Opinion
No. CV 04 0412495
August 20, 2008
MEMORANDUM OF DECISION RE MOTION TO SUBSTITUTE PLAINTIFF AND MOTION TO DISMISS
The defendant, Susan Skiba, has filed a motion to dismiss claiming that the plaintiffs lack standing to bring the subject action, and, therefore, the court lacks subject matter jurisdiction. The plaintiffs object and request that the court grant the plaintiffs' motion to substitute plaintiff, which if granted would substitute "Homeland Development, LLC" as the proper party in interest for the determination of the underlying matters in dispute.
The instant action was commenced by the individual plaintiffs by way of a writ, summons and complaint dated April 30, 2004, bearing a return date of June 8, 2004. The complaint alleges that the defendant breached a contract in that the defendant failed to pay the plaintiffs for construction of a dwelling upon premises owned by the defendant at 308 Webb Circle, Monroe, Connecticut. The defendant argues that the plaintiffs are not the proper parties to prosecute the claim on behalf of Homeland Developers, LLC and, thus, lack standing to bring the action.
The defendant's motion to dismiss is dated January 22, 2008, and it was filed on February 13, 2008. On February 28, 2008, the plaintiffs filed a motion to substitute plaintiff, requesting that the court grant the motion and allow Homeland Development, LLC to be substituted as the plaintiff. The present individual plaintiffs concede that the language of the construction contract makes clear that the parties to the construction contract were Homeland Developers, LLC and the defendant, Susan Skiba. The contract was executed by Skiba on December 8, 1997 and by the plaintiff Stanziale, acting as an authorized member of Homeland Developers, LLC on December 10, 1997. Homeland Developers, LLC, subsequently changed its name to Homeland Development, LLC. Homeland Development, LLC was legally dissolved by operation of law on June 3, 2002, approximately twenty-three months prior to the date of the subject complaint.
"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.) Blumenthal v. Barnes, 261 Conn. 434, 442, 804 A.2d 152 (2002). "The motion to dismiss shall be used to assert (1) lack of jurisdiction over the subject matter . . ." (Internal quotation marks omitted.) Sadloski v. Manchester, 235 Conn. 637, 645-46 n. 13, 668 A.2d 1314 (1995). "[S]tanding . . . implicates a Court's subject matter jurisdiction, which may be raised at any point in judicial proceedings." Stamford Hospital v. Vega, 236 Conn. 646, 656, 674 A.2d 821 (1996).
"Standing is the legal right to set judicial machinery in motion . . . and implicates this court's subject matter jurisdiction . . . A party cannot rightfully invoke the jurisdiction of the court unless he [or she] has, in an individual or representative capacity, some real interest in the cause of action, or a legal or equitable right, title or interest in the subject matter of the controversy . . . The burden rests with the party who seeks the exercise of jurisdiction in his favor . . . clearly to allege facts demonstrating that he is a proper party to invoke judicial resolution of the dispute." (Citations omitted; internal quotation marks omitted.) Payne v. TK Auto Wholesalers, 98 Conn.App. 533, 537-38 (2006) quoting Goodyear v. Discala, 269 Conn. 507, 511, 849 A.2d 791 (2004). "The question of standing does not involve an inquiry into the merits of the case . . . It merely requires allegations of a colorable claim of injury to an interest that is arguably protected by [a] statute or common law." (Internal quotation marks omitted.) McGinty v. McGinty, 66 Conn.App. 35, 38, 783 A.2d 1170 (2001). "Standing is not a technical rule intended to keep aggrieved parties out of court; nor is it a test of substantive rights. Rather it is a practical concept designed to ensure that courts and parties are not vexed by suits brought to vindicate non-justiciable interests and that judicial decisions which may affect the rights of others are forged in hot controversy, with each view fairly and vigorously represented." (Citations and internal quotation marks omitted.) West Farms Mall, LLC v. West Hartford, 279 Conn. 1, 11 (2006).
The plaintiffs allege that they are charged with winding up the affairs of Homeland Developers, LLC, a limited liability company, which the plaintiffs Stanziale and Spinelli dissolved in August 2000. However, General Statutes § 34-134 states "[a] member or manager of a limited liability company is not a proper party to a proceeding by or against a limited liability company solely by reason of being a member or manager of the limited liability company, except where the object of the proceeding is to enforce a member's or manager's right against or liability to the limited liability company or as otherwise provided in an operating agreement. The plaintiffs Stanziale and Spinelli are not the proper parties to the action, despite their allegations that they are winding up the affairs of the limited liability company. The authority to wind-up the business and affairs of a limited liability company is provided in General Statutes § 34-208 which reads as follows:
Paragraph 2 of the plaintiffs' complaint dated April 30, 2004, alleges the plaintiffs dissolved Homeland Developers, LLC in August 2000. The plaintiffs' memorandum of law objecting to the motion to dismiss states that "Homeland Development, LLC" was "legally dissolved by operation of law on June 3, 2002."
