Mark K. Lewis v. PLC (2011)

MEMORANDUM OF DECISION DEFENDANTS' MOTION TO DISMISS ¹

The plaintiff, Marc K. Lewis, commenced this action against the defendants, Royal Bank of Scotland, PLC (RBS) and David Goodwin, on August 23, 2010.   The plaintiff alleges a claim of vexatious litigation against the defendants and seeks multiple damages pursuant to General Statutes § 52–568.   The plaintiff's vexatious litigation complaint is based upon a foreclosure action that RBS commenced against the plaintiff and Lexham Farmington I, LCC (Lexham) on January 21, 2010.²  The foreclosure action arose out of a loan agreement between Lexham and Greenwich Capital Financial Products, Inc. (Greenwich), RBS's predecessor in interest, dated January 3, 2008.   As the sole member of Lexham, the plaintiff signed the loan agreement on its behalf.   The plaintiff also signed a guaranty agreement in his individual capacity.   In the foreclosure action, RBS included a breach of guaranty agreement claim against the plaintiff personally.   On July 27, 2010, RBS filed a withdrawal of the claim against the plaintiff;  On September 8, 2010, RBS filed an amended complaint in the foreclosure action, in reflecting the withdrawal of the breach of guaranty claim against the plaintiff in the foreclosure action.   In the case presently before this court, the plaintiff alleges that RBS had no good faith basis to bring a claim against him personally and that the defendants fabricated the breach of guaranty agreement claim.   The plaintiff further alleges that defendant Goodwin oversaw, managed, and was responsible for bringing the foreclosure suit against him.

On October 14, 2010, the defendants filed a timely motion to dismiss the plaintiff's complaint for lack of proper venue, pursuant to Practice Book § 10–31(a)(3).   In essence, the motion and memorandum in support assert that the plaintiff, as the “sole owner of Lexham's managing member,” executed the loan agreement between Lexham and RBS, and, as such, is bound by the forum selection clause in the loan agreement.   Section 10.6 of the loan agreement between Lexham and Greenwich states, in relevant part:  “ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN NEW YORK COUNTY, NEW YORK ․” In this agreement, Lexham is “lender” and Greenwich is “borrower.”   The defendants further assert that Lewis should be bound by the forum selection clause because he is “closely related to Lexham and, by his direct involvement with the Loan, could foresee being so bound.”   Finally, the defendants assert that allowing Lewis to bring an action against the defendant in Connecticut would “obviate the clear terms and express intent of this mandatory forum selection clause.”   In opposition, the plaintiff argues that the vexatious litigation claim is not governed by the forum selection clause;  the plaintiff is not bound by the terms of the forum selection clause;  and, that the forum selection clause should not be enforced for public policy reasons.   Oral argument on the motion was held on February 7, 2011.

“The motion to dismiss shall be used to assert ․ improper venue ․” Practice Book § 10–31(a)(3).   When addressing a motion to dismiss, “a court must take the facts to be those alleged in the complaint, including those facts necessarily implied from the allegations, construing them in a manner most favorable to the pleader.”  (Internal quotation marks omitted.)  ABB Automation, Inc. v. Zaharna, 77 Conn.App. 260, 265, 823 A.2d 340 (2003).

“[W]here there is definitive contract language, the determination of what the parties intended by their contractual commitments is a question of law ․ [Connecticut Courts] accord the language employed in the contract a rational construction based on its common, natural and ordinary meaning and usage as applied to the subject matter of the contract ․ Where the language is unambiguous, we must give the contract effect according to its terms ․” (Internal quotation marks omitted.)  Landmark Investment Group, LLC v. Chung Family Realty Partnership, LLC, 125 Conn.App. 678, 690, 10 A.3d 61 (2010).  “It is not within the power of the court to make a new and different agreement.”   On Site Energy Corp. v. Sperry Rand Corp., 5 Conn.App. 326, 330, 498 A.2d 121, cert. denied, 197 Conn. 818, 501 A.2d 388 (1985);  see also Ramirez v. Health Net of the Northeast, Inc., 285 Conn. 1, 16, 983 A.2d 576 (2008) (“it is well settled that we will not import terms into [an] agreement ․ that are not reflected in the contract” [internal quotation marks omitted] ).

