Opinion
FSTCV166028562
10-19-2016
UNPUBLISHED OPINION
MEMORANDUM OF DECISION ON DEFENDANT'S MOTION TO DISMISS (NO. 103)
Hon. Charles T. Lee, J.
On May 9, 2016, Attorney Arik Brice Fetscher commenced this action on behalf of plaintiff 3CAN, LLC against Nicholas and Constance Manero, who is Attorney Fetscher's mother. The Maneros and Attorney Fetscher are the members of 3CAN, LLC. The Maneros are also involved in a pending marital dissolution proceeding, FST FA 13 4024800. In the present action, Attorney Fetscher on behalf of 3CAN seeks money damages against Mr. Manero for his alleged failure to pay property taxes due on property owned by 3CAN.
On June 23, 2016, Mr. Manero filed a motion to dismiss the complaint for lack of subject matter jurisdiction, claiming, among other things, that 3CAN lacked standing to bring the action because it was not properly authorized by its members (No. 103). Attorney Fetscher filed a memorandum in opposition on July 5, 2016 with supporting exhibits (Nos. 104-07). The court heard the motion at short calendar on August 8, 2016, and denied it without prejudice by order dated August 17, 2016 (No. 103.01), having found that a resolution of the motion was intertwined with a resolution on the merits.
On August 28, 2016, Mr. Manero filed a motion to strike (No. 110) with supporting memorandum (No. 111). Ms. Manero, who is self-represented, filed a motion for order on August 30, 2016 (No. 112), and Attorney Fetscher filed a memorandum in opposition on September 6, 2016 (No. 113). The motion was heard at short calendar on October 11, 2016. After reviewing the parties' filings and during argument, the court sua sponte indicated that it would revisit the motion to dismiss for lack of summary judgment. As more fully set forth below, the court denies the motion to dismiss and will rule on the motion to strike in subsequent decision.
Findings of Fact
Upon a review of the record, including the pleadings and exhibits, the court makes the following findings:
1. 3CAN, LLC is a Connecticut limited liability company. Its three members are Nicholas Manero, Constance Manero and Arik Fetscher.
2. The Operating Agreement of 3CAN was signed by its three members on July 24, 2000 and August 4, 2000. Paragraph 4 of the Agreement provides that the members may elect a manager to operate and manage the affairs of the company. Paragraph 4 also provides that, " A majority vote of the members shall be required to decide any matter connected with the business of [sic] affairs of the company."
3. Paragraph 8 of the Agreement provides that the three members each have one-third interest in the company. Paragraph 11 (Dissociation) essentially repeats the language of General Statutes Section 34-180 (Events of dissociation) and provides, in pertinent part, " A person ceases to be a member of the company upon the occurrence of one or more of the following events: . . . (5) [the member] files a petition or answer seeking for himself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statue, law or regulation . . ."
4. Mr. and Mrs. Manero are engaged in marital dissolution proceedings pending in Stamford family court, commenced on or about March 5, 2013. Attorney Fetscher's attempt to intervene in those proceedings was denied, and he was disqualified from representing his mother by decision of the court dated January 12, 2015 (Colin, J.).
5. The present action of 3CAN seeks money damages against Nicholas Manero for failure to pay real estate taxes on property the LLC owns on the island of St. Martin in the Caribbean, as well as other relief, including the recovery of attorneys fees. The action was commenced on or about May 13, 2016 by Attorney Fetscher without a vote of the members.
6. The summons in this action was signed by Attorney Fetscher in two places, but the line for signature by a Commissioner of the Superior Court or an Assistant Clerk was left blank.
Contentions of the Parties
In his motion to dismiss, Mr. Manero contends that the LLC lacks standing because the action was not properly authorized by its members, as only Attorney Fetscher authorized its filing. Secondly, Mr. Manero contends that personal jurisdiction over the defendants is lacking because the summons was not signed by a commissioner of the Superior Court.
