Background
Deutsche Bank obtained an English judgment exceeding $243 million against Sebastian Holdings, Inc. (SHI), a company controlled by Alexander Vik. In an earlier Connecticut action filed in 2013, the bank sought to pierce SHI’s corporate veil and hold Alexander personally liable. After trial, the court found that the bank had not proved Alexander transferred SHI’s assets with the specific intent to leave SHI unable to pay its debts, and the Connecticut Supreme Court affirmed.
This separate action concerns later conduct surrounding a Norwegian forced sale of shares in Confirmit AS, which were subject to an execution lien securing the English judgment. Deutsche Bank alleged that Alexander and his daughter, Caroline Vik, disrupted the 2019–2020 sale through tactics including a sham right-of-first-refusal agreement, litigation seeking to halt the sale, and a fraudulent $325 million bid. The bank claimed their conduct depressed the shares’ sale price to $65 million and asserted tortious-interference and Connecticut Unfair Trade Practices Act claims.
After the Connecticut Supreme Court held that the litigation privilege did not bar those claims, the defendants moved for summary judgment based on res judicata and collateral estoppel. The trial court granted judgment for both defendants, reasoning that the earlier veil-piercing action precluded the present claims and certain underlying issues.
The Court’s Holding
The Appellate Court reversed. As to Caroline, the defendants had waived res judicata by failing to plead it on her behalf and expressly stating that they were not asserting it for her. The trial court also incorrectly concluded that Caroline was in privity with Alexander for purposes of claim preclusion.
As to Alexander, the court held that genuine issues of material fact remained because the present case did not involve the same underlying claim as the earlier veil-piercing action. The earlier case addressed Alexander’s liability for SHI’s debt based principally on 2008 asset transfers, while this case concerns alleged interference with a distinct Confirmit sale more than a decade later. Deutsche Bank also lacked a full and fair opportunity to litigate the present claims in the earlier action, and the bank’s interest in vindicating those claims outweighed res judicata’s policy objectives.
Collateral estoppel likewise did not apply. The present action rests on different conduct involving a different transaction, the relevant determination in the earlier action was not necessary to that judgment, and the required identity of issues was absent. The case was remanded for further proceedings.
Key Takeaways
- A court cannot grant summary judgment on an unpleaded res judicata defense that a defendant expressly disclaimed.
- Claims based on alleged interference with the 2019–2020 Confirmit sale were not the same claims as an earlier veil-piercing case focused on 2008 asset transfers.
- Issue preclusion requires an identical issue that was actually and necessarily determined in the prior action.
Why It Matters
The decision underscores that Connecticut’s preclusion doctrines are flexible rules grounded in fairness and public policy, not mechanical barriers to later litigation. Even related disputes involving the same debt and parties are not necessarily precluded when they arise from different conduct and transactions.
For litigators, the opinion also highlights the importance of properly pleading affirmative defenses and establishing privity, identity of claims or issues, and a full and fair prior opportunity to litigate before obtaining judgment on preclusion grounds.