Opinion
No. H-1301, Docket No. 7276
April 24, 2006
MEMORANDUM OF DECISION DEFENDANTS' MOTION FOR SUMMARY JUDGMENT
FACTS
On or about November 21, 2005, the plaintiff filed the Fourth Amended Complaint alleging the following counts: (1) Declaratory Judgment, (2) Breach of Contract, (3) Unlawful Eviction, (4) Breach of Covenant of Quiet Enjoyment, (5) Intentional Misrepresentation, (6) Negligent Misrepresentation, (7) Violation of C.G.S. Sec. 47a-7, (8) Breach of Fiduciary Duty, (9) Statutory Theft, (10) Conversion, (11) Negligent Infliction of Emotional Distress, and (12) Negligence. The plaintiff seeks to pierce the corporate veil of K K of Hartford, LLC, hereinafter ("K K"), for the purpose of reaching the assets of the individual defendants, Karl Aziz and Kathryn Taleriko, hereinafter ("the defendants").
The defendants now move for summary judgment on the complaint on the grounds that there is no dispute of material fact as to the following issues: (1) the lessor of the subject premises under the lease is K K, and is not the defendants; (2) the defendants are not a party to the lease nor did they enter into any contract with the plaintiff; (3) the defendants' conduct in relation to the plaintiff was as the managing members of the lessor corporation; and (4) the defendants did not commit an intentional tort against the plaintiff.
At the motion hearing on February 1, 2006, the defendants stated that they were no longer pursuing summary judgment on the ninth count, Statutory Theft, because the plaintiff had presented an issue of material fact. Accordingly, the Motion for Summary Judgment is denied as to the ninth count.
As to the tenth count, Conversion, the plaintiff contends that the defendants, without authorization, assumed and exercised ownership of the plaintiff's furniture and security deposit to the exclusion of the plaintiff. "The tort of [c]onversion occurs when one, without authorization, assumes and exercises ownership over property belonging to another, to the exclusion of the owner's rights." (Emphasis in original; internal quotation marks omitted.) Hi-Ho Tower, Inc. v. Com-Tronics, Inc., 255 Conn. 20, 43, 761 A.2d 1268 (2000). "[C]onversion is an unauthorized assumption and exercise of the right of ownership over goods belonging to another, to the exclusion of the owner's rights. . . . In addition, conversion requires that the owner be harmed as a result of the unauthorized act. . . . Conversion may arise subsequent to an initial rightful possession. . . . Conversion can be distinguished from statutory theft as established by § 53a-119 in two ways. First, statutory theft requires an intent to deprive another of his property; second, conversion requires the owner to be harmed by a defendant's conduct. Therefore, statutory theft requires a plaintiff to prove the additional element of intent over and above what he or she must demonstrate to prove conversion." (Citations omitted; internal quotation marks omitted.) Suarez-Negrete v. Trotta, 47 Conn. App. 517, 521, 705 A.2d 215 (1998). Given the defendants' concession on the statutory theft count, the court finds that there is a genuine issue of material fact; therefore, the Motion for Summary Judgment is denied as to the tenth count.
For the past several years, the plaintiff has operated a restaurant at the premises under a written lease. On or about November 18, 2003, K K purchased the property. On or about December 9, 2004, the plaintiff and K K executed a new lease agreement. The defendants, as managing members, handled the day-to-day activities of K K, including negotiating and enforcing the terms of the lease. After the new lease was signed, the plaintiff began to make renovations to the premises. This case results from the parties' dispute regarding the renovations and the lease terms. On or about April 26, 2005, K K conveyed the property to GLJ Properties, the current landlord.
