Opinion
No. CV09-6001329S
May 28, 2010
MEMORANDUM OF DECISION
Facts
On October 6, 2009, the plaintiff, Sales Team Staffing, Inc. commenced this action alleging breach of contract against the defendant, GHP Media, Inc., f/k/a Gist and Herlin Press, Inc. In its complaint, the plaintiff alleges that it "was engaged in the business of locating and providing staffing services for eventual full-time employment for its customers." According to the complaint, the defendant, a Connecticut corporation, "retained the services of [the] plaintiff . . . [i]n regard to the defendant's request for qualified candidates for an open position [in its company] . . . The terms of the agreement provide that [the] defendant would pay [the] plaintiff a `placement fee' of [15 percent] of the candidate's annual salary in the event that such a candidate was hired by [the] defendant . . . [The] plaintiff did, in fact, obtain a qualified candidate which [the] defendant, on or about January 14, 2008, hired at a salary of $150,000 . . . Following the ["test period" provided for in the contract] said candidate continued his employ with the defendant, and pursuant to the [agreement], the plaintiff [sent an invoice to the defendant] for the sum of $25,OOO [which is 15 percent] of the candidate's annual salary . . . Despite repeated written demands, [the] defendant has failed, refused and neglected to pay [the] plaintiff in accordance with [the agreement]." The plaintiff attached to the complaint a copy of the agreement and refers to it therein as Exhibit A. The plaintiff seeks money damages, interest thereon pursuant to the contract, reasonable attorneys fees pursuant to the contract, costs and "[a]ll such other relief as the court deems just, equitable and proper."
"[A]ny plaintiff desiring to make a copy of any document a part of the complaint may, without reciting it or annexing it, refer to it as Exhibit A, B, C, etc., as fully as if it had been set out at length; but in such case the plaintiff shall serve a copy of such exhibit or exhibits on each other party to the action forthwith upon receipt of notice of the appearance of such party and file the original or copy of such exhibit or exhibits in court with proof of service on each appearing party . . .' Practice Book § 10-29(a). A complaint includes all exhibits attached thereto . . . Tracy v. New Milford Public Schools, 101 Conn.App. 560, 566, 922 A.2d 280, cert. denied, 284 Conn. 910, 931 A.2d 935 (2007)." (Internal quotation marks omitted.) Villano v. Splan, Superior Court, judicial district of Ansonia-Milford at Derby, Docket No. CV 09 5010185 (March 4, 2010, Bellis, J.)
On November 27, 2009, the defendant filed an answer in which it admits that it is a Connecticut corporation and denies that the defendant has failed, refined and neglected to pay the plaintiff in accordance with the agreement, that "as a result of the defendant's hiring of the candidate placed by the plaintiff, the defendant is indebted to the plaintiff for the sum of $25,000," and that according to the agreement, "[the] defendant is liable for interest at a rate of 18 [percent] per annum and all costs of collection, including reasonable attorneys fees." The defendant claimed insufficient knowledge or information as to the remaining allegations. The defendant did not raise any special defenses.
On February 1, 2010, pursuant to Practice Book § 13-19, the plaintiff filed a demand for disclosure of defenses. On February 2, 2010, the defendant filed a "motion for stay" seeking to "stay the proceedings pending [the court's] determination whether the plaintiff, a foreign corporation, requires a certificate of authority to transact business in the state of Connecticut as required by [General Statutes] § 33-920(a)." On February 4, 2010, the defendant filed a disclosure of defenses in which it states in relevant part that "[the] plaintiff, a foreign corporation, is barred from pursuing this action until it acquires a certificate of authority to transact business . . . as required by . . . [§ ]33-920(a)." On February 5, 2010, the plaintiff filed an objection to the defendant's motion for a stay and, on April 19, 2010, the plaintiff filed a memorandum of law in opposition as well as exhibits, submitting an affidavit and a copy of the agreement between the parties. The court beard oral argument on this matter at the short calendar on April 19, 2010.
Book § 13-19 provides in relevant part: "In any action . . . upon any written contract, in which there is an appearance by an attorney for any defendant, the plaintiff may at any time file and serve . . . a written demand that such attorney present to the court, to become a part of the file in such case, a writing signed by the attorney stating whether he or she has reason to believe and does believe that there exists a bona fide defense to the plaintiff's action and whether such defense will be made, together with a general statement of the nature or substance of such defense. If the defendant fails to disclose a defense within five days of the filing of such demand . . . the plaintiff may file a written motion that a default be entered against the defendant by reason of the future of the defendant to disclose a defense . . ."
In the present case, the defendant's attorney entered an appearance on November 4, 2009.
