Morris v. Cee Dee, LLC

877 A.2d 899

90 Conn.App. 403

Ronald MORRIS et al. v. CEE DEE, LLC, et al.

No. 25279.

Appellate Court of Connecticut.

Argued April 21, 2005.

Decided July 26, 2005.

Matthew G. Berger, New London, for the appellant (defendant Dee C. Cheshire).

Toby M. Schaffer, for the appellees (plaintiffs).

DRANGINIS, FLYNN and HENNESSY, Js.

DRANGINIS, J.

In this appeal from the judgment of the trial court granting the application for a prejudgment remedy,¹ the defendant Dee C. Cheshire (individual defendant),² claims that the court improperly (1) pierced the corporate veil of the defendant Cee Dee, LLC (company) to award a prejudgment attachment against him individually, and (2) refused to consider his arguments regarding comparative negligence and failure to mitigate damages, contrary to General Statutes § 52-278d. We conclude that the court improperly pierced the corporate veil of the company and, therefore, affirm in part and reverse in part the judgment of the trial court.

In December, 2003, the plaintiffs, Ronald Morris and his wife, JoAnn Morris,³ commenced this action against the defendants for injuries that Ronald Morris allegedly sustained due to the defective condition of a grate on the floor of the bathroom in the mobile home that they had leased. The injury allegedly led to a below the knee amputation of Ronald Morris' left leg. The complaint sounds in five counts: four counts of negligence alleging defective premises, alternatively, against each of the defendants and one count of loss of consortium. The plaintiffs served the standard personal injury discovery requests on each of the defendants. After receiving the defendants' answers to the interrogatories, the plaintiffs filed an application for a prejudgment remedy in the amount of $5 million.

In his affidavit in support of the prejudgment remedy attachment, Ronald Morris attested, in part: "In August, 2002, my family and I took possession, as renters, of a mobile home unit known as lot 16, 268 Flanders Road, in the Rogers Mobile Home Park, Groton, Connecticut. The owner of the property was [the company], which in turn is solely owned by [the individual defendant]. The property was managed by Palmerone and Moriarty Real Estate company. . . . Shortly after moving in, in August, the landlord had the carpeting in the main bathroom . . . of the mobile home removed . . . . When the carpet was removed, it became obvious that the metal floor vent register . . . was not flush with the floor, but rather was raised approximately one-half to three-quarters of an inch off the floor. It was also sharp and rusty. . . . Twice thereafter, during the month of August, we asked [the individual defendant] to come to the unit so that we could show him the problem. He came to the unit twice, and observed the condition. At each visit, we asked him to please rectify the condition. This was never done. . . . On October 9, 2002, I took a shower in the bathroom. As I stepped out of the shower and took a step towards the sink, I cut my left big toe on the floor vent."⁴

In her affidavit in support of the application for a prejudgment remedy, the plaintiffs' counsel attested in part that "[t]he defendants have appeared through their attorney . . . and have answered requests for interrogatories. . . . In these answers, the defendants allege that they have no insurance coverage which can be applied to pay a judgment which might be rendered in this action. . . . The injuries herein are obviously very severe and there is probable cause that a judgment will be rendered of one million dollars or more."

The court held a hearing on the application during two days in March, 2004. Ronald Morris, JoAnn Morris and their grandson, Joshua Geyer, testified on behalf of the plaintiffs. Ronald Morris' medical records and bills also were placed in evidence, as well as photographs of the allegedly defective grate. The defendants' counsel offered the testimony of Nicholas Palmerone of the Palmerone and Moriarity Real Estate Company, the property manager, and placed in evidence documents and copies of documents demonstrating that the mobile home and land were owned by the company, a nonpayment of rent schedule and corporate filings of the company. The individual defendant did not attend the hearing.

