Opinion
CV126013378.
12-27-2012
Eric J. SHAMES v. Joshua PROTTAS et al.
Matthew James Corcoran, Matthew J. Corcoran, Hamden, CT, for Eric J. Shames.
UNPUBLISHED OPINION
Matthew James Corcoran, Matthew J. Corcoran, Hamden, CT, for Eric J. Shames.
COSGROVE, J.
FACTS
On July 11, 2012, the plaintiff, Eric J. Shames, filed a five-count revised complaint, involving a dispute among partners of a foreign partnership, against the defendants, Joshua Prottas, Skender Ibric, Wisp Partners and the city of Norwich. In the first, second, third and fourth counts, the plaintiff seeks an accounting, dissolution of the partnership, appointment of a receiver, and partition or sale of the Wisp Partnership properties, respectively. In the fifth count, the plaintiff brings suit for a breach of fiduciary duty against Prottas. The plaintiff alleges the following facts. The plaintiff, Prottas and Ibric are residents of New York and they formed WISP Partners, a New York partnership with an office in New York, in 1999. WISP Partners owns and manages a commercial real estate property located at 320 West Thames Street in Norwich, Connecticut. Prottas has been acting as the managing general partner of Wisp Partners. The plaintiff has unsuccessfully demanded an accounting of income, expenses, and other payments from the managing general partner. Prottas has neglected to include the partners in the partnership decisions and has mismanaged the property. Specifically, the property is not insured and was the subject of arson committed by a tenant on October 26, 2011, which was never reported to the plaintiff. Furthermore, the partnership has been the subject of actions prosecuted by the co-defendant, the city of Norwich.
Prottas, Ibric and Wisp Partners filed this motion to strike and will be collectively referred to as " the defendants" in this memorandum.
On July 25, 2012, the defendants filed a motion to strike and a memorandum of law in support of the motion to strike counts one, two, three and four of the plaintiff's revised complaint. The plaintiff filed a memorandum of law in opposition to the defendants' motion to strike on August 23, 2012. The matter was heard at short calendar on September 24, 2012.
DISCUSSION
" The purpose of a motion to strike is to contest ... the legal sufficiency of the allegations of any complaint ... to state a claim upon which relief can be granted." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003). In ruling on a motion to strike, the court takes " the facts to be those alleged in the [complaint] ... and ... construe[s] the [complaint] in the manner most favorable to sustaining its legal sufficiency." (Internal quotation marks omitted.) New London County Mutual Ins. Co. v. Nantes, 303 Conn. 737, 747, 36 A.3d 224 (2012). The motion to strike does not require the trial court to make any factual findings. Id. Rather, " [t]he role of the trial court in ruling on a motion to strike is to examine the [complaint], construed in favor of the [plaintiff], to determine whether the [pleading party has] stated a legally sufficient cause of action." (Internal quotation marks omitted.) Coe v. Board of Education, 301 Conn. 112, 117, 19 A.3d 640 (2011). Although " [a] motion to strike admits all facts well pleaded; it does not admit legal conclusions or the truth or accuracy of opinions stated in the pleadings." (Internal quotation marks omitted.) Faulkner v. United Technologies Corp., 240 Conn. 576, 588, 693 A.2d 293 (1997).
Count Two: Dissolution
The defendants first argue that count two of the revised complaint is legally insufficient because the court lacks authority to dissolve a foreign partnership. The plaintiff counters that the court does have authority to dissolve a foreign partnership because he has invoked the equitable power of the court to do so.
In the revised complaint, the plaintiff seeks to have this court issue a decree of dissolution of Wisp Partners, a foreign partnership, under General Statutes §§ 34-339(b)(2)(C) and 34-372(5). Neither of these sections expressly authorize the court to dissolve a foreign partnership, nor do they expressly prohibit the court from doing so. A review of Connecticut case law does not reveal any relevant authority that addresses the court's power to dissolve a foreign partnership under these statutes. Thus, a statutory analysis of these sections is necessary to determine whether this court has the power to do so.
