Opinion
CV166067424S
04-27-2017
Joseph Sullo v. Foodservicewarehouse.com, LLC et al
UNPUBLISHED OPINION
MEMORANDUM OF DECISION RE MOTION TO DISMISS (#109)
Jane S. Scholl, J.
Introduction
The amended complaint here alleges that the plaintiff, Joseph Sullo, owned and operated Restaurant Supply, LLC, located in Hartford, Connecticut. Restaurant Supply was a member of FoodServiceWarehouse.com, LLC, (FSW). The defendant, Madhu Natarajan, who resided in Colorado, was a member of the Management Committee of FSW. On or about August 1, 2015, FSW borrowed $1,000,000 from Sullo pursuant to a promissory note and security agreement. The terms of the note were negotiated with Sullo while he was in Connecticut and the funds were wired from a bank branch located in Connecticut. Pursuant to the terms of the note the entire balance of the principal and interest was payable any time after thirty days written notice demanding payment. In February 2016, Sullo made such demand, yet FSW has failed to pay the principal and accrued interest to Sullo. Count One of the amended complaint makes a claim for breach of contract as to FSW. In Count Two Sullo makes a claim of misrepresentation as to the defendant Natarajan. Sullo claims that Natarajan represented to him that FSW was in a temporary cash-flow shortage and needed a bridge loan until it secured other financing. Natarajan represented that the loan would be required for no more than sixty days. Sullo claims that Natarajan individually and as a member of the FSW management committee misrepresented facts to Sullo in a number of ways and that he knew or should have known that his statements were false. In Count Three the plaintiff also makes a negligence claim as to Natarajan claiming that Natarajan was negligent and careless in entering into the note between FSW and Sullo.
The defendant, Madhu Natarajan, has moved to dismiss this action as to him claiming that the court cannot exercise personal jurisdiction over him. The court heard argument on the motion on February 6, 2017.
It has been held that: " In deciding whether the applicable long arm statute authorizes jurisdiction over the defendant, the court generally is limited to the allegations in the complaint; however, [w]hen issues of fact are necessary to the determination of a court's jurisdiction, due process requires that a trial-like hearing be held, in which an opportunity is provided to present evidence and to cross-examine adverse witnesses." (Citation omitted; internal quotation marks omitted.) Solano v. Calegari, 108 Conn.App. 731, 737, 949 A.2d 1257, cert. denied, 289 Conn. 943, 959 A.2d 1010 (2008). Here the plaintiff claims that the court can determine the jurisdictional issue based on the allegations of the complaint and the undisputed facts set forth in the parties' affidavits. The defendant did not request an evidentiary hearing and the court does not believe one is required since there appears to be no dispute as to the facts which form the basis of the claim of jurisdiction.
Discussion
Natarajan claims that he is not a resident of Connecticut, that he has never had any presence in Connecticut, and there is no basis under the longarm statute for this court to exercise any jurisdiction over him.
" When a defendant challenges personal jurisdiction in a motion to dismiss, the court must undertake a two-part inquiry to determine the propriety of its exercising such jurisdiction over the defendant. 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 . . . Thus, based on the facts in the record, this court must determine: first, whether [the long-arm statute] properly applies to the defendant; and, second, if the statutory threshold is met, whether the defendant has the requisite minimum contacts with this state sufficient to satisfy constitutional due process concerns." (Citations omitted; internal quotation marks omitted.) Cogswell v. American Transit Insurance Company, 282 Conn. 505, 514-15, 923 A.2d 638 (2007). " If the defendant challenging the court's personal jurisdiction is a foreign corporation or a nonresident individual, it is the plaintiff's burden to prove the court's jurisdiction . . . Thus, once the defendant contested personal jurisdiction in the present case, it was the plaintiff's burden to produce evidence adequate to establish such jurisdiction. (Citation omitted.) Id., 515-6.
The complaint alleges that Natarajan resides in Colorado. In his affidavit Natarajan states that during the times relevant to the complaint he resided in Colorado but he is currently a resident of Texas. He further states that he has never traveled to Connecticut or transacted business here.
Jurisdiction over a non-resident is governed by General Statutes § 52-59b. That statute states: " (a) 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, foreign partnership or foreign voluntary association, or over the executor or administrator of such nonresident individual, foreign partnership or foreign voluntary association, who in person or through an agent: (1) Transacts any business within the state; (2) commits a tortious act within the state, except as to a cause of action for defamation of character arising from the act . . ."
