ABBOTT TERRACE HEALTH CENTER v. PARAWICH

990 A.2d 1267

120 Conn.App. 78

ABBOTT TERRACE HEALTH CENTER, INC. v. Anna PARAWICH et al.

No. 31007.

Appellate Court of Connecticut.

Argued December 8, 2009.

Decided March 23, 2010.

Kari L. Olson, with whom, on the brief, was Kevin T. Hansted, Hartford, for the appellant (plaintiff).

GRUENDEL, BEACH and DUPONT, Js.

GRUENDEL, J.

The plaintiff, Abbott Terrace Health Center, Inc., appeals from the judgment of the trial court in favor of the defendant William Hulstrunk, also known as William Hulstrunk.¹ The plaintiff maintains that the court, following the entry of default against the defendant, improperly declined to impose liability thereon. We reverse in part the judgment of the trial court.

Our recitation of the relevant facts is governed by the procedural posture of this case. "The entry of a default constitutes an admission by the defendant of the truth of the facts alleged in the complaint." DeBlasio v. Aetna Life & Casualty Co., 186 Conn. 398, 400, 441 A.2d 838 (1982). The complaint in the present case set forth the following facts. The plaintiff is a Connecticut corporation located at 44 Abbott Terrace in Waterbury and is licensed as a chronic and convalescing nursing home and rest home. On December 13, 2007, the defendant's aunt, Anna Parawich, acting through the defendant as her attorney in fact, transferred certain moneys in her bank accounts to the defendant. The very next day, Parawich entered the plaintiff nursing home to receive care and services for an indefinite period of time. She did so knowing that the plaintiff would bill her for the costs of the care and services provided, and she transferred the moneys on December 13, 2007, knowing that she would incur debt for the costs of care and services provided by the plaintiff and would be billed accordingly. That transfer of Parawich's assets rendered her unable to meet her financial obligations to the plaintiff. Further, Parawich conveyed those assets without adequate consideration and with the intent to avoid paying for her health care costs. In so doing, Parawich transferred her assets with actual intent to hinder, to delay and to defraud creditors. As her attorney in fact and the recipient of those assets, the defendant acted as a transferee, participant in and beneficiary of Parawich's fraudulent transfer, causing damages to the plaintiff.

On December 14, 2007, Parawich was admitted to the plaintiff home as a private, self-pay resident to receive twenty-four hour skilled nursing care and services. At all times during her stay, the plaintiff rendered skilled nursing care and services to Parawich. At the same time, the plaintiff did not receive full payment for the costs associated with those services. The principal amount due and owing to the plaintiff for services rendered to Parawich totaled $75,151.77. Despite demand by the plaintiff, Parawich failed to pay for the services provided to her by the plaintiff.

On February 18, 2008, Parawich, through the defendant, her attorney in fact, executed an admissions agreement (agreement). Pursuant thereto, Parawich was obligated to pay the plaintiff for the costs of skilled nursing care and services rendered, including the basic daily rate and any ancillary charges. In addition, the agreement provided that the plaintiff was entitled to collect interest at the prevailing rate on any overdue principal balance that was more than ninety days overdue. The agreement also entitled the plaintiff to recoup reasonable attorney's fees and all costs it incurred in connection with any collection action on Parawich's account. Parawich breached that agreement, causing damage to the plaintiff.

At the time the agreement was entered into, the defendant, as Parawich's attorney in fact, represented to the plaintiff that he would comply with the terms of the agreement, including using Parawich's assets and income to pay the plaintiff and promptly applying for and cooperating with the department of social services (department) to establish Parawich's medicaid eligibility when her assets neared exhaustion. The defendant made those promises to the plaintiff with the expectation that the plaintiff would rely on them. Relying on the defendant's promises, the plaintiff rendered care and services to Parawich.

The defendant thereafter failed to respond to the department's requests for the information required to establish Parawich's medicaid eligibility. He further failed to use Parawich's assets and income to pay the plaintiff for the care and services it rendered to Parawich. As a result of the plaintiff's reliance on the defendant's promises, the plaintiff rendered care and services to Parawich, the costs for which it was not paid. The plaintiff thus was damaged by its reliance on the defendant's promises.

