Opinion
UWYCV146025750S
03-29-2018
FORT HILL PARK CONDOMINIUM ASSOC. et al. v. Coral BARNES et al.
UNPUBLISHED OPINION
Brazzel-Massaro, J.
INTRODUCTION
The court has filed this memorandum of decision to include in the conclusion the finding regarding Count Eight.
BACKGROUND
The plaintiffs filed this action by way of summons and complaint on December 2, 2014. The plaintiff brings this action in eight counts. Counts one and two were withdrawn by the plaintiff and the court granted a motion to strike as to the Third Count of the Counterclaim. The plaintiff Fort Hill Park Condominium Association is a common interest community located in Waterbury, Connecticut. The plaintiff Daniel Outler (" Outler" ) is a unit owner and treasurer of the Association. The complaint is dated November 21, 2014, six months after Daniel Outler was elected as an officer along with others who replaced Coral Barnes (" Barnes" ) as the President of the Board of the Condominium and Robert Elliot (" Elliot" ) as Treasurer.
Counts One and Two are not being pursued. Count Three is a claim pursuant to the Common Interest Ownership Act that the defendants in their capacity as board members failed to perform their duties in that they did not collect common charges or begin collection procedures and that the individual defendants failed to pay common charges and thus the Association has been damaged. Count Four alleges a breach of fiduciary duty. Count Five alleges a civil conspiracy. Count Six alleges a constructive fraud. Count Seven alleges a piercing of the corporate veil. Count Eight alleges unjust enrichment.
The defendants have filed several special defenses. In addition, the defendants filed a multiple-count counterclaim against Daniel Outler alleging that he converted Association funds and also this amounted to larceny on the part of Outler, as well as a breach of duty of loyalty and care, a breach of fiduciary duty, a civil conspiracy, and unjust enrichment.
The court conducted a trial on the matter on April 7, 2017. The court received testimony and evidence. The parties were permitted to submit memorandum to summarize the testimony and exhibits. Prior to the submission of the post-hearing memorandum, the defendant Coral Barnes died. The court met with counsel to discuss the intent of counsel as to the claims involving Mr. Barnes. The parties discussed a substitution for Mr. Barnes but that was not accomplished. On November 27, 2017 the plaintiffs filed a withdrawal as to Mr. Barnes. The plaintiff submitted a post-trial memorandum on September 1, 2017 and the defendant filed a post-trial memorandum on October 6, 2017.
The various counts have as common allegations, the actions or non-actions of the individual defendants in their capacity as officers of the board of directors for the condominium association. In particular, the plaintiffs contend that the defendants failed to satisfy their responsibilities as set forth by statutes and the by-laws of the Association known as the Fort Hill Park Condominium Association. (Hereinafter " Association." ) In particular, the plaintiff alleges that the defendants failed to adopt a budget in accordance with Connecticut General Statutes § 47-261e which provides that the Association shall adopt a budget each year. This budget must be approved in accordance with the process established in C.G.S. § 47-250e(a)(1). Additionally, state law has established procedures and requirements for meetings of the Board and notice to the Unit owners. These plaintiffs contend that in addition, the defendants have failed in their duties to collect monthly fees and/or initiate legal action for collection for those owners that failed to pay their monthly fees including the defendants. The plaintiffs contend that the action of the defendants violated their responsibilities as officers and amount to fraud and unjust enrichment.
In addition the By Laws of the Association requires that the Board adopt and amend budgets as well as collect assessments for common expenses from the Unit Owners. Article II, Section 2(b).
The defendants have filed special defenses and counterclaims against Mr. Outler as treasurer of the Association claiming that he failed to pay his common charges and engaged in acts of breach of fiduciary duty as well as larceny, civil conspiracy and unjust enrichment.