The plaintiff posits that the court has personal jurisdiction over Natarajan because he transacted business in this state. The plaintiff claims that the representations about the need for the loan and the terms of the loan were made by the defendant by email, telephone, and text message to the plaintiff while the plaintiff was in Connecticut. The plaintiff claims that this is sufficient to support the court's exercise of jurisdiction over Natarajan. Natarajan admits that he " discussed the terms of the bridge loan with Sullo on a handful of occasions via telephone and/or email." He was also CEO of FSW at that time and signed the note on behalf of FSW. The defendant argues that these facts do not support a conclusion that he transacted business in Connecticut.
The plaintiff cites The Doyle Group v. Alaskans for Cuddy, 146 Conn.App. 341, 77 A.3d 880 (2013), in support of his position. There the plaintiff sued for money due for consulting work performed from Connecticut for the defendant non-residents. The consulting services were provided via numerous e-mails and telephone calls to the defendants. The individual defendant claimed that he was not a resident of Connecticut, he signed the subject contract outside of Connecticut, he never physically had been present in Connecticut for any purpose related to the subject of the cause of action, he never had engaged in any business activity in Connecticut, he had no physical presence in Connecticut, and he owned no property, bank accounts, or business interests in Connecticut. The plaintiff's representative stated that it offers political consulting services and has offices only in Hartford, Connecticut. The court held: " [A]lthough the term '[t]ransacts any business' is not defined by statute, [our Supreme Court has] construed the term to embrace a single purposeful business transaction . . . In the present case, the court reasonably could have concluded from the allegations of the amended complaint and the affidavits of the parties that Cuddy transacted business in Connecticut . . . Moreover, our review of the record demonstrates there is a factual basis that supports the court's legal conclusion. The first paragraph of the contract recites that the plaintiff is a Connecticut company, and that it has no presence outside of Connecticut. Pursuant to his affidavit, Cuddy engaged in negotiations with the plaintiff, signed the contract for services to be performed by the plaintiff in Connecticut, mailed the contract and his personal check to the plaintiff in Connecticut, and engaged in telephone calls and e-mail communication arising from the contract. We conclude that the allegations of the amended complaint and the parties' affidavits constitute conduct that falls within the scope of '[t]ransacts any business within the state' pursuant to § 52-59b. [A] nonresident individual who has not entered this state physically nevertheless may be subject to jurisdiction in this state under § 52-59b(a)(1) if that individual has invoked the benefits and protection of Connecticut's laws by virtue of his or her purposeful Connecticut related activity . . . [D]etermination of whether exercise of personal jurisdiction satisfies due process will vary with the quality and nature of the defendant's activity, but it is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum [s]tate, thus invoking the benefits and protections of its laws . . . In the present case, the allegations of the amended complaint are sufficient to demonstrate that Cuddy purposefully conducted activities in this state when he signed a contract in which he agreed to have the plaintiff provide political consulting services from Connecticut and mailed that contract along with his personal $10,000 check to the plaintiff at its place of business in Connecticut." (Citations omitted; internal quotation marks omitted; footnote omitted.) Id., 347-9. The defendant argues that Doyle is distinguishable because there the services were not for a single act, as here, but consisted of ongoing tasks performed by the Connecticut company for the out of state resident. Yet in Doyle the Court cited the decision in Zartolas v. Nisenfeld, 184 Conn. 471, 474, 440 A.2d 179 (1981), where the court held " the term 'transacts any business' to embrace a single purposeful business transaction . . . The term 'transacts any business' extends beyond the typical commercial enterprise to include the execution of a warranty deed pursuant to a single sale of real property." (Citations omitted.) Thus the term " transacts any business" in General Statutes § 52-59b(a)(1) encompasses the single loan transaction which is the subject of the complaint here.
