LLC v. LLC (2013)

MEMORANDUM OF DECISION RE MOTION TO STRIKE (110.00)

I. FACTS

On April 17, 2013, the plaintiffs, David Fuhrer Enterprises, LLC,¹ and David Fuhrer, filed an eight-count complaint against the defendants, Add the Flavor, LLC (ATF), Corey Capasso, Bruce Angus, and MoGo Sport, LLC. In the complaint, the plaintiffs allege the following facts.

Funanuf creates and licenses toys and household products.   Capasso, acting on behalf of his company, ATF, and Fuhrer, acting on behalf of Funanuf, entered into a confidentiality agreement on June 30, 2008, to develop and market a technology that infuses flavor into plastic.   Funanuf and ATF entered into a letter agreement on August 29, 2008, which named Funanuf as the exclusive agent for the commercial exploitation of products incorporating the new technology, which included flavored mouth guards.   The letter agreement also provided Funanuf with a royalty provision.   On September 19, 2008, the letter agreement was amended to include additional shares of revenue to Funanuf should commercial exploitation preclude royalties.   On August 31, 2009, ATF and Funanuf agreed to extend their agreement and continue the partnership past the expiration date.

In December 2008, Fuhrer designed and created a prototype for a flavored mouth guard and marketing materials.   Fuhrer also had the idea to create a new mouth guard company.   In November 2009, ATF, Funanuf, and Angus collectively agreed to pursue the mouth guard business as equal partners.   In December 2009, Capasso circulated a preliminary written plan for the new mouth guard company that confirmed the November 2009 oral agreement among ATF, Funanuf, and Angus to collectively pursue the mouth guard business as equal partners.   The plan included a provision whereby in the event ATF, Funanuf, and Angus formed a new corporation for the mouth guard business, each party would share a one-third equity interest in the new entity to be formed.   The agreement also confirmed that Capasso would be president of the new company, Fuhrer would be head of business development, and Angus would be the chief executive officer.   Fuhrer conceived of the new name of the mouth guard product and company, which he called “MoGo.” He shared this name and concept of the brand with Angus and Capasso.   On March 26, 2010, Angus and/or Capasso circulated an executive summary for “MoGo Sport,” which incorporated substantial information provided by Fuhrer.   The document refers to Angus, Capasso, and Fuhrer as partners and identifies Fuhrer as the head of business development of the new company.

Between September 2010 and January 2011, Angus and Capasso secretly conspired and agreed to continue the joint venture without Fuhrer and also to cut out Fuhrer from the mouth guard business.   During this same time period, Angus and Capasso obtained financing and set up a new company called “MoGo Sport, LLC.” Despite attempts by Fuhrer to resolve the matter, ATF, Capasso, and Angus refused to include Fuhrer in the business he co-created and/or otherwise compensate Fuhrer for his substantial contributions.

On May 29, 2013, MoGo Sport, LLC,² filed a motion to strike the eighth count of the complaint on the grounds that the plaintiffs fail to make any allegations of wrongdoing against the defendant, that accounting is a remedy and not a cause of action, and that the plaintiffs fail to allege the existence of the kind of fiduciary relationship between Funanuf and the defendant upon which an obligation of an accounting can be based.   In support of the motion, the defendant filed a memorandum of law.   In response, on June 20, 2013, the plaintiffs filed an objection and memorandum of law in opposition.   The matter was heard at short calendar on June 24, 2013.   On June 24, 2013, the defendant filed a memorandum in reply to the plaintiffs' opposition.   On July 31, 2013, the plaintiffs filed an amended revised complaint in response to the request to revise filed by Angus.

II. DISCUSSION

“The purpose of a motion to strike is to contest ․ the legal sufficiency of the allegations of any complaint ․ to state a claim upon which relief can be granted.”  (Internal quotation marks omitted.)  Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003).  “[I]t is fundamental that in determining the sufficiency of a complaint challenged by a defendant's motion to strike, all well-pleaded facts and those facts necessarily implied from the allegations are taken as admitted.”  (Internal quotation marks omitted.)  Coe v. Board of Education, 301 Conn. 112, 116–17, 19 A.3d 640 (2011).  “[P]leadings are to be construed broadly and realistically, rather than narrowly and technically ․” (Internal quotation marks omitted.)   Downs v. Trias, 306 Conn. 81, 92, 49 A.3d 180 (2012).  “If any facts provable under the express and implied allegations in the plaintiff's complaint support a cause of action ․ the complaint is not vulnerable to a motion to strike.”  Bouchard v. People's Bank, 219 Conn. 465, 471, 594 A.2d 1 (1991).