The defendants argued that the plaintiffs do not have the authority to bring this action. The court makes the following findings of facts. The Fort Hill Park Condominium Association consists of sixteen units in the City of Waterbury. The Association has by-laws which have been in effect since approximately 1987. The common charges for the Association during the relevant times has been $150.00 per month assessed as to each unit. For a period of time before April of 2014 the defendants were officers of the Board of Directors for the Fort Hill Condominium Association. The defendants did not have in effect either a proposed or approved budget approved by the Unit owners in 2012 or 2013. The individual plaintiff and other unit owners challenged the failure to provide a budget, assess expenses, collect common charges and take action against the unit owners who failed to pay common charges. As a result, in April 2014, four unit owners signed a petition to hold a meeting and discuss as part of the agenda, the removal of Coral Barnes as the President and the board members with a vote for new officers for the Board. The members/officers at the time of the May 2014 notice were Coral Barnes as President, Jeffrey Sprinkle as Vice-president, James Russell as Secretary and Robert Elliot as Treasurer.
The correspondence for the Association meeting of May 11, 2014 indicated that Mr. Barnes’ term as President ended on March 5, 2014. In accordance with C.G.S. § 47-250(a) 20% of the owners can sign a petition to call a meeting. There are 16 owners and the petition included 4 of the 16 owners.
The meeting noticed by the plaintiffs was conducted on May 11, 2014. (Exhibit A.) The May 11, 2014 meeting was properly noticed by the unit owners with the required 15 days and conducted on May 11, 2014. The notice included an agenda for the election of new board members as well as the removal of Coral Barnes as President, a discussion of the budget and other matters that required attention. The notice indicated that Coral Barnes had the right to appear and speak at the meeting. Four unit owners of the sixteen owners (25%) attended the meeting and voted. This was a quorum. At the May 11, 2014 meeting new officers were elected. They were Jim Russell as President, Luis Rivera as Vice-President, Daniel Outler as Treasurer and Janette Gonzalez as Secretary. Neither of the defendants attended this meeting. The notice of change of officers was filed with the Secretary of the State of the State of Connecticut on July 23, 2014.
As newly elected treasurer to the board, Outler began to address the expenses, obligations and collection of common charges for the Association immediately after May 11, 2014. In accordance with the By-laws, Article IV, Section 7, " the treasurer shall be responsible for Association funds, securities, full and accurate financial records and books of account showing all receipts and disbursements, and for the preparation of all required financial and other valuable effects in such depositories as may from time to time be designated by the Executive Board. The Treasurer shall perform generally all the duties incidental to the office of treasurer of a nonstock corporation organized under the law of the State of Connecticut; may endorse on behalf of the Association, for collection only, checks, notes and other obligations, and shall deposit the same and all moneys in the name of and to the credit of the Association in such banks as the Executive Board may designate ..." This obligation had not changed since the term of Robert Elliot as the Treasurer.
As a part of the minutes of the first meeting, the officers noted that all financial records would be obtained from the former treasurer. A certified letter was sent to Robert Elliot as the former treasurer. Dan Outler began the duties as Treasurer in May 2014 after election and in so doing acquired the bank accounts for the Association at Wells Fargo Bank and thereafter proceeded to change and open a new account. Additionally, he began to collect the monthly common fees as noted in the minutes which had been provided to each unit owner. Outler became aware that some of the owners were still paying Elliot although he had been replaced as treasurer and Elliot was accepting payments.
It became known to Outler after review of the records that the Barnes Board of Directors made a decision to forgo collecting any overdue common charges which were owed prior to 2014. Mr. Outler discovered that neither the officers nor the board initiated any legal action to collect the common charges due to the Association before or after the date of forgiveness of non-payment. Neither of the defendants provided any evidence that the board placed for a vote or consideration the decision to forgo collection of the overdue charges at any time. A review of the early records of G & W Realty when they collected the common charges confirmed some lapses in payment. Outler obtained records that indicated both Barnes and Elliot had past due common charges. The G & W records as of March 2013 demonstrated that Elliot did not have a balance due but Barnes owed $1,865.00 and Outler owed $322.35. There were also other unit owners who failed to pay the common charges leaving outstanding fees as of the 2013 date. However, the defendant Elliot testified that he and Barnes as officers met and decided to waive all account balances at the beginning of 2014. There was no notice of this meeting nor any recorded vote of the decision. Barnes had outstanding balances as well as other unit owners who had not paid and thus were not subject to legal action or collection by the Association as a result of the decision to waive. The records confirm the failure to make considerable payments by Coral Barnes. There was significant testimony and evidence that after 2014 Mr. Barnes had a number of lapses in the payment of his common fees. The testimony and evidence was not consistent as to when or how many payments he missed. This testimony although demonstrating a failure to pay does not have an impact on Barnes as an individual because after the hearing in this action Mr. Barnes passed away and the plaintiff withdrew the claims as to him leaving only Mr. Elliot as a defendant. The testimony and evidence does not demonstrate that Mr. Elliot had outstanding balances during the relevant time periods.