In support of his position the defendant also cites Solano v. Calegari, 108 Conn.App. 731, 739-40, 949 A.2d 1257, cert. denied, 289 Conn. 943, 959 A.2d 1010 (2008), and the cases cited by the court there. But the court concluded that: " The nonspecific nature of the [trial] court's findings do not permit us properly to analyze the defendant's contacts with this state or to balance considerations of public policy, common sense or the chronology and geography of the relevant factors . . . Accordingly, absent the necessary factual findings, we cannot say that the defendant transacted any business in this state." Consequently a comparison of the facts there to those here is not appropriate. In addition, in the other cases cited by the court in Solano, and by the defendant here, in which the court found that it did not have jurisdiction over the out of state defendant, the activities which were cited by the plaintiff as the basis for the court's jurisdiction in Connecticut actually took place outside of Connecticut. For example, in Ryan v Cerullo, 282 Conn. 109, 918 A.2d 867 (2007), the plaintiff, who worked in New York, hired the defendant, a New York accounting firm, to prepare his state and federal tax returns and all meetings between them took place in New York; in Rosenblit v. Danaher, 206 Conn. 125, 537 A.2d 145 (1988), the plaintiffs went to Massachusetts and there, together with a Massachusetts resident, hired an attorney, who resided and practiced law in Massachusetts, to bring an action in Massachusetts that arose out of a series of contacts by the plaintiffs with Massachusetts residents; and in Green v. Simmons, 100 Conn.App. 600, 919 A.2d 482 (2007), a South Carolina resident attempted to sue a South Carolina attorney for malpractice when the attorney had simply sent two letters to a Connecticut business where the plaintiff allegedly fell. Here the plaintiff claims that the defendant made presentations to him while he was in Connecticut and that as a result he loaned the defendant FSW a significant sum of money which was transferred from his account in Connecticut to FSW's account.
The defendant also argues that it is not appropriate to exercise jurisdiction over a corporate officer where the claims really relate to the defendant's corporation transacting business in the state. He cites Ferrara v. Munro, Superior Court, Judicial District of Middlesex, Docket No. CV146011790, (Aurigemma, J., Nov. 20, 2014) , and Isola v. RLJ Electric Corp., Superior Court, Judicial District of Stamford-Norwalk, Docket No. CV136018537S, (Truglia, J., Mar. 28, 2014) . Yet in Ferrara the court noted that: " Connecticut law [does not] hold that officers are automatically subject to personal jurisdiction simply by virtue of their status as corporate officers or shareholders. Each determination is based on whether, in a given case, the corporate officer has sufficient minimum contacts with the forum state such that personal jurisdiction complies with federal due process standards . . . In such situations, the individual must have been a primary actor in the matter giving rise to a plaintiff's claims." (Citations omitted; internal quotation marks omitted.) The court found it had no jurisdiction over the individual corporate offices because there was neither allegations of relevant acts in Connecticut by the defendants nor evidence of direct involvement by the defendants in any corporate malfeasance. Similarly, in Isola no jurisdiction was found over the individual defendants because the causes of action directed against the individual defendants were all equitable in nature and derivative of the legal causes of action directed against the defendant corporation. Here the defendant is alleged to have had direct involvement in the request for the loan from the plaintiff, as well as the negotiation and execution of the loan. Therefore the court has jurisdiction over the defendant pursuant to General Statutes § 52-59b(a)(1).
In any event, the plaintiff also claims that the court can exercise jurisdiction over the defendant pursuant to General Statutes § 52-59b(a)(2) in that the defendant committed " a tortious act within the state." The defendant cites numerous superior court decisions in support of his argument that in order for this provision of the statute to be applicable, the defendant must have been physically present in Connecticut at the time the tort was committed. However, it has been held that: " False representations entering Connecticut by wire or mail constitute tortious conduct in Connecticut . . ." (Citations omitted.) Knipple v. Viking Communications, Ltd., 236 Conn. 602, 610, 674 A.2d 426 (1996). In Cody v. Ward, 954 F.Supp. 43, 46 (D.Conn. 1997) the court held that although the Connecticut Supreme Court has not addressed the issue, it believed that Court would conclude that General Statutes § 52-59b(a)(2) applies to a nonresident who sends oral and written misrepresentations into Connecticut even though he was not physically present in the state when the acts occurred. The court noted: " Many states assert jurisdiction over a nonresident when, as in this case, oral and written misrepresentations are directed specifically to the forum . . . Interpreting Connecticut's long arm statute to reach this type of intentional tort is consistent with the statute's remedial purpose of providing Connecticut residents with a convenient forum to seek redress for losses they suffer here as a result of a nonresident's tortious actions. This interpretation of the statute is also consistent with Connecticut's traditional adherence to the doctrine that tort cases are governed by the law