Although the plaintiff signed the loan agreement on behalf of Lexham, the LLC, not he, was the “borrower” in the agreement.   As a limited liability company, Lexham is a separate legal entity that can be subject to litigation.   See General Statutes § 34–124(b) (“A limited liability company shall have power to and may sue and be sued ․”);  First National Bank of Chicago v. Maynard, 75 Conn.App. 355, 359, 815 A.2d 1244, cert. denied, 263 Conn. 914, 821 A.2d 768 (2003) (recognizing that a limited liability company is a legal entity separate from its members).   Although the plaintiff is the sole member of Lexham, the protections of the limited liability company prevent him from being personally liable on Lexham's contracts.   See General Statutes § 34–133(a) (“[A] person who is a member or manager of a limited liability company is not liable, solely by reason of being a member or manager, under a judgment, decree or order of a court, or in any other manner, for a debt, obligation or liability of the limited liability company, whether arising in contract, tort or otherwise for the acts or omissions of any other member, manager, agent or employee of the limited liability company”).

The forum selection clause of the loan agreement unambiguously applies to the parties of the agreement, Lexham and Greenwich, and to no one else.   There is a separate forum selection clause in the guaranty, but that does not apply to this case either.³  Binding the plaintiff, in his personal capacity, to the forum selection clause of the loan agreement would essentially require the court to rewrite the forum selection clause and insert an additional provision, which the court cannot do.   See Ramirez v. Health Net of Northeast, Inc., supra, 285 Conn. 16;  On Site Energy Corp. v. Sperry Rand Corp., supra, 5 Conn.App. 330.   The forum selection clause in the loan agreement does not apply to the plaintiff's individual claims.⁴

The defendants cite BioCapital, LLC v. BioSystem Solutions, Inc., Superior Court, judicial district of Stamford–Norwalk, Docket No. 08 5009331 (June 1, 2009, Pavia, J.) in support of their argument that the “arising out of or relating to” language of the loan agreement's forum selection clause applies to plaintiff's vexatious litigation claim.   Specifically, the defendants cite the following statement made by the court:  “When ‘arising out of,’ ‘relating to,’ or other similar words appear in a forum selection clause, such language is regularly construed to encompass ․ tort claims associated with the underlying contract.”  (Internal quotation marks omitted.)  Id. This language does not support the defendants' position because, in the present case, the plaintiff's vexatious litigation claim is not a tort claim associated with the underlying contract;  rather, it is a tort claim that is associated with a prior lawsuit, the foreclosure action.

CONCLUSION

Accordingly, for all the foregoing reasons, the defendants' motion to dismiss for improper venue is hereby denied.

Peck, J.

FOOTNOTES

FN1. The essential facts are not in dispute and are derived from the following sources:  (1) the plaintiff's complaint, dated August 19, 2010;  (2) the return of service from Royal Bank of Scotland v. Lexham Farmington I, LLC, Superior Court, judicial district of Hartford, Docket No. CV 10 6007558 (foreclosure action);  (3) the original complaint in the foreclosure action, dated January 19, 2010;  (4) the amended complaint in the foreclosure action, dated September 8, 2010;  (5) the withdrawal of count three of the foreclosure action, filed July 27, 2010;  and (6) the loan agreement between Lexham Farmington I, LLC and Greenwich Capital Financial Products, dated January 3, 2008, which is attached to an affidavit submitted with memorandum of law in support of the defendants' motion..  FN1. The essential facts are not in dispute and are derived from the following sources:  (1) the plaintiff's complaint, dated August 19, 2010;  (2) the return of service from Royal Bank of Scotland v. Lexham Farmington I, LLC, Superior Court, judicial district of Hartford, Docket No. CV 10 6007558 (foreclosure action);  (3) the original complaint in the foreclosure action, dated January 19, 2010;  (4) the amended complaint in the foreclosure action, dated September 8, 2010;  (5) the withdrawal of count three of the foreclosure action, filed July 27, 2010;  and (6) the loan agreement between Lexham Farmington I, LLC and Greenwich Capital Financial Products, dated January 3, 2008, which is attached to an affidavit submitted with memorandum of law in support of the defendants' motion.

FN2. As of the date of this memorandum, Royal Bank of Scotland v. Lexham Farmington I, LLC, supra, Docket No. CV 10 6007558, the foreclosure action, remains pending..  FN2. As of the date of this memorandum, Royal Bank of Scotland v. Lexham Farmington I, LLC, supra, Docket No. CV 10 6007558, the foreclosure action, remains pending.