(a) Except as otherwise provided in writing in the operating agreement, the business and affairs of the limited liability company may be wound up (1) by the members or managers who have authority pursuant to section 34-140 to manage the limited liability company prior to dissolution or (2) on application of any member or legal representative or assignee thereof, by the superior court for the judicial district where the principal office of the limited liability company is located, if one or more of the members or managers of the limited liability company have engaged in wrongful conduct, or upon other cause shown.
(b) The persons winding up the business and affairs of the limited liability company may, in the name of and for and on behalf of, the limited liability company: (1) Prosecute and defend suits; (2) settle and close the business of the limited liability company; (3) dispose of and transfer the property of the limited liability company; (4) discharge the liabilities of the limited liability company; and (5) distribute to the members any remaining assets of the limited liability company.
While the plaintiffs Stanziale and Spinelli are authorized to wind up the business and affairs of Homeland Developers, LLC, they are not authorized to bring suit in their own names or individual capacities. General Statutes § 34-208(b)(1) makes it clear that the proper plaintiff in this matter would be Homeland Developers, LLC, not Stanziale and Spinelli. See Elecor, LLC v. King, Superior Court, judicial district of New Haven at New Haven, No. CV06-5006235 S (Dec. 5, 2007, Bellis, J.); Zipp v. Florian, Superior Court, judicial district of New Britain, Housing Session at New Britain, No. CVN-0310-1980 (Nov. 13, 2006, Bentivegna, J.); Maile v. Webster Bank, Superior Court, judicial district of New Britain at New Britain, No. CV 04-0527763 (Feb. 10, 2005, Burke, J.). However, the court's inquiry does not end here. The court must decide whether to consider the plaintiffs' motion to substitute Homeland Development, LLC, as the plaintiff. The court's consideration of the motion to substitute the plaintiff is determinative of the motion to dismiss, as Stanziale and Spinelli, the present plaintiffs lack standing.
The plaintiffs' motion to substitute plaintiff was filed February 28, 2008, subsequent to the defendant's motion to the dismiss, but prior to oral argument on the motion to dismiss, which was heard by this court on May 5, 2008. General Statutes § 52-109 and Practice Book § 9-20 authorize the substitution of a plaintiff. Section 52-109 reads as follows:
When any action has been commenced in the name of the wrong person as plaintiff, the court may, if satisfied that it was so commenced through mistake, and that it is necessary for the determination of the real matter in dispute so to do, allow any other person to be substituted or added as plaintiff.
Practice Book § 9-20 reads as follows:
When any action has been commenced in the name of the wrong person as plaintiff, the judicial authority may, if satisfied that it was so commenced through mistake and that it is necessary for the determination of the real matter in dispute so to do, allow any other person to be substituted or added as plaintiff.
Both rules, of necessity, relate back to and correct, retroactively, any defect in a prior pleading concerning the identity of the real party in interest. Federal Deposit Ins. v. Retire. Mgmt. Group, 31 Conn.App. 80, 84, 623 A.2d 517 (1993). "In the context of analogous rules of federal civil procedure, it has been observed that where the change is made on the plaintiff's side to supply an indispensable party or to correct a mistake in ascertaining the real party in interest, in order to pursue effectively the original claim, the defendant will rarely be unfairly prejudiced by letting the amendment relate back to the original pleading." (Internal quotation marks omitted.) Id.; F. James G. Hazard, Civil Procedure (2d Ed. 1977) 5.7, pp. 167-68. "As long as [the] defendant is fully apprised of a claim arising from specified conduct and has prepared to defend the action, his ability to protect himself will not be prejudicially affected if a new plaintiff is added . . . Thus, an amendment substituting a new plaintiff [will] relate back if the added plaintiff is the real party in interest." Id., 84-85. 6A C. Wright, A. Miller M. Kane, Federal Practice and Procedure 1501, pp. 154-57; see also Health Research Group v. Kennedy, CT Page 13390 82 F.R.D. 21 (D.D.C. 1979) (substitution of real party in interest as plaintiff permitted to cure lack of standing of original plaintiff). "An amendment to pleadings will relate back to its filing, at the very least, and back to the beginning of the action under appropriate circumstances." Id.; Sharp v. Mitchell, 209 Conn. 59, 70-75, 546 A.2d 846 (1988); Giglio v. Connecticut Light Power Co., 180 Conn. 230, 239-40, 429 A.2d 486 (1980); see also Consolidated Motor Lines, Inc. v. M M Transportation Co., 128 Conn. 107, 109, 20 A.2d 621 (1941). This court sees no reason why our general policy with respect to pleadings should not also apply in the context of the substitution of a plaintiff. See Federal Deposit Ins. v. Retire. Mgmt. Group, supra, 31 Conn.App. 85. Here, the motion to substitute Homeland Development, LLC as plaintiff was filed February 28, 2008, subsequent to the defendant's motion to dismiss, but prior to oral argument on the motion to dismiss and the motion to substitute plaintiff which heard both motions on May 5, 2008. Thus, if the motion to substitute Homeland Development, LLC, the real party in interest, is granted, it would relate back in time to affect the motion to dismiss.
