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Zuvic, Carr & Assocs., Inc. v. Morande Bros., Inc.

Appellate Court of Connecticut

May 19, 2015

ZUVIC, CARR & ASSOCIATES, INC.
v.
MORANDE BROTHERS, INC

Argued December 2, 2014.

Action to recover damages for breach of a settlement agreement brought to the Superior Court in the judicial district of Hartford, small claims session, where the matter was transferred to the judicial district of New Britain, regular civil docket; thereafter, the plaintiff filed an amended complaint; subsequently, the court, Pittman, J., granted the plaintiff's motion to cite in Robert J. Morande et al. as party defendants; thereafter, the matter was tried to the court, Cobb, J.; judgment in part for the plaintiff, from which the plaintiff appealed to this court.

Reversed in part; remanded.

SYLLABUS

The plaintiff, an environmental remediation company, sought to recover from the defendants M Co. and its director, R, the cost of certain unpaid invoices pursuant to a settlement agreement. The plaintiff and M Co. had entered into the settlement agreement to resolve a prior litigation. The settlement agreement stated that the plaintiff was obligated to provide future remediation services in the event that M Co.'s property was audited by the Department of Environmental Protection, and that M Co. was obligated to pay the plaintiff for providing those services. In May, 2011, the board of directors of M Co. voted to dissolve the corporation. In June, 2011, the department notified the plaintiff and M Co. that it was auditing M Co.'s property and, in accordance with the settlement agreement, the plaintiff provided the required services. Thereafter, the plaintiff sent M Co. invoices for the services provided in order to respond to the audit and a copy of the settlement agreement. When M Co. refused to pay the invoices, the plaintiff commenced an action in small claims court against M Co. for breach of the settlement agreement, seeking to recover the cost of the unpaid invoices. Subsequently, in December, 2011, the court granted M Co.'s motion to transfer the case to the regular docket of the Superior Court. In January, 2012, M Co. filed documents of corporate dissolution with the Secretary of the State. The court then granted the plaintiff's motion to cite in R as a party defendant. The plaintiff filed an amended complaint seeking to recover the cost of the unpaid invoices and alleging, inter alia, that M Co. had breached the settlement agreement, and that R was liable as a director of M Co. because, pursuant to statute (§ 33-887b [a]), R had a duty to discharge or make reasonable provision for the payment of claims against the dissolved corporation. The court rendered judgment in part for the plaintiff, concluding that M Co. had breached the settlement agreement but that R was not liable because § 33-887b (a) did not apply when the claim against the dissolved corporation had been disputed and was in litigation at the time of dissolution. The court awarded the plaintiff damages in the amount of the unpaid invoices, and, pursuant to statute (§ 52-251a), attorney's fees and costs for prevailing in a small claims matter that had been transferred to the regular docket of the Superior Court on the motion of M Co. The plaintiff appealed to this court, claiming that the trial court improperly determined that § 33-887b (a) did not apply when a claim is disputed and in litigation when a corporation is dissolved and, furthermore, that R failed to comply with the statutory mandate to pay or otherwise provide for the payment of claims against M Co. On appeal, R argued that he could not be held liable under § 33-887b (a) because the plaintiff did not prove that M Co. distributed assets to shareholders after it ceased operating and before addressing the plaintiff's claim for unpaid invoices.

Held :

1. The trial court erred in determining categorically that § 33-887b (a) did not apply when a claim is disputed and in litigation at the time a corporation is dissolved: the trial court's conclusion was erroneous in light of the plain language of the statute that requires a director of a dissolved corporation to make reasonable provisions for the payment of claims, as well as the court's findings that the plaintiff had commenced the small claims action in December, 2011, the documents of corporate dissolution were filed in January, 2012, and the claim at issue was disputed, in litigation, and had not be disposed of at the time of the dissolution; furthermore, R was not relieved of his duty to discharge or make reasonable provision for the payment of undisposed claims against M Co. because he did not satisfy § 33-887b (b), which precludes a director from being liable for claims against a dissolved corporation only if the director has complied with the relevant statutes for the disposal of such claims; moreover, R could not prevail on his claim that he was not personally liable under § 33-887b (a) because his unchallenged testimony established that M Co. did not distribute assets to shareholders after it ceased operations, as the trial court did not find that M Co. ceased operations as of that date and the date of corporate discontinuance is immaterial under the statute.

2. This court would not address R's claim that he is not liable for attorney's fees and costs pursuant to § 52-251a because M Co. was the party who transferred the action to the Superior Court and he was not cited in as a party until after the transfer, as the resolution of that claim was not necessary to decide the plaintiff's appeal, and R did not file a cross appeal.

Peter A. Ventre, for the appellant (plaintiff).

John C. Matulis, Jr., for the appellee (defendant Robert J. Morande).

Beach, Alvord and Pellegrino, Js. BEACH, J.

OPINION

Page 359

[157 Conn.App. 299] BEACH, J.

The primary issue in this matter concerns the duty of a director of a corporation to provide for the payment of the corporation's debts upon its dissolution. The plaintiff, Zuvic, Carr & Associates, Inc., appeals from the judgment of the trial court rendered in favor of the defendant Robert J. Morande.[1] The court found [157 Conn.App. 300] in favor of the plaintiff on its breach of contract claim as to Morande Brothers, Inc., but rejected the plaintiff's claim that the defendant individually breached his duty as a director of that corporation under General Statutes § 33-887b (a). The plaintiff claims that the court erred in determining that § 33-887b (a) did not apply in the circumstances of this case. We agree and, accordingly, reverse in part the judgment of the trial court.

The trial court found the following facts. " On January 10, 2011, the plaintiff and . . . Morande Brothers, Inc., executed a settlement agreement, resolving a civil action entitled Zuvic Associates v. Morande Bros., Inc., Docket No. HHB-CV-10-5015129-S (original action). Pursuant to the recitals in the settlement agreement, the original action involved claims arising out of two invoices for services provided by the plaintiff to . . . Morande Brothers, Inc., totaling approximately $19,000. The invoices pertained to environmental remediation, and other services, ...


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