The defendant MoGo moves to strike the eighth count against it.   The eighth count is directed at all four defendants and is the only count pleaded against the defendant MoGo. The count alleges Funanuf is a partner in MoGo;  there is a balance due Funanuf, and the defendants have all the information necessary to determine Funanuf's share of the revenue.   Therefore, there should be a judicial accounting to determine that share.  “A number of Superior Court decisions have determined that a court may not grant a motion to strike a count against multiple defendants when the motion has been brought by only one defendant ․ A motion to strike a count brought against multiple defendants may not be granted on the ground that the allegations are insufficient as they relate to a single defendant.   When a single count of a complaint combines separate causes of action against multiple defendants, the proper way to cure any confusion in that regard is to file a [request] to revise, not a motion to strike ․ If a request to revise had been granted and complied with, the defendants would then have been in a position to move to strike ․” (Citations omitted;  internal quotation marks omitted.)   Brown v. Morant, Superior Court, judicial district of New Haven, Docket No. CV–10–6008983–S (October 15, 2010, Wilson, J.).

“Pursuant to Practice Book § ․ [10–7], the filing of any pleading provided for by the preceding section will waive the right to file any pleading which might have been filed in due order and which precedes it in the order of pleading provided in that section.”  (Internal quotation marks omitted.)   Hryniewicz v. Wilson, 51 Conn.App. 440, 445, 722 A.2d 288 (1999).   “Practice Book § 10–39, which govems motions to strike, makes no provision for striking a claim against one defendant when the count names multiple defendants.”   JFS Landscaping, LLC v. General Motors, LLC, Superior Court, judicial district of Fairfield, Docket No. CV–10–6013055–S (September 10, 2012, Richards, J.) (54 Conn. L. Rptr. 648, 650).

In a footnote in Madera v. Hartford Housing Authority, Superior Court, judicial district of Hartford, Docket No. CV–09–5034046–S (September 8, 2010, Peck. J.) (50 Conn. L. Rptr. 550, 553), the Superior Court noted that “[t]he plaintiff has not objected to the defendants' motion to strike on [the] basis [that it is improper to strike a claim against one defendant when the count names multiple defendants].   Therefore, the court addresses the merits of the motion to strike as to each of the defendants.”

In Coe v. Board of Education, supra, 301 Conn. 121 n.5, the Connecticut Supreme Court favorably cited Cook v. Stender, Superior Court, judicial district of Middlesex, Docket No. CV–04–0104110–S (December 22, 2004, Silbert, J.) (38 Conn. L. Rptr. 439, 440), and quoted parenthetically the following language from that case:  “Prior case law ‘ought not to be read for the proposition that clearly improper allegations upon which relief may not be granted as a matter of law must remain in a complaint indefinitely, leading to confusion for the court, the parties and the jury, just because there are aspects of the complaint that are otherwise valid.   If the motion to strike has merit as to certain allegations of the complaint ․ the proper course for the court is to strike those allegations only ․’ “ Similarly, the court quoted parenthetically the following language from Nordling v. Harris, Superior Court, judicial district of Fairfield, Docket No. 329660 (August 7, 1996, Levin, J.) (17 Conn. L. Rptr. 296, 298 n.1):  “ ‘Under prior case law and earlier versions of the Practice Book, it was generally improper to [move to strike] a paragraph of a complaint unless the paragraph purported to state a separate cause of action ․ Since 1978, however, the Practice Book has not contained such a constraint.’  “ Coe v. Board of Education, supra, 121 n.5.

In the present case, the plaintiffs' eighth count for an accounting is directed towards all four defendants and includes both a claim of accounting and a breach of partnership.   From a reading of the eighth count, it cannot be determined how the count relates as to the moving defendant.   The defendant perhaps should have filed a request to revise the eighth count to cure this confusion, thus placing the defendant in the proper position to file a motion to strike.

The defendant, however, upon filing the pending motion to strike, waived the right to file a request to revise in accordance with the order of pleadings set forth by Practice Book § 10–6.³  Therefore, if the court were to deny the motion on the ground that it is procedurally improper, the defendant, precluded from filing a request to revise, would be unable to cure the confusion in the eighth count.   As a result, any improper allegations upon which no relief can be granted as a matter of law could remain in the complaint indefinitely.   In addition, the plaintiffs have not objected to the motion on the ground that it is improper to strike a claim against one defendant when the count names multiple defendants.   For the foregoing reasons, the court determines that the motion to strike is properly before the court.

The second threshold procedural issue regards the untimely filing of the plaintiffs' objection.   The defendant, in its reply memorandum, argues that its motion should be granted on the ground that the plaintiffs' objection is not timely filed and should be disregarded.   According to Practice Book § 10–42(b), “[a]ny adverse party who objects to this motion [to strike] shall, at least five days before the date the motion is to be considered on the short calendar, file and serve in accordance with Sections 10–12 through 10–17 a memorandum of law.”  (Emphasis added.)

