Opinion
No. CV 04-5000021S
January 29, 2010
MEMORANDUM OF DECISION RE DEFENDANT'S MOTION TO DISMISS (#121)
I PROCEDURAL AND FACTUAL BACKGROUND
On July 15, 2004, the plaintiff, Lillian Garcia, filed a complaint against the defendants Two By Six, LLC and Avraham Cohen. The action arises out of personal injuries Garcia sustained on September 6, 2003, when she allegedly fell over a disconnected boiler in the basement of the apartment she was renting at 112 Hallock Avenue, New Haven, Connecticut (the property). In her complaint, Garcia alleges that the property is owned, controlled and/or maintained by Two by Six and Cohen. She also alleges that her injuries were caused by the defendants' carelessness and negligence, as they permitted the common areas of the apartment building to be unreasonably dangerous by leaving the boiler in a dangerous position, failed to keep the basement free of hazardous objects, failed to provide adequate and sufficient lighting in the basement, failed to conduct periodic and reasonable inspections of the basement to ensure the area was safe for tenants and failed to warn her of the dangerous and defective conditions of the basement.
Judgment against Two By Six and Cohen was rendered by the court, Zoarski, J.T.R., on November 4, 2008 in the amount of $33,444.77. On July 10, 2009, the court, Zoarski, J.T.R., granted Cohen's motion to open the judgment. Thereafter, on July 16, 2009, Cohen filed a motion to dismiss Garcia's complaint on the ground that the court lacks personal jurisdiction over him because he, as a non-resident individual, does not have the requisite contacts with the state of Connecticut necessary for the court to invoke jurisdiction over him. Cohen filed a memorandum of law and an affidavit in support of the motion. Garcia filed a memorandum of law in opposition to Cohen's motion to dismiss, arguing that because Cohen is in the business of renting properties to tenants in Connecticut, is responsible for managing these properties and has accepted rental income from Connecticut residents, he has sufficient ties to the state to allow the court to exercise its longarm jurisdiction over him.
The judgment rendered by the court on November 4, 2008, remains against Two By Six.
Cohen also moved to have the complaint dismissed on the ground that service of process was insufficient. This argument was abandoned on November 12, 2009, when the parties stipulated at an evidentiary hearing that service is effective so long as the court has longarm jurisdiction. Because Cohen is no longer contesting that service was insufficient, the court will not address that portion of Cohen's argument should it determine that it has longarm jurisdiction over Cohen.
This matter was initially heard at short calendar on October 26, 2009. At this time, the court determined that issues of fact necessary to the determination of the court's jurisdiction existed, and the court ordered an evidentiary hearing pursuant to Standard Tallow Corp. v. Jowdy, 190 Conn. 48, 56, 459 A.2d 503 (1983). This hearing was held on November 12, 2009. Following the hearing, the parties submitted supplemental briefs in support of their respective arguments.
II 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.) Caruso v. Bridgeport, 285 Conn. 618, 627, 941 A.2d 266 (2008). "When a [trial] court decides a jurisdictional question raised by a pretrial motion to dismiss, 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 . . . The motion to dismiss . . . admits all facts which are well pleaded, invokes the existing record and must be decided upon that alone . . . Where, however, as here, the motion is accompanied by supporting affidavits containing undisputed facts, the court may look to their content for determination of the jurisdictional issue . . ." (Citations omitted; internal quotation marks omitted.) Cogswell v. American Transit Ins. Co., 282 Conn. 505, 516, 923 A.2d 638 (2007). "Furthermore, [i]f a challenge to the court's personal jurisdiction is raised by a defendant, either by a foreign corporation or by a nonresident individual, the plaintiff must bear the burden of proving the court's jurisdiction." (Internal quotation marks omitted.) Ryan v. Cerullo, 282 Conn. 109, 118, 918 A.2d 867 (2007).
"When a defendant files a motion to dismiss challenging the court's jurisdiction, a two part inquiry is required. The trial court must first decide whether the applicable state longarm statute authorizes the assertion of jurisdiction over the [defendant]. If the statutory requirements [are] met, its second obligation [is] then to decide whether the exercise of jurisdiction over the [defendant] would violate constitutional principles of due process." (Internal quotation marks omitted.) Knipple v. Viking Communications, Ltd., 236 Conn. 602, 606, 674 A.2d 426 (1996). "Only if we find the statute to be applicable do we reach the question [of] whether it would offend due process to assert jurisdiction." Lombard Bros., Inc. v. General Asset Management Co., 190 Conn. 245, 250, 460 A.2d 481 (1983).
