Opinion
FBTCV196084463S
01-17-2020
Penny Bloom, Individually and in Her Derivative Capacity as the President of Hilliard Bloom Shellfish, Inc. et al. v. The Bloom Family Limited Partnership et al.
UNPUBLISHED OPINION
Judge (with first initial, no space for Sullivan, Dorsey, and Walsh): Stewart, Elizabeth J., J.
MEMORANDUM OF DECISION ON DEFENDANTS HARBOR HOUSE, LLC, MARK BRYAN, TODD REEVES AND TIMOTHY C. REEVES’ MOTION TO DISMISS
STEWART, J.
The plaintiff, Penny Bloom, has brought this action in her individual capacity and in her derivative capacity as president of Hillard Bloom Shellfish, Inc. (HBS) and a limited partner of The Bloom Family Limited Partnership (Partnership). The Partnership is the sole shareholder of HBS, which farms, raises, spawns and harvests various types of shellfish from the Long Island Sound and the Delaware Bay in New Jersey. Two of HBS’ subsidiaries, Hillard Bloom Packing Co., Inc.and Long Reach Marina, Inc., entered into a contract to sell their assets (collectively referred to in the complaint as the "New Jersey Assets") to the defendants who filed this motion to dismiss (no. 114.00).
The moving defendants are Harbor House Seafood, LLC, Todd Reeves, Timothy Reeves and Mark Bryan. The plaintiff alleges in her complaint the following claims against the moving defendants: breach of fiduciary duty (Timothy Reeves), tortious interference with business expectations (all moving defendants), civil conspiracy (all moving defendants), negligence (Timothy Reeves), unjust enrichment (all moving defendants) and violation of the Connecticut Unfair Trade Practices Act (CUTPA) (all moving defendants). The moving defendants argue that there is no personal jurisdiction over them in Connecticut because they do not fall within the long-arm jurisdiction of the Connecticut courts, and even if they did, the due process clause of the United States constitution precludes the exercise of jurisdiction over them in Connecticut.
FINDINGS OF FACT
Based on the evidence at the evidentiary hearing, the affidavits and other evidence submitted by the moving defendants, and the allegations of the complaint, the court makes the following findings of fact:
The Partnership is a Connecticut limited partnership and the sole shareholder of HBS, a Connecticut corporation with its principal place of business in Norwalk, Connecticut. Among HBS’ holdings are two subsidiaries: Hillard Bloom Packing Co., Inc. (Hillard Bloom Packing Co.) and Long Reach Marina, Inc. (Long Reach Marina). These two subsidiaries are New Jersey corporations with principal places of business in Port Norris, New Jersey.
Harbor House Seafood, LLC (Harbor House) is a limited liability company organized under the laws of New Jersey with its principal place of business in New Jersey. Harbor House operates a shellfish shucking house, marina, boats and shellfish grounds, which are all located in New Jersey. Mark Bryan is the managing member of Harbor House. Mark Bryan is an individual domiciled in Maryland. Todd and Timothy Reeves are both individuals domiciled in New Jersey. Todd Reeves was, and may still be, a member of Harbor House. He also is a former vice president of both Hillard Bloom Packing Co. and Long Reach Marina. Timothy Reeves, Todd’s son, was, at the time of the events alleged in the complaint, an employee of both New Jersey subsidiaries and vice president of Hillard Bloom Packing Co.
On or about March 21, 2019, Harbor House entered into a contract with the subsidiaries to purchase their assets for $2,000,000. The real estate and all of the assets at issue in the sale are located in New Jersey. Indeed, the plaintiff refers in her complaint to the assets to be sold as the "New Jersey Assets." In connection with the negotiations of the contemplated sale of the New Jersey Assets, each of the individual moving defendants traveled once to Norwalk, Connecticut for a meeting at which the value of the assets was discussed.
During the period from December 2018 to June 2019, Harbor House bought product from HBS. To do so, Harbor House sent its refrigerated truck to Norwalk, Connecticut to take delivery of the product.
