Opinion
CV165006850S
01-08-2018
John DIEKAN v. HYPERDAPTIVE, LLC et al.
UNPUBLISHED OPINION
OPINION
Kathleen E. McNamara, Judge
I.
FACTS
On June 2, 2016, the plaintiff, John Diekan, filed an application for judicial winding up of hyperDaptive LLC (hD) against hD and its members, Richard Tanner, Robert Tattersall, Steven Settle, and Troy Lemieux. On May 8, 2017, Diekan filed an amended complaint in which he added five counts against the defendants, Steven Settle and Troy Lemieux, to his original complaint.
The following facts are alleged in the amended complaint and are common to each count. In September of 2015, Diekan, Settle, Lemieux, Tanner, and Tattersall formed hD, and each member owned one-fifth of hD. Diekan worked as the company’s sole full-time employee from September until January 2016, when Settle and Lemieux joined the company as full-time members. Prior to the formation of the company, Settle and Lemieux promised other members that (1) members would have equal pay and ownership, (2) no meetings would be held without all members present, (3) all members would participate equally in management, and (4) no company funds would be used or managed without authorization from all members. Subsequent to the formation of the company, Diekan substantially contributed to the company, including assisting Lemieux in obtaining Bay State Milling Company (BSM) as hD’s first client.
Diekan also alleges the following. " Settle and Lemieux knowingly made false representations and promises to [Diekan] in order to induce [Diekan] to act in reliance on those statements in the formation and management of hD." Compl., Count Two, ¶ 44. Settle and Lemieux made false representations that were " designed to allow Settle and Lemieux to gain control of [hD’s] management, gain control of [hD’s] funds and opportunities, use [hD’s] funds for their own purposes, and take over [hD’s] opportunities." Compl., Count Two, ¶ 47. Diekan relied on the false representations regarding the formation and management of hD to his detriment. See Compl., Count Two, ¶ 48.
Diekan further alleges the following. From April to May 2016, Settle and Lemieux conspired to appropriate assets of hD in violation of promises Settle and Lemieux made to other members. See Compl., Count Two, ¶ 22. " In May 2015, in furtherance of their scheme, Settle and Lemieux collaborated behind the scene through in person meetings and through telephone calls. They produced hD documents that heavily favored them and their interests." Compl. Count Two, ¶ 23. On May 17, 2017, Settle and Lemieux, without unanimous authorization from other members, removed $104, 693.05 from hD’s cash accounts, and deposited those funds into their private bank accounts, which could not be accessed by other hD members, including the plaintiff. After hD members demanded the return of the funds to hD, funds were returned except for $1000 that Lemieux had already spent on personal expenses. See Compl., Count Two, ¶ 29. On May 17, 2016, as a result of the removal of those funds, members of hD voted unanimously to dissolve hD. See Compl., Count Two, ¶ 30. Settle and Lemieux continue to provide services for BSM, and have refused to account for billable hours since May 16, 2016, to hD. Compl., Count Two, ¶ 31 and 39. Settle and Lemieux have not accounted for any payments made to them by BSM during the time period leading up to the dissolution, or after the dissolution vote on May 17, 2016. Compl., Count Two, ¶ 39. Settle admitted that BSM promised greater rewards to the defendants if they were not part of hD. Compl., Count Two, ¶ 33.
Diekan further alleges, on May 25, 2016, Lemieux withdrew from hD’s account and transferred to his personal account $138, 208 from hD without unanimous approval from hD members. Compl., Count Two, ¶ 34-36. Lemieux transferred these funds to his personal bank account. Compl., Count Two, ¶ 35. Settle and Lemieux are in control of, have not accounted for, and refuse access by other members to these funds, which are being wrongfully withheld from hD and its members. See Compl., Count Two, ¶¶ 37-38. On July 7, 2017, Settle and Lemieux filed a motion to dismiss counts two through six of the amended complaint on the ground that Diekan has no standing to bring a direct claim against them because Diekan’s injuries are not separate and distinct from other members and, therefore, the court does not have subject matter jurisdiction over Diekan’s claims alleged in counts two through six. Diekan’s memorandum in opposition was filed on August 7, 2017. Settle and Lemieux’ reply memorandum was filed on September 5, 2017. Oral arguments were heard on September 11, 2017.
II.
DISCUSSION
A. GENERAL PRINCIPLES
" A motion to dismiss tests, inter alia, whether, on the face of the record, the court is without jurisdiction." (Internal quotation marks omitted.) MacDermid, Inc. v. Leonetti, 310 Conn. 616, 626, 79 A.3d 60 (2013). " A court deciding a motion to dismiss must determine not the merits of the claim or even its legal sufficiency, but rather, whether the claim is one that the court has jurisdiction to hear and decide." (Internal quotation marks omitted.) Hinde v. Specialized Education of Connecticut, Inc., 147 Conn.App. 730, 740-41, 84 A.3d 895 (2014).
" [B]ecause the issue of standing implicates subject matter jurisdiction, it may be a proper basis for granting a motion to dismiss." Electrical Contractors, Inc. v. Dept . of Education, 303 Conn. 402, 413, 35 A.3d 188 (2012). " [The plaintiff bears the burden of proving subject matter jurisdiction, whenever and however raised." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. New London, 265 Conn. 423, 430 n.12, 829 A.2d 801 (2003). " [I]t is the burden of the party who seeks the exercise of jurisdiction in his favor ... clearly to allege facts demonstrating that he is a proper party to invoke judicial resolution of the dispute ... It is well established that, in determining whether a court has subject matter jurisdiction, every presumption favoring jurisdiction should be indulged." (Internal quotation marks omitted.) Financial Consulting, LLC v. Commissioner of Insurance, 315 Conn. 196, 226, 105 A.3d 210 (2014).
" When a trial court decides a jurisdictional question raised by a pretrial motion to dismiss on the basis of the complaint alone, it must consider the allegations of the complaint in their most favorable light ... In this regard, a court must take the facts to be those alleged in the complaint, including those facts necessarily implied from the allegations, construing them in a manner most favorable to the pleader." (Internal quotation marks omitted.) Conboy v. State, 292 Conn. 642, 651, 974 A.2d 229 (2009).
" Standing is established by showing that the party claiming it is authorized by statute to bring suit or is classically aggrieved ... The fundamental test for determining aggrievement encompasses a well-settled twofold determination: first, the party claiming aggrievement must successfully demonstrate a specific, personal and legal interest in [the subject matter of the challenged action], as distinguished from a general interest, such as is the concern of all members of the community as a whole. Second, the party claiming aggrievement must successfully establish that this specific personal and legal interest has been specially and injuriously affected by the [challenged action] ... Aggrievement is established if there is a possibility, as distinguished from a certainty, that some legally protected interest ... has been adversely affected." (Internal quotation marks omitted.) May v. Coffey, 291 Conn. 106, 112, 967 A.2d 495 (2009).
