Opinion
No. CV09-5009458S
November 23, 2009
MEMORANDUM OF DECISION RE MOTIONS TO DISMISS #101, #112 FACTS
This case arises from a dispute among three doctors who worked together in a medical practice. The plaintiffs, David Witt and Paul Berard, commenced this action in the Superior Court for the judicial district of Ansonia-Milford at Milford by service of process against the defendants, Hervey Weitzman and Black Rock Turnpike Medical Group, P.C. (Black Rock), on June 11, 2009. In the three-count complaint, the plaintiffs allege causes of action for a judicial dissolution of Black Rock, the appointment of a receiver, and an accounting.
In the complaint, the plaintiffs allege the following: Witt, Berard and Weitzman are practicing doctors in Connecticut. In 1994, Weitzman founded Black Rock, a hematology, oncology and internal medicine practice. Black Rock's principal office is located in Trumbull, Connecticut. Weitzman was the sole shareholder at the time of incorporation, holding 1000 shares of its common stock. Witt became a shareholder of Black Rock in 1996. Weitzman sold 333 shares of his stock to Witt for one dollar pursuant to a shareholders agreement, leaving himself with 667 shares. Both Witt and Weitzman also executed employment agreements with Black Rock in which they agreed to share the work and compensation equally, and they began to practice together as co-owners.
The plaintiffs allege that in February 2002, Berard began practicing with Black Rock, without having executed an employment agreement. Furthermore, neither Witt nor Weitzman sold any shares to or executed a shareholder agreement with Berard. Instead, the three parties agreed to run Black Rock as a partnership, with each party having a one-third interest in the profits and losses. They each also agreed to share the management duties equally, perform equal work, and guarantee the liabilities of Black Rock when necessary. From that point forward, Witt and Weitzman stopped following the provisions of their employment agreements. The shareholders agreement was never amended to reflect that Berard had a one-third interest in Black Rock.
The plaintiffs also allege that recently, Weitzman's productivity dropped to a level that was unacceptable to Witt and Berard. Despite not performing his fair share of the work, Weitzman demanded one-third of the profits and would not accept a fairer alternative profit sharing scheme proposed by the other two parties. Weitzman also took a job in violation of his employment agreement and managed Black Rock in an unlawful manner. Witt, Berard and Weitzman became deadlocked because they could not agree on issues relating to the structure, ownership and control of Black Rock. Witt and Berard believed that each of the three owned a one-third interest in Black Rock, whereas Weitzman believed that he owned two thirds of Black Rock, Witt owned one third and Berard had no ownership interest.
The plaintiffs allege that this deadlock has not been resolved and its continued existence will lead to wrongful dissipation of Black Rock's assets. Furthermore, they believe that the manner in which Weitzman is operating Black Rock is an abuse of his authority and is unlawful. In this action, the plaintiffs seek the following forms of relief in their three-count complaint: The dissolution, liquidation and winding up of the affairs of Black Rock pursuant to General Statutes § 33-896; the appointment of a receiver pursuant to General Statutes §§ 33-897(c) and 33-898; an accounting from Weitzman of all of Black Rock's revenue and expenses since January 1, 2008, including compensation received by him from Black Rock as provided for by General Statutes § 52-401 and the common law; the disgorgement of all unlawful compensation received by Weitzman; and attorneys fees and costs per General Statutes § 33-900.
On July 13, 2009, Weitzman filed a motion to dismiss (#101) with an accompanying memorandum of law and an affidavit, which Black Rock incorporates by reference and adopts in its motion of July 24, 2009 (#112). In their motions, the defendants make three arguments. First, they contend that Berard lacks standing to bring a claim for judicial dissolution. Second, they argue that the Superior Court for the judicial district of Ansonia-Milford lacks subject matter jurisdiction over the claims of both plaintiffs. Third, they assert that the plaintiffs brought the action in an improper venue.
Black Rock labeled this document: "Response of the Defendant, Black Rock Turnpike Medical Group, P.C., to Defendant Hervey Weitzman, M.D's Motion to Dismiss." As Black Rock states therein that it is incorporating the arguments in Weitzman's motion to dismiss, I will refer to it as Black Rock's motion to dismiss.