Attorney Fetscher, on behalf of the LLC, contends that the pendency of the marital dissolution proceedings between Mr. and Mrs. Manero constitutes a dissolution within the meaning of General Statutes Section 34-180 and that they have been disassociated as members of the LLC. Accordingly, Attorney Fetscher claims that he is the only remaining member of the LLC, and may properly authorize suit by the LLC. As to the challenge to personal jurisdiction, Attorney Fetscher claims that he, an attorney admitted to practice in Connecticut, signed the summons in two places, which should be sufficient.
Discussion
A. Subject Matter Jurisdiction
Connecticut General Statutes Section 34-187 (Authority to sue on behalf of limited liability company) regulates how suit may be brought in the name of a limited liability corporation such as 3CAN. It provides:
(a) Except as otherwise provided in an operating agreement, suit on behalf of the limited liability company may be brought in the name of the limited liability company by: (1) Any member or members of a limited liability company, whether or not the articles of organization vest management of the limited liability company in one or more managers, who are authorized to sue by the vote of a majority in interest of the members, unless the vote of all members shall be required pursuant to subsection (b) of section 34-142; or (2) any manager or managers of a limited liability company, if the articles of organization vest management of the limited liability company in one or more managers, who are authorized to sue by the vote required pursuant to section 34-142.
(b) In determining the vote required under section 34-142 for purposes of this section, the vote of any member or manager who has an interest in the outcome of the suit that is adverse to the interest of the limited liability company shall be excluded.
As mentioned above, the Operating Agreement of 3CAN provides, at Paragraph 4, that, " A majority vote of the members shall be required to decide any matter connected with the business of [sic] affairs of the company." As only Attorney Fetscher has authorized this litigation, it would appear to be unauthorized because neither Mr. Manero nor Mrs. Manero voted to authorize it, and Attorney Fetscher has only a one-third interest.
Attorney Fetscher contends, however, that the Maneros have lost their membership or, more formally, have been disassociated by reason of the pending dissolution of the marriage. He points to the use of the word " dissolution" in General Statutes Section 34-180(a)(4)(D), which mirrors the language in the Operating Agreement. Section 34-180(a) provides:
While not material to this decision, the court notes that this section and Section 34-187 were repealed prospectively by passage of the Uniform Limited Liability Company Act, effective July 1, 2017, see 2016 P.A. 16-97, Section 110.
(a) Subject to subsection (b) of section 34-173, a person ceases to be a member of a limited liability company upon the occurrence of one or more of the following events: . . . (4) unless otherwise provided in writing in the operating agreement or by written consent of all members at the time, the member (A) makes an assignment for the benefit of creditors, (B) files a voluntary petition in bankruptcy, (C) is adjudicated a bankrupt or insolvent, (D) files a petition or answer seeking for himself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation . . .
Relying on the use of the word " dissolution" and the reference to " any statute, law or regulation, " plaintiff claims that marital dissolution must trigger disassociation under the LLC law.
The court disagrees. First, the statute speaks of " similar relief" under another statute, having followed a list of corporate actions such as " reorganization, arrangement, composition, readjustment, liquidation, dissolution, " which are associated with insolvency. Marital dissolution is associated with personal divorce, which is entirely different. Applying the canons of construction of euisdem generis (" of the same kind or class") and noscitur a sociis (" it is known by associates"), 34-180(a)(4)(D) refers to a corporate dissolution and not to marital divorce proceedings.
Black's Law Dictionary, Eighth Edition (2004), defines eiusdem generis as " A canon of construction that, when a general word or phrase follows a list of specifics, the general word or phrase will be interpreted to include only items of the same type as those listed." The same source defines noscitur a sociis as " A canon of construction holding that the meaning of an unclear word or phrase should be determined by the words immediately surrounding it."
Second, recent controlling authority is contrary to plaintiff's contention. In Styslinger v. Brewster Park, LLC, 321 Conn. 312, 314, 138 A.3d 257 (2016), an ex-wife assigned her membership interest to the plaintiff, her former spouse, as part of a marriage dissolution agreement. The court held that the ex-wife " remains a member of the [LLC] unless and until the plaintiff is admitted to membership by . . . the other member of [the LLC]." The court held that " none of the events of dissolution specified in § 34-206 has occurred, " and the plaintiff-assignee did not have standing to bring an action on behalf of the LLC. Id., 321 Conn. at 320. Explicit in this holding is the finding that a marital dissolution does not disassociate a spouse from an LLC.