On July 1, 2017, General Statutes § § 34-243 through 34-283 became effective, and the Connecticut Uniform Limited Liability Company Act (Act) thereby became the law in Connecticut, which is similar to the Uniform Limited Liability Company Act (2006) (uniform law). See Conn. Gen. Stat. Ann. § 34-243 (West 2001 Pocket Part), notation. The Act explicitly made derivative actions applicable to Limited Liability Companies (LLCs). General Statutes § 34-271a provides in relevant part: " A member may maintain a derivative action to enforce a right of a limited liability company ..." (Emphasis added.)
The act does not apply retroactively, and is not applicable to the present case because the events giving rise to this action arose prior to its effective date. The Act, however, provides insight into the way that Connecticut courts view derivative actions in the context of LLCs. Moreover, prior to the codification of the Act, Connecticut courts held that derivative actions were applicable to LLCs; see, e.g., Wasko v. Farley, 108 Conn.App. 156, 170, 947 A.2d 978, cert. denied, 289 Conn. 422, 958 A.2d 155 (2008); and, for purposes of evaluating whether a plaintiff has standing to bring direct and derivative claims, Connecticut courts have treated LLCs the same as corporations. See Scarfo v. Snow, 168 Conn.App. 482, 501, 146 A.3d 1006 (2016); see also Uniform Limited Liability Company Act (2006), with prefatory note and comments, Article 8, § 801, comment (b), p. 159 (editors from the National Conference of Commissioners on Uniform State Laws cited to Delaware case for proposition that " issues of standing viz-a-viz direct and derivative claims are comparable regardless of whether the entity is a limited partnership, a limited liability company, or a corporation").
General Statutes § 34-243i(a) provides in relevant part: " Except as provided in subsection (b) of this section, on and after July 1, 2017, sections 34-243 to 34-283d, inclusive, govern all limited liability companies." Section 34-243i(b) does not apply to the present case.
In a case involving a shareholder who attempted to bring a direct action against a corporation, our Supreme Court held that " [a] distinction must be made between the right of a shareholder to bring suit in an individual capacity as the sole party injured, and his right to sue derivatively on behalf of the corporation alleged to be injured ... Generally, individual stockholders cannot sue the officers at law for damages on the theory that they are entitled to damages because mismanagement has rendered their stock of less value, since the injury is generally not to the shareholder individually, but to the corporation- to the shareholders collectively ... In this regard, it is axiomatic that a claim of injury, the basis of which is a wrong to the corporation, must be brought in a derivative suit, with the plaintiff proceeding secondarily, deriving his rights from the corporation which is alleged to have been wronged ... It is, however, well settled that if the injury is one to the plaintiff as a stockholder, and to him individually, and not to the corporation, as where an alleged fraud perpetrated by the corporation has affected the plaintiff directly, the cause of action is personal and individual ... In such a case, the plaintiff-shareholder sustains a loss separate and distinct from that of the corporation, or from that of other shareholders, and thus has the right to seek redress in a personal capacity for wrong done to him individually." (Internal quotation marks omitted.) May v. Coffey, supra, 291 Conn. 114-15.
In Fink v. Golenbock, 238 Conn. 183, 200-01, 680 A.2d 1243 (1996), our Supreme Court held " a shareholder who believes that the corporation has been harmed by the actions of corporate officers, directors, or third parties may bring suit on behalf of the corporation, should the corporation fail to do so itself. In contrast, in order for a shareholder to bring a direct or personal action against the corporation or other shareholders, that shareholder must show an injury that is separate and distinct from that suffered by any other shareholder or by the corporation." Fink also cited In re Ionosphere Clubs, Inc., 17 F.3d 600, 605 (2d Cir. 1994) for the proposition that " [t]he distinction between derivative and direct claims turns primarily on whether the breach of duty is to the corporation or to the shareholder[s] and whether it is the corporation or the shareholder[s] that should appropriately receive relief." (Internal quotation marks omitted.) Fink v. Golenbock, supra, 201.
In May, the court provided an example of how the plaintiff’s standing to bring a direct rather than derivative action turns on who would benefit from a remedy. See May v. Coffey, supra, 291 Conn. 120. In May, the court held that " [b]ecause an unreasonably low offering price injured the corporation and because a proper remedy to the corporation would make all shareholders whole, we conclude that the injury suffered by the plaintiffs, the dilution of their existing shares by the unreasonably low pricing of the new shares, was derivative of the harm suffered by the company." (Emphasis added.) Id., 119-20.
The May court is consistent with the general rule set forth in 19 C.J.S. 761, Corporations § 485 (2007): " Under some authority, the analysis for determining whether a stockholder’s action should be classified as direct or derivative turns on the determination of who suffered the alleged harm, the corporation or the suing stockholder individually, and who would receive the benefit of recovery or other remedy."
It follows, then, that the distinction between derivative and direct claims does not turn primarily on whether the business entity is closely held, or on whether the plaintiff is the only member of the business entity other than the defendants. See Fink v. Golenbock, supra, 238 Conn. 202 (our Supreme Court expressly rejected one plaintiff’s argument that " because the corporation [is] a closely held professional corporation in which the plaintiff and [the defendant] were the only shareholders, each holding 50 percent of the outstanding stock, any injury claimed by the plaintiff to have been caused by [the defendant] would necessarily be an individual injury and not an injury to the corporation").
One appellate case did turn on the fact that the corporation was closely held. See Guarnieri v. Guarnieri, 104 Conn.App. 810, 823-24, 936 A.2d 254 (2007). In Guarnieri, our Appellate Court held that a plaintiff had standing because of " the plaintiff’s peculiar status as both alleged perpetrator of corporate wrongs and sole shareholder of the corporation." (Emphasis added.) Id. On the basis of these unique facts the court held that the plaintiff had standing to pursue a direct claim against the defendants with respect to the five counts in which the plaintiff clearly alleged violations which resulted in harm to the plaintiff, rather than the corporation. Id., 824. Even in this case, however, the court dismissed two counts for lack of standing to bring a direct claim because those counts clearly alleged wrongs against the corporation. Id. 820-21. In the first of the dismissed counts, the plaintiff asked for an accounting, which " [t]he defendant conceded in his opposition to the motion to dismiss that the relief sought on count one was reimbursement to the corporation of all [moneys] due to the corporation from the plaintiff stemming from accounting irregularities." (Emphasis added; internal quotation marks omitted.) Id., 820. In the second of the dismissed counts, the plaintiff alleged conversion of the corporation’s business opportunities and income, which the court concluded " plainly [belonged] to the corporation, and the defendant [had] not alleged otherwise." Id., 821.
Prior to the court’s consideration of counts two through six individually, the court will resolve whether Diekan may establish standing despite sharing his injury with other members.
