Wittman v. Intense Movers, Inc.

Matthew WITTMAN v. INTENSE MOVERS, INC.

No. FSTCV166030430S

Superior Court of Connecticut, Judicial District of Stamford-Norwalk, Stamford

May 31, 2018

UNPUBLISHED OPINION

POVODATOR, J.

Nature of the Proceeding

The plaintiffs and the individual defendants are the 100% owners of the corporate defendant. (There is some level of dispute as to exact percentages, but it appears to be undisputed that these four individuals comprise the universe of shareholders.) The plaintiffs have commenced this action largely but not exclusively in the nature of a shareholder derivative lawsuit- there also are claims for dissolution of the corporate entity and at least some claims that appear to be directed to individual parties. In this last respect, the defendant Alexander Leute has filed a counterclaim, which is nominally directed to the individual plaintiffs although as discussed below, the plaintiffs contend that at least some of the claims actually are directed to the corporate entity.^[1]

Three motions to dismiss have been filed. The plaintiffs filed a motion to dismiss (# 136.00), directed to the counterclaim asserted by Alexander Leute (# 134.00); ^[2] defendant William Leute filed a motion to dismiss the complaint (# 138.00); and defendant Intense Movers, Inc. filed a motion to dismiss the complaint (# 157.00) which motion subsequently was withdrawn prior to argument (# 182.00).

The motions currently before the court were argued on August 28 2017. On October 11, 2017, after a status conference, the parties submitted a stipulation, agreeing that the court should hold off on addressing any of the then-pending motions to dismiss, pending efforts by the parties to resolve their disputes by way of mediation (# 169.00). Subsequently, at a status conference on February 1, 2018, the parties indicated that the efforts at resolution of their disputes by way of mediation had proved unsuccessful, and requested that the court take up the then-pending motions to dismiss. On February 26, 2018, the plaintiffs submitted a supplemental memorandum in opposition to the motion filed by William Leute (# 183.00) (followed by a motion seeking permission to file that supplemental memorandum).

The court will address the two remaining motions to dismiss, in the order in which they were filed.

Discussion

1. Plaintiffs’ Motion to Dismiss Counterclaim of Alexander Leute

The plaintiffs have moved to dismiss the counterclaim of Alexander Leute on two grounds:

Alexander Leute lacks standing to bring the Counterclaim against Matthew Wittman because (a) Alexander Leute cannot assert a counterclaim against Matthew Wittman who is a nominal plaintiff bringing only derivative claims against Alexander Leute and (b) the allegations in the Counterclaim are derivative in nature and, therefore, Alexander Leute cannot bring them in his individual capacity as a direct Counterclaim. Consequently, this Court lacks subject matter jurisdiction over the Counterclaim and should dismiss the Counterclaim.

With respect to the contention that Alexander Leute lacks standing to pursue the counterclaim, the law relating to standing and subject matter jurisdiction is well-established:

Standing is the legal right to set judicial machinery in motion. One cannot rightfully invoke the jurisdiction of the court unless he [or she] has, in an individual or representative capacity, some real interest in the cause of action, or a legal or equitable right, title or interest in the subject matter of the controversy. Nevertheless, [s]tanding is not a technical rule intended to keep aggrieved parties out of court; nor is it a test of substantive rights. Rather it is a practical concept designed to ensure that courts and parties are not vexed by suits brought to vindicate nonjusticiable interests and that judicial decisions which may affect the rights of others are forged in hot controversy, with each view fairly and vigorously represented. These two objectives are ordinarily held to have been met when a complainant makes a colorable claim of direct injury he has suffered or is likely to suffer, in an individual or representative capacity. Such a personal stake in the outcome of the controversy ... provides the requisite assurance of concrete adverseness and diligent advocacy. Standing [however] requires no more than a colorable claim of injury ... Citibank v. Lindland, 310 Conn. 147, 161-62 (2013) (Internal quotation marks and citations, omitted.) In other words, to demonstrate standing, one need not prove his case on the merits. Rather, standing entails a consideration of whether there is a possibility that some legally protected interest of the person asserting a claim has been adversely affected by the actions of the defendant. Citizens Against Overhead Power Line Construction v. Connecticut Siting Council, 139 Conn.App. 565, 590 (2012).