During the time after the May 11, 2014 meeting, there was a disagreement by the parties as to the make-up of proper officers and board members. On September 28, 2014, four months after the Board meeting electing new officers and two months after filing a notice of the new board members and officers with the Secretary of State, the defendants with other association members conducted what they contend was a meeting to oust the new officers and re-elect themselves. The notice of this meeting did not comply with the by-laws or the state statutes. It was deficient in notice and the minutes of this improper meeting are incomplete. The defendants never introduced documentation of a properly scheduled meeting. The defendants did not provide an agenda outlining the business to be conducted, especially the election of Coral Barnes and Robert Elliot along with other officers. The handwritten minutes of Mr. Barnes are lacking the detail to demonstrate that the meeting, the election and the actions thereafter in collecting common fees or making demands were authorized. In October 2014 the defendants filed a notice of change of officers with the Secretary of State for Connecticut based upon the improper meeting conducted in September. This filing has no legal significance because there was no authority to remove the legally constituted board and substitute themselves. For the time period of May 2014 until May 2016, neither Barnes nor Elliot were officers. On May 11, 2016, after the filing of this action, the Association noticed and conducted a proper meeting. At this meeting the election of new board members and officers took place. Barnes was once again elected as president and Outler was elected as treasurer.
Since 2012 the assessment of common charges for each unit owner has been $150.00 per month. During the time period of 2012 up until April 2013 the common charges were collected by the property management company, G & W Management, Inc. In April 2013 G & W Management ended their business arrangement with Fort Hill Condominium Association. The records of the management company indicates as noted above that there were overdue payments. There are records kept by the defendants concerning collections from 2013 until May 11, 2014 (and thereafter) but the records are inconsistent and unclear as to collection efforts. During the time period from May 11, 2014 until May 11, 2016, the method of collection of common charges was totally unstructured with two separate individuals claiming to have the right to collect and leaving the accounting for the collection without any consistency. It is amazing that the association collected what it did given the haphazard method of collection and recording. However, during the time, each of the parties to this action made claims that the other party had failed to diligently pay. The plaintiff, Outler, testified that it was difficult to enforce any system because there were claims of authority by both plaintiff and the defendants. However, the plaintiff Outler was the legally authorized treasurer responsible for the collection of the common charges as well as managing the expenses and maintenance. It was impossible for him to collect in a fair manner from each unit owner with Elliot also collecting or not collecting from other unit owners. Although there are records it was like keeping two sets of books on a business and obviously during the time with conflicting officers there was no method to address payment or nonpayment. As to the claims concerning Mr. Outler, his testimony and evidence indicate that there were a number of credits for work in his unit in 2006 or 2007 that were applied to his common charges as well as a small claims action which was applied. He recognized a mistake by G & W which gave him a double credit and he addressed it. His testimony and documentation confirms that he was not subject to any legal action such as a foreclosure for nonpayment. Mr. Outler made an effort to determine what if anything was due and thereafter made appropriate payments. He accurately portrayed his credits for the common charges.
DISCUSSION
" It is well established that in cases tried before courts, trial judges are the sole arbiter of the credibility of witnesses and it is they who determine the weight to be given specific testimony ... it is the quintessential function of the fact finder to reject or accept certain evidence ..." (Citations omitted; internal quotation marks omitted.) In re Antonio M., 56 Conn.App. 534, 540, 744 A.2d 915 (2000). The trier of fact must evaluate the credibility of both testimonial and documentary evidence. Coombs v. Phillips, 5 Conn.App. 626, 627, 501 A.2d 395 (1985) (per curiam). " The fact finding function is vested in the trial court with its unique opportunity to view the evidence presented in a totality of the circumstances, i.e., including its observations of the demeanor and conduct of the witnesses and parties." (Internal quotation marks omitted.) Cavoli v. DeSimone, 88 Conn.App. 638, 646, 870 A.2d 1147, cert. denied, 274 Conn. 906 (2005).