DISCUSSION
"Practice Book § 17-49 provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party. . . . The party moving for summary judgment has the burden of showing the absence of any genuine issue of material fact and that the party is, therefore, entitled to judgment as a matter of law. . . ." (Citations omitted, internal quotation marks omitted) Cogan v. Manhattan Auto Financial, 276 Conn. 1, 6-7, 882 A.2d 597 (2005)
"`In ruling on a motion for summary judgment, the court's function is not to decide issues of material fact, but rather to determine whether any such issues exist.' Nolan v. Borkowski, 206 Conn. 495, 500, 538 A.2d 1031 (1988). `As the party moving for summary judgment, the [movant] is required to support its motion with supporting documentation, including affidavits.' Heyman Associates No. 1 v. Insurance Co. of Pennsylvania, 231 Conn. 756, 796, 653 A.2d 122 (1995). `[T]he party opposing . . . a motion [for summary judgment] must provide an evidentiary foundation to demonstrate the existence of a genuine issue of material fact.' (Internal quotation marks omitted.) Schilberg Integrated Metals Corp. v. Continental Casualty Co., 263 Conn. 245, 252, 819 A.2d 773 (2003). `It is not enough . . . for the opposing party merely to assert the existence of . . . a disputed issue. Mere assertions of fact . . . are insufficient to establish the existence of a material fact and, therefore, cannot refute evidence properly presented to the court [in support of a motion for summary judgment].' (Internal quotation marks omitted.) Id., 252-53. "Only evidence that would be admissible at trial may be used to support or oppose a motion for summary judgment." (Internal quotation marks omitted.) Great Country Bank v. Pastore, 241 Conn. 423, 436, 696 A.2d 1254 (1997), citing Practice Book § 17-46." Bowen v. 707 On Main, Superior Court, judicial district of New Haven at Meriden, Docket No. CV02 0282643 (Tanzer, J.; February 24, 2004) ( 2004 Ct. Sup. 2224, 2225-2226.)
"A `genuine' issue has been variously described as a `triable,' `substantial' or `real' issue of fact; . . .; and has been defined as one which can be maintained by substantial evidence. . . . Hence, the `genuine issue' aspect of summary judgment procedure requires the parties to bring forward before trial evidentiary facts, or substantial evidence outside the pleadings, from which the material facts alleged in the pleadings can warrantably be inferred. . . . A `material' fact has been defined adequately and simply as a fact which will make a difference in the result of the case. . . . `Issue of fact' encompasses not only evidentiary facts in issue but also questions as to how the trier would characterize such evidentiary facts and what inferences and conclusions it would draw from them. . . . The test of the requirement for the granting of a summary judgment that the moving party be entitled to judgment as a matter of law is resolved by applying to the established facts the same criteria as used in determining whether a party would be entitled to a directed verdict on the same facts. . . . [A] summary disposition . . . should be on evidence which a jury would not be at liberty to disbelieve and which would require a directed verdict for the moving party. . . . In Connecticut, a directed verdict may be rendered only where, on the evidence viewed in the light most favorable to the nonmovant, the trier of fact could not reasonably reach any other conclusion than that embodied in the verdict as directed. . . ." (Citations omitted; internal quotation marks omitted.) United Oil Company v. Urban Redevelopment Commission, 158 Conn. 364, 378-79, 260 A.2d 596 (1969). A "material" fact has also been described as "one that would alter the outcome of the case. . . ." (Citations omitted.) Southbridge Associates, LLC v. Garofalo, 53 Conn. App. 11, 14, 728 A.2d 1114 (1999).
"Generally speaking, summary judgment procedure is an attempt to dispose of cases involving sham or frivolous issues in a manner which is speedier and less expensive for all concerned than a full-dress trial. . . . It is, however, apt to be ill adapted to cases of a complex nature or to those involving important public issues, which often need the full exploration of trial. . . . It is also well recognized that summary judgment procedure is particularly inappropriate where the inferences which the parties seek to have drawn deal with questions of motive, intent and subjective feelings and reactions. . . . It is only when the witnesses are present and subject to cross-examination that their credibility and the weight to be given to their testimony can be appraised." (Citations omitted; internal quotation marks omitted.) United Oil Co. v. Urban Redevelopment Commission, supra, 158 Conn. 375-76.
The defendants move for summary judgment on the ground that since they were not parties to the lease, there exists no genuine issue of material fact as to their personal liability; therefore, they are entitled to judgment as a matter of law. As managing members of K K, they argue that they cannot be held personally liable in their individual capacities for any judgment against K K.
"A lease is a contract. In its construction, three elementary principles must be kept constantly in mind: (1) the intention of the parties is controlling and must be gathered from the language of the lease in the light of the circumstances surrounding the parties at the execution of the instrument; (2) the language must be given its ordinary meaning unless a technical or special meaning is clearly intended; (3) the lease must be construed as a whole and in such a manner as to give effect to every provision, if reasonably possible." Hatcho Corp. v. Della Pietra, 195 Conn. 18, 20, 485 A.2d 1285 (1985). See Peter-Michael, Inc. v. Sea Shell Associates, 244 Conn. 269, 275, 709 A.2d 558 (1998). "[A]n unexpressed intent is of no significance. . . . The controlling factor is the intent expressed in the lease, not the intent which the parties may have had or which the court believes they ought to have had." (Citation omitted.) Ingalls v. Roger Smith Hotels Corp., 143 Conn. 1, 6, 118 A.2d 463 (1955).
