Sebastion Carballo et al. v. Pedro Carballo (2011)

Caption Date:

MEMORANDUM OF DECISION

Preliminary Statement

This action arises out of a joint business venture undertaken by brothers, plaintiff Sebastion Carballo and defendant Pedro Carballo.   The irretrievable break down in their relationship resulted in both a complaint and counterclaim seeking dissolution of Bridgeport Auto Glass, LLC, the entity through which they pursued their joint venture pursuant to Conn. Gen.Stat. § 34–207.   Both brothers also sought an accounting of the assets of Bridgeport Auto Glass, LLC and an equitable distribution of those assets.   Both brothers have withdrawn their request for an accounting and have asked this court to dissolve the corporation and divide the assets based upon the evidence adduced at trial.

The matter was tried to the court on July 19, 2011.   The evidence consisted of the testimony of each of the brothers as well as a series of exhibits.¹

The Evidence at Trial

Both parties testified that there was mutual agreement to form a business which would be called Bridgeport Auto Glass, LLC. Each party agreed that the business was to be a 50–50 partnership and that the work and division of profits would be the same for each.   In fact, records from the Secretary of State demonstrate that the brothers are the only members of the LLC, which was formed in August 2005.   Beyond this understanding and mutual expectation, there is little agreement between the brothers.

A. Sebastion Carballo's version of events

Sebastion Carballo testified that he has been a glazier, a person trained in fixing and replacing automobile glass, for many years.   He commuted to various work sites in New York where he worked as a glazier.   He was not licensed as New York does not require licensing of glaziers.   He testified that his brother, Pedro Carballo, did not have experience as a glazier.   In 2005, Sebastion and Pedro Carballo agreed to form an auto glass repair and replacement business in Bridgeport, Connecticut.   It would come to be called Bridgeport Auto Glass, LLC, and it would be equally owned by each brother.²

Sebastion stated that his then current employer gave him 250 pieces of auto glass, both new and used, to assist in the start up.   He testified that he would drive to his work and bring back the glass needed for Bridgeport Auto Glass, Inc. He testified that he was supposed to be a signatory on the bank account for Bridgeport Auto Glass, Inc., and that it was many months into the project that he learned he did not have authority on the bank account.   He could not explain how this came to pass, but he was thereafter placed on the account.

In terms of his financial contribution to the LLC, he testified that he purchased a 1998 Chevy Astrovan for $4,000.00 for the business.   He testified that he paid Pedro $62.00 per week for his EZ Pass use on his commute to New York. He testified that he purchased a 1999 Toyota Tacoma pick up truck for the business for $3,000.00.   He provided a check payable to “Omar Soto” as proof thereof.   Subsequently, this vehicle was recalled and the business received $10,000.00 from a dealership.   This $10,000 was then used to purchase a 2008 Chevy Express van, which is currently used in the business.

When the business began, the address listed was Sebastian's home address.   The business did not have a separate location until late 2006, when it rented space at 1357 Barnum Avenue.   Sebastian Carballo testified that he paid $2,800.00 to secure the lease.   In sum, Sebastian Carballo depicted himself as both the founder and financier of Bridgeport Auto Glass, Inc.

Sebastian Carballo further testified that he regularly loaned Pedro Carballo money because Pedro Carballo could not pay his bills.   He identified $19,300.00 in payments made to Pedro as funds loaned as a financial assist.³  He further testified to paying $1,976.00 for insurance for Bridgeport Auto Glass, LLC, and $3,000.00 for repairs to the Astrovan before it finally broke down for good.

In March 2010, according to Sebastian, Pedro was angered by Sebastian's determination to take his ailing daughter to the hospital in lieu of coming to work.   When Sebastian arrived at work, he found the inventory locked and inaccessible.   Thereafter, he learned that he had been removed from the bank account at Webster Bank and that their auto glass suppliers had been advised that Sebastian no longer had purchase authority for Bridgeport Auto Glass, LLC., rendering it impossible for him to get more glass.

Sebastian began to get glass from New York and obtained his own AG1 license so that he could continue to work.