The trier of fact must observe the demeanor of witnesses and draw inferences as to the motives underlying the testimony and conduct. Christie v. Eager, 129 Conn. 62, 64-65, 26 A.2d 352 (1942). " It is well established that [t]he trier of fact may accept or reject the testimony of any witness ... The trier can, as well, decide what- all, none, or some of a witness’ testimony to accept or reject." (Citation omitted; internal quotation marks omitted.) Wilson v. Hryniewicz, 51 Conn.App. 627, 633, 724 A.2d 531, cert. denied, 248 Conn. 904, 731 A.2d 310 (1999).
In evaluating the credibility of the witnesses, this Court considered the appearance and demeanor of the witnesses who took the stand, the consistency or inconsistency of their testimony, memory of certain events, manner in responding to questions by counsel and whether they were candid and forthright or evasive and incomplete, their interest or lack of interest in the case and the consistency or inconsistency of the testimony in relation to other evidence, including exhibits in the case.
One of the first arguments by the defendants is that the plaintiffs do not have standing to bring this action. In particular, the defendants argue that the Board did not vote to bring this action. The plaintiff ignores the claims of the defendants and argues that C.G.S. § 47-278 provides the basis. This statute states: " A declarant, association, unit owner or any other person subject to this chapter may bring an action to enforce a right granted or obligation imposed by this chapter, the declaration or the bylaws." Article II, Section 2(f) of the Bylaws of the Association gives the power to the Executive Board to act on behalf of the Association to institute litigation " in its own name on behalf of itself or two or more Unit Owners on matters affecting the Condominium." Section 15 states as to acts of the Association that: " Unless approval by Unit Owners and/or a specific percentage of the Executive Board is required by Declaration certificate of incorporation of the Association, these Bylaws, or applicable law, all approvals or actions required or permitted to be given or taken by the Association shall be given or taken by the Executive Board without the consent of the Unit Owners ..." As to the consent to corporate action, § 14 of the bylaws states that: " if all the Directors or all members of a committee established for such purpose, as the case may be, severally or collectively consent in writing to any action taken or to be taken by the Association, and the number of the Directors or committee constitutes a quorum for such action, such action shall be a valid corporate action as though authorized at a meeting of the Executive Board or the committee, as the case may be. The Secretary shall file such consents with the minutes of the meetings of the Executive Board." The state law also provides that " ... before an association brings an action or institutes a proceeding against a unit owner other than a declarant, the association shall schedule a hearing to be held during a regular or special meeting of the executive board and shall send a written notice by certified mail, return receipt requested, and by regular mail, to the unit owner at least ten business days prior to the date of such hearing. Such notice shall include a statement of the nature of the claim against the unit owner and the date, time, and place of the hearing." C.G.S. § 47-278(c)(1)(A). Additionally, the statute provides that a unit owner can seek to " enforce a right granted or obligation imposed by this chapter, the declaration or the by-laws against the association or another unit owner other than a declarant ..." The statute as well as the bylaws of the Association permit an action by the Association but in order to do so in accordance with the bylaws the Association must take an action for approval which is filed. The plaintiff argues that the action must be authorized because the law firm which has represented the Association in other legal actions has filed the complaint and is representing the Association in the instant action. This argument ignores the defendants’ position that in order to bring an action the Association must be authorized by a vote to initiate the action. The plaintiff has not provided any testimony in this action of a meeting to authorize the filing of this action against the defendants in accordance with the statutes and the bylaws. In accordance with the bylaws it is the Association that must initiate a legal action through the approval process. Without evidence of an approval to initiate the action, the court does not find that the Fort Hill Park Association authorized the action and thus no legal authority to pursue this action as to them. Therefore, the court reviews the allegations considering only one plaintiff, Daniel Outler.