A Longarm Jurisdiction Analysis
Connecticut's longarm statute provides in relevant part: "As to a cause of action arising from any of the acts enumerated in this section, a court may exercise personal jurisdiction over any nonresident individual . . . who in person or through an agent: (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 . . . (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." General Statutes § 52-59b(a). Because the parties have stipulated that Two By Six owns the rental property, and there have been no alleged tortious acts occurring outside of the state or computer use on the part of Cohen, subsections (a)(3), (4) and (5) of the statute are not implicated by this action.
Garcia's complaint alleges that 112 Hallock Avenue is "owned" by Two By Six and Cohen. However, at short calendar on October 26, 2009, Garcia stipulated that the property was owned by Two By Six and not by Cohen.
In the present case, Cohen argues that the fiduciary shield doctrine prevents the court from exercising personal jurisdiction over him. He argues that because he has never resided, has never possessed real property and has not transacted business within the state of Connecticut, the court may not exercise personal jurisdiction over him. He maintains that any contact he had with the state of Connecticut was as result of his membership in three different limited liability corporations. Cohen therefore argues that the court may not properly invoke the longarm statute in order to haul him into court. Garcia argues, however, that because Cohen controlled and maintained the property where the injury occurred and has engaged in significant business relations within the state, Cohen has sufficient ties with the state to permit this court's exercise of jurisdiction over him.
Although Cohen did not describe the fiduciary shield doctrine by its name, this is precisely what Cohen's argument presents. "The fiduciary shield doctrine is based upon the notion that it is unfair to subject a corporate employee personally to suit in a foreign jurisdiction when his only contacts with that jurisdiction have been undertaken on behalf of his corporate employer." (Internal quotation marks omitted). West State Mechanical, Inc. v. Paramount Health Resources, Inc., Superior Court, judicial district of Litchfield, Docket No. CV 07 5002640 (March 12, 2008, Marano, J.) ( 45 Conn. L. Rptr. 178, 179).
Cohen testified at the November 12, 2009 evidentiary hearing that at one time he was a member of three different limited liability companies, Two By Six, LLC, Columbus, LLC and Winchester, LLC, all of which bought and sold real estate within the state of Connecticut.
"The appellate courts in Connecticut have not yet ruled on the viability of the fiduciary shield doctrine." (Internal quotation marks omitted). West State Mechanical, Inc. v. Paramount Health Resources, Inc., Superior Court, judicial district of Litchfield, Docket No. CV 07 5002640 (March 12, 2008, Marano, J.) ( 45 Conn. L. Rptr. 178, 179). A number of Superior Court decisions have recognized the fiduciary shield doctrine and have held "that a nonresident individual's status as a paid officer or employee of a corporation over which Connecticut has personal jurisdiction is insufficient to confer jurisdiction over the nonresident individual where no allegations or evidence is submitted indicating that the individual has transacted business in Connecticut in an individual capacity and on his or her own behalf." Cadle Co. v. Sydorowycz, Superior Court, judicial district of Hartford, Docket No. CV 00 0597714 (June 5, 2001, Hennessey, J.) ( 30 Conn. L. Rptr. 202, 204). A growing trend among Superior Court decisions and Connecticut District Court decisions, however, has been to reject the fiduciary shield doctrine altogether, as "the `fiduciary shield' doctrine finds no place in the text or underlying policy of § 52-59b." Under Par Associates, LLC v. Wash Depot A., Inc., 47 Conn.Sup. 319, 327, 793 A.2d 300 (2001) [ 31 Conn. L. Rptr. 20].