Discussion I
The defendant has filed a motion to stay the proceedings pursuant to General Statutes § 33-921(c), which provides: "A court may stay a proceeding commenced by a foreign corporation, its successor, or assignee until it determines whether the foreign corporation or its successor requires a certificate of authority. If it so determines, the court may further stay the proceeding until the foreign corporation or its successor obtains the certificate."
"Section 33-920(a) provides in relevant part: `A foreign corporation . . . may not transact business in this state until it obtains a certificate of authority from the Secretary of the State . . .' A foreign corporation that transacts business in violation of § 33-920 is subject to the penalties set forth in . . . § 33-921, which provides in relevant part: `A foreign corporation transacting business in this state without a certificate of authority may not maintain a proceeding in any court in this state until it obtains a certificate of authority . . .'" Wagner Wagner Auto Sales, Inc. v. Tarro, 93 Conn.App. 376, 381, 889 A.2d 875 (2006), appeal dismissed, 281 Conn. 64, 914 A.2d 523 (2007). "The statute exists to ensure that the foreign corporation can be properly taxed, so that domestic corporations do not bear an undue burden. The purpose of the statute . . . is to afford domestic corporations assistance in bearing their share of the cost of the state's services rather than to require them to bear it alone and, as a practical consequence, suffer the serious competitive disadvantage which would result from permitting foreign corporations to carry on intrastate business unburdened by taxes and other duties." (Internal quotation marks omitted.) Groton Landing, Ltd. v. Lambtown Development, LLC, Superior Court, judicial district of New London, Docket No. CV 4004594 (January 11, 2006, Devine, J.) ( 40 Conn.L.Rptr. 533, 533).
"It is . . . clear that an attack on the corporate capacity of a plaintiff to sue must be raised by way of special defense." U.S. Trust Co. of New York v. DiGhello, 179 Conn. 246, 249, 425 A.2d 1287 (1979). "Any defendant who intends to controvert the right of the plaintiff to sue . . . as a corporation . . . shall deny the same in the answer specifically." Practice Book § 10-46. See also Coolidge-Fairfield Equities Ltd Partnership v. Somma, Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. CV 97 0159269 (March 17, 1998, Hickey, J.) ( 21 Conn. L. Rptr. 416, 416) ("if a defendant intends to controvert the capacity of a corporate plaintiff to maintain a suit, the proper procedural vehicle to raise that issue is by way of a special defense in his answer").
In the present case, the plaintiff objects to the defendant's motion in part because "the defendant fails to provide any factual support [for] its request, other than [that the] plaintiff is a foreign corporation . . . [I]f defendant wants to raise this issue, it should do so in its Answer, Special Defenses or motion after it can present facts to support its belief that [the p]laintiff is `transacting business' in this state, within the meaning of § 33-920, and as such is required to possess a [c]ertificate of [a]uthority."
The defendant did not challenge the capacity of the plaintiff to maintain this suit in a special defense. Rather, it filed a disclosure of defenses statement in response to the plaintiff's demand. Filing a statement in response to a demand pursuant to Practice Book § 13-19 is not the same as pleading a special defense pursuant to Practice Book § 10-50. See Bank One, N.A. v. Naholnik, Superior Court, judicial district of New London, Docket No. CV 00 053830 (May 22, 2001, Martin, J.) ("The [defendant has] merely filed a disclosure of defense, but no special defenses. A disclosure of defenses, governed by Practice Book § 13-19, merely anticipates defenses that will be asserted but cannot substitute for the assertion of a special defense. See Elis v. Rogers, 15 Conn. App. 362, 364, 544 A.2d 663 (1988)"). In a disclosure of defenses statement, "[the defendant is] only required to give the plaintiff timely notice of [its] defenses in general terms and in an informal manner." Geha v Lake Road Trust, Superior Court, judicial district of Windham, Docket No. CV 03 0071065 (May 25, 2004, Foley, J.). In contrast "one of the purposes for a special defense is not to deny the factual allegations, but to demonstrate that in spite of those factual allegations, the plaintiff has no cause of action"; SNET Information Inc. v. Prime One/Prime Direct, Inc., Superior Court, judicial district of New Haven, Docket No. CV 07 5008131 (August 7, 2009, Robinson, J); and another "fundamental purpose of a special defense, like other pleadings, is to apprise the court and opposing counsel of the issues to be tried, so that basic issues are not concealed until the trial is underway." (Internal quotation marks omitted.) Almada v. Wausau Business Ins. Co., 274 Conn. 449, 456, 876 A.2d 535 (2005).
