Deutsche Bank AG v. Vik

314 A.3d 583

349 Conn. 120

DEUTSCHE BANK AG

v.Caroline VIK et al.

(SC 20777)

Supreme Court of Connecticut.

Argued November 14, 2023

Officially Released May 28, 2024

David G. Januszewski, with whom were Thomas D. Goldberg, Stamford, and, on the brief, Sheila C. Ramesh, pro hac vice, Sesi V. Garimella, pro hac vice, John W. Cerreta, Hartford, and Jennifer M. Palmer, Stamford, for the appellant (plaintiff).

Monte E. Frank, Hartford, with whom were Dana M. Hrelic, Hartford, and Meagan A. Cauda, Hartford, for the appellees (defendants).

D’Auria, Mullins, Ecker, Alexander and Dannehy, Js.

ALEXANDER, J.

₁₂₃The plaintiff, Deutsche Bank AG, has spent the last decade attempting to collect from a nonparty, Sebastian Holdings, Inc. (SHI), an approximately $243 million foreign judgment (English judgment)¹ resulting from an unpaid margin call in 2008. In Deutsche Bank AG v. Sebastian Holdings, Inc., 346 Conn. 564, 294 A.3d 1 (2023), the plaintiff unsuccessfully sought to pierce SHI’s corporate veil and to hold the defendant Alexander Vik (Alexander) jointly and severally liable with SHI for the English judgment.² Id., 568–69, 294 A.3d 1. While that case was pending in the trial court, the plaintiff commenced the present action against Alexander and his daughter, the defendant Caroline Vik (Caroline), al- leging tortious interference with business expectancy and violation of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq., on the basis of the defendants’ alleged efforts to interfere with the order of a Norwegian court requiring the sale of SHI’s shares in a Norwegian software company in partial satisfaction of SHI’s debt to the plaintiff. The defendants moved to dismiss the action, arguing that it was barred by the litigation privilege. The trial court denied the motion, and the defendants appealed to the Appellate Court, which reversed the trial court’s decision and directed the trial court to dismiss the plaintiff’s complaint in its entirety. See Deutsche Bank AG ₁₂₄v. Vik, 214 Conn. App. 487, 511, 281 A.3d 12 (2022). We granted the plaintiff’s petition for certification to appeal, limited to the issue of whether the Appellate Court correctly determined that the plaintiff’s complaint was barred by the litigation privilege. See Deutsche Bank AG v. Vik, 345 Conn. 964, 964–65, 285 A.3d 388 (2022). During oral argument before this court, the defendants argued that this case was rendered moot by our decision in Deutsche Bank AG v. Sebastian Holdings, Inc., supra, 346 Conn. 564, 294 A.3d 1, which we issued after the parties had filed their briefs in this case. We conclude that the case is not moot and that the plaintiff’s complaint is not barred by the litigation privilege. Accordingly, we reverse the judgment of the Appellate Court.

The plaintiff’s complaint alleges the following relevant facts.³ "Since 2013, [the plaintiff] has vigorously sought to collect [the English] judgment debt by undertaking a global enforcement effort, which include[d] filing actions in Connecticut, New York, Delaware, Pennsylvania, the United Kingdom, and Norway. At all times, SHI has claimed that it lacks sufficient assets to satisfy the English judgment. …

"This action concerns one such asset: shares in a Norwegian software company, Confirmit AS (Confirmit). In 2008, [Alexander] wrongfully caused SHI to transfer the shares in Confirmit to his personal account in order to keep those shares beyond [the plaintiff’s] reach. … [With respect to] the English judgment, the … court found that the shares of Confirmit were one portion of the approximately $1 billion of assets that [Alexander] drained from SHI to avoid paying [the plaintiff] amounts owed. … In 2015, [Alexander] again purported to ₁₂₅transfer those same shares, this time to his father, Erik Martin Vik [Erik], while the shares were the subject of litigation with [the plaintiff]."

The complaint alleges that, on April 13, 2016, the Oslo Court of Probate, Bankruptcy, and Enforcement (Oslo Enforcement Court) issued a decision declaring the English judgment to be an enforceable judgment in Norway. On April 26, 2016, the Oslo Enforcement Court granted the plaintiff’s petition to execute a lien on the Confirmit shares. On December 21, 2016, following a trial, the Oslo Enforcement Court confirmed the validity of the plaintiff’s execution lien and invalidated Alexander’s transfer of the shares to himself in 2008 and to his father in 2015. As a result, the shares reverted to SHI and were thus subject to enforcement. Two years later, on May 24, 2019, the Supreme Court of Norway affirmed the Oslo Enforcement Court’s ruling. On June 12, 2019, the enforcement officer issued a decision to commence the sale of the Confirmit shares and to appoint ABG Sundal Collier ASA (ABG) to oversee the sale. In June, 2019, as part of the sales process, ABG assessed the shares and determined their value to be between $100 and $150 million. During the first phase of the sale, ABG "communicated with approximately [seventy-two] potential buyers. By October, 2019, ten interested parties submitted indicative bids for the [shares]. In November, 2019, during the second phase of the sales process, two companies submitted final bids."