Settle and Lemieux argue that the wrongful conduct alleged with respect to each cause of action asserted by Diekan gives rise to the same injuries for all members, and not just Diekan. Therefore, Diekan cannot establish standing to bring a direct claim for any of the causes of action alleged because his injury is not separate and distinct from other members of hD.
In order to have standing to bring a direct action, " [t]he plaintiff must allege a special injury to himself separate and distinct from that suffered by the corporation or by other persons in a situation similar to the plaintiff’s." (Emphasis added.) 19 C.J.S. 761, Corporations § 485 (2007).
Accordingly, so long as Diekan has alleged a special injury that is separate and distinct from hD, Diekan is not necessarily precluded from bringing a direct claim because he has suffered an injury that is shared with other members of hD.
Furthermore, Settle and Lemieux argue that the rule from Fink is inapplicable here, and thus Diekan’s claims cannot simultaneously be both direct and derivative.
Diekan counters that under Fink, his claims are not mutually exclusive, and the plaintiff has standing to bring a direct action against other members, even if the claims could also be brought in a derivative action.
This argument is relevant to counts four, five, and six of the complaint, but not relevant to count three, because, as is further discussed in part two, section C of this memorandum, the court finds that Diekan does not have standing to bring a direct action for breach of a fiduciary duty against Settle and Lemieux as Settle and Lemieux do not owe a fiduciary duty directly to Diekan. This argument is also not relevant to count two, because, as is further discussed in part two, section B of this memorandum, the court finds that Diekan has standing to bring a direct action for fraud against Settle and Lemieux.
In Fink, our Supreme Court held that it " recognize[d] that there may be some instances in which the facts of a case give rise either to a direct action or to a derivative action- such as when an act affects both the relationship of the particular shareholder to the corporation and the structure of the corporation itself, causing or threatening injury to the corporation." Fink v. Golenbock, supra, 238 Conn. 202. In a footnote, the court indicated that " [a]t least one authority has suggested that in the case of a closely held corporation, the court may choose to treat a derivative action as a direct action ..." Id., 200 n.14. " In a subsequent case, however, [our Supreme Court] reiterated the narrowness of the Fink exception by holding that it did not apply if the predominant injury occurs to the corporation, and such injury simply affects the relationship of the shareholders to the corporation." (Emphasis in original.) Ward v. Gamble, Superior Court, judicial district of Hartford, Docket No. CV-08-5017829-S (July 23, 2009, Prescott, J.) (48 Conn.L.Rptr. 286).
In May, the Court expressly rejected the plaintiff’s argument that " the facts of [May gave] rise to the type of dual standing contemplated in Fink ." May v. Coffey, supra, 291 Conn. 121. In fact, the court held: " The present action reflects the reverse situation, that is, an injury to the corporation, which affects the relationship of the shareholders to the corporation and the structure of the corporation itself. As such, it cannot be remedied through a direct action by individual shareholders." Id., 222. The court reasoned that " nothing in our case law suggests [and the plaintiffs did not argue], that an individual cause of action is required when a derivative action would have the indirect effect of redressing an injury to those shareholders whose self-dealing caused the harm to the corporation ... If the plaintiffs were to receive relief through an individual action, however, shareholders who committed no wrongdoing would continue to bear the cost to the company of the [alleged wrongful conduct]." (Citations omitted.) Id., 118-19.
In Ward v. Gamble, supra, 48 Conn.L.Rptr. 286, the trial court held that " [t]he present case [did] not fit within the Fink exception because the alleged wrongful acts did not affect both the plaintiff’s relationship to the LLC and the structure of the LLC. Rather the facts of this case fit more squarely with [May ], that due to an injury to [the company] itself- misuse of assets, violation of trade secrets, etc.- the plaintiff’s interest in [the company] was affected. Therefore, unlike Fink, the plaintiff did not have the option to bring either a derivative or an individual action. Instead, his sole option in this case is to bring a derivative suit."
Tellar v. Webber, Superior Court, judicial district of Hartford, Docket No. CV-11-6017750-S (January 11, 2012, Peck, J.) (53 Conn.L.Rptr. 367), which Diekan cites as an example of a trial court case that applied the exception in Fink, is distinguishable from the present case. In Tellar, the court held that " in certain situations the facts of a case may give rise to both an individual and derivative action. This [was] such a case. While the alleged actions caused damage to the corporation, they specifically caused damage to the plaintiff and no other shareholder. Likewise, the money allegedly taken from [the company] was taken by [the defendant]. While all of the money taken may not have been directly contributed by the plaintiff, it would be an unjust result to allow the defendant to avoid suit, considering that, aside from the plaintiff, [the defendant] was the only other shareholder to be impacted by the action, and he was its perpetrator." Id., 369. The plaintiff in the present case has not argued that it would be unjust for the defendants to avoid suit. Additionally, unlike in Tellar, the plaintiff is not the only member aside from the defendants in hD.
In the present case, with respect to counts four (statutory theft), five (conversion), and six (accounting), as is more fully discussed in part two, sections D, E, and F of this memorandum, Diekan has alleged injuries primarily to hD. The injuries to Diekan flow derivatively from those injuries suffered by hD, and would be redressed, indirectly, through a derivative action against Settle and Lemieux for statutory theft, conversion, and accounting on behalf of hD.
Additionally, as in May, if Diekan were to receive relief through an individual action, other members who did not participate in the alleged wrongdoing would continue to be aggrieved and bear the cost of the misappropriation of hD’s assets and failure of Settle and Lemieux to give a proper accounting.
Accordingly, this is not a case to which the exception from Fink applies.
B. COUNT TWO: FRAUD
In count two of his complaint, Diekan alleges fraud against Settle and Lemieux. Specifically, Diekan alleges that " Settle and Lemieux knowingly made false representations and promises to [Diekan] in order to induce [Diekan] to act in reliance on those statements in the formation and management of hD"; compl., count 2, ¶ 44; and that " [Diekan] relied upon the representations of [Settle and Lemieux] in the formation and management of hD, to his detriment." Compl., Count 2, ¶ 48. Diekan also alleges that Settle and Lemieux acted fraudulently and deceptively in connection with business dealings of hD " wherein Settle and Lemieux used the business for personal gain, excluded [Diekan] from profits owed to him as an equal member, diverted business interests and funds away from hD, and attempted to retroactively authorize the fraudulent scheme through a company vote." Compl., Count 2, ¶ 9. While allegations of fraud in Settle and Lemieux’ business conduct might not have been sufficient to survive a motion to dismiss, " [i]t is well established that, in determining whether a court has subject matter jurisdiction, every presumption favoring jurisdiction should be indulged." (Internal quotation marks omitted.) Financial Consulting, LLC v. Commissioner of Insurance, supra, 315 Conn. 226. Settle and Lemieux moved to dismiss count two of the amended complaint in its entirety, and did not specify individual paragraphs within count two that alleged a cause of action for which Diekan did not have standing to bring directly against Settle and Lemieux. In accordance with Financial Consulting, LLC, and because Settle and Lemieux’ motion to dismiss does not distinguish between the causes of action within count two of the amended complaint, the court need not consider the portion of count two which alleges fraud in business conduct as the court finds that Diekan’s allegations that Settle and Lemieux fraudulently induced Diekan to form and manage hD sufficiently demonstrate that Diekan has standing to bring a direct claim for fraud against Settle and Lemieux.