Long Reach Marina has a lease with the State of New Jersey for 2, 823 acres of shellfish grounds. On or about December 8, 2010, Todd Reeves, who then was vice president of both subsidiaries, executed a sublease from Long Reach Marina to Harbor House for 589 acres of those shellfish grounds. Mark Bryan executed the sublease on behalf of Harbor House. In the sublease, Harbor House agreed to pay all fees charged by the State of New Jersey. Ex. 7. On or about June 1, 2018, Timothy Reeves, who then was vice president of the subsidiaries, executed a sublease of all 2, 823 acres of the shellfish grounds to Harbor House. Mark Bryan executed that sublease on behalf of Harbor House. In that sublease, Harbor House again agreed to pay all fees charged by the state of New Jersey. Ex. 9. Harbor House also entered into two leases on June 3, 2009 and August 3, 2017 with Hillard Packing Co. for a warehouse and real property located at 2601 Ogden Avenue in Port Norris, New Jersey. Exs. 6 and 8.
Starting sometime around 2001 and continuing until 2014, HBS directed corporate funds to the New Jersey subsidiaries to help them fund their operations. As of 2016 and 2017, Hillard Bloom Packing Co. owed HBS $835,000, and Long Reach Marina owed HBS $156,000. There was no evidence presented as to whether any of that debt has been paid down since those dates.
LEGAL ANALYSIS
I. STANDARDS FOR MOTIONS TO DISMISS
A. Procedure for Motions to Dismiss
"If the defendant challenging the court’s personal jurisdiction is a foreign corporation or a nonresident individual, it is the plaintiff’s burden to prove the court’s jurisdiction." Cogswell v. American Transit Ins. Co., 282 Conn. 505, 515, 923 A.2d 638, 647 (2007). "Depending on the record before it, a trial court ruling on a motion to dismiss for lack of subject matter jurisdiction pursuant to Practice Book § 10-31(a)(1) may decide that motion on the basis of: (1) the complaint alone; (2) the complaint supplemented by undisputed facts evidenced in the record; or (3) the complaint supplemented by undisputed facts plus the court’s resolution of disputed facts ... Different rules and procedures will apply, depending on the state of the record at the time the motion is filed ... If the court decides the motion 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 ...
"In contrast, if the complaint is supplemented by undisputed facts established by affidavits submitted in support of the motion to dismiss ... other types of undisputed evidence [for example, contract documents] ... and/or public records of which judicial notice may be taken ... the trial court, in determining the jurisdictional issue, may consider these supplementary undisputed facts and need not conclusively presume the validity of the allegations of the complaint ... Rather, those allegations are tempered by the light shed on them by the [supplementary undisputed facts] ... If affidavits and/or other evidence submitted in support of a defendant’s motion to dismiss conclusively establish that jurisdiction is lacking, and the plaintiff fails to undermine this conclusion with counteraffidavits ... or other evidence, the trial court may dismiss the action without further proceedings ... If, however, the defendant submits either no proof to rebut the plaintiff’s jurisdictional allegations ... or only evidence that fails to call those allegations into question ... the plaintiff need not supply counteraffidavits or other evidence to support the complaint, but may rest on the jurisdictional allegations therein ...
"Finally, where a jurisdictional determination is dependent on the resolution of a critical factual dispute, it cannot be decided on a motion to dismiss in the absence of an evidentiary hearing to establish jurisdictional facts ... Likewise, if the question of jurisdiction is intertwined with the merits of the case, a court cannot resolve the jurisdictional question without a hearing to evaluate those merits ... An evidentiary hearing is necessary because a court cannot make a critical factual [jurisdictional] finding based on memoranda and documents submitted by the parties." (Citation omitted; emphasis in original; internal quotation marks omitted.) Rocky Hill v. SecureCare Realty, LLC, 315 Conn. 265, 277-78, 105 A.3d 857, 865-66 (2015). In this case, the court held an evidentiary hearing on August 12, 2019. Both sides submitted post-hearing memoranda that included testimony from a preliminary injunction hearing held earlier in this action.