B. Pedro Carballo's version of events

Pedro Carballo testified that he has been a glazier since before 1988, working for various businesses.   In 2001 he bought his home.   In 2002 he refinanced his home and received $53,000.00 with which he thought he could open his own business.   He testified that $50,000.00 was given to Sebastian so that Sebastian could invest in a junk yard.   The checks which he claims to document this loan are made out to a Jose Dimas Lemus and Jesus Elizaldo.   He further claims to have given Sebastian $20,000 of the loan in cash, at Sebastian's urging.   These individuals are described as people “known” to both brothers, without much in the way of further explanation.   He testified that the $19,300 in payments made by Sebastian were not to assist him with his bills or to invest in the LLC, but were repayments of this loan.⁴  He testified that Sebastian never loaned him any money and that he has always been able to pay his bills without Sebastian's assistance.⁵

Pedro testified that he signed the lease and paid the rent on a monthly basis.⁶  The lease, introduced into evidence, is in the name of Pedro Carballo and is signed by Pedro Carballo.   He testified that Sebastian never gave him any cash for the use of the EZ Pass. The payments for the EZ pass were included in the loan repayments.   Pedro testified that the agreement was for a repayment plan of $650.00 per month, plus the EZ Pass charge of $252.00 per month and insurance for the Corolla, which Sebastian was driving.   The total monthly payment was therefore close to $1,000.⁷

Pedro also testified that it was he who purchased the 1999 Tacoma pick up truck for $3,000.   As evidence thereof, he provided the invoice of the sale from HP Auto Group.   The invoice is signed by Pedro Carballo and indicates a payment made of $3,000.00 and a sale to Bridgeport Auto Glass.   Pedro Carballo further testified that “Omar Soto” does not work at HP Auto Group and in fact is known to him as an individual who has a car dealership in Puerto Rico. Pedro Carballo confirmed that the Tacoma was the subject of a recall for which Bridgeport Auto Glass, LLC received $9,892.00, which was applied to the purchase of the Chevy Express van, which was purchased for $16,000.00.   He testified that the current value of the van is $8,000.00.

Pedro testified that Sebastian put no financial investment into the business.   He testified that the current inventory is worth approximately $15,000.00.⁸  He testified that when the business received a ticket for operating without a license, it was he who went to the State and arranged for a AG1 license.   Although he acknowledges that Sebastian would bring back glass from New York, he testified that much of it was cracked or broken and that he would not use it.

As is evident, the plaintiff and the defendant agree on virtually nothing.   Each party testified to the events which led to the formation of Bridgeport Auto Glass, LLC, the investment that each made to the venture, and the relative contribution each made to its success.   However, the testimony is utterly irreconcilable.   The court is left to decide what is “equitable” faced with the unfortunately noncredible testimony of both brothers.   On the face of the testimony received, at the very least, one of the brothers testified falsely.   However, based upon the fact that each version of events could have been independently supported or verified, but neither was, suggests that it is more likely than not, that both were untruthful in various respects.⁹

Dissolution

This court has the power to dissolve this limited liability corporation pursuant to Conn. Gen.Stat. § 34–207, which provides:

On application by or for a member, the superior court for the judicial district where the principal office of the limited liability company is located may order dissolution of a limited liability company whenever it is not reasonably practical to carry on the business in conformity with the articles of organization or operating agreement.

Bridgeport Auto Glass, LLC operated in Bridgeport, Connecticut, within this judicial district.   There was no evidence that the parties had “articles of organization” but it is clear from the evidence that they had a mutual operating agreement.   Both brothers provided services and were to be equal partners in the work and profits of the business.   Also manifest is that it would be impossible, let alone “not reasonably practical” for these brothers to try to continue in this business under that operating agreement.   Ironically, on this issue, both parties agree and seek dissolution.   It is clear to this court that the irretrievably broken relationship between the principals makes dissolution appropriate under the circumstances.   The court will issue a separate “Order of Dissolution” for filing with the Secretary of State.   Per the agreement of both parties, neither Sebastian Carballo nor Pedro Carballo are permitted to use the name “Bridgeport Auto Glass” in connection with either of their future endeavors in the trade.

Distribution of Assets 10

The court is also asked to divide, using principals of equity, the assets of the corporation.   On this issue the evidence established the following assets:  (1) an inventory of glass;  (2) the 1998 Chevrolet Express van;  (3) tools belonging to Pedro Carballo;  (4) tools belonging to Sebastian Carballo;  (5) a land line telephone number;  (6) an inoperable Chevrolet Astrovan;  (7) a bank account of unknown value.

The testimony was conflicting as to the value of the current glass inventory.   The testimony was scant as to the genesis of the current inventory, that is, whether it was procured by Sebastian Carballo through his former employer, or whether it was secured through other purchase channels.   In the absence of the latter, the current value is of little import.   Based upon the evidence presented, the current inventory is to be divided between the plaintiff and the defendant in equal shares, fifty percent to each.