"The longstanding rule in Connecticut is that whenever the absence of jurisdiction is brought to the notice of the court or tribunal, cognizance of it must be taken and the matter passed upon before it can move one further step in the cause; as any movement is necessarily the exercise of jurisdiction."(Internal quotation marks omitted, internal citations omitted.) Dilieto v. County Ob and Gyn Group, Superior Court, judicial district of Waterbury at Waterbury, Complex Litigation Docket No. (X02) CV97-0150435S (Jan. 31, 2000, Sheldon, J.) [ 26 Conn. L. Rptr. 345]; see also, Rhode Island v. Massachusetts, 12 Pet. (37 U.S.) 657, 717 [1838]; Denton v. Danbury, 48 Conn. 368, 372 (1880); Woodmont Ass'n. v. Milford, 85 Conn. 517, 524, 84 A. 307 (1912). The point has been frequently made. See, e.g., Kohn Display Woodworking Co. v. Paragon Paint Varnish Corporation, 166 Conn. 446, 448, 352 A.2d 301 (1974); East Side Civic Ass'n. v. Planning Zoning Commission, 161 Conn. 558, 559, 290 A.2d 348 (1971); Carten v. Carten, 153 Conn. 603, 610, 219 A.2d 711 (1966); Felletter v. Thompson, 133 Conn. 277, 280, 50 A.2d 81 (1946); Baldwin Piano Organ Co. v. Blake, 186 Conn. 295, 297-98, 441 A.2d 183 (1982). "The continuing vitality of this rule is undoubted, for in 1996 our Supreme Court expressly reaffirmed it by an en banc decision in Federal Deposit Ins. Corp. v. Peabody, N.E., Inc., 239 Conn. 93, 99, 680 A.2d 1321 (1996) (quoting and relying on the foregoing passage from Baldwin Piano Organ Co. v. Blake, supra)." Dilieto v. County Ob and Gyn Group, Superior Court, judicial district of Waterbury at Waterbury, supra. A classic situation in which a court lacks subject-matter jurisdiction is when the party prosecuting an action lacks standing to do so. McGee v. Dunnigan, CT Page 13391 138 Conn. 263, 83 A.2d 491 (1951); Nader v. Altermatt, 166 Conn. 43, 59, 347 A.2d 89 (1974); Crone v. Gill, 250 Conn. 476, 477 n. 1, 736 A.2d 131 (1999) (dismissing a writ of error challenging an order disqualifying an attorney from representing a criminal defendant because the attorney, who filed the writ in his own name as plaintiff in error, had no standing to challenge the disqualification order). The defendants have moved this Court to dismiss this case for lack of subject-matter jurisdiction. Accordingly, the Court must grant the defendants' motions to dismiss unless it finds that the Homeland Development, LLC may properly be substituted as party plaintiff.
General Statutes § 52-109 "appears to contemplate that when the conditions set forth therein are met, a lawsuit `commenced in the name of the wrong person' presumably a person who has no present interest in or legal right to prosecute the lawsuit can be saved from dismissal by the substitution of `any other person' as party plaintiff." Dilieto v. County Ob and Gyn Group, Superior Court, judicial district of Waterbury at Waterbury, supra. The two conditions that must be met to invoke the statutory remedy of substitution are: first, that the action was commenced in the name of the wrong person by mistake; and second, that the proposed substitution is necessary for the determination of the real matter in dispute. Id.