Although the court has indicated that the defendant Coral Barnes is no longer a party to the action because the plaintiff has withdrawn the matter as to him, the argument set forth in the memorandum refers to defendants.
As to Daniel Outler, he brings this action as an owner of a unit within the condominium Association. The statute C.G.S. § 47-278 provides in part: " [a] declarant, association, unit owner or other person subject to this chapter may bring an action to enforce a right granted or obligation imposed by this chapter, the declaration or the bylaws ..." The defendants argue that the action is brought against them as unit owners and thus there are prerequisites which the plaintiff has failed to satisfy to give authority to bring this action. This analysis does not accurately depict the claims against the defendants in this action. It is not a claim for failure to pay common charges which would require approvals in accordance with the statute. However, the claims by the plaintiff involve the official positions of the defendants as officers and the allegation that they used their position not only to relieve them from paying common charges but also the associated expenses because of the nonpayment. However, the claims by the plaintiff also go directly to their duties and responsibilities as officers and the alleged improper use of the position to benefit them. The plaintiff has the authority to pursue such claims.
Counts one and two are no longer before the court. Counts three and four are claims for breach of the duties pursuant to the common ownership act and a breach of fiduciary duty by the defendants. The only remaining defendant for purposes of reviewing these claims is Robert Elliot. Both counts involve the actions of the defendants as officers of the Association. The essential elements of a claim of breach of fiduciary duties requires that: (1) a fiduciary relationship existed which gave rise to (a) a duty of loyalty on the part of the defendant to the plaintiff, (b) an obligation on the part of the defendant to act in the best interests of the plaintiff, and (c) an obligation on the part of the defendant to act in good faith in any matter relating to the plaintiff, (2) that the defendant advanced his or her own interests to the detriment of the plaintiff, (3) that the plaintiff sustained damages; (4) that the damages were proximately caused by the fiduciary’s breach of his or her fiduciary duty. Everett v. Everett, Superior Court, judicial district of Stamford-Norwalk, at Stamford, Docket No. CV 10-6004013 (December 16, 2010, Adams, J.) (quoting T. Merritt, 16 Connecticut Practice Series, Elements of an Action (2010-2011 Ed.) § 8:1, p. 534). The Board and the Association are governed by the Common Interest Ownership Act (" CIOA" ), General Statutes § 47-200 et seq., which the plaintiffs and the defendants acknowledge. Section 47-245(a) provides in relevant part: " In the performance of their duties, officers and members of the executive board appointed by the declarant shall exercise the degree of care and loyalty to the association required of a trustee and officers and members of the executive board not appointed by a declarant shall exercise the degree of care and loyalty to the association required of an officer or director of a corporation ..." Thus " Connecticut condominium law presently recognizes that the board owes a duty of care and loyalty to the association but not to an individual owner. Accordingly, a statutory fiduciary duty does not exist between the individual defendants as board members and they do not owe a duty to the plaintiff Outler as an individual owner of the unit. Their only duty is to the association. McCreary v. One Strawberry Hill Ass’n Inc., Superior Court, judicial district of Stamford-Norwalk, at Stamford, Docket No. FST CV 10-6006749-S (April 29, 2011, Tobin, J.) . See also: Eastburn v. Imagineers, LLC, Superior Court, judicial district of Fairfield, Docket No. FBT CV 136039189S (May 13, 2016, Arnold, J.) . Therefore, as to the claims in counts three and four by Dan Outler there is no valid claim against the individual board member Elliot.