The court notes that the plaintiffs have submitted no evidence challenging the existence of standing. In other words, they are relying upon their interpretation of the pleadings.

It is well established that, in determining whether a court has subject matter jurisdiction, every presumption favoring jurisdiction should be indulged ... Ed Lally and Associates, Inc. v. DSBNC, LLC, 145 Conn.App. 718, 728 (2013); see, also, One Country, LLC v. Johnson, 314 Conn. 288, 298 (2014).

This lack of any evidentiary submission also implicates the tiered approach to jurisdictional issues, as articulated in Conboy v. State, 292 Conn. 642, 650-54 (2009), and more recently in Cuozzo v. Town of Orange, 315 Conn. 606, 615-17 (2015):

Trial courts addressing motions to dismiss for lack of subject matter jurisdiction pursuant to [Practice Book § 10-30] may encounter different situations, depending on the status of the record in the case ... [L]ack of subject matter jurisdiction may be found in any one of three instances: (1) the complaint alone; (2) the complaint supplemented by undisputed facts evidenced in the record; or (3) the complaint supplemented by undisputed facts plus the court’s resolution of disputed facts. (Citing Conboy, supra ; internal quotation marks omitted.)

The first contention of the plaintiffs ("Alexander Leute cannot assert a counterclaim against Matthew Wittman who is a nominal plaintiff bringing only derivative claims against Alexander Leute") does not implicate standing. This argument seems to focus on Matthew Wittman as a defendant. During argument, a substantial portion of the plaintiffs’ attention was directed to the contention that that there was an improper joinder of claims, or that the plaintiffs were not the proper parties to whom some aspects of the counterclaim should be directed. Indeed, at one point, the court believes that the argument in favor of the motion explicitly (if not verbatim) referred to a failure to state a claim- which is an approximation of the standard for a motion to strike. Standing addresses the propriety of the party asserting a claim to be the party asserting that claim; it does not address the propriety of the party against whom a claim is directed, or the legal sufficiency of the claim.^[3]

The other aspect of the motion is that the claims being asserted are derivative in nature. Accepting that assertion of corporate claims as if they were personal claims implicates standing, dismissal would be warranted only if all claims asserted were subject to that classification. Although some of the claims in the counterclaim might properly be characterized as derivative claims, asserting harm to the corporation, the plaintiffs have not established that to be the case as to all claims asserted. Putting aside whether the claim ultimately might be deemed cognizable (in a motion to strike sense), the defendant alleges in ¶ 32 that "[a]s shareholders in a closely held company, Alexander Leute and Matt Wittman owed duties of care and loyalty to one another" followed in ¶ 33 by an allegation that Matt Wittman breached his duty to Alexander Leute. Whether such a personal-level duty existed as between the two individuals, and whether such a claimed breach would be actionable, are matters that may have to be resolved at some point, but not in the context of a jurisdictional challenge.

The court notes that the defendant did not address this aspect of the motion in his opposition to the motion to dismiss.

Somewhat simplistically, the court is faced with a melange of grievances of the defendant that in any way involve Matthew Wittman, without filtering for claims that properly are advanced by the defendant in a personal capacity (claims that are based on injuries he personally sustained) as opposed to injuries sustained by the corporation. In at least one instance, a single allegation encompasses both types of claims: Matthew Wittman "encouraging Sam Johnson to sue Intense Movers and Alexander Leute in Florida." The defendant is asserting a direct form of injury (deferring to a later date any issue of whether there is a legally cognizable claim on that basis) while also asserting a parallel claim of injury to the corporation.

The counterclaim is asserted in a single count, and given the existence of claims for which jurisdiction seemingly exists, the court cannot dismiss the entire counterclaim. The court can, however, dismiss all claims that assert injuries to the corporate entity, leaving in place any claims asserting injury to Alexander Leute. The court does dismiss all claims that assert injury to the corporation.

In order to effectuate this "bifurcated" order, and in order to facilitate either the filing of a motion to strike (if the plaintiff chooses to do so) or ultimate trial on the merits, the court directs the defendant to file an amended complaint, asserting the personal claims of injury for which he contends that the...