Superior Court of Connecticut, Judicial District of New Haven, New Haven
MEMORANDUM OF DECISION OPPOSITION TO SUBJECT MATTER JURISDICTION (#111) MOTION TO SUBSTITUTE PARTY (#112)
Robin L. Wilson, J.
This action arises from a dispute between a member of a limited liability company. On March 13, 2014, the plaintiff, Richard Hender, acting in his capacity as an individual, commenced this action by service of process on the defendant, Paul Scarpa. On March 19, 2014, the plaintiff filed a one-count complaint alleging the following facts. The plaintiff and defendant were members of APEX Power Sports, LLC (APEX), with each party holding a 50% ownership interest therein. The defendant owed fiduciary obligations to APEX and its members. The parties operated a store, Apex Power Sports, which sold a wide variety of power vehicles, apparel, and accessories.
The plaintiff alleges that, in or about January 2012, the store closed and left behind a large amount of inventory belonging to APEX. Such inventory was left in the possession of the defendant, and remains so without the authorization of the members of APEX. The plaintiff additionally alleges that the defendant withdrew $80, 000 from APEX's bank account, closed that account, and then deposited the money into a personal account. The defendant has refused the plaintiff's demands for an accounting and return of either the inventory or money.
Based on these allegations, the plaintiff claims that the defendant has committed civil theft, violated APEX's operating agreement, and violated his fiduciary duty as a member of APEX.
On June 6, 2014, the defendant filed a motion to dismiss, which was denied because it was premised on the nonjoinder of a necessary party. Hender v. Scarpa, Superior Court, judicial district of New Haven, Docket No. CV-14-6045768-S (October 10, 2014, Nazzaro, J.) (#102.20) [59 Conn. L. Rptr. 114, 2014 Conn. Super. LEXIS 2591]. Following the court's decision, the defendant filed a motion to strike. (#108). On further review and research on the substantive issues raised in the motion to strike, this court determined that there may be an issue that implicates the court's subject matter jurisdiction. Therefore, the court ordered briefing and further argument from the parties on the question of whether a plaintiff has standing to bring a lawsuit in his individual capacity when the complaint alleges damages and injury not to the plaintiff, but to a limited liability company of which the plaintiff is a member. (#108.01).
On June 29, 2015, the defendant filed a supplemental brief in opposition to subject matter jurisdiction. The plaintiff did not file a supplemental brief addressing the question presented, but instead filed a motion to substitute party plaintiff, by which APEX would be substituted in as the party plaintiff. Argument concerning the above matters was heard at short calendar on July 13, 2015.
" [T]he plaintiff bears the burden of proving subject matter jurisdiction, whenever and however raised." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. New London, 265 Conn. 423, 430 n.12, 829 A.2d 801 (2003). " [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.) Electrical Contractors, Inc. v. Dept. of Education, 303 Conn. 402, 413-14, 35 A.3d 188 (2012). 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.) MacDermid, Inc. v. Leonetti, 310 Conn. 616, 626, 79 A.3d 60 (2013).
" When any action has been commenced in the name of the wrong person as plaintiff, the court may, if satisfied that it was so commenced through mistake, and that it is necessary for the determination of the real matter in dispute so to do, allow any other person to be substituted or added as plaintiff." General Statues § 52-109; Practice Book § 9-20. " [When] a motion to dismiss is filed on the ground that the plaintiff lacks standing, and the plaintiff quickly follows by filing a motion to substitute the correct party, the motion to substitute may be heard while the motion to dismiss is pending, notwithstanding the general rule that the subject matter jurisdictional issues raised by a motion to dismiss must be dealt with prior to other motions." (Internal quotation marks omitted.) Youngman v. Schiavone, 157 Conn.App. 55, 63, 115 A.3d 516 (2015).
MOTION TO SUBSTITUTE PARTY
" Under § 52-109, substitution is permitted only when the trial court determines that the action was commenced in the name of the wrong plaintiff 'through mistake, ' which properly has been interpreted to mean an honest conviction, entertained in good faith and not resulting from the plaintiff's own negligence that she is the proper person to commence the [action]." (Internal quotation marks omitted.) DiLieto v. County Obstetrics & Gynecology Group, P.C., 297 Conn. 105, 151, 998 A.2d 730 (2010). " The decision whether to grant a motion for the addition or substitution of a party to legal proceedings rests in the sound discretion of the trial court." (Internal quotation marks omitted.) Youngman v. Schiavone, supra, 157 Conn.App. 65.
In support of the motion to substitute, the plaintiff states that he brought the action as an individual while under the honest belief that APEX, because it had already been dissolved, did not have the ability to bring an action, and therefore was not the proper plaintiff. The plaintiff further believed that he had the authority to file suit individually as a member winding up the affairs of APEX per General Statutes § 34-208. The plaintiff argues that those beliefs were an " honest mistake, " arrived at because of a split of Superior Court authority regarding whether § 34-208 requires a suit be brought in the name of a limited liability company or permits it to be brought by an individual. Compare Stanziale v. Skiba, Superior Court, judicial district of Fairfield, Docket No. CV-04-0412495-S, 2008 Conn. Super. LEXIS 2138 (August 20, 2008, Arnold, J.) (action on behalf of dissolved limited liability company must be brought in name of limited liability company) with Rosinski v. The Frontier Group, Inc., Superior Court, judicial district of Litchfield, Docket No. CV-04-0092958-S (July 25, 2006, Pickard, J.) (41 Conn. L. Rptr. 705, 2006 Conn. Super. LEXIS 2311) (section 34-208 does not require suit to be in name of limited liability company). The plaintiff notes that in Stanziale, Judge Arnold declined to adopt the reasoning of Rosinski, but permitted a motion to substitute a limited liability company as the party plaintiff because the difference of opinion regarding the application of § 34-208 ...