When interpreting a statute, General Statutes § 1-2z provides: " The meaning of a statute shall, in the first instance, be ascertained from the text of the statute itself and its relationship to other statutes. If, after examining such text and considering such relationship, the meaning of such text is plain and unambiguous and does not yield absurd or unworkable results, extratextual evidence of the meaning of the statute shall not be considered." " [W]e seek to determine, in a reasoned manner, the meaning of the statutory language as applied to the facts of [the] case, including the question of whether the language actually does apply ... In seeking to determine that meaning, General Statutes § 1-2z directs us first to consider the text of the statute itself and its relationship to other statutes." (Internal quotation marks omitted .) Felician Sisters of St. Francis of Connecticut, Inc. v. Historic District Commission, 284 Conn. 838, 847, 937 A.2d 39 (2008). " [I]n interpreting a statute, we do not interpret some clauses of a statute in a manner that nullifies other clauses but, rather, read the statute as a whole in order to reconcile all of its parts ... Every word and phrase is presumed to have meaning, and we do not construe statutes so as to render certain words and phrases surplusage." (Internal quotation marks omitted.) Ugrin v.. Cheshire, 307 Conn. 364, 383, 54 A.3d 532 (2012).
Section 34-339(b)(2)(C) gives a partner the right to compel a dissolution and winding up of a partnership. Section 34-372 provides in relevant part: " A partnership is dissolved and its business must be wound up, only ... (5)[o]n application by a partner, a judicial determination that: (A) The economic purpose of the partnership is likely to be unreasonably frustrated; (B) another partner has engaged in conduct relating to the partnership business which makes it not reasonably practicable to carry on the business in partnership with that partner; or (C) it is not otherwise reasonably practicable to carry on the partnership business in conformity with the partnership agreement ..." Thus, under §§ 34-339(b)(2)(C) and 34-372(5), the court has the power to dissolve a " partnership" if certain prerequisites are met. General Statutes § 34-301(12), as amended by No. 11-146 of the 2011 Public Acts, defines " partnership" broadly as " an association of two or more persons to carry on as co-owners a business for profit formed under § 34-314, predecessor law or comparable law of another jurisdiction ..." (Emphasis added.) Based on this definition, therefore, § 34-372 authorizes a court of this state to dissolve a foreign partnership because, pursuant to the definition of partnership in § 34-301(12), which includes partnerships formed pursuant to the laws of a foreign state, it applies to both foreign and domestic partnerships. By contrast, § 34-301(7) explicitly defines " foreign registered limited liability partnership" as " a partnership formed pursuant to an agreement governed by the laws of any state other than this state and registered or denominated as a registered limited liability partnership ..." The existence of this definition demonstrates that the legislature was clearly capable of specifically prescribing rules applicable to foreign partnerships within this state but elected not to differentiate between foreign and domestic partnerships that are not foreign registered limited liability partnerships. Accordingly, based on the language of § 34-372 and related statutes, this court has the statutory power to dissolve a foreign partnership that is not a foreign registered limited liability partnership.
General Statutes § 34-339(b) provides in relevant part: " A partner may maintain an action against the partnership or another partner for legal or equitable relief ... to: (2)[e]nforce the partner's rights under sections 34-300 to 34-399, inclusive, including ... (C) the partner's right to compel a dissolution and winding up of the partnership business under section 34-372 ..."
General Statutes § 34-314(a) provides in relevant part: " [T]he association of two or more persons to carry on as co-owners a business or profit forms a partnership, whether or not the persons intended to form a partnership."
Furthermore, at least one judge of the Superior Court has determined that it has the equitable power to determine a request for dissolution of a foreign partnership. See Saluki Investors v. GP Station Partners, Superior Court, judicial district of Stamford-Norwalk, Docket No. CV 93 0129471 (June 17, 1993, Rush, J.). An examination of case law outside Connecticut also supports the conclusion that the court has authority to dissolve a foreign partnership pursuant to its equitable powers. The New York Appellate Division considered a similar situation where all the parties were residents of a foreign state, Pennsylvania, and the plaintiff sought a dissolution of the partnership, an accounting of all partnership dealings, the appointment of a receiver and liquidation of the partnership assets. Rothstein v. Rothstein, 272 A.D. 26, 27, 68 N.Y.S.2d 305, aff'd, 297 N.Y. 705, 77 N.E.2d 13 (1947). The court stated that it has the authority to " entertain commonlaw actions of a commercial nature between nonresidents." Id., at 28. The court also held that it has discretion to decline jurisdiction for actions between nonresidents which " call for relief of a kind which makes it inconvenient or impractical for the court to act." Id. Although, the court ultimately declined jurisdiction in that case, it did so because the action presented problems and difficulties with respect to directing and overseeing the dissolution and liquidation of the partnership. Id. Among the difficulties pointed out by the court, it specifically noted the impossibility of appointing a receiver for property located in Pennsylvania. Id. Unlike in Rothstein, in the present case, the real property owned by WISP Partners is located within Connecticut. Thus, it would not be inconvenient or impractical for this court to order a dissolution.