B. Test for Personal Jurisdiction
Connecticut courts apply a two-part test for personal jurisdiction: first, the court must determine whether the applicable Connecticut long-arm statute permits the exercise of jurisdiction over the defendant; and second, if such statutory requirements are met, the court must determine whether assertion of jurisdiction over the defendant would comport with constitutional notions of due process. Cogswell v. American Transit Ins. Co., supra, 282 Conn. 515, 923 A.2d at 646.
II. LONGARM JURISDICTION
General Statutes § 52-59b is the longarm statute that applies to the moving defendants, including the limited liability company defendant. Matthews v. SBA, Inc., 149 Conn.App. 513, 545-49, 89 A.3d 938, 960-63 (2014). Section 52-59b(a) provides that a court may exercise personal jurisdiction if the person or limited liability company: "(1) Transacts any business within the state; (2) commits a tortious act within the state ... (3) commits a tortious act outside the state causing injury to person or property within the state, ... if such person or agent (A) regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the state, or (B) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce; (4) owns, uses or possesses any real property situated within the state; or (5) uses a computer, ... or a computer network, ... located within the state."
At the initial argument on the motion on July 1, 2019, the plaintiff conceded that the only prong of this statute that is applicable is the prong for a defendant who commits a tortious act outside the state that causes injury within the state. However, in the plaintiff’s memorandum in opposition (no. 122.00), the plaintiff also argues that the prong for transaction of business in Connecticut applies. Specifically, the plaintiff argues that in the December 2018 - June 2019 timeframe surrounding the signing of the purchase and sale agreement, Harbor House bought product from HBS and did so by driving its trucks to Connecticut to pick up the product. The court finds that these purchases meet the standard of § 52-59b for "transacts any business." See, e.g., Technipower, LLC v. Mustang Vacuum Systems, LLC, Superior Court, judicial district of Danbury, Docket No. CV-09-5007190-S (October 8, 2009, Matasavage, J.) (48 Conn.L.Rptr. 627, 628-29). However, the cause of action also must arise out of that transaction. See, e.g., New London County Mutual Ins. Co. v. Nantes, 303 Conn. 737, 745, 36 A.3d 224, 230 (2012). None of the claims against the moving defendants arose out these purchases, which are not even alleged in the complaint. Moreover, even if these purchases of product are enough to confer long-arm jurisdiction over Harbor House, for the reasons set forth below, they do not satisfy the constitution’s requirement of specific jurisdiction or general jurisdiction.
Our Supreme Court has required the cause of action to arise out of the transaction of business in a series of cases going back to at least Zartolas v. Nisenfeld, 184 Conn. 471, 440 A.2d 179 (1981). This court has reviewed these decisions and cannot discern whether the Supreme Court is holding that this requirement is necessary for long-arm jurisdiction under § 52-59b before even reaching the constitutional analysis, or the Supreme Court is simply melding the two steps of the analysis together. The statute makes no reference to this requirement. In light of this ambiguity, this court will conduct the constitutional analysis for Harbor House.
The plaintiff also argues that the individual moving defendants "directed" these purchases, but the court agrees with the moving defendants that there is not enough evidence that any of the individual moving defendants were involved in the purchases such that they transacted any business in Connecticut.
The one trip to Connecticut that the individual moving defendants made to negotiate the sale of the New Jersey Assets also does not suffice for transacting business under the long-arm statute. See, e.g., Rosenblit v. Danaher, 206 Conn. 125, 138, 140-41, 537 A.2d 145, 152-53 (1988) (holding that even though out-of-state attorney held business meeting in Connecticut, it was not the transaction of business); Solano v. Calegari, 108 Conn.App. 731, 739, 949 A.2d 1257, 1263 (2008) (holding that discussion of loan and request for loan made in Connecticut did not suffice for transaction of business in Connecticut). Where Connecticut courts have found that there was enough for transaction of businesses, the assets involved were Connecticut assets (Gaudio v. Gaudio, 23 Conn.App. 287, 299-300, 580 A.2d 1212, 1220, cert. denied, 217 Conn. 803, 584 A.2d 471 (1990)) or there were multiple meetings and contacts with Connecticut ( Hart, Nininger & Campbell Associates, Inc. v. Rogers, 16 Conn.App. 619, 625, 548 A.2d 758, 762 (1988)).