On September 2, 2009, Berard filed an objection to Weitzman's motion to dismiss and a memorandum of law. Witt has not filed an objection to either of the motions to dismiss. The matter was heard at short calendar on September 8, 2009.
DISCUSSION
"A motion to dismiss . . . properly attacks the jurisdiction of the court, essentially asserting that the plaintiff cannot as a matter of law and fact state a cause of action that should be heard by the court . . . A motion to dismiss tests, inter alia, whether, on the face of the record, the court is without jurisdiction." (Internal quotation marks omitted.) Beecher v. Mohegan Tribe of Indians of Connecticut, 282 Conn. 130, 134, 918 A.2d 880 (2007).
"The motion to dismiss . . . admits all facts [that] are well pleaded, invokes the existing record and must be decided upon that alone . . . Where, however . . . the motion is accompanied by supporting affidavits containing undisputed facts, the court may look to their content for determination of the jurisdictional issue . . ." (Internal quotation marks omitted.) Cogswell v. American Transit Ins. Co., 282 Conn. 505, 516, 923 A.2d 638 (2007).
I WHETHER THE MOTIONS SHOULD BE GRANTED BECAUSE BERARD ALLEGEDLY LACKS STANDING
The defendants' first argument is that Berard lacks standing to seek a judicial dissolution. They argue that, since Berard is neither the registered owner of any shares of Black Rock nor the beneficial owner of any such shares, he is not empowered to bring a judicial dissolution action under § 33-896(a)(1). Berard notes that the defendants do not challenge Witt's standing to bring the same action. Therefore, Berard contends that their argument is really that Berard is an improper party and that an argument of misjoinder is properly raised via a motion to strike rather than a motion to dismiss.
General Statutes § 33-896 provides in relevant part: "(a) The superior court for the judicial district where the corporation's principal office or, if none in this state, its registered office, is located may dissolve a corporation:
"(1) In a proceeding by a shareholder if it is established that: (A) the directors or those in control of the corporation have acted, are acting or will act in a manner that is illegal, oppressive or fraudulent; or (B) the corporate assets are being misapplied or wasted . . ."
It should be noted that this language does not incorporate an amendment found in Public Acts 2009, No. 09-55, § 23, which became effective October 1, 2009. The substance of the amendment is not relevant to the pending motions, however.
"Standing is the legal right to set judicial machinery in motion. One cannot rightfully invoke the jurisdiction of the court unless [one] has, in an individual or representative capacity, some real interest in the cause of action . . ." (Internal quotation marks omitted.) Stamford Hospital v. Vega, 236 Conn. 646, 657, 674 A.2d 821 (1996). "Standing focuses on whether the party initiating the action is the proper party to request adjudication of the issues." (Internal quotation marks omitted.) Id.
Normally, "[t]he proper procedural vehicle for disputing a party's standing is a motion to dismiss." (Internal quotation marks omitted.) D'Eramo v. Smith, 273 Conn. 610, 615 n. 6, 872 A.2d 408 (2005). When an action is maintained by plaintiffs whose standing is not challenged, however, an attack on the standing of one of the plaintiffs is essentially a claim of misjoinder. See, e.g., Connecticut Light Power Co. v. Public Utilities Control Authority, 176 Conn. 191, 200, 405 A.2d 638 (1978) (holding that presence of two proper parties plaintiff to action rendered challenge to standing of one other party plaintiff in essence claim of misjoinder); Hartford v. Local 308, 171 Conn. 420, 429, 370 A.2d 996 (1976) (rejecting argument that joinder of party without standing to application for confirmation of arbitration award, filed jointly by multiple parties, deprived court of jurisdiction over application). Misjoinder is the "[n]aming [of] an improper person as a party in a legal action . . ." Zanoni v. Hudon, 42 Conn.App. 70, 73, 678 A.2d 12 (1996). Moreover, General Statutes § 52-108 provides: "An action shall not be defeated by the nonjoinder or misjoinder of parties . . ." See also Practice Book § 9-19. Rather, under Practice Book § 11-3, "[t]he exclusive remedy for misjoinder of parties is by motion to strike . . ."
Practice Book § 9-19 provides in relevant part: "Except as provided in [§§ ]10-44 and 11-3 no action shall be defeated by the nonjoinder or misjoinder of parties."