The plaintiffs did not file their objection until Thursday, June 20, 2013, which is only four (4) days prior to the June 24, 2013 short calendar date at which the motion was considered.   Research has revealed no direct appellate authority on this issue.   Nonetheless, “a majority of decisions have concluded that the failure to file a timely opposing memorandum will not necessarily be fatal and that the court, in its discretion, may address the merits of the motion to strike ․ [S]ome of the decisions in the majority have stressed the absence of an objection from the moving party, while others have waived the five-day requirement of § 10–42(b) ․ (Internal quotation marks omitted.)   McDuffie v. Schaffer Associates, LLC, Superior Court, judicial district of New Haven, Docket No. CV–08–5024230–S (May 27, 2010, Wilson, J.).   Further, in McCreary v. One Strawberry Hill Assn., Inc., judicial district of Stamford–Norwalk at Stamford, Docket No. CV–10–6006749–S (April 29, 2011, Tobin, J.) (51 Conn. L. Rptr. 892, 896 n.2), the Superior Court notes that “[t]he defendants have not argued that they have been prejudiced by this late filing and have in fact filed an additional memorandum ․ addressing the arguments raised in the plaintiffs' late-filed objection.   The court, therefore, will invoke its discretion to consider the merits of the motion to strike and the memorandum in opposition.”   Cf. Chen v. Hopkins School, Inc., judicial district of New Haven, Docket No. CV–10–6016084–S (April 20, 2011, Woods, J.) (court addressed the merits of the arguments presented in plaintiff's untimely filed memorandum, noting that the memorandum was not objected to by the defendants when a copy was presented to the defendants at short calendar).

In the present case, the defendant has not argued it has been prejudiced by the plaintiffs' late-filed objection.   In addition, the defendant filed a reply memorandum, addressing the arguments raised in the plaintiffs' late-filed objection.   For the foregoing reasons, and in light of the majority decisions by the Superior Court holding that an untimely filed opposing memorandum will not necessarily be fatal, the court will address the merits of the motion to strike.

In the eighth count, which is labeled “Accounting, Funanuf Against All the Defendants” the plaintiffs incorporate the allegations contained in paragraphs one through forty-three of the first count.   Funanuf further alleges it is a partner in MoGo but it has not received any distribution, dividends, or accounting of its interest therein, that the defendants have and control this information and per the partnership agreement, are required to account to Funanuf.

The defendant, in its supporting memorandum of law, seeks to strike the eighth count on the grounds that the plaintiffs have not alleged any wrongdoing against the defendant, that accounting is a remedy and not a cause of action, and that the plaintiffs fail to allege the existence of the kind of fiduciary relationship between Funanuf and the defendant upon which an obligation of accounting can be drawn.   The plaintiffs counter that accounting is not a remedy and is a cause of action.   The plaintiffs also argue that they are unable to seek relief from the defendant through another cause of action and that the complaint contains sufficient allegations to support the legal basis for an accounting.   Consequently, the defendant argues that the plaintiffs' objection should be discarded because it was untimely filed and reasserts its argument that the plaintiffs do not allege the defendant engaged in any wrongdoing against the plaintiffs.

A split of authority exists among the judges of the Superior Court on whether accounting is a remedy or a cause of action.   See AHP Holdings, LLC v. New Meadows Realty Co., LLC, Superior Court, judicial district of New Haven, Docket No. CV–12–6031174–S (April 22, 2013, Zemetis, J.) [56 Conn. L. Rptr. 117];  Eberle v. Ohlheiser, Superior Court, judicial district of Hartford, Docket No. CV–12–6029172–S (September 27, 2012, Robaina, J.) (54 Conn. L. Rptr. 852);  Simko Law Firm, LLC v. Yale New Haven Health Services Corp., Superior Court, judicial district of Fairfield, Docket No. CV–07–5006228–S (March 25, 2008, Frankel, J.).

In a footnote in Macomber v. Travelers Property and Casualty Corp., 261 Conn. 620, 623 n.3, 804 A.2d 180, 185 (2002), the Supreme Court noted that “[t]he plaintiffs ․ requested that the trial court order an accounting of all moneys that allegedly were wrongfully obtained by the defendants in purchasing the structured settlements on the plaintiffs' behalf, and impose a constructive trust over such moneys.   Although the plaintiffs framed these requests as counts eleven and twelve of their complaint, these are issues to be addressed by the trial court upon remand because, rather than being substantive causes of action upon which the complaint is predicated, these counts request remedies, the appropriateness of which would be left to the discretion of the trial court if the plaintiffs, or either of them, were to prevail at trial.”  (Emphasis added.)  “[The count for accounting is] ordered stricken with the proviso that [it] may be sought in prayers for relief associated with appropriate causes of action.”   Priceline.com, Inc. v. Mayes, judicial district of Stamford–Norwalk at Stamford, Complex Litigation Docket, Docket No. X08–CV–03–0196820–S (March 16, 2005, Adams, J.) (39 Conn. L. Rptr. 9, 12).

