Background
Joseph and Leonard Cannavo were real estate investors who, through dozens of entities, acquired and managed approximately seventy properties by 2008. One entity, Western Greenwich Holdings, LLC, owned two Greenwich, Connecticut properties encumbered by mortgages. When the Cannavo brothers fell behind on payments, a portfolio lender, ECP Port Chester, LLC, agreed to sell the loan portfolio back to them if they could secure financing. Unable to do so because of poor credit, they transferred Blue Mountain Partners, LLC—a shell they had formed—to their sister Carmela, whose strong credit was then used to obtain a $1,745,000 Provident Bank loan. On January 25, 2012, Western Greenwich Holdings transferred the two Greenwich properties to Blue Mountain Partners for nominal recorded consideration of $10 each while Blue Mountain Partners used the Provident Bank proceeds to pay off the existing ECP and Branca mortgages.
SR Holdings I, LLC, which had acquired Sovereign Bank’s interest in two New York foreclosure actions, obtained deficiency judgments totaling more than $4.4 million against the Cannavo brothers and Western Greenwich Holdings. In January 2016, SR Holdings filed suit in Connecticut Superior Court alleging that the transfer of the Greenwich properties violated the Connecticut Uniform Fraudulent Transfer Act (CUFTA), Gen. Stat. § 52-552a et seq. After multiple mistrials, a fourth jury in January 2023 found in the plaintiff’s favor, determining that the properties’ combined market value was $2,490,000, that the liens encumbering them were less than that value (leaving $745,000 in net equity), and that Blue Mountain Partners did not furnish reasonably equivalent value. The trial court subsequently ordered a remittitur reducing the verdict to $595,000 to account for a $150,000 Branca mortgage the jury had omitted; the plaintiff accepted the reduction. The court then attached liens totaling $595,000 on the two properties. Both sides appealed.
The Appellate Court consolidated the two appeals. The plaintiff (AC 46673) challenged the remittitur as an abuse of discretion; the defendants (AC 46880) sought to have the verdict set aside entirely, arguing that the transferred properties were not “assets” under CUFTA because they were over-leveraged, and that Blue Mountain Partners had paid reasonably equivalent value.
The Court’s Holding
The court dismissed the plaintiff’s appeal (AC 46673) for lack of subject matter jurisdiction. Under Gen. Stat. § 52-228a, a party that accepts a remittitur cannot then appeal from the order imposing it. By filing a pleading expressly accepting and consenting to the reduced award, SR Holdings forfeited its right to challenge the remittitur on appeal, regardless of the merits of its objection.
The court affirmed the trial court’s denial of the defendants’ motion to set aside the verdict (AC 46880). On the “assets” question, the jury was entitled to find that the total value of the Greenwich properties ($2,490,000) exceeded the total valid liens against them, meaning the properties were not overleveraged and therefore constituted assets within the meaning of CUFTA. On the “reasonably equivalent value” question, the jury’s finding was supported by substantial evidence: Blue Mountain Partners furnished $1,745,000 in total consideration (cash paid to lienholders plus liabilities assumed) against a market value of $2,490,000—a shortfall of $745,000—and the jury was not required to accept the defendants’ characterization that payoff of the existing mortgages constituted fair exchange for the full value of the properties.
Key Takeaways
- A creditor that accepts a court-ordered remittitur under § 52-228a surrenders appellate jurisdiction over that ruling; there is no “conditional acceptance” strategy that preserves a right to appeal the reduction.
- Under CUFTA, property encumbered by debt is not automatically excluded from the definition of “asset”; the jury may find the properties are assets if their market value exceeds the valid liens, even if mortgage payoffs form part of the transferee’s consideration.
- A transferee’s payment of existing mortgages on transferred property does not, by itself, establish reasonably equivalent value when the total consideration paid is materially less than the market value of the properties received.
- A directed-verdict claim will be deemed abandoned on appeal if the appellant fails to brief the applicable standard of review and provide substantive analysis separate from its motion-to-set-aside arguments.
Why It Matters
This decision reinforces the breadth of Connecticut’s fraudulent-transfer regime for creditors pursuing real-property conveyances. Courts and juries are not required to treat mortgage payoffs as dollar-for-dollar equivalent value when the underlying properties are worth more than the debt retired; the relevant comparison is the total consideration furnished against the full market value of what was transferred. For practitioners, the case is also a cautionary tale on remittitur procedure: accepting a court-ordered reduction—even with apparent reservations—extinguishes appellate review of that order under Connecticut law.
The case also illustrates the difficulty defendants face in setting aside CUFTA verdicts when the underlying facts show that distressed borrowers used a family member with clean credit to absorb assets at below-market consideration, leaving judgment creditors with nothing to collect. Where circumstantial evidence of insolvency, intra-family transfers, and nominal recorded consideration align, courts will be reluctant to disturb a jury’s finding of actual fraudulent intent.