The plaintiff relies heavily on Vertrue, Inc. v. Meshkin, 429 F.Supp.2d 479 (D.Conn. 2006), for the proposition that the individual defendants transacted business in Connecticut. In that case, the individual defendant had two day-long business trips to Connecticut and had numerous phone conversations, emails, mail and facsimile transmissions with the plaintiff in Connecticut to negotiate the terms of a "fee-generating membership program" that would allow its members to obtain benefits provided by the defendant’s company and by the Connecticut-based plaintiff. Id., 484-86, 490-91. This court does not find such extensive business contacts occurred in Connecticut, in this action.
The other basis for longarm jurisdiction asserted by the plaintiff is the alleged commission of torts in New Jersey that caused harm in Connecticut. Notably, each of the claims against the moving defendants refers to harm or damages to "the Partnership, HBS, LRM and/or HBP." (Emphasis added.) Complaint, ¶¶25, 30, 40, 42, 43, 49, 51 and 53. This implies that the harm, if any, could be limited to the New Jersey subsidiaries.
The plaintiff did not meet her burden at the hearing of demonstrating harm that occurred in Connecticut. There must be direct economic injury to the plaintiff within the state of Connecticut. See, e.g., Vertrue, Inc. v. Meshkin, supra, 429 F.Supp.2d 493; Connecticut Artcraft Corp. v. Smith, 574 F.Supp. 626, 630 (D.Conn. 1983). Moreover, Connecticut courts follow New York case law interpreting that state’s statutory language that is identical to § 52-59b(a)(3). Zartolas v. Nisenfeld, 184 Conn. 471, 474, 440 A.2d 179, 180-81 (1981). Under that case law, "[t]he situs of the injury is the location of the original event which caused the injury, not the location where the resultant damages are felt by the plaintiff." (Internal quotation marks omitted.) Robb v. Robb, 620 F.Supp.2d 282, 286 (D.Conn. 2009), quoting Whitaker v. American Telecasting, Inc., 261 F.3d 196, 209 (2d Cir. 2001). For example, in Connecticut Artcraft Corp., the court found that no injury was sustained in Connecticut because, even though the defendant allegedly stole trade secrets from the Connecticut plaintiff, it did not sell any of its products in Connecticut or steal any of the plaintiff’s customers in Connecticut. Connecticut Aircraft Corp. v. Smith, supra, 630. By contrast, the court in Vertrue, Inc. found that injury was sustained in Connecticut because misrepresentations were made in Connecticut and the Connecticut-based plaintiff sustained the loss of an advance that was to be paid in Connecticut. Vertrue, Inc. v. Meshkin, supra, 494.
The plaintiff here argues in her memorandum in opposition that the Connecticut entities were harmed because HBS continued to loan monies to the New Jersey subsidiaries at the same time that those subsidiaries were entering into subleases with Harbor House for no consideration from Harbor House. The moving defendants counter that there was no harm because Harbor House picked up the payment of all of the fees for the subsidiaries’ leases to the state of New Jersey and the subleases enabled HBS to stop sending money to the subsidiaries in 2014. The court does not have enough evidence before it to determine whether it is more probable than not that the subleases caused harm to the New Jersey subsidiaries, much less to HBS. As the parent corporation, HBS is a separate and distinct legal person. See, e.g., Tyler E. Lyman, Inc. v. 19 Thames Street Partnership, 109 Conn.App. 670, 676, 953 A.2d 121, 125 (2008). Therefore, the mere fact that the subsidiaries entered into subleases is not sufficient even to show harm to HBS. The plaintiff would have had to establish that the subleases caused HBS to make more payments from Connecticut than it otherwise would have or caused the subsidiaries to fail to make loan repayments they otherwise would have made to Connecticut. The plaintiff did not make this showing. Furthermore, the plaintiff did not establish any harm in Connecticut to the partnership, an HBS shareholder, which is even more remote, much less to herself derivatively as a limited partner of the partnership or directly in her individual capacity.