"A court will not torture words to import ambiguity where the ordinary meaning leaves no room for ambiguity. . . . Similarly, any ambiguity . . . must emanate from the language used in the contract rather than from one party's subjective perception of the terms. . . . Moreover, [t]he mere fact that the parties advance different interpretations of the language in question does not necessitate a conclusion that the language is ambiguous. . . . If the language of the contract is susceptible to more than one reasonable interpretation, the contract is ambiguous. . . . By contrast, language is unambiguous when it has a definite and precise meaning . . . concerning which there is no reasonable basis for a difference of opinion." (Citation omitted; internal quotation marks omitted.) Goldberg v. Hartford Fire Ins. Co., 269 Conn. 550, 559, 849 A.2d 368 (2004). "When the plain meaning and intent of the language is clear, a clause in a written lease cannot be enlarged by construction. There is no room for construction where the terms of a writing are plain and unambiguous, and it is to be given effect according to its language." Collins v. Sears, Roebuck Co., 164 Conn. 369, 373-74, 321 A.2d 444 (1973). "If the language is ambiguous, the construction which favors the lessee should be adopted." Perruccio v. Allen, 156 Conn. 282, 285, 240 A.2d 912 (1968).
In Connecticut Properties Tri-Town Plaza, LLC v. Seymour Cinema, Inc., 84 Conn. App. 569, 579, 854 A.2d 756 (2004), the court construed the ambiguous clause in favor of the draftsman. The court stated: "The plaintiff claims that the trial court erroneously found that the plaintiff was the draftsman of the lease. The plaintiff does not dispute the proposition that, having found the lease to be ambiguous, the court had the authority to construe ambiguities in favor of the defendant. Rund v. Melillo, 63 Conn. App. 216, 222, 772 A.2d 774 (2001). The plaintiff does dispute the court's factual finding that the plaintiff was the draftsman in this case." Id., 579.
The written lease agreement in question is clear and unambiguous as to who the contracting parties are. See Gelinas v. Fuss, Superior Court, judicial district of Windham, Docket No. CV 030070629 (Foley, J.; March 19, 2004) ( 2004 Ct. Sup. 4318). The first paragraph of the lease states that this is an agreement "by and between `KK OF HARTFORD, LLC' and having its address as: P.O. Box 19379, Johnston, RI 02919-0379, as LESSOR, and `MENASSIE WOLDEYOHANES' and having his address as 232 Farmington Ave., E-7, Hartford, CT. 06105, as LESSEE." Moreover, on December 9, 2004, KK acknowledged receipt of the plaintiff's security deposit.
K K is a limited liability corporation. The defendants are managing members of K K. A limited liability company is a form of business that combines the limited liability characteristics of corporations with the tax status of partnerships. A member or manager of a limited liability corporation may only be held liable for the company's debt and obligations under specific circumstances.
General Statutes Sec. 34-134 states in relevant part: "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." General Statutes Sec. 34-133 (a) provides in relevant part: "Except as provided in subsection (b) of this section, a person who is a member or manager of a limited liability company is not liable, solely by reason of being a member or manager, under a judgment, decree or order of a court, or in any other manner, for a debt, obligation or liability of the limited liability company, whether arising in contract, tort or otherwise or for the acts or omissions of any other member, manager, agent or employee of the limited liability company." General Statutes Sec. 34-141 (a) states in relevant part: "A member or manager shall discharge his duties under section 34-140 and the operating agreement, in good faith, with the care an ordinary prudent person in a like position would exercise under similar circumstances, and in the manner he reasonably believes to be in the best interests of the limited liability company, and shall not be liable for any action taken as a member or manager, or any failure to take such action, if he performs such duties in compliance with the provisions of this section."
The plaintiff argues that based on the doctrine of piercing the corporate veil, it is proper to disregard the statutory protections given to members of limited liability companies and hold the defendants personally liable for their misrepresentations.