Count five is a claim for a civil conspiracy. The plaintiff alleges that the defendants conspired to do a criminal or unlawful act in which they took advantage of their positions of trust as board members and failed to pay common charges to the Association. The elements of civil conspiracy are: (1) a combination between two or more persons, (2) to do a criminal or unlawful act or a lawful act by criminal or unlawful means, (3) an act done by one or more of the conspirators pursuant to the scheme and or in furtherance of object, (4) which act results in damage to the plaintiff. Harp v. King, 266 Conn. 747, 779, 835 A.2d 953 (2003). To have such a claim there must be an allegation of a substantive tort. Id. at 779 n. 37. Pursuant to Connecticut jurisprudence, there is, precisely speaking, no independent claim for civil conspiracy. " Rather, [t]he action is for damages caused by acts committed pursuant to a formal conspiracy rather than by the conspiracy itself." (Internal quotation marks omitted.) Macomber v. Travelers Property & Casualty Corp., 277 Conn. 617, 636, 894 A.2d 240 (2006). The testimony and the allegations regarding this claim refer to the breach of duty in Count Three which is not sustainable. The purpose of a civil conspiracy claim is to impose civil liability for damages on those who agree to join in a tortfeasor conduct and thereby become liable for the ensuing damage, simply by virtue of their agreement to engage in wrongdoing. Id. The specific claim in Count Five is the failure to pay common charges to the Association. Neither the allegations nor the testimony of the parties demonstrate that the defendant Elliot engaged in an act which supports a civil conspiracy.
Count six alleges a constructive fraud in which the plaintiff repeats the same allegation as to the breach of fiduciary duty in Count four. To establish an action for constructive fraud, the plaintiff must prove in addition to the elements of fraud, the existence of a confidential or special relationship and the breach of that relationship. Mitchell v. Mitchell, 31 Conn.App. 331, 334-35, 625 A.2d 828 (1993). Once such a relationship is established the burden shifts to the fiduciary to prove fair dealing by clear and convincing evidence. In addition, the elements of a fraud must be proven by clear and convincing evidence. Id., 335, 625 A.2d 828.
" The elements of fraud are: (1) a false representation was made as a statement of fact, (2) the statement was untrue and known to be so by its maker; (3) the statement was made with the intent of inducing reliance thereon; and (4) the other party relied on the statement to his detriment." Mitchell, id., 336, 625, A.2d 828. However, " [t]he burden of proof and the elements necessary in an action for constructive fraud differ markedly from the prerequisites to liability for actual fraud. The breach of a confidential or special relationship forms the basis for liability under the doctrine of constructive fraud. The plaintiff must establish the existence of a confidential or special relationship ... Once such a relationship is found to exist, the burden shifts to the fiduciary to prove fair dealing by a clear and convincing evidence." (Citations omitted.) Id., at 334-35. " A fiduciary or confidential relationship is characterized by a unique degree of trust and confidence between the parties, one of whom has superior knowledge, skill or expertise and is under a duty to represent the interests of the other ... The superior position of the fiduciary or dominant party affords him great opportunity for abuse of the confidence reposed in him." Dunham v. Dunham, 204 Conn. 322, 528 A.2d 1123 (1987). The claim by the plaintiff is that the defendant utilized his position as an officer so that he did not need to pay his common charges. The plaintiff also alleges that Elliot engaged in criminal or unlawful acts. In support of this claim, the plaintiff relies upon the testimony that Mr. Elliott as an officer did not conduct meetings, did not adopt a budget, nor did he collect common charges. However, the testimony of Mr. Elliot clearly establishes that he did not take any action based on his own preferences. He made it clear in his testimony that the decisions were based upon the consensus of the Board. Although Mr. Elliot had some difficulty with specific recollections he was confident that the Board chose to forgive payments prior to his election in 2014. He indicated that although he did not have specific documentation, there was at least one meeting in 2013, 2014 and 2015 and two meetings in 2016. Additionally, he did not bring the past due accounts to the Board at their meetings but did discuss the past due common charges with Barnes and other individuals. His testimony about the rationale for not collecting late fees and charges to those who did not make their payments was not only compelling but provided a true sense of the concern the Board had for those who were having financial difficulties. Unlike the picture being painted by the plaintiff of a sinister intent, the testimony of Mr. Elliot describes the concern for the unit owners’ financial difficulties which he states most of them experienced at some point. He had a policy of patience for payments rather than placing further stress upon the unit owner. This Association has only 16 units and thus it appears there is a closer group of people who have the tolerance extended to all unit owners to satisfy their obligations. The testimony by Mr. Elliot does not support a claim of indifference to his position but contrary to this it is a position that attempts to address the needs of the Association in conjunction with the obligation of the unit owners. These actions and statements do not support a cause of action for civil conspiracy. Lastly, the claim that Elliot did not make payments for common charges is contrary to the testimony of Jordan Woodruff who indicated that Elliot had a $0 balance.
