Crown Milford, LLC v. Jackson Law Group, LLC

Crown Milford, LLC v. Jackson Law Group, LLC

No. AANCV156017933S

Superior Court of Connecticut, Judicial District of Ansonia-Milford, Milford

November 1, 2017

UNPUBLISHED OPINION

Filed November 2, 2017

RULING ON PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

Peter L. Brown, J.

The issue in the present case is whether the plaintiff is entitled to summary judgment on the ground that there is no genuine issue of material fact as to whether the defendant Jackson Law Group CT, LLC (Jackson CT), is a mere continuation of The Jackson Law Group, LLC (Jackson Law), and can thus be held liable under a theory of successor liability for a breach of contract. More specifically, the issue is whether the defendant is liable for its breach of a lease agreement with the plaintiff, Crown Milford, LLC. The plaintiff filed a motion for summary judgment, as to liability only, along with a memorandum of law and exhibits.^[1] Thereafter, the defendant filed an objection to the motion, and did not include any exhibits. The court heard the matter at short calendar on September 18 2017.

" In seeking summary judgment, it is the movant who has the burden of showing the nonexistence of any issue of fact. The courts are in entire agreement that the moving party for summary judgment has the burden of showing the absence of any genuine issue as to all the material facts, which, under applicable principles of substantive law, entitle him to a judgment as a matter of law. The courts hold the movant to a strict standard. To satisfy his burden the movant must make a showing that it is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact . . . As the burden of proof is on the movant, the evidence must be viewed in the light most favorable to the opponent . . . When documents submitted in support of a motion for summary judgment fail to establish that there is no genuine issue of material fact, the nonmoving party has no obligation to submit documents establishing the existence of such an issue . . . Once the moving party has met its burden, however, the opposing party must present evidence that demonstrates the existence of some disputed factual issue . . . It is not enough, however, for the opposing party merely to assert the existence of such 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 under Practice Book [§ 17-45]." (Internal quotation marks omitted.) State Farm Fire & Casualty Co v. Tully, 322 Conn. 566, 573, 142 A.3d 1079 (2016).^[2]

In its memorandum of law in support of summary judgment, the plaintiff argues that there is no genuine issue of material fact that the first corporation, Jackson Law, breached the lease agreement under its claims of both breach of contract and anticipatory breach of contract, and thus, under a theory of successor liability, Jackson CT should be held liable for such breach. Specifically, the plaintiff argues that successor liability applies to the present case because Jackson CT holds itself out to the public as " the effective continuation" of Jackson Law; Attorney Bruce Jackson was the corporate agent and sole partner in Jackson Law, and continues in those positions in Jackson CT; Jackson CT performs the same legal services as Jackson Law; Jackson CT was formed three days after the " effective date" of Jackson Law's dissolution; and most of Jackson CT's employees were also employees of Jackson Law.

At oral argument, the defendant does not dispute that Jackson Law breached the lease agreement between itself and the plaintiff. The defendant argues, however, that Jackson CT should not be held liable because the plaintiff has not sufficiently established its cause of action for successor liability to warrant the granting of its motion for summary judgment. Specifically, there were no transfers of assets between the two entities; no funds were transferred from Jackson Law to Jackson CT; the overlap of employees for both entities is minimal; and the fact that. Attorney Jackson was the sole principal and operated both entities is not by itself enough to satisfy the burden for granting the plaintiff's motion.

The following facts are found in the plaintiff's submission of evidence. Jackson Law Group, LLC was formed on July 19 2013. (Jackson Dep., pp. 9, 31.) Attorney Jackson testified that sometime in 2014 or 2015, he changed the name of his firm from Jackson Law Group, LLC to Jackson Law Group CT, LLC because when potential clients searched for the firm online, they were directed to firms in other states. (Jackson Dep., pp. 10-11.) When asked what areas of law Jackson CT specializes in, Jackson responded " mostly transactional . . . So I do represent some lenders on mortgages where we help them close them. I represent buyers who are purchasing property. I represent sellers who are selling property. I represent corporate entities, setting up, mostly representing individual on their buy or their sell of their house or their setting up a business . . . [I am] primarily a real estate lawyer." (Jackson Dep., pp. 11-12.) The lease between the plaintiff and defendant expires on July 31, 2018 (Jackson Dep., p. 16), and Jackson Law vacated the premises on October 31, 2014 (Jackson Dep., p. 18). Attorney Jackson admitted that he did not pay remainder of the rent to the plaintiff (Jackson Dep., p. 18), and moved to Two Enterprise Drive, Suite 406, in Shelton (Jackson Dep., p. 19). The lease with the new Shelton office is between Jackson Law, not Jackson CT, and the third party. (Jackson Dep., p. 20.)