See West State Mechanical, Inc. v. Paramount Health Resources, Inc., supra, Superior Court, Docket No. CV 07 5002640; Shafik v. Andria, Superior Court, judicial district of New Britain, Docket No. CV 06 5001472 (June 1, 2007, Shapiro, J); Zelinsky v. Borck, Superior Court, judicial district of New Haven, Docket No. CV 04 4001993 (June 16, 2005, Rodriguez, J.); Cadle Co. v. Sydorowycz, supra, 30 Conn. L. Rptr. 202; Whalley Glass Co. v. Nielson Co., Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. CV 00 0176028 (May 18, 2001, Hickey, J.); Advanced Claims Service v. Franco Enterprises, Superior Court, judicial district of Fairfield, Docket No. CV 00 0374548 (October 13, 2000, Melville, J.); Leach Holdings, Inc. v. Raymark Industries, Inc., Superior Court, judicial district of Fairfield, Docket No. CV 97 0345036 (December 23, 1997, Melville, J.) ( 21 Conn. L. Rptr. 468); Abrams v. Riding High Dude Ranch, Superior Court, judicial district of Fairfield, Docket No. CV 97 0345046 (November 21, 1997, Skolnick, J.); Charles Town Associates Ltd. Partnership v. Dolente, Superior Court, judicial district of Litchfield, Docket No. CV 95 069233 (May 1, 1996, Picket, J.); Basta v. Today's Adoption, Superior Court, judicial district of Waterbury, Docket No. 95 119321 (July 25, 1995, Sullivan, J.); Tek-Motive, Inc. v. AFB, Inc., Superior Court, judicial district of New Haven, Docket No. CV 93 0349298 (November 12, 1993, Zoarski, J.); N.E. Contract Packers v. Beverage Services, Superior Court, judicial district of Waterbury, Docket No. 1000039 (June 18, 1992, Gaffney, J.) ( 7 C.S.C.R. 828) [ 6 Conn. L. Rptr. 582].
See Ruocco v. Metropolitan Boston Hockey League, supra, Superior Court, Docket No. CV 07 4024835; University of Bridgeport v. Maxus Leasing, Superior Court, judicial district of Fairfield, Docket No. CV 05 4009423 (June 15, 2006, Gilardi, J.) ( 41 Conn. L. Rptr. 522); Sobol Family Partnership v. Cushman Wakefield, Superior Court, complex litigation docket at Middlesex, Docket No. X04 CV 04 4003559 (November 1, 2005, Beach, J.) ( 40 Conn. L. Rptr. 214); Milford Paintball, LLC v. Wampus Milford Associates, LLC, Superior Court, judicial district of New Haven, Docket No. CV 05 4007571 (August 25, 2005, Lopez, J.); Haynes Construction Co. v. Famm Steel, Inc., Superior Court, judicial district of Ansonia Milford, Docket No. CV 04 0085304 (April 27, 2005, Moran, J.) ( 39 Conn. L. Rptr. 195); Memberworks, Inc. v. Heartland Direct, Inc., Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. CV 03 0197372 (September 27, 2004, Lewis, J.) ( 38 Conn. L. Rptr. 24); Under Par Associates, LLC v. Wash Depot A., Inc., 47 Conn.Sup. 319, 793 A.2d 300 (2001).
See Panterra Engineered Plastics, Inc. v. Transportation System Solutions, LLC, 455 F.Sup.2d 104 (D.Conn. 2006); Vertrue, Inc. v. Meshkin, 429 F.Sup.2d 479 (D.Conn. 2006); Dictaphone Corp. v. Gagnier, United States District Court, Docket No. 3:05CV266 (D.Conn. March 22, 2006); Chase v. Cohen, United States District Court, Docket No. 3:04CV588 (D.Conn. December 29, 2004); Grunberger Jewelers, Inc. v. Leone, United States District Court, Docket No. 3:03CV647 (D.Conn. June 18, 2004).
In Under Par, Judge Blue held that "[t]his doctrine of `fiduciary shield' . . . emerged with little notice and with no critical examination as a novel principle by way of dicta in a series of decisions of the New York state and federal courts in the mid-sixties just as a more liberal and relaxed rule was developing in federal courts in favor of the application of state longarm statutes themselves . . . The doctrine was initially considered to be a substantive requirement of New York law . . . In 1988, however, the New York Court of Appeals rejected the doctrine in a well reasoned decision. Kreutter v. McFadden Oil Corp., 71 N.Y.2d 460, 522 N.E.2d 40, 527 N.Y.S.2d 195 (1988)." (Citations omitted; internal quotation marks omitted.) Id., 325-36. As noted by Judge Blue, the court in Kreutter found that "[n]othing in the [long arm] statute's language or the legislative history relating to it suggests that the Legislature intended to accord any special treatment to fiduciaries acting on behalf of a corporation or to insulate them from long arm jurisdiction for acts performed in a corporate capacity . . ." (Citation omitted; internal quotation marks omitted). Id., 326. Furthermore, the doctrine is not "necessary as a matter of fairness . . . The equitable concerns which motivated development of the doctrine are amply protected by constitutional due process requisites which guarantee that jurisdiction over a nonresident will be sustained only when the demand for his presence is reasonable and consistent with notions of fair play and substantial justice . . ." (Citations omitted; internal quotation marks omitted). Id. "Finally . . . the fiduciary shield doctrine is undesirable as a matter of public policy . . . It unfairly prejudices plaintiffs who seek relief against defendants conducting affairs in this State . . . The unfairness of the doctrine is exemplified by the numerous exceptions created along the way by the courts adopting it." (Citations omitted; internal quotation marks omitted.) Id. Accordingly, the court in Under Par rejected the fiduciary shield doctrine.