Sebastian and Pedro Carballo are each entitled to their own tools.   The testimony established that each brother brought to the business previously acquired glazier tools.   To the extent Sebastian Carballo's tools are within the possession and control of Pedro Carballo, Pedro Carballo is ordered to return them within 10 days of this Order.

According to the testimony, the land line telephone number is associated with Bridgeport Auto Glass, LLC. Insofar as neither brother is permitted to continue or resume business under that name, neither brother will be permitted to use the telephone number of the land line.   Pedro Carballo is here ordered to cease using this telephone number in connection with his auto glass business.   Sebastian Carballo is precluded as well from using this number.

As to the Chevrolet Express van, if Pedro Carballo wants to continue to use the van, he must pay to Sebastian Carballo the sum $4,000.00.   This payment will extinguish any right, title or interest which Sebastian Carballo claims to the van.   If Pedro Carballo does not wish to use the van, then Sebastian Carballo has the right to secure the van to his possession and use by payment of $4,000.00 to Pedro Carballo.   Such a payment would extinguish any right, title or interest which Pedro Carballo claims to the van.   In the event that neither Pedro Carballo nor Sebastian Carballo determines to proceed in accordance with the above provision, the van will be sold with the proceeds being equally divided between Pedro and Sebastian Carballo after any liens are satisfied.¹¹

The now inoperable astrovan was described as having no value.   This court does not therefore address it.

The LLC bank account is to be closed after payment of any outstanding liabilities to vendors or providers.   Insofar as Sebastian Carballo has not been involved in the generation of income to the business for over 12 months, any remaining funds may revert to Pedro Carballo.

Other Claims

Sebastian Carballo seeks an order for distribution of 50% of the profits of the business for the time period following the alleged “lock out.”   The court has no evidence, as none was presented, as to what, if any, those profits may have been.   The parties did not present any business records, bank accounts, accounts receivable, accounts payable, invoices, purchase orders, tax returns or other material from which this issue might be determined.

Sebastian Carballo seeks equitable distribution of the liabilities of the company.   As with the profits, other than the passing reference to “still paying” on the Express van, the court heard no evidence of any liabilities that the LLC may have.   However, any outstanding liabilities incurred after March 2010, will be the responsibility of Pedro Carballo.   Any liabilities incurred prior to March 2010 will be the joint and several responsibility of each party if the order of dissolution is filed in advance of those liabilities being satisfied with the assets of the LLC.

Sebastian Carballo includes a conversion count in his complaint.   He failed to satisfy his burden of proof on this claim.

Pedro Carballo seeks a return of $89,000.00 loaned to Sebastian Carballo.   Pedro Carballo has failed to satisfy his burden of proof on this claim.   In the alternative, he asks this court to off set any distribution by the amounts loaned and which remain unpaid.   This would, in essence, eliminate any distribution to Sebastian Carballo.   The evidence regarding the purported loan to Sebastian and the repayment thereof is insufficient for this court to determine that such an offset would be appropriate.

Judgment of Dissolution of Bridgeport Auto Glass, LLC will enter accordingly.   The assets and liabilities are to be divided as set forth above.

K. Dooley, J.

FOOTNOTES

FN1. The complaint and counterclaim contain additional causes of action which are discussed infra..  FN1. The complaint and counterclaim contain additional causes of action which are discussed infra.

FN2. In 2006, Bridgeport Auto Glass, Inc. was required to cease operations because neither Sebastian nor Pedro had glazier licenses.   Under Connecticut law, a business owner or an individual glazier can get a license.   Pedro arranged for an AG1 license, which would permit Bridgeport Auto Glass, Inc. to operate and would permit Sebastian to work as a glazier under that license..  FN2. In 2006, Bridgeport Auto Glass, Inc. was required to cease operations because neither Sebastian nor Pedro had glazier licenses.   Under Connecticut law, a business owner or an individual glazier can get a license.   Pedro arranged for an AG1 license, which would permit Bridgeport Auto Glass, Inc. to operate and would permit Sebastian to work as a glazier under that license.

FN3. Included within those funds was $6,000 to pay for Pedro's Corolla..  FN3. Included within those funds was $6,000 to pay for Pedro's Corolla.

FN4. Sebastian denies having received any loan;  denies investing in a junk yard;  denies ever receiving any cash and denies ever seeing the checks to Dimas or Elizado.   In short, he completely disavows Pedro's version of events on this issue..  FN4. Sebastian denies having received any loan;  denies investing in a junk yard;  denies ever receiving any cash and denies ever seeing the checks to Dimas or Elizado.   In short, he completely disavows Pedro's version of events on this issue.

