Opinion
HHDCV095034526S
02-01-2019
WINDSOR FEDERAL SAVINGS AND LOAN ASSOCIATION v. RELIABLE MECHANICAL CONTRACTORS, LLC et al.
UNPUBLISHED OPINION
OPINION
ROBERT B. SHAPIRO, JUDGE TRIAL REFEREE
On December 3, 2018, the court heard oral argument concerning the plaintiff’s motion to dismiss (# 283) the defendants’ counterclaims (# 138) for lack of subject matter jurisdiction. The plaintiff asserts that the defendants lack standing to bring the counterclaims and that they are barred by the statute of limitations. In its reply, the plaintiff also alleges that the counterclaims are barred by collateral estoppel.
The court has reviewed the plaintiff’s motion to dismiss (# 283); the defendants’ brief in opposition to the plaintiff’s motion to dismiss (# 289); the plaintiff’s reply and amended reply to the defendants’ opposing brief (## 290 [reply] and 291 [amended reply]); and the defendants’ surreply in opposition to the plaintiff’s motion to dismiss (# 294). For the reasons set forth below the plaintiff’s motion to dismiss is granted.
The plaintiff’s reply and amended reply are identical, except that several exhibits accompany the amended reply. The plaintiff has not withdrawn its original reply.
The defendants filed their surreply by agreement of the parties.
I
Background
This collection action was returned to the court on remand from the Appellate Court. See Windsor Federal Savings & Loan Assn. v. Reliable Mechanical Contractors, LLC, 175 Conn.App. 651, 168 A.3d 586 (2017). In their counterclaims, the defendants, Reliable Mechanical Contractors, LLC (Reliable Mechanical), and its sole member, Elijah El-Hajj-Bey, seek to recover damages from the plaintiff, Windsor Federal Savings and Loan Association (Windsor), for fraud and a violation of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq., as alleged in counts one and two, respectively, of the defendants’ two-count counterclaim, set forth in the defendants’ answer, special defenses, and counterclaim (# 138), which was filed in response to the plaintiff’s amended complaint (# 127).
Hereafter, Reliable Mechanical and El-Hajj-Bey are referred to, collectively, as the defendants, and individually by name where appropriate.
The defendants allege that, beginning in 2005, they dealt with Windsor’s vice president concerning financing of a facility for oil delivery, involving the purchase of real property. In paragraph 14, they allege that, "[a]cting in reliance on the representations made by the plaintiff’s vice-president, defendant El-Hajj Bey purchased the plaintiff’s suggested property located at 42 Griffin Road, Bloomfield, CT, using funding from the plaintiff."
The defendants allege that the plaintiff deceived and misled them concerning environmental and zoning issues concerning the property which rendered the property useless to them. They further allege that, "[a]s a result of the plaintiff’s misrepresentations, the defendants were unable to make use of the land purchased and also lost the potential sales from the proposed business." See counterclaims, ¶ 19. They further allege that they eventually lost the property due to foreclosure and suffered a deficiency judgment in excess of $ 70, 000.00.
In Count One, the defendants base their claim on fraud. In Count Two, they reallege the allegations of Count One and allege violation of CUTPA.
II
Standard of Review
The legal standard governing a motion to dismiss for lack of subject matter jurisdiction is well settled. "When a trial court decides a jurisdictional question raised by a pretrial motion to dismiss on the basis of the complaint alone, 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 ... In contrast, if the complaint is supplemented by undisputed facts established by affidavits submitted in support of the motion to dismiss ...; other types of undisputed evidence; ... and/or public records of which judicial notice may be taken; ... the trial court, in determining the jurisdictional issue, may consider these supplementary undisputed facts and need not conclusively presume the validity of the allegations of the complaint ... Rather, those allegations are tempered by the light shed on them by the [supplementary undisputed facts] ... If affidavits and/or other evidence submitted in support of a defendant’s motion to dismiss conclusively establish that jurisdiction is lacking, and the plaintiff fails to undermine this conclusion with counteraffidavits ... or other evidence, the trial court may dismiss the action without further proceedings ... If, however, the defendant submits either no proof to rebut the plaintiff’s jurisdictional allegations ... or only evidence that fails to call those allegations into question ...; the plaintiff need not supply counteraffidavits or other evidence to support the complaint, but may rest on the jurisdictional allegations therein ... Finally, where a jurisdictional determination is dependent on the resolution of a critical factual dispute, it cannot be decided on a motion to dismiss in the absence of an evidentiary hearing to establish jurisdictional facts ..." (Citations omitted; emphasis in original; footnote omitted; internal quotation marks omitted.) Conboy v. State, 292 Conn. 642, 651-52, 974 A.2d 669 (2009).