The plaintiff has failed to satisfy the elements for a claim of constructive fraud.
Count seven is a claim of piercing the corporate veil and thus causing damage to the Association. The decision in McCreary v. One Strawberry Hill Ass’n Inc., Superior Court, judicial district of Stamford-Norwalk, at Stamford, Docket No. FST CV 10-6006749-S (April 29, 2011, Tobin, J.) , that the individual board members do not have a duty but that the duty is from the Association impacts the claim of piercing the corporate veil when in fact the board members individually have no duty. See also: Eastburn v. Imagineers, LLC, Superior Court, judicial district of Fairfield, Docket No. FBT CV 136039189S (May 13, 2016, Arnold, J.) .
However, the court will analyze the law in such a claim because as noted below there is no support for a claim of piercing the corporate veil. In Angelo Tomasso, Inc. v. Armor Construction and Paving, Inc., 187 Conn. 544, 557 (1982), the court enunciates the longstanding law that the corporate veil cannot be pierced unless there are exceptional circumstances. The theories that will satisfy the criteria of exceptional circumstances to pierce the corporate veil are well recognized in the law in Connecticut. They are instrumentality or identity.
The instrumentality rule requires that the plaintiff prove that: " (1) Control, not mere majority or complete stock control, but complete domination, not only of finances but of policy and business practice in respect to the transaction attacked so that the corporate entity as to this transaction had at the time no separate mind, will or existence of its own; (2) that such control must have been used by the defendant to commit fraud or wrong, to perpetrate the violation of a statutory or other positive legal duty, or a dishonest or unjust act in contravention of [the] plaintiff’s legal rights; and (3) that the aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of ..." Mountview Plaza Assoc., Inc. v. World Wide Pet Supply, Inc., 76 Conn.App. 627, 633-34, 820 A.2d 1105 (2003). The identity exception requires that, " the plaintiff can show that there was such a unity of interest and ownership that the independence of the corporations had in effect ceased or had never begun, an adherence to the fiction of separate identity would serve only to defeat justice and equity by permitting the economic entity to escape liability arising out of an operation conducted by one corporation for the benefit of the whole enterprise." (Citation omitted.) (Internal quotation marks omitted.) Labbe v. Carusone, 115 Conn.App. 832, 838, 974 A.2d 738 (2009). The identity doctrine has been primarily applied to reach beyond the veil to another corporation, it may also be employed to hold an individual liable. Klopp v. Therman Sash, Inc., 13 Conn.App. 87, 89 n.3, 534 A.2d 907 (1987). Applying the testimony and evidence in this action particularly the testimony of Mr. Elliot about the work he did and the reporting to the Association as a whole as well as Mr. Barnes, there is no factual basis to find a piercing of the corporate veil. In fact, the plaintiff although including this claim does not argue that there is a factual basis. Therefore, court finds for the defendant as to this claim in Count Seven.
The plaintiff lastly asserts that the defendant was unjustly enriched because he did not pay common charges and thus benefitted. The only remaining defendant as to this count is Robert Elliot. " [A] right of recovery under the doctrine of unjust enrichment is essentially equitable, its basis being that in a given situation it is contrary to equity and good conscience for one to retain a benefit which has come to him at the expense of another." (Internal quotation marks omitted.) Vertex v. Waterbury, 278 Conn. 557, 573, 898 A.2d 178 (2006). The testimony of Jordan Woodruff who supports the position of Mr. Elliott that there was a $0 balance when they left as the managing company and the testimony of Mr. Elliot that there was no benefit to him in the form of forgiven charges or nonpayment of common charges is contrary to such a finding. Neither the plaintiff nor the records he introduced demonstrated that Mr. Elliot in any way benefitted at the expense of the plaintiff. The testimony fails to support any claim for unjust enrichment.
The defendants filed a seven-count counterclaim alleging claims of conversion, larceny, unfair trade practices, breach of loyalty and care, breach of fiduciary duty, civil conspiracy and unjust enrichment as to the plaintiff Daniel Outler.