FN5. Although Sebastian testified that he made over $19,000 in personal loan payments to Pedro, at an earlier date, he claimed those payments to have been investments in the LLC. See, Plaintiff's exhibit 4..  FN5. Although Sebastian testified that he made over $19,000 in personal loan payments to Pedro, at an earlier date, he claimed those payments to have been investments in the LLC. See, Plaintiff's exhibit 4.

FN6. Pedro Carballo testified that he provided the funds to pay the rent for the initial months of the lease, to include the time when the business was closed for failing to be licensed.   It appears that by 2008, the business was generating adequate revenue to cover its expenses.   Although Pedro Carballo was responsible for making the payments, it appears they were made by the LLC, with LLC funds.   The same is true of the vehicle purchases..  FN6. Pedro Carballo testified that he provided the funds to pay the rent for the initial months of the lease, to include the time when the business was closed for failing to be licensed.   It appears that by 2008, the business was generating adequate revenue to cover its expenses.   Although Pedro Carballo was responsible for making the payments, it appears they were made by the LLC, with LLC funds.   The same is true of the vehicle purchases.

FN7. The checks offered by Sebastian as purported “loans” to Pedro total $13,300.00 for the 14–month period following the alleged “loan” to Sebastian of $50,000.00.   While the checks are not written on a monthly basis, they do total very close to that which would be owed if Pedro's testimony is accurate..  FN7. The checks offered by Sebastian as purported “loans” to Pedro total $13,300.00 for the 14–month period following the alleged “loan” to Sebastian of $50,000.00.   While the checks are not written on a monthly basis, they do total very close to that which would be owed if Pedro's testimony is accurate.

FN8. Pedro was not asked and so did not testify as to the day upon which Sebastian claims to have been locked out of the inventory..  FN8. Pedro was not asked and so did not testify as to the day upon which Sebastian claims to have been locked out of the inventory.

FN9. Pedro Carballo's testimony could have been corroborated (assuming it was accurate) by production of the Bridgeport Auto Glass, Inc. bank statements or business records.   He testified that the bills he paid on behalf of Bridgeport Auto Glass, Inc. were paid from money he deposited into the business bank account, as a continuing “investment.”   Similarly, Sebastian's testimony could have been corroborated through any number of witnesses he claims to have been involved in the various events.   He could have produced his own bank statements or documents pertaining to the alleged purchase of the various vehicles.   In short, neither party made much effort to support their respective claims.   The parties provided no tax returns, business records, bank statements, invoices, accounts payable records;  accounts receivable records;  receipts for purchases or any of the myriad of records which might shed light on which brother, if either, is to be believed..  FN9. Pedro Carballo's testimony could have been corroborated (assuming it was accurate) by production of the Bridgeport Auto Glass, Inc. bank statements or business records.   He testified that the bills he paid on behalf of Bridgeport Auto Glass, Inc. were paid from money he deposited into the business bank account, as a continuing “investment.”   Similarly, Sebastian's testimony could have been corroborated through any number of witnesses he claims to have been involved in the various events.   He could have produced his own bank statements or documents pertaining to the alleged purchase of the various vehicles.   In short, neither party made much effort to support their respective claims.   The parties provided no tax returns, business records, bank statements, invoices, accounts payable records;  accounts receivable records;  receipts for purchases or any of the myriad of records which might shed light on which brother, if either, is to be believed.

FN10. As previously indicated, the parties each sought an accounting of Bridgeport Auto Glass, LLC. At the conclusion of the evidence, the court stated that the determination as to an equitable distribution might be made after any accounting, if the court determined to order an accounting.   At that juncture, both parties indicated that they no longer wished for the court to order an accounting.   Notwithstanding the dearth of information available, the parties asked this court to make an equitable distribution based upon the evidence presented.   The court has done so, within the limitations imposed by the state of the evidence on these issues..  FN10. As previously indicated, the parties each sought an accounting of Bridgeport Auto Glass, LLC. At the conclusion of the evidence, the court stated that the determination as to an equitable distribution might be made after any accounting, if the court determined to order an accounting.   At that juncture, both parties indicated that they no longer wished for the court to order an accounting.   Notwithstanding the dearth of information available, the parties asked this court to make an equitable distribution based upon the evidence presented.   The court has done so, within the limitations imposed by the state of the evidence on these issues.

FN11. While it is unclear as to what he was referring, Pedro Carballo made passing reference to “still paying” on the Chevrolet Express van..  FN11. While it is unclear as to what he was referring, Pedro Carballo made passing reference to “still paying” on the Chevrolet Express van.

Dooley, Kari A., J.