The court turns to Diekan’s claim for fraud in inducing Diekan to form and manage hD against Settle and Lemieux. Settle and Lemieux argue that Diekan has failed to allege a separate and distinct injury from other members and hD so as to establish standing to bring a direct claim. Settle and Lemieux further argue that Tellar v. Webber, Superior Court, judicial district of Hartford, Docket No. CV-11-6017750-S (January 11, 2012, Peck, J.) (53 Conn.L.Rptr. 367), the case on which Diekan relies, is distinguishable because, unlike in Tellar, Diekan is not the only other member of the company aside from Settle and Lemieux, and Diekan did not enter into a contract prior to the creation of hD.
Diekan counters that he has alleged an injury that is separate and distinct from other members and the company and relies on Tellar v. Webber, supra, 53 Conn.L.Rptr. 367 for the proposition that claims arising prior to the creation of hD are individual and not derivative. Diekan argues further that he has standing to bring a direct claim even though Settle and Lemieux may have fraudulently induced other members to join hD. As previously discussed, however, so long as Diekan alleges an injury that is separate and distinct from the corporation, the fact that other members share a similar injury does not preclude Diekan from bringing a direct claim. See 19 C.J.S., supra, p. 761.
In Tellar, the court, Peck, J., found that as to a breach of contract claim and related claim for the breach of the duty of good faith and fair dealing, the plaintiff had standing to bring a direct, rather than a derivative claim against the defendants. Tellar v. Webber, supra, 53 Conn.L.Rptr. 368. In Tellar, the plaintiff had a relish recipe, and " discussed and negotiated a business proposal to manufacture and market relish made from the plaintiff’s recipe" with one of the defendants. Id. The plaintiff and the defendant agreed to form an LLC " in which they would be sole and equal principals." Id. Subsequent to the formation of the LLC, the defendant wrote himself a check from the LLC’s account without authorization and used the funds for personal use. Id. Additionally, the defendant executed articles of dissolution of the LLC without informing the plaintiff, filed the articles of dissolution with the secretary of state, and formed a competing LLC of which the plaintiff had no part in. Id. The plaintiff brought a direct action against the defendants for breach of contract, breach of the covenant of good faith and fair dealing, conversion, civil theft, usurpation of business opportunity, breach of a fiduciary duty, and violations of the Connecticut Unfair Trade Practices Act (CUTPA). Id. As to the plaintiff’s claim for breach of contract and breach of the duty of good faith and fair dealing, the court reasoned that " [t]he contract to which the plaintiff [referred was] alleged to have been entered into by the plaintiff and [the defendant] as individuals before the creation of the corporation. Therefore, because the plaintiff [sought] to enforce rights pursuant to that contract, which [were] alleged to be individual and not shared by fellow shareholders, he [had] standing to do so." Id., 369.
In the present case, the plaintiff alleges that he agreed to form the company on the basis of the fraudulent misrepresentations made by the defendants. See Compl., Count Two, ¶ 48., the court finds Tellar persuasive, and that the defendants do not sufficiently distinguish Tellar. The fact that a formal contract was never executed does not necessarily mean that Diekan has no personal rights arising from his agreement with Settle and Lemieux. The alleged facts demonstrate that Diekan relied, to his detriment, on the false representations of Settle and Lemieux. Compl., Count Two, ¶¶ 11-16, 44, 45, and 48. Specifically, Diekan was injured by his reliance as he became the sole full-time employee of hD; compl., count two, ¶ 11; during which time he made substantial contributions, " including burdensome administrative tasks, research, [and] documentation." Compl., Count Two, ¶ 14. Diekan also alleged " Settle and Lemieux falsely represented that the efforts and investment into hD was for the benefit of [Diekan] and all hD members, and [Diekan] would reap a return on the investment." Compl. Count Two, ¶ 45. It is the plaintiff’s claim, not the claim of hD or its members, to vindicate his rights, if any such exist, under the agreement. Diekan, as did the plaintiff in Tellar, has a direct claim that is based upon a primary or personal right belonging to him.
Accordingly, the court denies Settle and Lemieux’ motion to dismiss count two of the amended complaint because Diekan has standing to bring a direct claim for fraud in the inducement of forming and managing hD against Settle and Lemieux.
Diekan also argues that from a policy standpoint, it would be nonsensical for him to have standing to bring a derivative action for fraud prior to the formation of the LLC., the court will not address this because the court denies Settle and Lemieux’ motion to dismiss with respect to Diekan’s claim for fraud against Settle and Lemieux in the inducement of the formation and management of hD on the basis of Settle and Lemieux’ other arguments.
C. COUNT THREE: BREACH OF A FIDUCIARY DUTY
In count three of the amended complaint, Diekan claims that Settle and Lemieux breached their fiduciary duties owed to Diekan. Diekan alleges the following. Settle and Lemieux gained the trust and confidence of Diekan through a fraudulent scheme designed to benefit Settle and Lemieux to the detriment of Diekan. Settle and Lemieux used control and access to hD’s operations to implement their fraudulent scheme, and breached their duties to Diekan by, among other things, refusing to inform Diekan of hD meeting times, excluding Diekan from meetings, witholding hD funds and bank information, and refusing to file change of tax status as agreed. The members of hD had a fiduciary relationship to each other. Settle and Lemieux owed Diekan a duty of loyalty and had an obligation to act in the best interest of Diekan and in good faith in any matter related to Diekan and hD. Settle and Lemieux also owed Diekan an obligation of the utmost good faith, loyalty, and honesty.
Diekan further alleges the following. Settle and Lemieux breached their duties to Diekan in one or more of the following ways: (1) that Settle and Lemieux failed to account for billable time on BSM operations as employees of hD, (2) Settle and Lemieux failed to deposit hD’s funds from BSM operations, (3) Settle and Lemieux performed unauthorized withdrawals of hD’s funds from an hD account into private accounts that were not accessible to members, (4) Settle and Lemieux used hD’s funds for personal expenses without authorization, (5) Settle and Lemieux voted retroactively to categorize disputed actions as within the best interest of hD, (6) Settle and Lemieux voted retroactively to rescind the dissolution of hD after a unanimous vote to dissolve, (7) Settle and Lemieux refused to inform Diekan of hD meeting times, (8) Settle and Lemieux excluded Diekan from meetings, (9) Settle and Lemieux withheld hD funds and bank information; and (10) Settle and Lemieux refused to file change of tax status as agreed. See Compl., Count Three, ¶ 55(a)-(f).