The complaint alleges that, as soon as the plaintiff obtained its execution lien in 2016, Alexander, operating through various Vik related entities and family members, engaged "in a series of vindictive maneuvers" intended to disrupt, delay, and otherwise interfere with the sale. Specifically, after the Oslo Enforcement Court ruled that SHI was the true owner of the shares, Erik, at the behest of Alexander, filed numerous baseless appeals challenging that determination. According to ₁₂₆the complaint, these appeals, and the uncertainty they created surrounding Confirmit’s ownership, caused Confirmit to lose market share and "significantly contributed to reduced [bids] that … potential purchasers submitted during the sales process …. "

The complaint further alleges that, in September, 2017, Erik "requested that the execution lien be removed from the Confirmit shares in the VPS registry, the central securities repository in Norway," even though such removal was unlawful. According to the complaint, "[Erik’s] request lacked any legitimate basis, and … was made in coordination with Alexander … in furtherance of the long-running scheme to obstruct [the plaintiff’s] ability to recover on the English judgment." The complaint further alleges that, on January 27, 2020, "the Oslo Enforcement Court rejected [Erik’s] plea to stop the Confirmit sale [based on the 2017] removal of the execution lien from the VPS registry. Noting that ‘only the enforcement office may instruct a VPS account operator to delete a registered execution lien,’ the Oslo enforcement court held that ‘the application made [in] September, 2017, by [Erik] for deletion of the execution lien was unlawful.’ "

Another tactic allegedly utilized by Alexander to disrupt, delay, and otherwise interfere with the sale of the Confirmit shares was to stack Confirmit’s board of directors with Vik family members and close associates. According to the complaint, the plaintiff, fearful that the newly configured board would deplete Confirmit’s assets, filed a petition for a preliminary injunction seeking to have the Viks and their associates removed from the board. On March 30, 2017, the Oslo Enforcement Court granted the petition. In doing so, the court expressed concern that allowing the Viks or their associates to remain on Confirmit’s board increased the risk that " ‘bad faith transactions may be implemented [by them] that reduce the value of the [company].’ " The ₁₂₇court further stated that " ‘Alexander … has systemically sought to withhold funds from service in payment of creditors by transferring assets’ " and that it " ‘must also be concluded that [his] family members and business advisers will act in accordance with [his] wishes.’ " (Emphasis omitted.)

The complaint alleges that the plaintiff’s fears regarding Alexander’s stacking of Confirmit’s board were realized in November, 2019, when Caroline, midway through the bidding process for the Confirmit shares, sought to invoke her rights under a "sham" agreement between her and SHI purporting to grant her an irrevocable right of first refusal (ROFR) to purchase 100 percent of Confirmit’s shares. According to the complaint, SHI and Caroline "reached this purported agreement on the very same day [that the plaintiff] petitioned … to replace Confirmit’s board …. " "As further evidence of fraud, the existence of the purported ROFR was not disclosed until July, 2019, in the midst of negotiations to sell [the] Confirmit [shares] and despite SHI’s obligations to produce or disclose [any] such [agreement] in the course of various ongoing [litigation] between SHI and [the plaintiff]."

The complaint alleges that, on November 1, 2019, Caroline "provided ABG with a copy of the fraudulent ROFR … and requested information about [all] offers [to purchase the Confirmit shares, which] she claimed to be entitled to under the [agreement]." According to the complaint, after ABG informed Caroline "that, pursuant to Norwegian law, it could not consider the ROFR … in connection with the sale of [the] Confirmit [shares] because the … agreement was dated after [the plaintiff] … register[ed] its execution lien," Caroline commenced an action against ABG in the United States District Court for the District of Connecticut (Connecticut District Court action) seeking to enforce the fraudulent ROFR and to enjoin ₁₂₈the sale of the Confirmit shares. On December 4, 2019, the District Court denied her application for a preliminary injunction. Two days later, Caroline filed another petition, this time with the Oslo Enforcement Court, again seeking to enforce the ROFR. This petition also was denied. On February 11, 2020, the District Court issued an order to show cause why Caroline’s action should not be...