None of the allegations about the subleases and the debt appear until the third count of the complaint and, therefore, are not relevant to the breach of fiduciary duty count against Timothy Reeves. The plaintiff has not established long-arm jurisdiction over him for that claim.
Finally, this prong of the long-arm statute does not end with the issue of injury sustained in the state of Connecticut. It also requires that the moving defendants "(A) regularly [do] or [solicit] business, [engage] in any other persistent course of conduct, or [derive] substantial revenue from goods used or consumed or services rendered, in the state, or (B) [expect] or should reasonably expect the act to have consequences in the state and [derive] substantial revenue from interstate or international commerce." General Statutes § 52-59b(a)(3). See Sanchez v. Corona, 283 F.Supp.2d 648, 654 (D.Conn. 2003) (holding that there was no jurisdiction without these allegations). The plaintiff did not produce any evidence that would satisfy either of these subparts for the individual moving defendants or Harbor House.
III. CONSTITUTIONAL DUE PROCESS
"The due process clause of the fourteenth amendment to the United States constitution operates as a limitation on the jurisdiction of state courts to enter judgments affecting rights or interests of nonresident defendants." Panganiban v. Panganiban, 54 Conn.App. 634, 638, 736 A.2d 190, 193, cert. denied, 251 Conn. 920, 742 A.2d 359 (1999). "The due process test for personal jurisdiction has two related components: the minimum contacts inquiry and the reasonableness inquiry." (Internal quotation marks omitted.) Cogswell v. American Transit Ins. Co., supra, 282 Conn. 524, 923 A.2d at 651. The minimum contacts inquiry focuses on whether the defendant should have reasonably anticipated being haled into court in Connecticut, and the reasonableness inquiry focuses on whether the assertion of personal jurisdiction would be reasonable under the circumstances. Austen v. Catterton Partners V, LP, 729 F.Supp.2d 548, 553 (D.Conn. 2010).
A. Minimum Contacts
"[A]ll assertions of state-court jurisdiction must be evaluated according to the standards set forth in International Shoe [Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945)] and its progeny." Standard Tallow Corp. v. Jowdy, 190 Conn. 48, 51, 459 A.2d 503, 505 (1983). Those standards require that in order to subject a defendant to personal jurisdiction if he or it is not present within the territory of the forum, he or it must have "certain minimum contacts with it such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." (Internal quotation marks omitted.) Id., 52, 459 A.2d at 506, quoting International Shoe Co. v. Washington, supra, 316. "Whether due process is satisfied must depend ... upon the quality and nature of the activity in relation to the fair and orderly administration of the laws which it was the purpose of the due process clause to insure. That clause does not contemplate that a state may make binding a judgment in personam against an individual or corporate defendant with which the state has no contacts, ties, or relations." International Shoe Co. v. Washington, supra, 319.
The assessment of whether there are minimum contacts with the forum is a fact-specific inquiry. See Cogswell v. American Transit Ins. Co., supra, 282 Conn. 525, 923 A.2d at 652 ("the minimum contacts test of International Shoe Co. is not susceptible of mechanical application; rather the facts of each case must be weighed to determine whether the requisite affiliating circumstances are present" [internal quotation marks omitted]).
A defendant’s contacts in a forum state can be sufficient if there is "specific" (case-linked) or "general" (all-purpose) personal jurisdiction. A foreign defendant is subject to specific jurisdiction only when the claim "arise[s] out of or relate[s] to the defendant’s contacts with the forum." (Emphasis omitted; internal quotation marks omitted.) Bristol-Myers Squibb Co. v. Superior Court of California, 137 S.Ct. 1773, 1780, 198 L.Ed.2d 395 (2017). This court may exercise specific jurisdiction over a foreign defendant if that defendant "has purposefully directed [its] activities at residents of the forum ... and the litigation [has] [resulted] from alleged injuries that arise out of or relate to those activities." (Citation omitted; emphasis omitted.) Cogswell v. American Transit Ins. Co., supra, 282 Conn. 524, 923 A.2d at 651.