Settle and Lemieux argue in their memorandum in support of their motion to dismiss that Diekan may not bring a direct claim for breach of a fiduciary duty because Diekan’s injuries are not separate and distinct from those suffered by other members and hD.
Diekan argues in his memorandum in opposition to the motion to dismiss that " [t]he well pleaded allegations of Diekan’s complaint, deemed admitted for the purposes of this motion, demonstrate direct injuries to Diekan and not [hD]. For example, the basis for Diekan’s [counts] arise out of the agreement reached between Diekan and the other members concerning the affairs of [hD], including their percentage ... Diekan’s allegations are based on [Settle and Lemieux’] conduct that violates that agreement, such as: failing to ensure equal payment and ownership harming Diekan’s individual interest, holding private meetings without Diekan present, [and] using and managing funds without the knowledge or consent of Diekan." (Citations omitted.) Pl.’s Mem. in Opp’n, 8-9.
The court turns to Diekan’s argument that he has standing to bring a direct claim for a breach of a fiduciary duty against Settle and Lemieux because his injuries arise out of the agreement made by the parties. In an LLC, " the statutory scheme controls and provides for the default method of operation, unless the organizers or members of the limited liability company contract, through the operating agreement, for another method of operation. Indeed, this is one of the foundational principles of the law governing limited liability companies." (Internal quotation marks omitted.) Scarfo v. Snow, supra, 168 Conn.App. 503.
In the present case, there is no written operating agreement, duly signed and executed by all members. See Compl., Count One, ¶ 8. The statutory scheme designates the duties owed from one member of an LLC to another, and the agreement between the parties is not relevant for purposes of Diekan’s claim for breach of a fiduciary duty against Settle and Lemieux. The portion of Diekan’s argument that relies on a fiduciary duty arising out of the parties’ agreement can thus be quickly disposed of by the court.
Even if the court were to assume that the agreement between the parties amounted to an operating agreement, Diekan would still not have standing to bring a direct claim for a fiduciary duty on the basis of the agreement. General Statutes § 34-255h(d) (Rev. to 2017), applicable in this action, provides " [a] member shall discharge the duties and obligations under this [act] or under the operating-agreement and exercise any rights consistently with the contractual obligation of good faith and fair dealing." (Emphasis added.) Diekan has not claimed breach of the contractual covenant of good faith and fair dealing. Instead, Diekan has claimed a breach of a fiduciary duty, which is not the same. Diekan does not have standing to bring a direct claim for breach of a fiduciary duty on the basis of the agreement made between Diekan and Settle and Lemieux because a breach of the agreement would implicate a breach of the duty of good faith and fair dealing, not a breach of a fiduciary duty owed to Diekan, and such has not been alleged.
The court turns to the issue of whether Diekan has alleged a sufficiently separate injury from hD. " Most courts hold ... that a shareholder may have standing to bring an action arising from an injury to the corporation if the injury is a result of a violation of duty owed directly to the shareholder, or if the shareholder sustains an injury that is peculiar to him or her alone and does not fall alike upon other stockholders even if the corporation was similarly harmed." (Emphasis added.) 19 C.J.S, supra, 761.
As previously discussed, the Act does not apply to the present case because it is not retroactive. See General Statutes § 34-243i(a). While the Act provides that fiduciary duties are owed between members in a member-managed LLC, the repealed statutes, which are applicable in this case, do not provide for the same. See General Statutes (Rev. to 2017) § § 34-140 and 34-141.
General Statutes § 34-255h(a) provides in relevant part: " A member of a member-managed limited liability company owes to the company
In Connecticut cases, where a defendant owed a duty directly to a plaintiff by virtue of a special relationship, Connecticut courts have permitted plaintiffs to bring direct actions for breach of fiduciary duty. See, e.g., Yanow v. Teal Industries, Inc., 178 Conn. 262, 283, 422 A.2d 311 (1979) (plaintiff had standing to bring direct claim for breach of fiduciary duty against defendants because plaintiff claimed " pervasive breach of the fiduciary duty owed by the corporate majority to the sole minority stockholder"); Newlands v. NRT Associates, LLC, Superior Court, judicial district of Fairfield, CV-08-4027098-S (March 25, 2010, Tyma, J.) (49 Conn.L.Rptr. 557, 560) (plaintiff had standing to bring direct claim for breach of fiduciary duty in case where majority members assumed control of company to their benefit and to detriment of plaintiff); but see Calpitano v. Rotundo, Superior Court, judicial district of New Britain, Docket No. CV-11-6008972-S (August 3, 2011, Swienton, J.) (52 Conn.L.Rptr. 464, 467) (plaintiff did not have standing to bring direct claim for breach of fiduciary duty against defendants because " [the] plaintiff [did] not provide any authority for the proposition that members of an LLC owe a fiduciary duty to each other"). In Tellar v. Webber, supra, 53 Conn.L.Rptr. 369-70, the trial court, Peck, J., held that the plaintiff could bring a direct action for breach of fiduciary duty after it concluded that members of an LLC owe other members of an LLC a fiduciary duty. In support of its conclusion, the court cited to another trial court’s decision and reasoned that " [i]t has also been said that [s]hareholders in a close corporation owe each other a fiduciary duty as do partners. As 50% shareholders in [the close corporation], [the parties] ... owe each other a fiduciary duty." (Internal quotation marks omitted.) Id., 370. Rocco v. Furrer, Superior Court, judicial district of Middlesex, Docket No. CV-13-6009192-S (October 17, 2013, Aurigemma, J.), the court held that a plaintiff had standing to bring a direct claim against a defendant for breach of a fiduciary duty in a circumstance where the plaintiff and the defendants collectively were the only members of the company.
In the present case, under General Statutes (Rev. to 2017) § § 34-140 and 34-141, Settle and Lemieux do not owe other members, including Diekan, a fiduciary duty. Additionally, Diekan, unlike the plaintiffs in Yanow or Newlands, has not alleged that he is a minority member or that Settle and Lemieux are majority members. Furthermore, the present case is distinguishable from Tellar and Rocco because Diekan, Settle, and Lemieux are not the only members of the company. On the basis of this analysis, the court finds that Settle and Lemieux do not owe the plaintiff a direct duty.
Settle and Lemieux additionally argue that Diekan has attempted to " transform the plain allegations of [the complaint] into direct, specific allegations against him personally rather than any of the other [members]." Defs.’ Reply Mem., 1. However, Settle and Lemieux argue that the allegations of the complaint are ultimately what control. Settle and Lemieux assert that the additional facts contained in Diekan’s memorandum in opposition to Settle and Lemieux’ motion to dismiss must not be considered as part of the court’s record. Settle and Lemieux refer specifically to the allegations that Settle and Lemieux excluded Diekan and targeted him unlike other members of hD.