Even if the statement that the defendant filed as a disclosure of defenses had been pleaded instead as a special defense, "[t]he defendants . . . failed to allege that the plaintiff was transacting business in this state; accordingly the special defense is critically flawed. Peters Production, Inc. v. Dawson, 182 Conn. 526 [ 438 A.2d 747] (1980). The absence of this allegation renders the special defense insufficient as a matter of law. [ Id., 529]. A corporation not transacting business in this state may freely bring and maintain a lawsuit without offending General Statutes § [33-920] and § [33-921]." Arrett Sales Corp. v. D'Amore, Superior Court, judicial district of Hartford, Docket No. CV 90 0387575 (February 10, 1992, Spada, J.) ( 5 Conn.L.Rptr. 801, 802)
In Arrett Sales Corp. v. D'Amore, supra, 5 Conn. L. Rptr. 802, the court cites the predecessors of General Statutes § 33-920 and § 33-921.
"General Statutes § 33-396 provides: `(a) No foreign corporation except an insurance or surety or indemnity company shall transact business in this state until it has procured a certificate of authority so to do from the secretary of the state . . .' General. Statutes § 33-412 provides in part: `(a) No foreign corporation transacting business in this state in violation of [§ ]33-396 shall be permitted to maintain any action suit or proceeding in any court of this state unless such corporation has obtained a certificate of authority.'" Arret Sales Corp. v. D'Amore, supra, 802 n. 1.
Thus, the defendant has failed to challenge the capacity of the plaintiff to maintain this suit in a special defense.
II
In the present case, the plaintiff also argues that it is not transacting business in the state as the term is used in § 33-920(a).
"It is well established that the question of whether a foreign corporation is transacting business so as to require a certificate of authority must be determined on the complete factual picture presented in each case, and that the corporation's activities must be more substantial than those which would suffice to subject it to service of process . . . The situs of the contract, the presence of corporate offices and agents in Connecticut, and the extent of the business activities in Connecticut have been identified as relevant factors in resolving this question." (Citation omitted; internal quotation marks omitted) Wagner Wagner Auto Sales, Inc. v. Tarro, supra, 93 Conn.App. 381-82.
General Statutes § 33-920(b) enumerates some activities that do not amount to transacting business within the meaning of § 33-920(a). "A foreign, corporation shall not be considered to be transacting business in this state solely because it carries on in this state one or more of the enumerated activities [of § 33-920(b)]. This does not exclude a finding that a foreign corporation transacts business in this state if its other activities lead to that conclusion. Connecticut Tool Mfg. Co. v. Bowsteel Distributors, Inc., 24 Conn. Sup. 290, 296, 190 A.2d 236 (1963)." (Internal quotation marks omitted.) Hill v. W.R. Grace Co., 42 Conn.Sup. 25, 31, 598 A.2d 1107 (1991).
Section 33-920(b) provides: "The following activities, among others, do not constitute transacting business within the meaning of subsection (a) of this section: (1) Maintaining, defending or settling any proceeding; (2) holding meetings of the board of directors or shareholders or carrying on other activities concerning internal corporate affairs; (3) maintaining bank accounts; (4) maintaining offices or agencies for the transfer, exchange and registration of the corporation's own securities or maintaining trustees or depositories with respect to those securities; (5) selling through independent contractors; (6) soliciting or obtaining orders, whether by mail or through employees or agents or otherwise, if the orders require acceptance outside this state before they become contracts; (7) creating or acquiring indebtedness, mortgages and security interest in real or personal property; (8) securing or collecting debts or enforcing mortgages and security interests in property securing the debts; (9) owning, without more, real or personal property; (10) conducting an isolated transaction that is completed within thirty days and that is not one in the course of repeated transactions of a like nature; (11) transacting business in interstate commerce."
Section 33-920 (c) provides: "The list of activities in subsection (b) of this section is not exhaustive."
In support, of its argument, the plaintiff presents the affidavit of Theodore Leuken, who avers that he is the president of the plaintiff corporation and is otherwise a competent affiant. He attests to the following. The plaintiff is "engaged in the business of employment recruiting and job placement." It "maintains only its Fairlawn, New Jersey office and does not have, nor ever had, an office, employees, agents or representatives in Connecticut . . . [It] does not own any property in Connecticut, does not maintain a [p]ost [o]ffice box or phone number in Connecticut [and] it does not send any business solicitations to Connecticut businesses or residents other than [its] advertising methods as identified [hereafter]." "All [its] business solicitation and advertising is conducted through local New Jersey television and advertising which is broadcast in the tri-state area and [I]nternet advertising." Finally, regarding the transaction with the defendant, he attests that "[it] was contacted by phone by the defendant and all subsequent communications were via [email] and/or telephonically."