Accordingly, the plaintiff on September 19, 2008, filed an application for a prejudgment remedy against the defendant and Parawich that was accompanied by the affidavit of Darlene Fortier, the director of financial services for the plaintiff. The court held a hearing on the matter on October 21, 2008. Neither Parawich nor the defendant appeared at that hearing, at which the plaintiff introduced into evidence certain documents. Exhibit one, titled "application requirements list," under which was written "last notice," was a document prepared by the department to determine Parawich's eligibility for long-term care assistance. That document was addressed to the defendant and requested, inter alia, a complete history of certain bank accounts. The department also requested verification of certain specified withdrawals. In particular, the department inquired as to the closure of a money market account at the Naugatuck Savings Bank on December 13, 2007, at which time the defendant withdrew $78,699.50. The department, in a notation next to that specified transaction, inquired "where did it go?" Exhibit two, titled "transfer of assets—preliminary decision notice," was also a document prepared by the department and addressed to the defendant. It stated in relevant part: "We reviewed the information that you gave us about the transfer of $78,699.50 on December 13, 2007. Our initial decision is that you made the transfer in order to be eligible for assistance. We made this decision because: You are applying for or receiving medical help for long-term care services or home care services; and you ... transferred assets that affect eligibility; and you have not given us proof that the transfer was not made in order to be eligible for assistance. The purpose of this notice is to tell you about our preliminary decision and give you a chance to contact us before the decision becomes final. If you do not agree with us, you need to tell us.... If we do not hear from you by August 18, 2008, we will act on our decision about the transfer." On the basis of the foregoing, the court on October 21, 2008, found that probable cause existed to conclude that a judgment "will be rendered ... in favor of the plaintiff." The court granted the application for a prejudgment remedy "to the value of $81,516.83" and ordered that the plaintiff "may attach, garnish and/or otherwise encumber all real property owned by Parawich and the defendant individually or jointly and may attach and/or garnishee all bank accounts owned by Parawich and the defendant individually or jointly."

The plaintiff commenced the present action against the defendant and Parawich on October 24, 2008. Its complaint, the gist of which we already have recounted, consisted of five counts. Count one alleged breach of contract against Parawich. Count two alleged promissory estoppel against the defendant. The third count, alleging fraudulent conveyance, pertained to both the defendant and Parawich. The fourth and fifth counts, alleging quantum meruit and unjust enrichment, respectively, were directed at Parawich.

Neither the defendant nor Parawich filed an appearance or responded in any manner to the plaintiff's complaint. Accordingly, the plaintiff on November 24, 2008, filed a motion for default for failure to appear, which was granted on December 9, 2008. The plaintiff then filed a "motion for judgment based upon default," to which it attached an affidavit of debt and bill of costs. A certificate of closed pleadings was filed on January 12, 2009, at which time the plaintiff claimed the matter for a hearing in damages. At no time did the defendant respond to the plaintiff's action, never mind file a motion to set aside the default; see Practice Book § 17-42; or provide written notice of a defense to liability. See Practice Book §§ 17-34, 17-35 and 17-37.

On January 26, 2009, the court ordered as follows: "Please be advised that the ... case has been assigned for a hearing in damages on March 5, 2009. Please report to the assigned courtroom at Waterbury Superior Court, 300 Grand Street. If counsel files an affidavit of debt, attorney's fees, current military affidavit and order page, the matter may be taken on the papers. All cases must file an order page with a breakdown of all monetary amounts." (Emphasis added.) Complying with that order, the plaintiff on March 5, 2009, filed with the court an updated affidavit of debt indicating that the principal amount due and owing to the plaintiff for care and services rendered to Parawich was $102,815. The plaintiff further filed a military affidavit stating that neither the defendant nor Parawich currently were on active military duty. Finally, the plaintiff filed an affidavit of attorney's fees and costs, in which attorney Kevin T. Hansted attested to a total of $7523 in attorney's fees and $936.55 in costs arising from the present litigation.

By order dated March 5, 2009, the court rendered judgment against Parawich in the amount of $116,748.57. The court expressly found that said amount "is due the plaintiff from Parawich only." The court further stated that it "does not find the defendant liable."

On March 25, 2009, the...