While it is conceivable that there is long-arm jurisdiction over defendant Harbor House based on its series of purchases of product in Connecticut, the plaintiff has not demonstrated that there is specific jurisdiction. The plaintiff argues that these purchases were designed to make the Harbor House offer to purchase the New Jersey Assets look more favorable than that of another prospective purchaser who offered the same price for all of the New Jersey Assets except for the shucking house. In support, the plaintiff cites testimony from Steve Lubrano, president of HBS, at the preliminary injunction hearing in this case. The moving defendants reply that the purchases of product had nothing to do with the plaintiff’s claims in this case, citing the plaintiff’s own testimony at the evidentiary hearing. There also is no mention of these product purchases in the complaint. Even if the court credits Lubrano’s testimony that the purchases were one of the reasons that the Harbor House offer was superior, the plaintiff’s claims here cannot be characterized as "arising out of or relating to" Harbor House’s purchases of product in Connecticut.
"[E]ven when the cause of action does not arise out of or relate to the foreign [defendant’s] activities in the forum State, due process is not offended by a State’s subjecting the [defendant] to its in personam jurisdiction if the defendant has had continuous and systematic general business contacts with the state." (Emphasis omitted.) Id., 524, 923 A.2d at 651-52. "A court with general jurisdiction may hear any claim against that defendant, even if all the incidents underlying the claim occurred in a different State." (Emphasis in original.) Bristol-Myers Squibb Co. v. Superior Court of California, supra, 137 S.Ct. 1780. However, general jurisdiction exists only when a defendant’s forum contacts are so "continuous and systematic" as to render the party "essentially at home" in the forum state. Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919, 131 S.Ct. 2846, 180 L.Ed.2d 796 (2011). "For an individual, the paradigm forum for the exercise of general jurisdiction is the individual’s domicile." Id., 924. A company’s place of formation and principal place of business are the "paradig[m] ... bases for general jurisdiction." Daimler AG v. Bauman, 571 U.S. 117, 137, 134 S.Ct. 746, 187 L.Ed.2d 624 (2014). The product purchases here are not sufficient for general jurisdiction. "[M]ere purchases [made in the forum State], even if occurring at regular intervals, are not enough to warrant a State’s assertion of [general] jurisdiction over a nonresident corporation in a cause of action not related to those purchase transactions." Goodyear Dunlop Tires Operations, S.A. v. Brown, supra, 929, quoting Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 418, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984). Neither the individual moving defendants nor Harbor House are "at home" in Connecticut such that there is general jurisdiction.
B. Reasonableness
Even if the requisite minimum contacts are found to exist such that there is specific or general jurisdiction, the second prong of the due process analysis asks whether the exercise of personal jurisdiction over the defendants satisfies notions of justice and reasonableness. "This examination includes five factors aimed at determining whether the quality and nature of the defendant’s activity make it reasonable and fair to require him to conduct his defense in that [s]tate." (Internal quotation marks omitted.) Samelko v. Kingstone Ins. Co., 329 Conn. 249, 269, 184 A.3d 741, 755 (2018). As set forth above, the plaintiff has not established that there is long-arm jurisdiction over the individual moving defendants or sufficient minimum contacts with Connecticut for the defendant, Harbor House. Therefore, it is not necessary for this court to undertake a reasonableness analysis.
The five factors are: "(1) the burden that the exercise of jurisdiction will impose on the defendant; (2) the interests of the forum state in adjudicating the case; (3) the plaintiff’s interest in obtaining convenient and effective relief; (4) the interstate judicial system’s interest in obtaining the most efficient resolution of the controversy; and (5) the shared interest of the states in furthering substantive social policies." (Internal quotation marks omitted.) Panganiban v. Panganiban, supra, 54 Conn.App. 640, 736 A.2d at 194.
CONCLUSION
The plaintiff has not met her burden of establishing personal jurisdiction, and the case is dismissed as to the moving defendants, Harbor House, Mark Bryan, Todd Reeves and Timothy Reeves.