of the place of injury." (Citations omitted.) Cody v. Ward, 954 F.Supp. 43, 46 (D.Conn. 1997). Similarly, in Oppenheim v. Erwin, Superior Court, Docket No. CV000441611, (Licari, J., Apr. 10, 2001) , the court agreed with those cases which held that " if a plaintiff alleges the elements of a tort committed by way of communications sent directly by the defendant into Connecticut, and alleges that the plaintiff and/or other individuals received the communications and that damage was inflicted on the plaintiff as a direct result of such communications, the last event necessary to make the defendant liable for the alleged tort occurred in Connecticut and the tortious act is regarded as having been committed within the state for purposes of § 33-411(c)(4) and, by implication, § 52-59b(a)(2)." In Pro Performance Corporation Services, Inc. v. Goldman, 47 Conn.Supp. 476, 483-86, 804 A.2d 248 (2002) , the court reached a similar result on claims close to those made here. There the non-resident defendant engaged in telephone communications with the plaintiff, a Connecticut corporation, for the purpose of obtaining Super Bowl tickets and promised to pay for such services pursuant to a promissory note. The court held that: " Consistent with the authorities that have found fraudulent communications by wire or mail tortious conduct for the purposes of § 52-59b(a)(2), and construing the facts in a light most favorable to the plaintiff, the plaintiff has sustained its burden of proving that the defendant in the present action is amenable to personal jurisdiction under § 52-59b(a)(2)." Id. Similarly in Rios v. Fergusan, 51 Conn.Supp. 212, 220, 978 A.2d 592 (2008) , the court concluded that a nonresident defendant does not need to be physically present in Connecticut at the time of the commission of the alleged tortious act for him to have committed a tortious act within the state for purposes of General Statutes § 52-59b(a)(2).
Here the defendant allegedly made misrepresentations, by email and telephone, to the plaintiff, who was located in Connecticut, such as to induce him to wire transfer from his account in Connecticut $1,000,000 to the company of which the defendant was, by his own admission, CEO. Therefore General Statutes § 52-59b(a)(2) also applies to give the court jurisdiction over the defendant.
Concluding that the defendant is subject to Connecticut's longarm statute does not end the inquiry, the court must also determine whether the defendant has the requisite minimum contacts with Connecticut sufficient to satisfy constitutional due process concerns. " When . . . the controversy is specifically related to a defendant's contacts with a forum, there is sufficient due process contact if the defendant has purposefully directed his activities at residents of the forum and the litigation results from alleged injuries that arise out of or relate to those activities . . . In the context of statutes conferring jurisdiction over non-resident motorists, single tortious acts committed in a forum state by persons having no other contacts with that state have long been held sufficient to warrant personal jurisdiction under the Due Process Clause . . . In broad language, the Court of Appeals for the Second Circuit has stated that there is no constitutional problem to bringing a nonresident defendant into Connecticut to answer for a tort alleged to have been committed in Connecticut upon a Connecticut resident even if that had been a wholly isolated event . . . In the case before this court, taking plaintiff's factual allegations to be true, as we must at this stage, defendants purposefully availed themselves of the benefits of this state by fraudulently misrepresenting to a person in this state that they would sell her a condominium on terms more advantageous to her than they ever intended to provide, or did provide, thereby inducing her to enter into a contract to buy and to make a deposit. The commission of the intentional tort of fraudulent misrepresentation has the foreseeable consequence of direct economic injury to plaintiff at her domicile in Connecticut. Connecticut would surely have an interest in providing a forum for her suit. The relative conveniences of Connecticut and Florida as fora in this case reduce essentially to the balance between the interests of the parties themselves in litigating in their respective home states. It would not, in these circumstances, offend the due process clause to subject defendants to suit in this district." (Citations omitted; internal quotation marks omitted.) David v. Weitzman, 677 F.Supp. 95, 99-100 (D.Conn. 1987). Here the defendant purposely directed his misrepresentations to Sullo in Connecticut such that he divested himself of significant funds, the loss of which resulted in his damage in Connecticut. Thus the defendant has sufficient minimum contacts with Connecticut to warrant the exercise of this court's jurisdiction over him.
" Once minimum contacts have been established, [t]he 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." (Citation omitted; internal quotation marks omitted.) Cogswell v. American Transit Insurance Company, supra, 282 Conn. at 525. The defendant claims that he will be required to expend funds for legal and travel expenses if he is required to defend this action in Connecticut. This argument does not support a compelling case against jurisdiction. As the court in David noted such an analysis reduces the argument to one which essentially balances the interests of the parties themselves in litigating in their respective home states.
Conclusion
For the reasons stated above the Motion to Dismiss is denied.