"To hold a member of the limited liability company liable for the company's alleged breach of contract, some additional factors must be `proven to provide a factual basis for circumventing the statutory protection against individual liability, i.e., to pierce the corporate veil.' (Internal quotation marks omitted.) McGovern Capital v. Papic, Superior Court, judicial district of Stamford/Norwalk at Stamford, Docket No. CV 02 0190931 (May 21, 2003, Adams, J.). Courts `may disregard the fiction of a separate legal entity to pierce the shield of immunity afforded by the corporate structure in a situation in which the corporate entity is so controlled and dominated that justice requires liability to be imposed on the real actor.' (Internal quotation marks omitted.) Mountview Plaza, Inc. v. World Wide Pet Supply, Inc., 76 Conn. App. 627, 632-33 (2003). `The principle of piercing the corporate veil, `also is applicable to limited liability companies and their members. General Statutes § 34-133.' Litchfield Asset Management Corp. v. Howell, 70 Conn. App. 133, 147, cert. denied, 261 Conn 911 (2002). `[T]he determination of whether to pierce the corporate veil . . . to disregard the protections afforded a limited liability company requires the same analysis [as that of a corporate entity].' KLM Industries, Inc. v. Tylutki, 75 Conn. App. 27, 28 n. 2, cert. denied, 263 Conn. 916 (2003)." Bowen v. 707 On Main, supra, 2004 Ct. Sup. 2229-2227.
"When determining whether piercing the corporate veil is proper, our [courts have] endorsed two tests: the instrumentality test and the identity test. The instrumentality rule requires . . . proof of three elements: (1) Control, not merely majority or complete stock control, but complete domination, not only of finances but of policy and business in respect to the transaction attacked so that the corporate entity as to this transaction had at the time no separate mind, will or existence of its own; (2) that such control must have been used by the defendant to commit fraud or wrong, to perpetuate the violation of a statutory or other positive legal duty, or a dishonest or unjust act in contravention of the plaintiff's legal rights; and (3) that the aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of." (Internal quotation marks omitted; citation omitted.) Mountainview Plaza, Inc. v. World Wide Pet Supply, Inc., 76 Conn. App. 627, 633-34, 820 A.2d 1105 (2003). "The identity rule has been stated as follows: If a plaintiff can show that there was such a unity of interest and ownership that the independence of the corporations had in effect ceased or had never begun, an adherence to the fiction of separate identity would serve only to defeat justice and equity by permitting the economic entity to escape liability arising out of an operation conducted by one corporation for the benefit of the whole enterprise." (Internal quotation marks omitted.) Litchfield Asset Management Corp. v. Howell, 70 Conn. App. 133, 156, 799 A.2d 298 (2002).
"`The concept of piercing the corporate veil is equitable in nature and courts should pierce [it] only under exceptional circumstances.' (Internal quotation marks omitted.) Hershey v. Lonrho, 73 Conn. App. 78, 87 (2002). Such exceptional circumstances would include instances `where the corporation is a mere shell, serving no legitimate purpose, and used primarily as an intermediary to perpetuate fraud or promote injustice.' (Internal quotation marks omitted.) SFA Folio Collections, Inc. v. Bannon, 217 Conn. 220, 230, cert. denied, 501 U.S. 1223, 111 S.Ct. 2839, 115 L.Ed.2d 1008 (1991). . . . `No hard and fast rule, however, as to the conditions under which the entity may be disregarded can be stated as they vary according to the circumstances of each case.' (Internal quotation marks omitted.) Angelos Tomasso v. Armor Construction Paving, Inc., 187 Conn. 544, 555-56 (1982). The `issue of whether the corporate veil [should be] pierced presents a question of fact.' (Internal quotation marks omitted.) Litchfield Asset Management Corp. v. Howell, supra, 148. `The complaint, however, must contain sufficient factual allegations for a court to pierce the corporate veil.' Mazzella v. Reed, Superior Court, complex litigation docket at Stamford, Docket No. X05 CV 02 0190929 (August 14, 2003, Rogers, J.)." Bowen v. 707 On Main, supra, 2004 Ct. Sup. 2227-2228.
After viewing the pleadings, affidavits and exhibits before the court in a light most favorable to the plaintiff, the court finds that the defendants have satisfied their burden of showing the absence of any genuine issue of material fact as to their liability as individuals. There is no genuine issue of material fact as to the following: the defendants acted at all relevant times as managing members of the LLC, not as individuals; they did not have contractual obligations to the plaintiff; they did not act in any way outside the scope of their capacities as managing members; and the individual defendants did not commit any torts against the plaintiff. The plaintiff has failed to submit any evidence establishing the existence of any disputed fact as to the defendants' personal liability.
The plaintiff has neither pleaded a sufficient factual basis for piercing the corporate veil nor put forth an evidentiary foundation as required by the Practice Book §§ 17-45 and 17-46 to withstand summary judgment on this basis. For the above-stated reasons, the defendants' motion for summary judgment is granted as to the remaining counts in regards to the defendants' personal liability.