Diekan argues that Settle and Lemieux fail to recognize the nature of the amended complaint, and that the facts necessarily implied from the allegations of the complaint are that Settle and Lemieux undertook a deliberate course of action to exclude Diekan, specifically, from hD and target him.
In his memorandum, the plaintiff asserts that " [u]nlike members Tattersall and Tanner, [Settle and Lemieux] specifically excluded Diekan from meetings and from [hD] correspondence ... In fact, [Settle and Lemieux] refused to tell Diekan when they planned to hold [hD] meetings even though they told the other members." (Emphasis in original.) Pl.’s Mem. in Opp’n, 2. In his memorandum, Diekan offers potential reasons for why Settle and Lemieux would take a deliberate course of action to exclude Diekan from hD and target him. According to Diekan, Settle and Lemieux may have targeted him because he blew the whistle after learning that Settle and Lemieux took money from hD’s bank account and diverted it to their personal accounts. Pl.’s Mem. in Opp’n, 4-5. Diekan further points to the fact that " between September 2015 and January 2016, Diekan was the sole full-time employee of [hD], and received no compensation for all his efforts during this time. [Diekan’s] position as outlined in the [amended complaint] is that he stood in a unique position as compared to the other members, and the [Settle and Lemieux] specifically sought to exclude him [due] to [sic] the fact that he stood to gain more than the other members." Pl.’s Mem in Opp’n, 5 n.2.
Diekan also offers the possibility that Settle and Lemieux " may have also been unhappy with Diekan’s objection that they receive a disproportionate salary." Pl.’s Mem. in Opp’n, 5. The evidence before the court does not support the fact that Diekan objected to the demands. See Compl., Count Two, ¶ 20. For that reason, the court will not consider this portion of the plaintiff’s argument.
The plaintiff also argues that the defendants’ " baseless allegation that [the plaintiff] was somehow responsible for the breakdown of the relationship of the members further shows how they marginalized [the plaintiff] specifically." Pl.’s Mem. in Opp’n, 5. This " baseless allegation" was made in the defendants’ memorandum in support of their motion to dismiss, and therefore is not evidence properly before the court.
In the present case, there are many facts that indicate that Diekan was not the only member who was excluded from meetings and hD correspondence. For example, Diekan alleges that " [i]n late April to early May 2016, [Settle and Lemieux] conspired together to misappropriate all assets of [hD] without vote or notice to any member." (Emphasis added.) Compl., Count 1, ¶ 19 and Count 2, ¶ 22. Diekan also alleges that " [o]n or about Tuesday, May 17, 2016, after privately planning their actions, [Settle and Lemieux] misappropriated funds in the amount of $104, 693.05 by electronically moving funds from hD’s cash accounts (checking and savings) at Digital Credit Union (" DCU") and depositing said funds into their respective private bank accounts in which no member of hD had access to." (Emphasis added.) Compl. Count 1, ¶ 20. See also Compl., Count 2, ¶ 37. Also, the plaintiff alleges that " [t]here is reason to believe that [Settle and Lemieux] have nonetheless continued working at hD’s client, [BSM], after May 16, and refused to account for their billable hours since May 16, to hD on their official timesheets ... Both members refuse to discuss the matter with [Diekan] and Tattersall. " (Emphasis added.) Compl. Count 1, ¶ 25. As a final example, the plaintiff asserted that " [w]ithout calling a meeting or consenting with all the members of hD, defendant Lemieux circulated an email on May 27, 2016 to the members of hD. The email called for a vote on three resolutions ..." (Emphasis added.) Compl., Count Two, ¶ 41, in viewing the facts in the complaint and the exhibits attached thereto, including those necessarily implied, in a manner most favorable to Diekan, the court could not infer that Diekan was specifically and exclusively excluded from the company.
The only evidence offered in this case is the complaint and the exhibits attached thereto.
Accordingly, the court grants Settle and Lemieux’ motion to dismiss count three of the amended complaint because Diekan lacks standing to bring a direct claim for breach of a fiduciary duty against Settle and Lemieux as Settle and Lemieux did not owe a fiduciary duty to Diekan directly and because the court cannot reconcile Diekan’s argument that he was injured unlike other members of hD with the facts of this case.
D. COUNT FOUR: STATUTORY THEFT
In count four of the amended complaint, Diekan claims statutory theft against Settle and Lemieux, because Diekan alleges that Settle and Lemieux wrongfully took hD’s funds in violation of General Statutes § 52-564, to which Diekan, as a one-fifth member, is entitled to a portion. These wrongful actions include withdrawing hD’s funds and depositing them into their personal accounts, using hD’s funds for personal expenses, and refusing to account for hD’s funds owed to hD for work performed for clients, and refusing to collect hD’s funds due to hD for work performed for clients. Compl., Count Four, ¶ 51.
In Settle and Lemieux’ memorandum in support of their motion to dismiss and reply memorandum, Settle and Lemieux argue that Diekan’s claim for misappropriation of funds refer to funds that were owned by hD itself, not Diekan individually or personally, and thus could not give rise to injuries that were separate and distinct from injuries suffered by other members and hD. Settle and Lemieux also argue that Diekan’s argument that he has an individual right to a portion of the funds, causing personal harm to Diekan, is insufficient since Diekan alleged that the withholding of hD’s funds affected hD and other members.
Diekan argues that he had an individual right to a portion of the funds taken by Settle and Lemieux as a member of hD, that Settle and Lemieux intended to take the money due to him, and that they intended to steal his money. Further, Diekan argues that although it is true that other members may also have an individual cause of action for conversion or theft, such a cause of action would be based upon their own share of hD’s assets.
General Statutes § 34-167(a) provides in relevant part: " Property transferred to or otherwise acquired by a limited liability company is property of the limited liability company and not of the members individually. A member has no interest in specific limited liability company property." (Emphasis added.) Although not binding on the court, the court finds Calpitano persuasive because it is factually similar to the present case. In Calpitano, the plaintiff alleged that the defendant transferred property that was owned by the LLC to a separate LLC owned by the defendant, for no consideration. Calpitano v. Rotundo, supra, 52 Conn.L.Rptr. 464. The plaintiff filed a five-count complaint against the defendant and the LLC owned by the defendant alleging, among other things, civil theft pursuant to General Statutes § 52-564. Id. The court held that " [t]he property which is the basis for the alleged improper transfer was owned by [the LLC], and not by the plaintiff, and therefore any harm alleged by this transfer [was] harm to [the LLC]- not to the plaintiff." Id., 468. It is worth noting that if the LLC were to receive the property again as a remedy, such a remedy would resolve the injury for the corporation and the plaintiff.
