.*
The Honorable Paul G. Gardephe, United States District Court for the
*
Southern District of New York, sitting by designation.
On appeal from a judgment of the United States District Court
for the District of Connecticut (Stefan R. Underhill, Judge) granting
summary judgment to Plaintiff‐Appellee on its claim of fraudulent
transfer of assets and denying a motion by Defendants‐Appellants
for partial summary judgment. We CERTIFY a question to the
Connecticut Supreme Court regarding the exemption of post‐
garnishment residual wages from further execution.
Paul N. Gilmore, Updike, Kelly & Spellacy,
P.C., Hartford, CT, for Plaintiff‐Appellee.
John W. Larson (Nicholas J. Harding, on
the brief), Reid & Riege, P.C., Hartford, CT,
for Defendants‐Appellants.
PER CURIAM:
This appeal presents an unsettled question of Connecticut law
regarding the interpretation of Conn. Gen. Stat. §§ 52‐361a and 52‐
367b1—specifically, whether those sections exempt a judgment
1 Conn. Gen. Stat. § 52‐367b, titled “Execution against debts due from
financial institution. Natural person as judgment debtor,” provides that
“[e]xecution may be granted pursuant to this section against any debts due from
any financial institution to a judgment debtor who is a natural person, except to
the extent such debts are protected from execution by” § 52‐361a. In turn, § 52‐
2
debtor’s post‐garnishment residual wages held in a third party’s
bank account from further execution, so that they are freely
transferable under the Connecticut Uniform Fraudulent Transfer
Act, Conn. Gen. Stat. § 52‐552a et seq. We believe it is more
appropriate for the Connecticut Supreme Court to address this
matter in the first instance, because it is in a better position than this
Court to determine how to interpret these sections in light of
Connecticut’s overall statutory scheme. Accordingly, we CERTIFY
this question to the Connecticut Supreme Court.
BACKGROUND
Plaintiff‐Appellee The Cadle Co. (“Cadle”) is a judgment
creditor of Defendant‐Appellant Terry B. Fletcher (“Fletcher”) with
respect to two state court judgments amounting to more than $3
million, which remain unsatisfied. The parties have stipulated that
since at least 2005, Fletcher has transferred to his wife, Defendant‐
Appellant Marguerite Fletcher, more than $300,000 by depositing, or
causing her to deposit, his wages into her bank account. During part
of this period, Cadle and another judgment creditor garnished
Fletcher’s wages.
In 2011, Cadle sued the Fletchers in the District Court to
recover those transfers, bringing three claims under the Connecticut
361a allows a creditor to execute on the debtor’s wages in the amount of “the
lesser of (1) twenty‐five per cent of his disposable earnings for that week, or (2)
the amount by which his disposable earnings for that week exceed forty times
the higher of” the federal or state minimum wage. § 52‐361a(f).
3
Uniform Fraudulent Transfer Act (“CUFTA”), Conn. Gen. Stat. § 52‐
552a et seq.2 (Cadle also brought an alternative equitable claim, not at
2 CUFTA provides that a
transfer made . . . by a debtor is fraudulent as to a creditor, if the
creditor’s claim arose before the transfer was made . . . and if the
debtor made the transfer . . . : (1) With actual intent to hinder,
delay or defraud any creditor of the debtor; or (2) without
receiving a reasonably equivalent value in exchange for the
transfer or obligation, and the debtor (A) was engaged or was
about to engage in a business or a transaction for which the
remaining assets of the debtor were unreasonably small in relation
to the business or transaction, or (B) intended to incur, or believed
or reasonably should have believed that he would incur, debts
beyond his ability to pay as they became due.
Conn. Gen. Stat. § 52‐552e(a). CUFTA defines “transfer” as “every mode . . . of
disposing of or parting with an asset or an interest in an asset.” Id. § 52‐552b(12).