Moreover, such considerations do not implicate the court's power to act, but relate to the issue of venue. By failing to raise the issue of improper venue in a timely motion to dismiss, the defendants have waived any claim of improper venue pursuant to Practice Book § 10-32, which provides in relevant part: " Any claim of ... improper venue ... is waived if not raised by a motion to dismiss filed in the sequence provided in Sections 10-6 and 10-7 and within the time provided by Section 10-30."
The cases cited by the defendants in support of its motion to strike count two are inapposite. Our Supreme Court has held that " [i]n the absence of statute, a corporation cannot be dissolved by judicial decree, except in an action commenced in the name of the State which created it." (Emphasis added.) Low v. Pressed Metal Co., 91 Conn. 91, 94, 99 A. 1 (1916). Thus, " [c]ourts have no power to dissolve corporations at the instance of private suitors except if and as authorized by statute." (Emphasis added.) In re Litchfield County Agricultural Soc., 91 Conn. 536, 539, 100 A. 356 (1917). The defendants' reliance on these decisions are misplaced as they only support the assertion that the court lacks the authority to dissolve foreign corporations. The present suit, however, involves the court's authority to dissolve a foreign partnership. Thus, these cases do not support the defendant's assertion that this court lacks the requisite authority to dissolve a foreign partnership.
Therefore, for these reasons, this court has the requisite authority to dissolve a foreign partnership. Accordingly, the motion to strike is denied as to this count.
Count Three: Appointment of Receiver
The defendants argue that count three of the revised complaint is legally insufficient on the ground that the appointment of a receiver that the plaintiff seeks is ancillary to the dissolution of the partnership, which the court lacks the power to do. The plaintiff objects on the ground that the appointment of a receiver is not ancillary to the dissolution of the partnership.
The plaintiff's complaint seeks to have a receiver appointed pursuant to General Statutes § 52-509. This statute sets forth a condition precedent that the partnership must first be dissolved before the court may appoint a receiver. Specifically, § 52-509(a) allows partners to apply for the appointment of a receiver to hold the business and all of the property belonging to the partnership " [w]hen any partnership is dissolved ..." " The application for a receiver is addressed to the sound legal discretion of the court, to be exercised with due regard to the relevant statutes and rules, and such exercise is not to be disturbed lightly nor unless abuse of discretion or other material error appears." Chatfield Co. v. Coffey Laundries, Inc., 111 Conn. 497, 501, 150 A. 511 (1930); Masterton v. Lenox Realty Co., 127 Conn. 25, 33, 15 A.2d 11 (1940); Antonio v. Johnson, 113 Conn.App. 72, 77, 996 A.2d 261 (2009). Here, the statute that the plaintiff invokes clearly does not authorize the court to order an appointment of a receiver prior to the dissolution of the partnership. Nevertheless, as the dissolution count has not been stricken, the claim seeking appointment of a receiver is not legally insufficient as the court could appoint a receiver pursuant to § 52-509 if it ultimately orders the dissolution of WISP Partners. Accordingly, the motion to strike is denied as to this count.
Count Four: Partition of the Property
The defendants argue that count four of the revised complaint is legally insufficient on the ground that the partition of the property that WISP Partners owns is ancillary to the dissolution of the partnership. The plaintiff objects on the ground that the partition relief is not ancillary to the dissolution of the partnership.
General Statutes § 52-495 allows for compulsory partition by physical division for any person " holding real property as a joint tenant, tenant in common, coparcener or tenant in tail ..." Fernandes v. Rodriguez, 255 Conn. 47, 56, 761 A.2d 1283 (2000). In the present case, however, the plaintiff does not allege that he is a joint tenant, tenant in common, coparcener or tenant in tail of the subject property. Instead, the plaintiff alleges that the commercial real estate located at 320 West Thames Street, Norwich, Connecticut is a partnership asset. Thus, § 52-495 is not applicable in this case to partition the subject property.