However, this conclusion does not end the inquiry into the LLC's standing to bring suit. At argument, Attorney Fetscher contended that Mr. Manero would be barred from voting on whether the LLC should bring suit against him because he has an interest in the lawsuit adverse to that of the LLC, within the meaning of General Statutes Section 34-187(b). (Authority to sue on behalf of limited liability company).
Plaintiff is correct in this contention. As set forth above, Section 34-187(b) provides,
(b) In determining the vote required under section 34-142 for purposes of this section, the vote of any member or manager who has an interest in the outcome of the suit that is adverse to the interest of the limited liability company shall be excluded.
Because the present suit seeks to recover from Mr. Manero on behalf of the LLC, he would be excluded from voting on whether to bring the case.
Mrs. Manero presents another question. While she is a nominal defendant, the suit does not seek any relief against her. Nevertheless, controlling authority has held that the adverse interest of an LLC member will be imputed to another member who is the first member's spouse. In 418 Meadow Street Associates, LLC v. Clean Air Partners, LLC, 304 Conn. 820, 834-35, 43 A.3d 607 (2012), our supreme court held,
Under § 34-187(b), the default rule is that a member will be ascribed the interests of his or her spouse. Thus, a member's vote to bring or not to bring a lawsuit will be excluded when the limited liability company's interest in the outcome of the lawsuit is adverse, or contrary to, the interest of that member or the interest of that member's spouse. Of course, organizers and members can always elect to proceed differently by drafting or amending the limited liability company s operating agreement so as to allow a member's vote to be included even when his or her spouse's interest may conflict with the company's interest. See General Statutes § 34-187(a) (" [e]xcept as otherwise provided in an operating agreement"). Thus, even though we read § 34-187(b) as categorically disqualifying a member's vote when his or her spouse has an interest in the outcome of a lawsuit that is adverse to the limited liability company's interest, members can always elect whether they want to be bound by that statute.
For that reason, we envision no situation in which this categorical rule would have an inequitable effect on a limited liability company's operation, and, therefore, it will not lead to an unworkable result. Cf. General Statutes § 1-2z. A categorical rule is preferable to the alternative because limited liability company members will be aware from the outset whether their votes may be excluded because of a spouse's interest. It avoids any need to determine the nature of the relationship between the member and his or her spouse (e.g., the extent to which they share in each other's financial gains and losses), and the nature of the relationship between the spouse and the defendant company (e.g., whether the spouse holds a sufficient interest in the company). Simply put, such a rule prevents unnecessary debate, which likely may lead to litigation among members as to whether their votes should be counted.
II
Because the Operating Agreement does not discuss the issue of whether an adverse interest of a member should be imputed to the member's spouse, the default rule, as stated in 418 Meadow St. Associates, LLC, is in effect. As a result, the vote of Mrs. Manero would also not be counted, provided she remains Mr. Manero's spouse.
The court may take notice of the docket in the Maneros' pending dissolution case and finds that no order of dissolution has been entered, apparently because proceedings have been held in abeyance because of Mr. Manero's ill health. As a result, Mr. and Mrs. Manero remain married. Mrs. Manero's vote cannot be considered on this issue, and Attorney Fetscher is the only member authorized to vote on the authorization of this suit. By his actions, he has authorized the litigation, and the motion to dismiss for lack of subject matter jurisdiction, as of now, must be denied.
B. Personal Jurisdiction
The defendant also claims that the court lacks personal jurisdiction because the summons was not signed by a Commissioner of the Superior Court. However, he concedes that Arik Fletscher is an attorney licensed to practice in Connecticut. An inspection of the summons reveals that Attorney Fletscher signed the summons twice: once for entry of his appearance and also at the bottom certifying that he has read and understands the notice provisions of the summons. While it is correct that he did not also sign the summons in the box provided for the signature of a Commissioner of the Superior Court or an Assistant Clerk, the court does not believe that this mistake deprives it of personal jurisdiction.