Finally, CUFTA defines an asset as “property of a debtor,” but excludes, in
relevant part, “property to the extent it is generally exempt under
nonbankruptcy law.” Id. § 52‐552b(2).
Connecticut General Statute § 52‐352b, titled “Exempt Property,” provides
that the
following property of any natural person shall be exempt:
(a) Necessary apparel, bedding, foodstuffs, household furniture
and appliances;
(b) Tools, books, instruments, farm animals and livestock feed,
which are necessary to the exemptioner in the course of his or her
occupation, profession or farming operation;
(c) Burial plot for the exemptioner and his or her immediate
family;
(d) Public assistance payments and any wages earned by a public
assistance recipient under an incentive earnings or similar
program;
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(e) Health and disability insurance payments;
(f) Health aids necessary to enable the exemptioner to work or to
sustain health;
(g) Workers’ compensation, Social Security, veterans and
unemployment benefits;
(h) Court‐approved payments for child support;
(i) Arms and military equipment, uniforms or musical
instruments owned by any member of the militia or armed forces
of the United States;
(j) One motor vehicle to the value of three thousand five hundred
dollars, provided value shall be determined as the fair market
value of the motor vehicle less the amount of all liens and security
interests which encumber it;
(k) Wedding and engagement rings;
(l) Residential utility deposits for one residence, and one
residential security deposit;
(m) Any assets or interests of an exemptioner in, or payments
received by the exemptioner from, a plan or arrangement
described in section 52‐321a;
(n) Alimony and support, other than child support, but only to the
extent that wages are exempt from execution under section 52‐
361a;
(o) An award under a crime reparations act;
(p) All benefits allowed by any association of persons in this state
towards the support of any of its members incapacitated by
sickness or infirmity from attending to his usual business;
(q) All moneys due the exemptioner from any insurance company
on any insurance policy issued on exempt property, to the same
extent that the property was exempt;
(r) Any interest of the exemptioner in any property not to exceed
in value one thousand dollars;
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issue here.) Both parties moved for partial summary judgment, and
the District Court granted partial summary judgment for Cadle on
one of its claims. The Fletchers appealed. The District Court
subsequently entered final judgment after dismissing Cadle’s
equitable claim as moot and dismissing its remaining claims without
prejudice.
DISCUSSION
I. Exemption of Post‐Garnishment Residual Wages
This case presents a question of Connecticut law that no
appellate court has answered: whether Conn. Gen. Stat. §§ 52‐361a
and 52‐367b, read together, exempt post‐garnishment residual
(s) Any interest of the exemptioner not to exceed in value four
thousand dollars in any accrued dividend or interest under, or
loan value of, any unmatured life insurance contract owned by the
exemptioner under which the insured is the exemptioner or an
individual of whom the exemptioner is a dependent;
(t) The homestead of the exemptioner to the value of seventy‐five
thousand dollars, or, in the case of a money judgment arising out
of services provided at a hospital, to the value of one hundred
twenty‐five thousand dollars, provided value shall be determined
as the fair market value of the real property less the amount of any
statutory or consensual lien which encumbers it; and
(u) Irrevocable transfers of money to an account held by a debt
adjuster licensed pursuant to sections 36a‐655 to 36a‐665,
inclusive, for the benefit of creditors of the exemptioner.
Notably, this statute does not provide that the balance of wages, post‐
garnishment, is exempt from execution.
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wages held in a third party’s bank account from further execution,
so that they become freely transferable under CUFTA.
The District Court answered that question in the negative.
Although its well‐reasoned opinion accords with an earlier District
of Connecticut decision3 and one Superior Court opinion,4 the
weight of state authority—including two Superior Court cases,5 an
opinion of the state Attorney General,6 and a Judicial Branch form7—
has adopted the contrary view.
Cadle Co. v. Jones, No. 3:00CV316WWELEAD, 2004 WL 2049321, at *6 (D.
3
Conn. Aug. 20, 2004).