The plaintiff argues further that the situs of the contract is New Jersey. "It is well established that a contract is considered made when and where the last thing is done which is necessary to create an effective agreement. Alfred M. Best Co., Inc. v. Goldstein, [ 124 Conn. 597, 602, 1 A.2d 140 (1938)]." (Internal quotation marks omitted.) Ross, S.R.L. v. Rofren Disc Brake, Inc., Superior Court, judicial district of Hartford, Docket No. CV 06 5007613 (August 20, 2008, Tanzer, J.). The plaintiff presents a copy of the contract which shows that the "authorized client signature" was dated October 15, 2007 and the signature of the plaintiff's representative was dated October 17, 2007.
The defendant maintained at oral argument that the plaintiff does transact business in the state. It presents evidence in the form of a printed copy of the front page of the plaintiff's Internet website. The website states that the plaintiff "is a Sales Employment Agency — Job Bank in NJ, NY, and CT." "[I]n Thomason v. Chemical Bank, 234 Conn. 281, 297-98, 661 A.2d 595 (1995) [our Supreme Court found] . . . personal jurisdiction under [General Statutes] § 33-411(c) over a New York bank being sued by nine Connecticut residents who were the beneficiaries of a trust managed by the bank for alleged violation of its trust obligations: At the time the trustee bank placed the advertisements, therefore, it was foreseeable that one or more Connecticut residents would respond to the advertisements by opening a trust account with the trustee bank and thereafter would sue in Connecticut for the misadministration of that trust. Id., 298." (Internal quotation marks omitted.) Rios v. Fergusan, 51 Conn.Sup. 212, 221-22, 978 A.2d 592 (2008).
The defendant presented this evidence at oral argument and subsequently electronically filed it with the court. The plaintiff stated on the record that it had no objection to the court's considering this evidence. A court has discretion to consider unauthenticated documentary evidence when no objection has been raised by the opposing party. Barlow v. Palmer, 96 Conn. App. 88, 92, 898 A.2d 835 (2006).
Accordingly, this court will consider this evidence.
"General. Statutes § 33-411 (now § 33-929) is Connecticut's longarm statute governing jurisdiction over foreign corporations. See General Statutes § 33-929. Subsection (c)(4) (now [f][4]) contains language nearly identical to that of § 52-59b(a)(2). General Statutes § 33-929(f) provides in relevant part: `Every foreign corporation shall be subject to suit in this state . . . on any cause of action arising as follows . . . (4) out of tortious conduct in this state . . .' General Statutes § 33-929(f)" Rios v. Ferguson, supra, 51 Conn. Sup. 219 n. 7.
"Several Connecticut trial courts, following the logic of Thomason v. Chemical Bank . . . have specifically decided the issue of personal jurisdiction against foreign corporations premised on their Internet postings on the basis of whether the corporation had specifically targeted Connecticut residents." (Citation omitted.) Id., 222-23. "See, e.g., RJM Aviation Associates, Inc. v. London Aircraft Service Center, Inc., Superior Court, judicial district of New Britain, Docket No. [CV 06 5000572 (June 17, 2008, Gilligan, J.] ( 45 Conn.L.Rptr. 759, 762) (`the missing element in the present case is any evidence that the defendant's Internet web site specifically targeted Connecticut customers'); Marcoccia v. Post, Superior Court, judicial district of Fairfield, Docket No. [CV 05 5000471 (May 20, 2008, Hiller,J.)] ( 45 Conn.L.Rptr. 572, 574) (`due to a lack of evidence of interactivity, the web site offers no grounds for the grant of personal jurisdiction')." Id., 223 n. 8.
Even if the court were to assume, without deciding, that the plaintiff's website would subject it to personal jurisdiction in this state because it has "targeted" Connecticut residents, it is well established that under § 33-920(a), the corporation's activities must be more substantial than those which would suffice to subject it to service of process. The plaintiff has submitted evidence that all communication between the parties was via telephone and email from its New Jersey office and that it maintains no offices, bank accounts, telephone listings, post office boxes or any other property in Connecticut, nor does it have employees or agents in the state. Because the last thing done which was necessary to create the agreement was the plaintiff's representative signing the contract in New Jersey, it appears that New Jersey is the situs of the contract. On these facts and without more, the website is not evidence that the plaintiff solicits or obtains orders in Connecticut such that it can be said to be transacting business in Connecticut within the meaning of § 33-920(a). The evidence before the court suggests that the plaintiff was not "transacting business" in the state for the purposes of § 33-920(a). However, the determination as to whether the plaintiff requires a certificate of authority cannot be properly made at this time, in the absence of a properly pleaded special defense and proof of facts related thereto.
Conclusion
For the foregoing reasons, the defendant's motion for a stay is denied.