For the reasons set forth by Judge Blue in Under Par, this court also concludes that the fiduciary shield doctrine does not bar the assertion of long arm jurisdiction over individual defendants merely because they are members of a limited liability company. Connecticut's legislature used New York's long arm statute as a model for the text of § 52-59b. Zartolas v. Nisenfeld, 184 Conn. 471, 474, 440 A.2d 179 (1981). Just as the fiduciary shield doctrine has no basis in New York law, the doctrine "finds no place in the text or underlying policy of [General Statutes] § 52-59b." Under Par Associates, LLC v. Wash Depot A., Inc., supra, 47 Conn.Sup. 327.
While "[t]he General Statutes do not define what the phrase `transacts any business' means in the context of § 52-59b . . . [the Supreme Court has] construe[d] the term . . . to embrace a single purposeful business transaction." Zartolas v. Nisenfeld, supra, 184 Conn. 474. "A purposeful business transaction is one in which the defendant has engaged in some form of affirmative conduct allowing or promoting the transaction of business within the forum state." Ruocco v. Metro Boston Hockey League, Superior Court, judicial district of New Haven, Docket No. CV 07 4024835 (December 7, 2007, Robinson, J.). "In determining whether the plaintiffs' cause of action arose from the defendants' transaction of business within this state . . . [the court does] not resort to a rigid formula. Rather . . . [it] balance[s] considerations of public policy, common sense, and the chronology and geography of the relevant factors." Zartolas v. Nisenfeld, supra, 184 Conn. 477.
At the November 12, 2009 Standard Tallow hearing, evidence was presented establishing the following facts: Prior to renting her apartment at 112 Hallock Avenue, Garcia and Cohen had a telephone conversation, and during this conversation Cohen informed Garcia of properties in New Haven that were available for rent; Cohen personally showed rental apartments to potential tenants in Connecticut; during an in-person meeting in Connecticut, Cohen referred Garcia to at least two different rental properties before she decided to rent the property on Hallock Avenue; Garcia signed a lease with Two By Six for the rental of 112 Hallock Avenue and Cohen personally picked up Garcia's rental checks.
At the November 12, 2009 hearing, Garcia admitted that her monthly rental payments were made payable to Two By Six, but she maintained that Cohen would drop by her apartment to pick up the payments. Cohen testified that he could not remember if he ever picked up rental payments from Garcia or other tenants. He testified, however, that he believed that the standard procedure was for payments to be submitted to Two By Six's manager, Wanda Swett, at the company's office located on 359 Sherman Avenue, New Haven, Connecticut.
At an evidentiary hearing, "the . . . judge is the sole arbiter of the credibility of the witnesses and the weight to be given specific testimony . . . It is within the province of the trial court, as the finder of fact, to weigh the evidence presented and determine the credibility and effect to be given the evidence." (Citation omitted; internal quotation marks omitted.) Cadle Co. v. D'Addario, 268 Conn. 441, 462, 844 A.2d 836 (2004). Further, as the trier of fact, the court "can . . . decide what — all, none, or some — of a witness' testimony to accept or reject." (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 the present case, the court finds Garcia's testimony to be credible as it pertains to Cohen's collection of rent from her. Cohen was the person Garcia called when she had problems with the apartment. Garcia testified that she called Cohen directly when she had a problem at her apartment on Hallock Avenue. Cohen admitted that some tenants would call him directly with problems, but he could not recall if Garcia had contacted him directly regarding problems with her apartment. Furthermore, Two By Six hired independent contractors to make repairs to its rental units; Cohen came to Connecticut weekly during 2003 for business purposes; and after first purchasing the building on Hallock Avenue, Cohen initially visited the building biweekly, but he later decreased his visits to the property to once every three or four months.