In Dilieto v. County Ob and Gyn Group, Superior Court, judicial district of Waterbury at Waterbury, supra, Judge Sheldon undertakes an excellent analysis of whether a case can be saved from dismissal for lack of subject matter jurisdiction by the granting of a proper motion to substitute under General Statutes § 52-109 and Practice Book § 9-20 and determined that a case can in fact be saved. Judge Sheldon points to Wickes Mfg. Co. v. Currier Electric Co., 25 Conn.App. 751, 760, 596 A.2d 1331 (1991), where the Appellate Court upheld a trial court's order permitting the substitution of a new plaintiff for the original plaintiff in a breach of contract action even though the record clearly showed that the original plaintiff had never had standing to bring the action. In Wickes Mfg. Co. v. Currier Electric Co., supra, the action was prosecuted for six years in the name of the original party to a contract even though that party had ceased to exist before the action was commenced. Even so, the Court approved the substitution of one of the original plaintiff's corporate successors for the following reasons, which brought it within the scope of Section 52-109: first, that the commencement of the action in the name of the original plaintiff had been a "mistake"; and second, that the substituted party, which owned all the rights to the original plaintiff's claim, was the real party in interest with respect to that claim, and thus was "necessary for a determination of the real matter in dispute." Wickes Mfg. Co. v. Currier Electric Co., CT Page 13392 supra, 25 Conn.App. at 760. At no point in the Court's decision did it suggest that the action should have been dismissed because of the original plaintiff's non-existence, and resulting lack of standing.
Judge Sheldon also notes that in 1993, the Appellate Court issued two decisions which expressly noted that one proper use of our liberal substitution statutes is to cure an original plaintiff's lack of standing by substituting the real party in interest as party plaintiff. "[I]n Federal Deposit Ins. Corp. v. Retirement Management Group, Inc., 31 Conn.App. 80, 84-85, 623 A.2d 517 (1993), the Court explained that our rules of practice . . . permit the substitution of parties as the interests of justice require. General Statutes §§ 52-108, 52-109; Practice Book §§ 100, 101; see also United States Trust Co. v. DiGhello, 179 Conn. 246, 247 n. 1, 425 A.2d 1287 (1979); Hagearty v. Ryan, 123 Conn. 372, 195 A. 730 (1937); Wickes Mfg. Co. v. Currier Electric Co., 25 Conn.App. 751, 760-61, 596 A.2d 1331 (199 1)." Dilieto v. County Ob and Gyn Group, supra. "These rules are to be construed so as to alter the harsh and inefficient result that attached to the mis-pleading of parties at common law." Id.; see also, Hagearty v. Ryan, supra, 375-76.
General Statutes § 52-108 and Practice Book § 100 provide that "no action shall be defeated by the non-joinder or misjoinder of parties." General Statutes § 52-109 and Practice Book § 101 allow a substituted plaintiff to enter a case "[w]hen any action has been commenced in the name of the wrong person as plaintiff . . ." "By repeatedly citing Health Research Group v. Kennedy, supra, for the proposition that `substitution of [the] real party in interest as plaintiff [is] permitted to cure lack of standing by original plaintiff,' the Court explicitly acknowledged the propriety of the course it had taken in Wickes, to wit: approving the substitution of a real party in interest for an original plaintiff without standing who was named through mistake when the action was commenced." Dilieto v. County Ob and Gyn Group, supra.
"What the foregoing cases make clear is that a court may order substitution of plaintiffs in lieu of dismissal whenever the statute's conditions are met. The legislature's provision of this statutory remedy would be completely undermined by any rule requiring the immediate dismissal for lack of subject-matter jurisdiction of any action commenced in the name of the wrong person as plaintiff. The statute, as an exercise of the legislature's constitutional authority to determine this Court's jurisdiction; Constitution of Connecticut, Article Fifth § 1; must be seen as an extension of that jurisdiction for the limited purpose of deciding a proper motion to substitute." Id.
"By ordering substitution of plaintiffs instead of dismissal when the statute's conditions are satisfied, a court fulfills the intent of the legislature by eliminating the harshness and inefficiency of common-law pleading." Hagearty v. Ryan, supra, 123 Conn. at 375-76. Here, then, the Court can properly consider the motions to substitute notwithstanding the pendency of the defendants' motions to dismiss.
Before the court can decide if the proposed substitution should be permitted in this case, the court must determine the true meaning of the statute's operative terms. First, it must determine if the plaintiffs' action was commenced in the name of the wrong person "through mistake." Second, the Court must determine whether it is necessary for the determination of the real matter in dispute to allow Homeland Developers, LLC to be substituted as the plaintiff.