In Tellar, another trial court decision, the court permitted the plaintiff to bring a direct claim for civil theft because, at least in part, the court found that it would be an unjust result to allow the defendant to avoid suit, considering that, aside from the plaintiff, the perpetrating defendant was the only other shareholder to be impacted by the direct action. Tellar v. Webber, supra, 53 Conn.L.Rptr. 369-70. As previously provided, Tellar is not binding, and the court does not find it persuasive with respect to Diekan’s cause of action for statutory theft as there are multiple members of hD.
Furthermore, in Smith v. Snyder, 267 Conn. 456, 462, 839 A.2d 589 (2004), our Supreme Court held that the plaintiffs " lacked standing to bring [a direct] action in their individual capacities because the allegations in the plaintiffs’ complaint, if true, [demonstrated] that [the plaintiff corporation] was harmed, but that no specific shareholder sustained an injury separate and distinct from that suffered by any other shareholder or by the corporation. Accordingly, the individual claims of [the plaintiffs] [were] dismissed."
In the present case, Diekan incorrectly argues that he has an individual, one-fifth interest in the wrongfully appropriated funds of hD. The funds of hD belong to the company, and the injury belongs to the company. See General Statutes § 34-167(a). Additionally, Diekan fails to argue that, as in Tellar, it would be an unjust result for the court to dismiss Diekan’s direct action with respect to count four. Furthermore, as in Calpitano, if the money were returned to hD, the harm to the members would be derivatively remedied.
Similar to the case in Smith, Diekan’s allegations themselves indicate that the injury was to hD itself, and not to himself individually. Diekan alleges that " [i]n late April to early May 2016, [Settle and Lemieux] conspired together to misappropriate all assets of [hD] without vote or notice to any member." (Emphasis added.) Compl., Count 1, ¶ 19 and Count 2, ¶ 22. Diekan also alleges that " [o]n or about Tuesday, May 17, 2016, after privately planning their actions, [Settle and Lemieux] misappropriated funds in the amount of $104, 693.05 by electronically moving funds from hD’s cash accounts (checking and savings) at Digital Credit Union (" DCU") and depositing said funds into their respective private bank accounts in which no member of hD had access to." (Emphasis added.) Compl. Count 1, ¶ 20. See also Compl., Count 2, ¶ 37. Also, Diekan alleges that " [t]here is reason to believe that [Settle and Lemieux] have nonetheless continued working at hD’s client, [BSM], after May 16, and refused to account for their billable hours since May 16, to hD on their official timesheets ... Both members refuse to discuss the matter with [Diekan] and Tattersall." (Emphasis added.) Compl. Count 1, ¶ 25.
Accordingly, the court grants Settle and Lemieux’ motion to dismiss count four of the amended complaint, because Diekan has not alleged an individual injury sufficient to establish standing to bring a direct claim for statutory theft against Settle and Lemieux.
E. COUNT FIVE: CONVERSION
In count five of the amended complaint, Diekan alleges conversion against Settle and Lemieux because Diekan alleges that he had ownership rights in the property in dispute and that Settle and Lemieux exercised dominion and control over the property to the exclusion of Diekan’s rights for the benefit of Settle and Lemieux, and that such acts have caused Diekan to sustain damages.
The parties make similar, if not identical, arguments with respect to the claim for conversion as they do to the claim for statutory theft. Accordingly, for the same reasons set forth in part two, section D of this memorandum, the court grants Settle and Lemieux’ motion to dismiss with respect to count five of the amended complaint, because Diekan has not alleged an individual injury sufficient to establish standing to bring a direct claim for conversion against Settle and Lemieux as the property is owned by hD.
F. COUNT SIX: ACCOUNTING
In count six of the amended complaint, Diekan requests an accounting against Settle and Lemieux because Diekan alleges that Settle and Lemieux should have to account to Diekan, including identification of all cash, assets, and expenditures and production of all books and records of the finances of hD, including work performed for BSM, and has failed to do so. Diekan also alleges that despite due demand, Settle and Lemieux refuse to account for the whereabouts of cash taken from the company and the full amount of any personal expenses paid. Additionally, Diekan alleges that Settle and Lemieux refuse to account for the amount of BSM billable hours and any of hD’s funds received in the course of earning those hours, despite due demand.
Settle and Lemieux argue in their memorandum in support of their motion to dismiss that Diekan has not alleged an individual injury that is sufficiently separate and distinct from other members and hD in order to establish standing to bring a direct claim for accounting. Diekan counters that he does allege an injury that is separate and distinct from other members and hD, and has standing to bring a direct claim for accounting. Specifically, Diekan argues that he has rights to the records, and that not providing them implicates his individual rights as a member.
Diekan cites to Yanow for the proposition that claims " of looting the corporation and of failure of the directors to disclose important facts concerning corporate transactions- state personal, as opposed to derivative, causes of action." Yanow v. Teal Industries, Inc., supra, 178 Conn. 283.
In Yanow, our Supreme Court held that a minority shareholder had standing to bring a direct claim against the defendant shareholder who was director and officer of the corporation in a case where the defendant fraudulently caused a decline in the percentage of the plaintiff’s shares, i.e., the plaintiff’s ownership interest in the company. See id., 283. Specifically, the complaint " [stated] nineteen individual transactions which the plaintiff alleged to be unfair and undisclosed to him, which put into issue the looting of [the corporation] by [the defendant shareholder]. Such claims- of looting the corporation and of failure of the directors to disclose important facts concerning corporate transactions- state personal, as opposed to derivative, causes of action." (Emphasis added.) Id. " In count four, the plaintiff alleged that [the defendant shareholder], in his capacity as officer and director of [the corporation], took advantage of special facts concerning [the corporation’s] financial condition, which he failed to disclose to the plaintiff, and that [the defendant shareholder] caused [a] merger to deprive the plaintiff of his shares and to avoid paying the plaintiff their full fair market value." (Emphasis added.) Id. " The plaintiff, in effect, via counts one and four, alleged that both defendants dismantled [the corporation] step-by-step, transaction-by-transaction, depriving [the corporation] and the plaintiff of income and assets." (Emphasis in original) Id., 283.