In the present case, the plaintiffs allege a claim for accounting against the defendant in the eighth count and also demand an accounting in their prayer for relief.   Because the Connecticut Supreme Court acknowledges the position that accounting is a remedy and not a cause of action, the court strikes the eighth claim directed at MoGo in its entirety, but leaves intact the relief requested based on that count.

Finally, the defendant argues that the plaintiffs fail to allege the existence of the kind of fiduciary relationship between the plaintiffs and the defendant upon which an accounting can be drawn.  “In general, partners act as trustees toward each other and toward the partnership ․ [T]he general partner ․ has the fiduciary duty of rendering true accounts and full information about anything which affects the partnership ․ We have stated that a fiduciary or confidential relationship is characterized by a unique degree of trust and confidence between the parties ․” (Citation omitted;  footnote omitted;  internal quotation marks omitted.)  Konover Development Corp. v. Zeller, 228 Conn. 206, 218–19, 635 A.2d 798 (1994).  “Although this court has refrained from defining a fiduciary relationship in precise detail and in such a manner as to exclude new situations ․ we have recognized that not all business relationships implicate the duty of a fiduciary ․ In particular instances, certain relationships, as a matter of law, do not impose upon either party the duty of a fiduciary.”  (Citations omitted, internal quotation marks omitted.)   Iacurci v. Sax, 139 Conn.App. 386, 401–02, 57 A.3d 736 (2012), cert. granted, 308 Conn. 910, 61 A.3d 1100 (2013).

In the present case, the plaintiffs attempt in the eighth count to allege that a fiduciary relationship exists between the plaintiffs and the defendants upon which an accounting can be drawn.   As cited in the preceding section, a fiduciary relationship is one of several conditions required to support an action of accounting.   The plaintiffs allege in the eighth count that “Funanuf is a partner in [the defendant]” and that the defendant was required to account properly to Funanuf per the partnership agreement.  (Emphasis added.)

The plaintiffs do not allege in the eighth count that they are partners of or with the defendant, nor do the plaintiffs allege that the defendant is a party to the partnership agreement.   The plaintiffs allege facts demonstrating that the defendant was created as a result of the plaintiffs' contributions and investment under the partnership agreement between ATF, Angus, and the plaintiffs.   These allegations are sufficient to demonstrate the existence of a business relationship between the plaintiffs and the defendant.   These allegations, however, fail to demonstrate the existence of a fiduciary relationship between Funanuf and the defendant that is characterized by a unique degree of trust and confidence.   Without sufficient allegations of a fiduciary relationship between the plaintiffs and the defendant, the required condition for an action of accounting is absent.   Therefore, the plaintiffs fail to allege sufficient facts to support a finding of a fiduciary relationship between the plaintiffs and the defendant upon which an obligation of accounting can be based.   This provides a second basis for granting the motion to strike.

III. CONCLUSION

In sum, the court grants the motion to strike on the ground that accounting is a remedy and not a cause of action, and on the ground that the plaintiffs fail to allege sufficient facts to support a finding of a fiduciary relationship between the plaintiffs and the defendant upon which an obligation of accounting can be based.

SO ORDERED.

TAGGART D. ADAMS

JUDGE TRIAL REFEREE

FOOTNOTES

FN1. David Fuhrer Enterprises, LLC, is doing business as Funanuf and hereafter will be referred to as Funanuf..  FN1. David Fuhrer Enterprises, LLC, is doing business as Funanuf and hereafter will be referred to as Funanuf.

FN2. As the motion to strike before the court is filed only by MoGo Sport, LLC, hereafter, it will sometimes be referred to as the defendant..  FN2. As the motion to strike before the court is filed only by MoGo Sport, LLC, hereafter, it will sometimes be referred to as the defendant.

FN3. Practice Book § 10–6 provides in relevant part:  “The order of pleadings shall be as follows ․ (3)[t]he defendant's request to revise the complaint.  (4) The defendant's motion to strike the complaint.  (5) The defendant's answer ․ to the complaint ․”.  FN3. Practice Book § 10–6 provides in relevant part:  “The order of pleadings shall be as follows ․ (3)[t]he defendant's request to revise the complaint.  (4) The defendant's motion to strike the complaint.  (5) The defendant's answer ․ to the complaint ․”

Adams, Taggart D., J.T.R.