In the present case, the defendants challenge only Berard's standing, not Witt's standing. The argument is essentially that Berard is not a proper party to the action — that he has been misjoined. Since dismissal of an action is inappropriate when there has been a misjoinder, the motions to dismiss on this ground are denied.
At oral argument, it was suggested that, under Commissioner of Environmental Protection v. Lake Phipps Land Owners Corp., 3 Conn.App. 100, 102 n. 2, 485 A.2d 580 (1985), the court could treat the motions to dismiss as motions to strike. In that case, the Appellate Court treated a motion to dismiss a third-party complaint for legal insufficiency as a motion to strike, as did the trial court. See id. While a court may have discretion to treat a motion to dismiss for legal insufficiency as a motion to strike, Practice Book § 11-3 clearly provides that a motion to strike is the "exclusive remedy" when the ground is the misjoinder of parties. Therefore, I will not treat the motions to dismiss as motions to strike.
The defendants' second argument is that the court lacks subject matter jurisdiction to grant dissolution under § 33-896(a) because the action for dissolution was not brought in the proper judicial district. They contend that only the Superior Court for the judicial district in which a corporation's principal office is located has jurisdiction over actions to dissolve that corporation. The defendants point out that Black Rock's principal office is located in Trumbull, which is covered by the judicial district of Fairfield, and not by the judicial district of Ansonia-Milford.
Berard agrees that the dissolution action should have been brought in the judicial district of Fairfield, but argues that this ground is essentially a claim of improper venue, which does not affect the jurisdiction of the court and does not warrant dismissal of the entire action. Instead, Berard contends, the action should be transferred to the judicial district of Fairfield.
Section 33-896(a) provides in relevant part: "The superior court for the judicial district where the corporation's principal office or, if none in this state, its registered office, is located may dissolve a corporation . . ." There is no appellate authority regarding the jurisdiction of the court when a judicial dissolution claim under § 33-896 is brought in a judicial district other than the one in which the corporation's principal office is located. The authority that does exist is conflicting. In Smith v. Aeolian Co., 53 F.Sup. 636, 639 (D.Conn. 1943), the United States District Court for the District of Connecticut, in holding that a plaintiff could seek judicial dissolution in federal court, determined that "[t]he limitation of suit to the Superior Court for the county wherein the corporation is located would appear to be for the purpose of establishing the venue of such actions within the state judicial system . . ." Cf. Prokoski v. Dept. of Mental Retardation, Superior Court, judicial district of Fairfield, Docket No. CV 01 0385684 (July 15, 2002, Thim, J.) (interpreting similar language in General Statutes § 31-290a as establishing proper venue for actions under that statute). Conversely, Salamone v. DVR Direct, Inc., Superior Court, judicial district of Waterbury, Docket No. 0125375 (March 23, 1995, Flynn, J.), suggests that the failure to bring a dissolution action in the correct judicial district may implicate the court's jurisdiction. In Salamone, the court determined that it had jurisdiction where the plaintiff had brought a petition in the judicial district of Waterbury to wind up the affairs of a corporation. Id. The court's rationale was that the corporation's principal office was actually located in the judicial district of Waterbury, rather than the judicial district of Ansonia-Milford, as the defendant contended. Id.
Both Aeolian Co. and Salamone were decided before § 33-896 became effective on January 1, 1997. See M. Ford, Connecticut Corporation Law Practice (2d ed. 2008) § 12.03(B)(2), p. 12-31 n. 142. The language of the prior version of the statute and the current statute is substantially the same, however. See id.
The court should always favor preserving its own jurisdiction whenever possible. "The Superior Court is a court of general jurisdiction. It has jurisdiction of all matters expressly committed to it and of all other matters cognizable by any law court of which the exclusive jurisdiction is not given to some other court . . . [T]he general rule of jurisdiction . . . is that nothing shall be intended to be out of the jurisdiction of a Superior Court but that which specially appears to be so . . . [N]o court is to be ousted of its jurisdiction by implication." (Internal quotation marks omitted.) New Haven v. God's Corner Church, Inc., 108 Conn.App. 134, 137, 948 A.2d 1035 (2008). "[I]n determining whether a court has subject matter jurisdiction, every presumption favoring jurisdiction should be indulged." (Internal quotation marks omitted.) Fedus v. Planning Zoning Commission, 2 78 Conn. 751, 778-79, 900 A.2d 1 (2006).