"The motion to dismiss ... admits all facts which are well pleaded, invokes the existing record and must be decided upon that alone." (Internal quotation marks omitted.) Cogswell v. American Transit Ins. Co., 282 Conn. 505, 516, 923 A.2d 638 (2007).
"Pursuant to the rules of practice, a motion to dismiss is the appropriate motion for raising a lack of subject matter jurisdiction." (Internal quotation marks omitted.) Mark v. Neundorf, 147 Conn.App. 485, 489, 83 A.3d 685 (2014). "Subject matter jurisdiction involves the authority of the court to adjudicate the type of controversy presented by the action before it ... [A] court lacks discretion to consider the merits of a case over which it is without jurisdiction ... The objection of want of jurisdiction may be made at any time ... [a]nd the court or tribunal may act on its own motion, and should do so when the lack of jurisdiction is called to its attention ... The requirement of subject matter jurisdiction cannot be waived by any party and can be raised at any stage in the proceedings." (Internal quotation marks omitted.) Frillici v. Westport, 264 Conn. 266, 280, 823 A.2d 1172 (2003). "It is well established that, in determining whether a court has subject matter jurisdiction, every presumption favoring jurisdiction should be indulged." (Internal quotation marks omitted.) Financial Consulting, LLC v. Commissioner of Insurance, 315 Conn. 196, 226, 105 A.3d 210 (2015).
III
Discussion
Windsor’s motion to dismiss attacks the court’s subject matter jurisdiction over both counts of the counterclaim. In challenging subject matter jurisdiction, Windsor first claims that the defendants do not have standing to bring the fraud and CUTPA claims asserted in counts one and two of their counterclaim. With respect to this point, Windsor argues that neither El-Hajj-Bey nor Reliable Mechanical purchased the property, as evidenced by a copy of a recorded warranty deed that is attached to its motion to dismiss as exhibit B, and, therefore, it is impossible for either of them to have been damaged by the alleged fraud of the plaintiff. Windsor further argues that, absent the alleged purchase of the property by the defendants, they could not have sustained damages from a conveyance of the property that was allegedly induced by fraud.
Contrary to the defendants’ assertion that a motion to strike is the only appropriate means of challenging standing to file a counterclaim, "[t]he issue of standing implicates subject matter jurisdiction and is therefore a basis for granting a motion to dismiss." (Internal quotation marks omitted.) Assn. Resources, Inc. v. Wall, 298 Conn. 145, 164, 2 A.3d 873 (2010). "Standing is the legal right to set judicial machinery in motion. One 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 ... When standing is put in issue, the question is whether the person whose standing is challenged is a proper party to request an adjudication of the issue ... Standing requires no more than a colorable claim of injury; a [party] ordinarily establishes ... standing by allegations of injury [that he or she has suffered or is likely to suffer]. Similarly, standing exists to attempt to vindicate arguably protected interests." (Internal quotation marks omitted.) Wilcox v. Webster Ins., Inc., 294 Conn. 206, 214, 982 A.2d 1053 (2009). "[I]t is the burden of 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." (Internal quotation marks omitted.; Assn. Resources, Inc. v. Wall, supra, 298 Conn. 164.
In this context, the defendants’ reliance on U.S. Bank Nat. Ass’n v. Sorrentino, 158 Conn.App. 84, 118 A.3d 607, cert. denied, 319 Conn . 951, 125 A.3d 530 (2015), is misplaced, since subject matter jurisdiction was not at issue there. See id., 158 Conn.App. 88 n.3.