As noted above when Daniel Outler was properly elected as treasurer he immediately, with the direction of the officers of the Association, began to collect the various financial records of the Association and in doing so protected the accounts by securing them at Wells Fargo Bank. The plaintiff was elected as treasurer between May 11, 2014 until May 2016. The defendant is also limited in that the cause of action because he was not authorized to bring an action against a unit owner nor did it follow the procedure as noted above in relation to the claim against the defendants by the Association. Additionally, as noted above, the courts have held that a cause of action against a board member and not the Association for breach of fiduciary duty is not proper. McCreary v. One Strawberry Hill Ass’n, Inc., Superior Court, judicial district of Fairfield, at Stamford, Docket No. FST CV 10-6006749-S (April 29, 2011, Tobin, J.), supra . Thus the claim of breach of fiduciary duty is not only factually deficient but also legally deficient. The defendants did not offer any evidence that Elliot’s actions were unilateral or not done in good faith to secure and protect the financial records of the Association. Additionally, the testimony of Outler was credible and his attempts to create an organized and professional accounting of the finances for the Association after the turmoil of the prior directors was obvious. The difficulties that he encountered were in major part because of the interference and refusal of the defendants to permit him to perform his duties as treasurer. There was no evidence that Outler at any time acted intentionally or even negligently in performing his duties as the treasurer. He acted in the best interest of the Association and in actuality his election along with the 2014 board brought some of the inept business practices to the attention of the Association members. The defendants did not support these claims with any testimony or evidence. The defendant alleges that the plaintiff committed a larceny. Under Connecticut criminal law, " [b]ecause larceny is a specific intent crime, the state must show that the defendant acted with the subjective desire or knowledge that his actions constituted stealing ... Larceny involves both taking and retaining. The criminal intent involved in larceny relates to both aspects. The taking must be wrongful, that is, without color of right or excuse for the act ... and without the knowing consent of the owner ... The requisite intent for retention is permanency." (Internal quotation marks omitted) State v. Saez, 115 Conn.App. 295, 302, 972 A.2d 277, cert. denied, 293 Conn. 909, 978 A.2d 1113 (2009). As noted above, the plaintiff began his work as the treasurer to correct some of the difficulties encountered in collecting and accounting. There was no evidence that he intended to wrongfully take the money of the Association or to retain any of the funds for himself. He established bank accounts to secure the funds for the Association. Any claim by the defendants of wrongdoing is not supported by the testimony and the evidence.
There is no basis to find a conversion, larceny, or unfair trade practices as a result of Outler’s work as Treasurer.
The civil conspiracy claim requires that the parties demonstrate: (1) a combination between two or more persons; (2) to do a criminal or an unlawful act by criminal or unlawful means, (3) an act done by one or more of the conspirators pursuant to the scheme and in furtherance of the object; (4) which act results in damage to the plaintiff. Larobina v. McDonald, 274 Conn. 394, 408 (2005). There is no evidence that the plaintiff Daniel Outler conspired with anyone to conduct the business of the Association in an unlawful manner or engaged in criminal acts in his duties as treasurer.
Lastly, the claim that Elliot did not fully pay his common fees is not only factually incorrect but was never addressed by the defendants as board members or the Association before making the claim in this action. Neither of the defendants as the purported officers requested that the Association address this issue and if necessary permit the initiation of a legal action. There was no notice given to him by the Association in accordance with the bylaws to address or answer the claim. The testimony and evidence about his payments does not support a finding that his actions were in any way fraudulent or improper behavior. The evidence does not support a cause of action for unjust enrichment.
CONCLUSION
Based upon the above, the Court finds that the Association was not legally authorized to bring an action and that the plaintiff Outler failed to satisfy his burden of proof with respect to the remaining counts against Robert Elliot in the complaint. Judgment is entered as to the Defendant on counts three, four, five, six, seven and eight of the Amended Complaint.
As to the counterclaim filed by the defendant Robert Elliot the court finds that the counterclaim plaintiff failed to produce any evidence in support of his claims against the defendant, Daniel Outler. Judgment is entered for the counterclaim defendant, Outler, on the counterclaim.