The plaintiffs' counsel argued that the court should attach the assets of the company and the individual defendant by piercing the corporate veil, but not attach the assets of the Palmerone and Moriarity Real Estate Company with whom the plaintiffs had no dealings. Counsel argued that "a prejudgment remedy [should] be issued against [the individual defendant] himself personally, because it is my contention that he in fact operated this [limited liability company] as a sham company that really existed for no purpose other than to shield him from liability, which might have been fine if he had insurance. . . but given that he didn't maintain insurance, as any prudent property owner would do, he should suffer the consequences."⁵

The defendants' counsel argued that his clients had no legal duty to repair the premises, and that Ronald Morris was contributorily negligent and failed to mitigate his damages. Counsel also provided the court with a memorandum of law on piercing the corporate veil, specifically citing Mountview Plaza Associates, Inc. v. World Wide Pet Supply, Inc., 76 Conn. App. 627, 820 A.2d 1105 (2003), noting that the company is a limited liability company and that the individual defendant was the sole member. He also argued that there was insufficient evidence as to how, when and if Ronald Morris' injury occurred.

In ruling orally on the application for the prejudgment attachment, the court found that the defective condition of the grate had been brought to the attention of the individual defendant, who neglected to do anything about it. It also found that Ronald Morris cut his toe on the defective grate and that the toe became infected, which led to the amputation of his lower left leg. Although there is a question regarding the date of the accident, that was not of major concern in the probable cause proceeding. The court acknowledged certain issues and the legal arguments made by counsel regarding the duty to repair, but concluded that there was statutory law and sufficient evidence to meet the probable cause standard. The court also found that the medical bills were about $200,000 and that there was an offset of $5500 for unpaid rent.

In rendering its oral decision, the court also stated: "The other arguments with respect to contributory negligence, again, are not really in a motion for a prejudgment remedy. Those are something that could be considered during the trial of the case as well as any facts as to the damages or failure of the plaintiff Ronald Morris, as the defendants claim, to take sufficient treatment, I don't think, or something that we need consider at this time. Although, again, they may be factors in the value of the case as well as the condition of the plaintiff Ronald Morris and so on at the time the injury occurred. . . . As to the amount, the court is familiar with the injury of this type. The last one I heard about, an amputation of a leg below the knee, one verdict was $3.5 million; the other verdict was about $9 million. So, the court will order a prejudgment attachment of $2 million [on the assets of both the company and individual defendant]."

The individual defendant subsequently filed a motion to reargue the prejudgment attachment, emphasizing law with respect to piercing the corporate veil. The court denied the motion to reargue. The company and the individual defendant appealed. The individual defendant filed a motion for articulation, which the court denied. This court granted the individual defendant's motion for review and ordered the trial court to articulate its decision. The trial court rendered its articulation by memorandum dated September 2, 2004.

The court articulated that it pierced the corporate veil to attach the property of the individual defendant because it found that he operated the company as a sham that existed for no purpose other than to shield him from liability, as argued by the plaintiffs' counsel. The individual defendant failed to attend the prejudgment remedy hearing and was unavailable for questioning by the plaintiffs' counsel. The court found the individual defendant's unexplained absence from the hearing of such an important matter of particular significance.

The court also found that the plaintiffs had established that the individual defendant operated, maintained and controlled the premises where Ronald Morris was injured and that the individual defendant had a duty to maintain the premises in a safe condition. Ronald Morris' injury was caused by the carelessness and negligence of the individual defendant, who had personal knowledge of the defective condition that caused the plaintiff's injuries.⁶ In attaching the assets of the individual defendant, the court noted that "an officer of a corporation does not incur personal liability for its torts merely because of his official position. Where, however, an agent or officer commits . . . a tort, whether or not he acts on behalf of his . . . corporation, he is liable to third persons injured thereby," quoting Scribner v. O'Brien, Inc., 169 Conn. 389, 404, 363 A.2d 160 (1975). The court also stated that the same rule applies to a limited liability company in this state. See PB Real Estate, Inc. v. DEM II Properties, 50 Conn.App. 741, 742, 719 A.2d 73 (1998). The court granted the application for a prejudgment remedy attaching the assets of the company on the first count and the assets of the individual defendant on the first and second counts.

We first review the law with respect to the granting of a prejudgment remedy. "General Statutes § 52-278d(a) provides in relevant part that a hearing on a prejudgment remedy shall `be limited to a determination of ... whether or...