The analysis in Connecticut cases in which Yanow has been interpreted suggests that the critical factor in determining if a plaintiff has standing to bring a direct claim where fraud is alleged is whether the defendant engaged in fraud to cause the plaintiff’s percentage interest to decline, or to take over the business. See Calpitano v. Rotundo, supra, 52 Conn.L.Rptr. 464 (explaining " [i]n Yanow, the court permitted the plaintiff’s direct action because he alleged that corporate officers’ fraudulent contact caused their stock to be worth more than his stock"); Savino v. Sullivan, Superior Court, judicial district of Hartford, Docket No. CV-10-6013378-S (February 14, 2011, Wagner, J.T.R.) (holding direct action permitted where plaintiff alleged that defendants conspired to remove plaintiff from LLC and take over business); Ward v. Gamble (48 Conn.L.Rptr. 286) (holding plaintiff lacked standing to bring direct claim in circumstance where " unlike Yanow, the plaintiff [did] not allege [the defendants] engaged in fraud, or caused their percentage interest to be worth more than his percentage interest"); LeBlanc v. Tomoiu, Superior Court, judicial district of Stamford-Norwalk, Docket No. CV-06-5001421-S (June 5, 2007, Jennings, J.) (43 Conn.L.Rptr. 599, 602) (holding direct claim allowed where defendants took over ownership and control of the company by depriving plaintiff of his management positions as a director and chairman of the board to marginalize and dilute his shares). In Rocco v. Furrer, supra, Superior Court, Docket No. CV-13-6009192-S, the court, relying in part on Yanow, allowed the plaintiff to bring a direct claim when the defendants adopted a resolution without the plaintiff’s consent, which advanced their own interests to the detriment of the plaintiff and his rightful share of the profits. In addition to using other tactics, the defendants formed a majority voting block to control and marginalize the plaintiff’s role in the management and operation of the LLC.
Moreover, in May, our Supreme Court held that " [e]ven if we accept as true ... the plaintiffs’ allegation that the defendants conspired to dilute the plaintiffs’ shares, a proper remedy to the company in this case, either in form of an additional contribution by the participating shareholder or by a cancellation of some of the shares purchased by the participating shareholders, would make whole all the shareholders"; (citations omitted) May v. Coffey, supra, 291 Conn. 119; and plaintiff lacked standing to bring a direct claim. See id., 120. In its holding, the court implied that had the remedy to the corporation not been sufficient to redress the harm, the plaintiff’s allegations that the defendants were conspiring to dilute the plaintiff’s share would have been sufficient for the plaintiff to have established standing to bring a direct claim against the defendants.
The present case is similar to the case in Smith in that Diekan has not demonstrated that his injury is separate and distinct from hD. See Smith v. Snyder, 267 Conn. supra, 462. Indeed, in the complaint, Diekan alleges that " [t]here is reason to believe that [the defendants] have nonetheless continued working at hD’s client, [BSM], after May 16, and refused to account for their billable hours since May 16, to [the company] on their official timesheets." Compl., Count 1, ¶ 25. (Emphasis added.)
Diekan also argues that the court cannot make a determination on whether other members have access to the account, and therefore, cannot determine whether other members are similarly aggrieved because Settle and Lemieux have refused access to the accounts. However, the court is not persuaded by this argument because Diekan alleges that " [t]hese funds are being wrongfully withheld from hD and its members. Currently, the funds are being held by Defendant Lemieux at TD Bank. Settle and Lemieux still control these funds
Additionally, Diekan alleges that " Settle and Lemieux utilized their positions of trust and confidence to implement their fraudulent scheme, to the detriment of [Diekan’s] membership interest." Compl., Count 3, ¶ 56. However, Diekan fails to allege facts demonstrating how Settle and Lemieux conspired to harm Diekan’s membership interest, specifically, as opposed to the membership interests of Tattersall and Tanner. For example, Diekan does not allege that there was a voting bloc created to marginalize Diekan’s participation, as the plaintiff alleged in Rocco. Diekan has not alleged that Settle and Lemieux were attempting to take over the business with intent to oust him, or that his membership interest was reduced. Diekan has not offered evidence that he was uniquely excluded from meetings and important business information. In fact, as discussed in part two, section C of this memorandum, Diekan’s amended complaint alleges that he and other members were similarly excluded. In summary, Diekan fails to assert similar enough allegations to those alleged in Yanow and the Superior Court cases that have interpreted Yanow in order to establish a separate and distinct injury to himself apart from other members.
The plaintiff argues in his memorandum in opposition to the defendants’ motion to dismiss that the court should deny the motion to dismiss because " in this case, additional discovery may demonstrate that [the defendants] formed a majority voting [bloc] with Tanner, Lemieux’s business partner in another company, to control and marginalize [the plaintiff’s] role." Pl.’s Mem. in Opp’n, 8. The plaintiff has not presented evidence that the defendants formed a majority voting bloc, and therefore the court will not consider this argument.
Accordingly, the court grants Settle and Lemieux’ motion to dismiss with respect to count six of the amended complaint, because Diekan has not alleged an individual injury sufficient to establish standing to bring a direct claim for accounting against Settle and Lemieux.
In his memorandum in opposition to Settle and Lemieux’ motion to dismiss, Diekan argues that
III.
CONCLUSION
Diekan has standing to claim fraud against Settle and Lemieux for fraudulent inducement in formation and management of the company. The plaintiff lacks standing to claim breach of a fiduciary duty, statutory theft, conversion, and accounting against Settle and Lemieux. Accordingly, the court denies Settle and Lemieux’ motion to dismiss as to count two of the amended complaint, but grants Settle and Lemieux’ motion to dismiss as to counts three, four, five, and six of the amended complaint because Diekan lacks standing to bring those claims directly against Settle and Lemieux.
and, subject to subsection (b) of section 34-271, the other members the duties of loyalty and care set forth in subsections (b) and (c) of this section." (Emphasis added.)
and have denied the other members’ access to the funds." (Emphasis added.) Compl., Count 2, ¶ 37.
Newlands v. NRT Associates, LLC, supra, 49 Conn.L.Rptr. 557, is particularly helpful to his case because the situation in Newlands is analogous to the harm suffered by Diekan, especially with respect to Diekan’s claim for statutory theft, conversion, and accounting. The court agrees, however, with Settle and Lemieux in as much as Newlands is distinguishable from the present case. The plaintiff in Newlands brought an action for, among other things, conversion, against the majority members of the company, who were the only members aside from the plaintiff. On the basis of these facts, the court concluded that " [the plaintiff’s] allegations concern improper acts and omissions solely against the plaintiff’s membership interest in [the company]. They set forth individual, not derivative, claims." Id., 560. In the present case, Diekan was not the only member effected. Diekan also argues that Rocco v. Furrer, Superior Court, Docket No. CV-13-6009192-S is particularly helpful to his case. Similarly, the court agrees with Settle and Lemieux in as much as Rocco is distinguishable from the present case as well. In Rocco, n ot only are the plaintiff and the defendants, collectively, the only members of the entities involved, but the plaintiff alleged that the defendants intentionally targeted the plaintiff and made efforts to freeze Rocco out of his investment by, among other tactics, a majority voting bloc to marginalize the plaintiff from the entities. Id. This is not similar to the factual situation in the present case, in which Settle and Lemieux did not specifically and exclusively conspire against Diekan, as opposed to other members.