Schoonmaker George & Colin, P.C. v. Siriwardene, No. FSTCV095010883S, 2009
4
WL 3086381, at *1 (Conn. Super. Ct. Aug. 24, 2009).
5 Cmty. Inv. Corp. v. Sirico Prof’l Servs., No. NNHCV146051279, 2015 WL
4880282, at *5 (Conn. Super. Ct. July 16, 2015); Discover Bank v. Marchetti, No.
HHBCV116010114, 2012 WL 3064665, at *4 (Conn. Super. Ct. June 21, 2012).
6 Conn. Att’y Gen. Op. No. 2002‐005, 2002 WL 393991, at *4 (Feb. 1, 2002); cf.
Wiseman v. Armstrong, 850 A.2d 114, 127 (Conn. 2004) (“Although an opinion of
the attorney general is not binding on a court, it is entitled to careful
consideration and is generally regarded as highly persuasive.” (internal
quotation marks omitted)).
7 Form JD‐CV‐24a, Appellant’s Br. Add. 15. Connecticut courts have
sometimes looked to Judicial Branch forms in construing statutes, see In re Elvin
G., 78 A.3d 797, 821 (Conn. 2013) (Zarella, J., dissenting); State v. Bernacki, 52 A.3d
605, 630 n.14 (Conn. 2012) (Eveleigh, J., dissenting); In re Darlene C., 717 A.2d
1242, 1249 (Conn. 1998), although Cadle has sharply criticized the process by
which this particular form was issued, see Appellee’s Br. 46‐49.
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II. Certification
We are permitted to certify a question to the Supreme Court of
Connecticut “if the answer may be determinative of an issue in
pending litigation in the certifying court and if there is no
controlling appellate decision, constitutional provision or statute of
this state.” Conn. Gen. Stat. § 51‐199b(d); see also 2d Cir. Local R.
27.2(a). “We have long recognized that state courts should be
accorded the first opportunity to decide significant issues of state
law through the certification process, and that, especially where the
issues implicate the weighing of policy concerns, principles of
comity and federalism strongly support certification.” Munn v.
Hotchkiss Sch., 795 F.3d 324, 334 (2d Cir. 2015) (brackets and internal
quotation marks omitted).
Certification is appropriate here for three reasons. First, this
question is determinative of the pending appeal, and no prior case is
controlling. Second, the divergence between federal and state
interpretation counsels in favor of certification. Third, postjudgment
execution is a deeply sensitive policy matter for Connecticut, whose
legislature recently revised § 52‐367b. We believe it is more
appropriate for the Connecticut Supreme Court to address this
matter in the first instance because it is in a better position than this
Court to determine how to interpret these sections in light of
Connecticut’s overall statutory scheme.
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CONCLUSION
For the foregoing reasons and pursuant to Conn. Gen. Stat.
§ 51‐199b and Local Rule 27.2 of this Court, we respectfully
CERTIFY to the Connecticut Supreme Court the following question:
“Do Conn. Gen. Stat. §§ 52‐361a and 52‐367b, read together,
exempt post‐garnishment residual wages held in a third party’s
bank account from further execution, so that they become freely
transferable under the Connecticut Uniform Fraudulent Transfer
Act, Conn. Gen. Stat. § 52‐552a et seq.?”
“The Connecticut Supreme Court may modify [this]
question[] as it sees fit and, should it choose, may direct the parties
to address other questions it deems relevant.” Munn, 795 F.3d at 337.
It is hereby ORDERED that the Clerk of this Court transmit to
the Clerk of the Connecticut Supreme Court a copy of this opinion
as our certificate, together with a complete set of the briefs, the
appendix, and the record filed in this Court by the parties. The
parties shall bear equally all fees and costs that may be imposed by
the Connecticut Supreme Court in connection with this certification.
This panel retains jurisdiction over this case and will resume its
consideration of this appeal after the disposition of this certification
by the Connecticut Supreme Court.
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