FN3. In the memorandum in support of their motion, the defendants cite Aguas Lenders Recovery Group, LLC v. Suez, S.A., 585 F.3d 696 (2009), BNY AIS Nominees Ltd. v. Quan, 609 F.Sup.2d 269 (2009);  Cuno, Inc. v. Hayward Industrial Products, Inc., United States District Court, Docket No. 03 Civ. 3076 (Southern District of New York, May 10, 2005), and Nanopierce Technologies, Inc. v. Southridge Capital Management, LLC, United States District Court, Docket No. 02 Civ. 0767 (Southern District of New York, December 4, 2003), in support of the proposition that non-parties to a contract that are closely related to the dispute can be bound by a contract's forum selection clause.   The defendants, however, do not cite any Connecticut law supporting such a position and the federal cases they rely upon cite other federal, not state, caselaw for support of the “closely related” rule.   See Aguas Lenders Recovery Group, LLC v. Suez, S.A., supra, 701;  BNY AIS Nominees Ltd. v. Quan, supra, 275;  Cuno, Inc. v. Hayward Industrial Products, Inc., supra, Docket No. 03 Civ. 3076;  Nanopierce Technologies, Inc. v. Southridge Capital Management, LLC, supra, Docket No. 02 Civ. 0767.   In fact, there is no Connecticut caselaw that supports the proposition that a non-party can be subject to a contract's forum selection clause.   Further, applying such a rule in the present case would run contrary to the protections afforded to limited liability companies.   See General Statutes § 34–133(a) (stating members of limited liability companies are not personally liable for limited liability company's contracts).   Therefore, the court declines to apply the closely related rule offered by the defendants to the present case..  FN3. In the memorandum in support of their motion, the defendants cite Aguas Lenders Recovery Group, LLC v. Suez, S.A., 585 F.3d 696 (2009), BNY AIS Nominees Ltd. v. Quan, 609 F.Sup.2d 269 (2009);  Cuno, Inc. v. Hayward Industrial Products, Inc., United States District Court, Docket No. 03 Civ. 3076 (Southern District of New York, May 10, 2005), and Nanopierce Technologies, Inc. v. Southridge Capital Management, LLC, United States District Court, Docket No. 02 Civ. 0767 (Southern District of New York, December 4, 2003), in support of the proposition that non-parties to a contract that are closely related to the dispute can be bound by a contract's forum selection clause.   The defendants, however, do not cite any Connecticut law supporting such a position and the federal cases they rely upon cite other federal, not state, caselaw for support of the “closely related” rule.   See Aguas Lenders Recovery Group, LLC v. Suez, S.A., supra, 701;  BNY AIS Nominees Ltd. v. Quan, supra, 275;  Cuno, Inc. v. Hayward Industrial Products, Inc., supra, Docket No. 03 Civ. 3076;  Nanopierce Technologies, Inc. v. Southridge Capital Management, LLC, supra, Docket No. 02 Civ. 0767.   In fact, there is no Connecticut caselaw that supports the proposition that a non-party can be subject to a contract's forum selection clause.   Further, applying such a rule in the present case would run contrary to the protections afforded to limited liability companies.   See General Statutes § 34–133(a) (stating members of limited liability companies are not personally liable for limited liability company's contracts).   Therefore, the court declines to apply the closely related rule offered by the defendants to the present case.

FN4. Both the defendants, in the memorandum in support of their motion, and the plaintiff, in the memorandum in support of his opposition, reference a forum selection clause in the guaranty agreement between Greenwich and the plaintiff.   That forum selection clause states, in relevant part:  “Guarantor irrevocably (a) agrees that any suit, action or other legal proceeding arising out of or relating to this Guaranty may be brought in a court of record in the City and County of New York or in the Courts of the United States of America located in the Southern District of New York ․” This forum selection clause is also irrelevant to the resolution of the motion before the court because the plaintiff's vexatious litigation lawsuit arises out of the foreclosure action brought by RBS and not the loan guaranty..  FN4. Both the defendants, in the memorandum in support of their motion, and the plaintiff, in the memorandum in support of his opposition, reference a forum selection clause in the guaranty agreement between Greenwich and the plaintiff.   That forum selection clause states, in relevant part:  “Guarantor irrevocably (a) agrees that any suit, action or other legal proceeding arising out of or relating to this Guaranty may be brought in a court of record in the City and County of New York or in the Courts of the United States of America located in the Southern District of New York ․” This forum selection clause is also irrelevant to the resolution of the motion before the court because the plaintiff's vexatious litigation lawsuit arises out of the foreclosure action brought by RBS and not the loan guaranty.

Peck, A. Susan, J.