In Boyles v. Preston, 68 Conn.App. 596, 603-04, 792 A.2d 878, cert. denied, 261 Conn. 901, 802 A.2d 853 (2002) the Appellate Court upheld the refusal to dismiss an action in similar circumstances, where the summons was allegedly not properly signed by counsel. The court stated:
General Statutes § 52-123 provides that " [n]o writ, pleading, judgment or any kind of proceeding in court or course of justice shall be abated, suspended, set aside or reversed for any kind of circumstantial errors, mistakes or defects, if the person and the cause may be rightly understood and intended by the court." Section 52-123 is used to provide relief from defects found in the text of the writ itself. Rogozinski v. American Food Service Equipment Corp., 211 Conn. 431, 434-35, 559 A.2d 1110 (1989). " It is not the policy of our courts to interpret rules and statutes in so strict a manner as to deny a litigant the pursuit of its complaint for mere circumstantial defects . . . Indeed, § 52-123 of the General Statutes protects against just such consequences, by providing that no proceeding shall be abated for circumstantial errors so long as there is sufficient notice to the parties." (Citations omitted.) Hartford National Bank & Trust Co. v. Tucker, 178 Conn. 472, 477-78, 423 A.2d 141 (1979), cert. denied, 445 U.S. 904, 100 S.Ct. 1079, 63 L.Ed.2d 319 (1980). It is our expressed policy preference " to bring about a trial on the merits of a dispute whenever possible and to secure for the litigant his day in court . . . The design of the rules of practice is both to facilitate business and to advance justice; they will be interpreted liberally in any case where it shall be manifest that a strict adherence to them will work surprise or injustice . . . Our practice does not favor the termination of proceedings without a determination of the merits of the controversy where that can be brought about with due regard to necessary rules of procedure." (Citations omitted; internal quotation marks omitted.) Coppola v. Coppola, 243 Conn. 657, 665, 707 A.2d 281 (1998).
Applying these principles to the facts in the case before it, the Appellate Court continued,
The defendant also asserts that the summons was fatally defective because it lacked the proper direction to the process server as to the nature of the documents to be served. That claim is without merit. Practice Book § 8-1(a) provides in relevant part that [m]esne process . . . shall be a writ of summons describing the parties, the court to which it is returnable and the time and place of appearance, and shall be accompanied by the plaintiff's complaint. Such writ shall be signed by a commissioner of the superior court . . . [T]he writ of summons shall be on a form substantially in compliance with . . . [Form 103.1 (JD-CV-1)] . . ." See also General Statutes § 52-45a. " [A] writ of summons is a statutory prerequisite to the commencement of a civil action . . . [I]t is an essential element to the validity of the jurisdiction of the court . . . [T]he writ of summons need not be technically perfect, and need not conform exactly to the form set out in the Practice Book . . ." (Citations omitted.) Hillman v. Greenwich, 217 Conn. 520, 526, 587 A.2d 99 (1991). " A writ must contain a direction to a proper officer for service and a command to summon the defendant to appear in court." General Motors Acceptance Corp. v. Pumphrey, 13 Conn.App. 223, 228, 535 A.2d 396 (1988).
Despite the defendant's claim to the contrary, the writ properly directs the serving officer to serve the defendant with the summons and attached complaint. As previously discussed, as long as the process served on the defendant comports with the basic statutory requirements, a circumstantial defect will not deprive the court of jurisdiction. See Hillman v. Greenwich, supra, 217 Conn. at 527, 587 A.2d 99.Id., 68 Conn.App. at 605-06.
In the present case, the summons was not technically perfect. However, plaintiff used the proper form (JD-CV-1) available on the Judicial website. The summons described the parties, the court to which it was returnable, the time and place of appearance, and was accompanied by the complaint. It also contained a direction to a proper officer for service. Accordingly, the summons comported with the basic statutory requirements sufficiently so that any circumstantial defects therein will not deprive the court of personal jurisdiction over the defendant.
CONCLUSION
As a result of the foregoing, defendant's motion to dismiss, for lack of subject matter jurisdiction or personal jurisdiction, is denied.