It is unclear from the language of § 33-896(a) as to whether that statute implicates the court's jurisdiction. The statute does not explicitly state that the Superior Court for the judicial district in which a corporation's principal office is located has exclusive jurisdiction over dissolution actions. Compare, e.g., General Statutes § 33-871("(b) The corporation shall commence the proceeding [to determine the value of stock held by certain shareholders] in the superior court for the judicial district where a corporation's principal office or, if none, its registered office in this state is located . . . (d) The jurisdiction of the court in which the proceeding is commenced under subsection (b) of this section is plenary and exclusive").
Neither does the legislative history of § 33-896(a) indicate that the legislature intended to deprive the Superior Court of jurisdiction except within a particular judicial district. The statute is based on a provision of the Model Business Corporation Act (Model Act). Morrow v. Prestonwold, Inc., Superior Court, judicial district of New Haven, Docket No. CV 00 0445844 (March 22, 2002, Berdon, J.T.R.) ( 31 Conn. L. Rptr. 668). The relevant provision of the Model Act does not specify which court has the authority to dissolve a corporation, rather it allows each state to designate a particular court. Model Business Corporation Act (Rev. to 2002) § 14.30. The official commentary to § 14.30 does not recommend which court should have jurisdiction; but, the official commentary to § 14.31, which, among other things, articulates the proper venue for hearing judicial dissolution actions, states that "[s]uits brought for judicial dissolution under . . . [§ ]14.30 must be brought where the corporation's principal office is located . . ." Even this provision does not contain a clear statement about subject matter jurisdiction.
Finally, to interpret § 33-896(a) as implicating the subject matter jurisdiction of the court in a particular judicial district absent a clear statement of such an intent would be inconsistent with the organizational scheme of Connecticut's courts. There is a single Superior Court in Connecticut. See Conn Const., art. V, § 1 ("The judicial power of the state shall be vested in a supreme court, an appellate court, a superior court, and such lower courts as the general assembly shall, from time to time, ordain and establish." (Emphasis added.)); General Statutes § 51-164s ("The Superior Court shall be the sole court of original jurisdiction for all causes of action . . ." (Emphasis added.)). The Superior Court is divided into judicial districts merely for the purpose of "establishing venue." General Statutes § 51-344. The granting of jurisdiction over a corporate dissolution action to only one judicial district of the Superior Court merely by implication is inconsistent with this conception of the nature of the Superior Court.
For the above reasons, whether the plaintiffs brought the action in the proper judicial district does not implicate the court's subject matter jurisdiction. Therefore, the motions to dismiss on this ground are denied.
III WHETHER THE MOTIONS TO DISMISS SHOULD BE GRANTED BECAUSE THE ACTION WAS BROUGHT IN AN IMPROPER VENUE
The defendants' final argument is that the judicial district of Ansonia-Milford is an improper venue for this judicial dissolution action. They assert that the plaintiffs do not dispute that Black Rock's principal office is located in Trumbull, which is in the judicial district of Fairfield. Therefore, the defendants conclude, the judicial district of Ansonia-Milford is not the proper venue and the action must be dismissed.
Berard does not dispute that Witt and he brought the judicial dissolution action in an improper venue. He also does not dispute that the judicial district of Fairfield is the proper venue. The parties' dispute relates to the proper remedy for this defect. Berard contends that the proper remedy is not dismissal, but rather transfer of the action to a proper venue.
According to General Statutes § 33-897(a), "[v]enue for a proceeding brought by any party named in [§ ]33-896 lies in the judicial district where a corporation's principal office or, if none in this state, its registered office is or was last located." Since Black Rock's principal office is in Trumbull, which, per § 51-344(3), is in the judicial district of Fairfield, the plaintiffs brought the judicial dissolution action in an improper venue.
General Statutes § 51-344 provides in relevant part: "For purposes of establishing venue, the Superior Court shall consist of the following judicial districts . . .