Substitution of the "real party in interest" to pursue a claim is obviously "necessary for the determination of the real issue in dispute" whenever the original party lacks standing to pursue it. Poly-Pak Corp. of America v. Barrett, 1 Conn.App. 99, 102, 468 A.2d 1260 (1983). In such circumstances, without the requested substitution, the court would have no subject-matter jurisdiction over the case, and any judgment it might render would be null and void. The "real party in interest" with respect to a claim is the true legal owner of the claim — one who has a sufficient legal interest in the claim to have standing to pursue it. See Richards v. Planning Zoning Commission, 170 Conn. 318, 327, 365 A.2d 1130 (1976). Here, the one true owner of the plaintiff's claims against these defendants is Homeland Developers, LLC-Homeland Development, LLC. The Court must therefore grant the pending motions to substitute if it is satisfied that the plaintiffs commenced their action in their own names, as individuals, "through mistake."
To prevail on a motion to substitute under Section 52-109, a plaintiff must prove that the mistake which led him to mis-plead in the name of the wrong person did not result from his own failure to exercise reasonable diligence to know the truth. The mistake must be an "honest mistake and belief." Petroman v. Anderson, 105 Conn. 366, 371, 135 A. 391 (1926); Doran v. Rugg, 22 Conn.Sup. 189, 164 A.2d 859 (1960). "`Mistake' as used in Section 52-109, means an honest conviction, entertained in good faith and not resulting from the plaintiff's own negligence, that she is the proper person to commence the lawsuit." Dilieto v. County Ob and Gyn Group, supra. Only if the plaintiffs bear the burden of proving that they acted upon such a conviction in commencing the lawsuit can the plaintiff's motion to substitute be granted. See. Poly-Pak Corp. of America v. Barrett, supra, 1 Conn.App. at 101.
"[M]istakes deemed correctable under the statute have obviously included errors as to who, among the successors to the original plaintiff's claim, actually had standing to assert the claim when the action was commenced." See, e.g., Wickes Mfg. Co. v. Currier Electric Co., supra. The Appellate Court observed in Federal Deposit Ins. Corp. v. Retirement Management Group, Inc., supra, 31 Conn.App. at 84, and Investors Mortgage Co. v. Rodia, supra, 31 Conn.App. at 484, substitution may properly be ordered to correct a mistake in ascertaining the real party in interest not just an error in the description, spelling or punctuation of a known party's name.
The original construction contract underlying the dispute between the parties was between Homeland Developers, LLC and the defendant Skiba. The contract was executed by Skiba and by the plaintiff Stanziale a principal of the limited liability corporation. As noted, herein, Homeland Developers, LLC, subsequently changed its name to Homeland Development, LLC. Homeland Development, LLC, was legally dissolved by operation of law on June 3, 2002, approximately twenty-three months prior to the date of the subject complaint. The plaintiffs allege that they are charged with winding up the affairs of Homeland Development, LLC, a limited liability company, which the plaintiffs Stanziale and Spinelli dissolved. The authority to wind-up the business and affairs of a limited liability company is provided in General Statutes § 34-208. The plaintiffs Stanziale and Spinelli are authorized to wind up the business and affairs of Homeland Development, LLC, so long as they bring the action in the limited liability company's name. The court finds that the mistake in naming the individual principals of the dissolved limited liability company as plaintiffs, rather than the limited liability company itself, was an honest mistake.
In determining that the plaintiffs' action was an honest mistake, the court takes note of Judge Pickard's decision in Rosinski v. Frontier Group, Inc., Superior Court, judicial district of Litchfield, Docket Number CV04 92958 S (July 25, 2006, Pickard, J.) [ 41 Conn. L. Rptr. 705]. In Rosinski, the plaintiffs brought suit in the wrong name. The cause of action belonged to a limited liability company, of which Rosinski was one of two members. The defendant challenged Rosinski's standing to bring suit in his individual name. The court in Rosinski, supra, that "General Statutes § 34-208 does not require that suit be brought in the name of the limited liability company; it is permissive only." Id. While this court respects Judge Pickard's decision, it does not adopt Judge Pickard's reasoning in Rosinski in reaching the decision in this case. However, the court recognizes that a difference of opinion exists among judges of the superior court as to the proper plaintiff in cases of this type.
The court finds that the defendant has been fully apprised of the claim and has been prepared to defend the action. Her ability to protect herself from the plaintiffs' claims will not be unfairly prejudiced by allowing the real party in interest to be substituted as plaintiff and by letting this amendment relate back to the original pleading. Accordingly, the plaintiffs' motion to substitute plaintiff is granted and the defendant's motion to dismiss for lack of subject matter jurisdiction is denied.