Jackson Law's practice areas included real estate and litigation. (Jackson Dep., pp. 23-26.) Attorney Jackson testified that he " had a very healthy foreclosure practice up to a point. So we did a lot of foreclosures for a number of banks." (Jackson Dep., p. 26.) Now, Jackson CT does some foreclosure litigation, specifically tax foreclosures. (Jackson Dep., p. 27.) " We do a lot of tax appeals, and we do some litigation for municipal dealing with slip and falls on the town property or litigation dealing with . . . zoning violations and stuff for the town." (Jackson Dep., pp. 27-28.) Jackson Law ceased business operations on January 29, 2017 and Jackson CT commenced business operations on the same date. (Defs. Answers to Interrogatories, ¶ ¶ 1, 2; Jackson Dep., p. 28.) Jackson is the principal of both companies. (Jackson Dep., p. 28.) In transitioning from Jackson Law to Jackson CT, Attorney Jackson took active case files with him to the new office. (Jackson Dep., p. 30.) He took some of the computers, some of the furniture and cubicle dividers, but did not take any kitchen items. (Jackson Dep., pp. 30-31.) Jackson Law and Jackson CT share the same phone number: (203) 647-3300. (Jackson Dep., p. 31.) When Jackson CT was formed, about half of the employees moved over from Jackson Law, with one additional attorney hired. (Def's. Answers to Interrogatories, ¶ ¶ 5, 6.)

Jackson filed for dissolution of Jackson Law on March 23, 2016. (Jackson Dep., p. 32.) Regarding bank accounts, there was an operating account and a trust account. (Jackson Dep., p. 37.) Those accounts were maintained until after the dissolution of Jackson Law " because we had to close them out and sort of empty them and start again." (Jackson Dep., p. 38.) This was done in 2016. (Jackson Dep., p. 38.) " I believe the [Jackson] CT accounts were opened first, because once [Jackson Law] terminated I have to close out the accounts under the bar rules to show that they balance down to zero. So I think I . . . opened [Jackson] CT first, and then . . . Jackson [Law] closed after I was able to balance them down to zero." (Jackson Dep., p. 38.)

" The legal principles governing a claim for successor liability in Connecticut were first set forth by [the Appellate Court] in Chamlink Corp. v. Merritt Extruder Corp., 96 Conn.App. 183, 899 A.2d 90 (2006)." Robbins v. Physicians for Women's Health, LLC, 133 Conn.App. 577, 584, 38 A.3d 142 (2012), cert. granted on other grounds, 311 Conn. 707, 90 A.3d 925 (2014).

" There are two theories used to determine whether the purchaser is merely a continuation of the selling corporation. Under the common-law mere continuation theory successor liability attaches when the plaintiff demonstrates the existence of a single corporation after the transfer of assets, with an identity of stock, stockholders, and directors between the successor and predecessor corporations. Under the continuity of enterprise theory, a mere continuation exists if the successor maintains the same business, with the same employees doing the same jobs, under the same supervisors, working conditions, and production processes, and produces the same products for the same customers." (Citation omitted; internal quotation marks omitted.) Chamlink Corp. v. Merritt Extruder Corp., supra, 96 Conn.App. 187-88. " The issues of whether a purchaser is a mere continuation of the selling corporation is a question of fact." Id., 187. " [T]he general rule is that where a corporation sells or otherwise transfers all of its assets, its transferee is not liable for the debts and liabilities of the transferor, and that [the] liability of a new corporation for the debts of another corporation does not result from the mere fact that the former is organized to succeed the latter . . . This general rule of corporate nonliability serves, in effect, as a security blanket that protects corporate successors from unknown or contingent liabilities of their predecessors." (Internal quotation marks omitted.) Robbins v. Physicians for Women's Health, LLC, supra, 311 Conn. at 714. Furthermore, " [a] successor corporation...