"(3) The judicial district of Fairfield, consisting of the towns of Bridgeport, Easton, Fairfield, Monroe, Stratford and Trumbull . . ."
"[V]enue is the place . . . where the suit may or should be heard . . . Venue does not involve a jurisdictional question but rather a procedural one, and thus is a matter that goes to process rather than substantive rights." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. New London, 282 Conn. 791, 814, 925 A.2d 292 (2007). "[V]enue requirements are created for the convenience of the parties . . . [C]onsequently, venue, unlike subject matter jurisdiction, can be waived by the parties." (Citations omitted; internal quotation marks omitted.) Haigh v. Haigh, 50 Conn.App. 456, 465, 717 A.2d 837 (1998). The proper procedural vehicle for asserting improper venue is a motion to dismiss. Practice Book § 10-31.
Under General Statutes § 51-351, "[n]o cause shall fail on the ground that it has been made returnable to an improper location." Therefore, the court cannot grant a motion to dismiss on the ground of improper venue. Lasky v. Pivnick, 46 Conn.Sup. 539, 543, 759 A.2d 560 [ 27 Conn. L. Rptr. 279] (2000). Instead, under General Statutes § 51-347b and Practice Book § 12-1, the court has the power to transfer actions to other judicial districts on its own motion, upon motion of a party, or upon agreement by the parties. Accordingly, the proper remedy when a party files an action in an improper venue is for the court to exercise this power and transfer the action to a proper venue. See Sprague v. Commission on Human Rights Opportunities, 3 Conn.App. 484, 486-87, 489 A.2d 1064, cert. denied, 196 Comm. 804, 492 A.2d 1240 (1985) ("[T]he legislature intended to authorize the transfer of cases . . . in enacting § 51-351, because there is no other established mechanism for implementing this declaration of policy." (Internal quotation marks omitted.)).
General Statutes § 51-347b provides in relevant part: "Any action or the trial of any issue or issues therein may be transferred, by order of the court on its own motion or on the granting of a motion of any of the parties, or by agreement of the parties, from the superior court for one judicial district . . . to a superior court location for any other judicial district . . ."
Practice Book § 12-1 provides in relevant part: "Any cause . . . may be transferred from a judicial district court location to any other judicial district court location . . . by order of a judicial authority . . . upon its own motion or upon the granting of a motion of any of the parties or . . . upon written agreement of the parties filed with the court."
There is no dispute that the judicial district of Fairfield is the sole proper venue for the judicial dissolution action. Therefore, there is no need to consider any party's motion to transfer. Rather, the court hereby transfers this action to the judicial district of Fairfield on its own motion.
On September 3, 2009, Berard filed a motion to transfer this action to the judicial district of Fairfield. In its opposition, filed on September 11, 2009, Weitzman argues, among other things, that Berard lacks standing to file a motion to transfer. Because the court has the authority to transfer the action sua sponte, there is no need to address whether Berard has standing to file a motion to transfer.
CONCLUSION
For the above reasons, the defendants' motions to dismiss are denied. Additionally, the court hereby transfers this action on its own motion, pursuant to General Statutes §§ 51-347b and 51-351 and Practice Book § 12-1, to the judicial district of Fairfield, which is the only proper venue for the claim of judicial dissolution.
On October 20, 2009, Black Rock filed a request that the court, in its consideration of the motions to dismiss, take judicial notice of certain asserted facts. The asserted facts relate to actions that Judge Gilardi took in a separate dissolution action concerning Black Rock that Weitzman brought on July 13, 2009, in the judicial district of Fairfield. Specifically, Black Rock asks that the court take judicial notice that Judge Gilardi granted a motion for appointment of a receiver of Black Rock, naming Michael DiGiacomo of Blum Shapiro as the receiver. Also, Black Rock asks the court to take judicial notice that Judge Gilardi set October 21, 2009, as the date that the court would hear a motion for an injunction that Witt, a defendant in that action, filed.
However, these asserted facts do not change the conclusions reached with regard to the defendants' motions to dismiss. In light of the reasoning in this memorandum, the asserted facts, if accurate, neither deprive the court of subject matter jurisdiction over any of the claims in the present action, nor establish any judicial district other than Fairfield as a proper venue for the present action.
Bellis, J.