Section 34-315 explicitly provides that " [p]roperty acquired by the partnership is property of the partnership and not of the partners individually." Additionally, § 34-347 provides: " The only transferable interest of a partner in the partnership is the partner's share of the profits and losses of the partnership and the partner's right to receive distributions. See also Gorelick v. Montanaro, 119 Conn.App. 785, 804, 990 A.2d 371 (2010)(" Under Connecticut's prior and current Uniform Partnership Act, partnership realty is considered personalty with respect to any individual partner's rights therein. "). Thus, a partner has no realty interest in real property owned by the partnership, but rather has a personal interest therein. Wheeler v. Polasek, 21 Conn.App. 32, 34, 571 A.2d 129 (1990). Consequently, the property located at 320 West Thames Street is not the real property of the plaintiff, Prottas or Ibric. Rather, the real property is owned wholly by WISP Partners. Although the plaintiff has not alleged sufficient facts to partition the property under § 52-495 prior to the dissolution of the partnership, the property can be partitioned to the individual partners if WISP Partners is ultimately dissolved in this action. Accordingly, although the defendants are correct in their assertion that the claim seeking partitioning of the property is ancillary to the dissolution claim, the partition claim is not legally insufficient for that reason because the court has the power to dissolve a foreign partnership. The motion to strike, therefore, must be denied as to this count.
Count One: Accounting
The defendants move to strike count one of the revised complaint on the ground that the court lacks the requisite authority to grant an accounting because such relief is ancillary to the dissolution of the partnership. They also argue that the accounting relief should not be bifurcated from the dissolution action. The plaintiff opposes the defendants' motion on the ground that the accounting relief is not ancillary to the dissolution of the partnership.
" Each partner owes to his associates the duty of rendering true accounts and full information about everything which affects the partnership. If he fails to perform this duty, his associates are entitled to maintain a suit for an accounting against him." Weidlich v. Weidlich, 147 Conn. 160, 164, 157 A.2d 910 (1960). " An action for an accounting calls for the application of equitable principles." Travis v. St. John, 176 Conn. 69, 74, 404 A.2d 885 (1978). " Courts of equity have original jurisdiction to state and settle accounts, or to compel an accounting, where a fiduciary relationship exists between the parties and the defendant has a duty to render an account." (Internal quotation marks omitted.) Mankert v. Elmatco Products, Inc., 84 Conn.App. 456, 460, 854 A.2d 706, cert. denied, 271 Conn. 925, 859 A.2d 580 (2004). " To support an action of accounting, one of several conditions must exist. There must be a fiduciary relationship, or the existence of a mutual and/or complicated accounts, or a need of discovery, or some other special ground of equitable jurisdiction such as fraud ... The right to compel an account in equity exists not only in the case of those relationships which are traditionally regarded as those of trust and confidence, but also in those informal relations which exist whenever one person trusts in, and relies upon, another. The relationship between ... parties to a business agreement ... [has] ... been deemed to involve such confidence and trust so as to entitle one of the parties to an accounting in equity ." (Citation omitted.) Id., at 460-61.
" It would be an intolerable proposition to assert that any local business was beyond the original equity jurisdiction of our courts merely because it was conducted by a foreign corporation. The principle that courts will not interfere in what are vaguely called the internal affairs of a foreign corporation, must yield to the larger and more important principle that all who choose to engage in business within the State ... necessarily subject such business to the jurisdiction of the courts as fully as if it were conducted by our own citizens or corporations." Low v. Pressed Metal Co., supra, 91 Conn. at 95-96.
In the present case, WISP Partners is alleged to be a foreign partnership that owns and operates a local business within this state, namely a commercial real estate property in Norwich, Connecticut. Additionally, the complaint sufficiently alleges that a fiduciary duty exists between the plaintiff, Ibric and Prottas as they are copartners of Wisp Partners. Furthermore, the plaintiff alleges that the plaintiff and the defendants are parties to a business agreement, specifically the partnership agreement. See Mankert v. Elmatco Products, Inc., supra, 84 Conn.App. at 460 (" The relationship between ... parties to a business agreement ... [has] ... been deemed to involve such confidence and trust so as to entitle one of the parties to an accounting in equity"); see also C & S Research Corp. v. Holton Co., 36 Conn.Supp. 619, 621-22, 422 A.2d 331 (1980) (discussing various cases in which a business relationship was deemed sufficient to confer the right of an accounting). Thus, the plaintiff has alleged a legally sufficient claim for an accounting.
Furthermore, the cases cited above also demonstrate that a claim for an accounting is a separate and independent action and the dissolution of the business is not a prerequisite to an order for accounting. Therefore, regardless of whether the plaintiff's claim seeking dissolution of the partnership is stricken, the plaintiff's complaint, read in the light most favorable to sustaining its legal sufficiency, supports a claim for an accounting and will not be stricken for the reasons asserted by the defendants.
CONCLUSION
For the foregoing reasons, the defendants' motion to strike counts one, two, three and four is denied.