Looking at the totality of the evidence, this court finds that Cohen "transacted business" within the meaning of General Statutes § 52-59b(a)(1). Cohen made frequent trips to Connecticut to inspect the properties that Two By Six owned and rented, recommended rental units to potential tenants and personally showed potential tenants available rental units. He also accepted phone calls from Garcia regarding problems with the apartment on 112 Hallock Avenue, and he personally accepted Garcia's monthly rent checks. These activities constitute "affirmative conduct allowing or promoting the transaction of business within the forum state." Ruocco v. Metro Boston Hockey League, supra, Superior Court, Docket No. CV 07 4024835. Accordingly, Cohen is subject to the court's long arm jurisdiction.
Garcia also argues that this court has personal jurisdiction over Cohen pursuant to General Statutes § 52-59b(a)(2). More specifically, Garcia argues that Cohen committed a tort within Connecticut when he failed to control or maintain the premises where her injury occurred. Because "only one of the provisions of § 52-59b needs to be satisfied for [the court] to assert personal jurisdiction over a defendant"; Vertrue, Inc. v. Meshkin, supra, 429 F.Sup.2d 492; the court need not address this argument.
B Due Process Analysis
Because Cohen is subject to this court's jurisdiction under the long arm statute, the next step in this court's inquiry is to determine whether the exercise of jurisdiction comports with constitutional principles of due process. "The federal due process clause permits state courts to exercise in personam jurisdiction over a nonresident corporate [or individual] defendant that has a certain minimum contacts with the forum such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." (Internal quotation marks omitted.) Ryan v. Cerullo, 282 Conn. 109, 117 n. 12, 918 A.2d 867 (2007). "The court [therefore] must first determine whether the defendant has sufficient contacts with the forum state to justify the court's exercise of personal jurisdiction." (Internal quotation marks omitted). Cogswell v. American Transit Ins. Co., supra, 282 Conn. 524. "Whether a given defendant has contacts with the forum state sufficient to satisfy due process is dependent upon the facts of the particular case. Like any standard that requires a determination of reasonableness, the minimum contacts test . . . 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). Id., 525.
"Once minimum contacts have been established, the second stage of the due process inquiry asks whether the assertion of personal jurisdiction comports with traditional notions of fair play and substantial justice — that is, whether it is reasonable under the circumstances of the particular case . . . [Therefore] [w]hile the exercise of jurisdiction is favored where the plaintiff has made a threshold showing of minimum contacts at the first stage of the inquiry, it may be defeated where the defendant presents a compelling case that the presence of some other considerations would render jurisdiction unreasonable . . ." (Citations omitted; internal quotation marks omitted). Id. To determine whether the exercise of jurisdiction would offend traditional notions of fair play and substantial justice, "the defendant's conduct and connection with the forum State [must be] such that he should reasonably anticipate being haled into court there." (Internal quotation marks omitted.) United States Trust Co. v. Hobart, 197 Conn. 34, 41, 495 A.2d 1034 (1985).
On the face of his motion to dismiss, Cohen argues that he does not have the "requisite contacts necessary for the court to invoke jurisdiction" over him. He claims that his only contact with the state of Connecticut was as a consequence of his membership in limited liability companies authorized to do business in Connecticut. Cohen's argument, however, fails to "acknowledge that the consideration of [his] contacts with Connecticut includes a consideration of [his] activities as [a member of a limited liability company]." Ruocco v. Metro Boston Hockey League, supra, Superior Court, Docket No. CV 07 4024835. Cohen engaged in significant activities within Connecticut when he made weekly business trips to Connecticut in 2003, showed rental units to Connecticut residents and collected rental payments from Connecticut residents. "[W]here the defendant `deliberately' has engaged in significant activities within a State . . . or has created `continuing obligations' between himself and residents of the forum . . . he manifestly has availed himself of the privilege of conducting business there, and because his activities are shielded by `the benefits and protections' of the forum's laws it is presumptively not unreasonable to require him to submit to the burdens of litigation in that forum as well." (Citations omitted.) Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475-76, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). Given Cohen's deliberate and purposeful contacts within the state of Connecticut, he should reasonably anticipate being haled into court here. Therefore, under these circumstances, the court's exercise of jurisdiction over Cohen is consistent with traditional notions of fair play and substantial justice.
III CONCLUSION
Cohen has transacted business within the state of Connecticut, and he is therefore subject to the state's long arm statute. Accordingly, as this court's exercise of jurisdiction over him does not violate constitutional principles of due process, this court has personal jurisdiction over him. The court therefore denies Cohen's motion to dismiss.