"The question of standing is essentially one of aggrievement." Munhall v. Inland Wetlands Commission, 221 Conn. 46, 54, 602 A.2d 566 (1992). "Two broad yet distinct categories of aggrievement exist, classical and statutory." (Internal quotation marks omitted.) Pond View, LLC v. Planning & Zoning Commission, 288 Conn. 143, 156, 953 A.2d 1 (2008). "Classical aggrievement ... requires an analysis of the particular facts of the case in order to ascertain whether a party has been aggrieved ..." Fleet National Bank’s Appeal from Probate, 267 Conn. 229, 242 n.10, 837 A.2d 785 (2004).
By contrast, "[s]tatutory aggrievement exists by legislative fiat, not by judicial analysis of the particular facts of the case. In other words, in cases of statutory aggrievement, particular legislation grants standing to those who claim injury to an interest protected by that legislation." (Internal quotation marks omitted.) Id.
In the present case, the defendants have failed to demonstrate that they are either classically or statutorily aggrieved. Although the defendants assert a fraud claim— i.e., a common-law cause of action— and a CUTPA claim— i.e., a statutory cause of action— the gravamen of both claims, as alleged in their counterclaims, is identical: the defendants suffered alleged economic losses as a result of Windsor’s allegedly fraudulent behavior in inducing the purchase of the property .
Exhibit B to the plaintiff’s motion to dismiss, a copy of a recorded warranty deed, indicates, however, that a third party, RMC Properties, LLC, purchased the property, not the defendants. Thus, under the facts of the present case, the defendants are without a colorable claim of injury stemming from the plaintiff’s allegedly fraudulent conduct, and, therefore, they do not have standing to bring their counterclaims.
The defendants rely on General Statutes § 34-187(a), which was repealed effective July 1, 2017, and argue that since RMC Properties, LLC is a one-member Limited Liability Company of which El-Hajj-Bey is the sole member, he has standing, since a limited liability company may sue or be sued in its own name or through one of its members. The Appellate Court has explained that "[a] limited liability company is a distinct legal entity whose existence is separate from its members ... A limited liability company has the power to sue or to be sued in its own name; see General Statutes [Rev. to 2011] § § 34-124(b) and 34-186; or may be a party to an action brought in its name by a member or manager. See General Statutes [Rev. to 2011] § 34-187." (Internal quotation marks omitted.) Bongiorno v. Capone, 185 Conn.App. 176, 199, 196 A.3d 1212, cert. denied, 330 Conn. 943, 195 A.3d 1134 (2018).
"A member or manager ... may not sue in an individual capacity to recover for an injury based on a wrong to the limited liability company ... [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 ..." (Internal quotation marks omitted.) Id., 185 Conn.App. 199-200. Here, the object of the counterclaims is not 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.
"This court has repeatedly held that damages suffered by a limited liability company cannot be recovered by a member of the limited liability company bringing the case in an individual capacity." Id., 200. "In Padawer v. Yur, [ 142 Conn.App. 812, 818, 66 A.3d 931, cert. denied, 310 Conn. 927, 78 A.3d 146 (2013) ], we held that [a]lthough the plaintiff [was] the sole member of [the limited liability company], that [did] not impute ownership of the limited liability company’s assets to the plaintiff, and that the plaintiff’s position as the sole member [did] not provide him with standing to recover individually for harm to the limited liability company." (Internal quotation marks omitted.) Bongiorno v. Capone, supra, 185 Conn.App. 200-01.
"In O’Reilly v. Valletta, [ 139 Conn. 208, 216, 55 A.3d 583 (2012), cert. denied, 308 Conn. 914, 61 A.3d 1101 (2013) ], we held that the plaintiff lacked the requisite direct personal interest in the lease, the leased premises or the restaurant business conducted by his [limited liability] company on those premises to confer standing on him to complain of any breach of the lease or of any harm to the business resulting therefrom and, therefore, that [t]he claim should have been dismissed for lack of subject matter jurisdiction ..." Bongiorno v. Capone, supra, 185 Conn.App. 201.
Here, similarly, El-Hajj-Bey’s position as sole member of RMC Properties, LLC does not provide him with standing to recover individually for harm to it.
Under these circumstances, the court need not address the parties’ other arguments, concerning the statute of limitations and collateral estoppel.
For the reasons set forth above, the plaintiff’s motion to dismiss the defendants’ counterclaims is granted.