Rick Calpitano et al. v. LLC (2014)

MEMORANDUM OF DECISION RE DEFENDANT, PAUL ARGAZZI'S, MOTION FOR SUMMARY JUDGMENT (# 170)

The defendant, Paul Argazzi, moves for summary judgment as to count ten contained in the plaintiff's amended complaint dated January 10, 2014.¹  The plaintiff, Liliana Calpitano, (“Liliana”), alleges professional negligence by the defendant in connection with professional services Argazzi performed for the defendant, Fountain Pointe, LLC (“Fountain Pointe”).   The plaintiff asserts this claim derivatively on behalf of Fountain Pointe.   Argazzi has moved for summary judgment because the plaintiff lacks standing to pursue her claim against him derivatively on behalf of Fountain Pointe, and therefore this court lacks subject matter jurisdiction over the action.

For the reasons set below, the court treats the motion as a motion to dismiss, and dismisses the only count directed at the defendant, Paul Argazzi, count ten.

I

FACTUAL BACKGROUND

The initial complaint, brought by Rick Calpitano and Liliana Calpitano was dated February 20, 2012, with a return date of March 27, 2012, and contained twenty counts against four defendants:  Fountain Pointe;  Rotundo Developers, LLC (“Rotundo Developers”);  Richard Rotundo (“Rotundo”);  and Argazzi.²  On January 10, 2014, while this motion was pending and before the court, the plaintiffs filed a withdrawal of counts one through ten of the complaint.   In addition to filing the withdrawal of counts one through ten brought by the plaintiff, Rick Calpitano, on the same day the plaintiff filed a request for leave to amended (sic) complaint, indicating that “Rick Calpitano has been withdrawn as a plaintiff in this matter due to the Appellate Court's finding that Liliana Calpitano was a fifty percent member of Fountain Pointe, LLC.” (Request for Leave to Amended (sic) Complaint.) ³  The request also indicated that counsel for all defendants consent to the amendment.⁴  The amended complaint attached to the request is in ten counts.⁵

The court then directed the plaintiff and the defendant, Argazzi, to file a supplemental brief indicating (1) whether Liliana was bringing this action in her derivative capacity only;  and (2) which count Argazzi was seeking to have dismissed.   The plaintiff indicated that Liliana was bringing this action in her derivative capacity only, and Argazzi was seeking to have count ten dismissed.⁶

In count ten, it is alleged that Argazzi, aware of a requirement in Fountain Pointe's operating agreement of a two-thirds majority vote to transfer or convey any “substantial assets” of Fountain Pointe, facilitated the sale of property known as Unit A, Building 2 of Fountain Pointe Professional Park, Willard Avenue, Newington, Connecticut (the “Property”) to Rotundo Development for no consideration.   As a result of said conveyance, the plaintiff “as manager and member of the nominal defendant, Fountain Pointe, LLC” has suffered damages.  (Count ten, ¶ 20.)

II

DISCUSSION

“Practice Book § 17–49 provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.   In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party.”  (Internal quotation marks omitted) Sherman v. Ronco, 294 Conn. 548, 553–54, 985 A.2d 1042 (2010).  “In seeking summary judgment, it is the movant who has the burden of showing the nonexistence of any issue of fact.   The courts are in entire agreement that the moving party for summary judgment has the burden of showing the absence of any genuine issue as to all the material facts, which, under applicable principles of substantive law, entitle him to a judgment as a matter of law.   The courts hold the movant to a strict standard ․ Once the moving party has met its burden, however, the opposing party must present evidence that demonstrates the existence of some disputed factual issue ․ It is not enough, however, for the opposing party merely to assert the existence of such a disputed issue.   Mere assertions of fact ․ are insufficient to establish the existence of a material fact and, therefore, cannot refute evidence properly presented to the court under Practice Book § [17–45].”  (Internal quotation marks omitted.)  Ramirez v. Health Net of the Northeast, Inc., 285 Conn. 1, 10–11, 938 A.2d 576 (2008).

“Subject matter jurisdiction involves the authority of the court to adjudicate the type of controversy presented by the action before it ․ [A] court lacks discretion to consider the merits of the case over which it is without jurisdiction ․ The objection of want of jurisdiction may be made at any time ․ [a]nd the court or tribunal may act on its own motion, and should do so when the lack of jurisdiction is called to its attention ․ The requirement of subject matter jurisdiction cannot be waived by any party and can be raised at any stage [of] the proceedings.”  (Internal quotation marks omitted.)   J.P. Alexandre, LLC v. Egbuna, 137 Conn.App. 340, 347, 49 A.3d 222, cert. denied, 307 Conn. 913, 53 A.3d 1000 (2012).

“Although the proper way to challenge subject matter jurisdiction is by a motion to dismiss, rather than a motion for summary judgment ․ it is not improper to treat a motion for summary judgment as a motion to dismiss.”   (Citation omitted;  internal quotation marks omitted.)   Id., 345 n.5. Accordingly, this court will treat Argazzi's motion for summary judgment as a motion to dismiss for lack of subject matter jurisdiction.

“A motion to dismiss tests, inter alia, whether, on the face of the record, the court is without jurisdiction.”  (Internal quotation marks omitted.)   Dayner v. Archdiocese of Hartford, 301 Conn. 759, 774, 23 A.3d 1192 (2011).  “[T]he plaintiff bears the burden of proving subject matter jurisdiction, whenever and however raised.”  (Internal quotation marks omitted.)  Fort Trumbull Conservancy, LLC v. New London, 265 Conn. 423, 430 n.12, 829 A.2d 801 (2003).

“When a trial court decides a jurisdictional question raised by a pretrial motion to dismiss on the basis of the complaint alone, it must consider the allegations of the complaint in their most favorable light ․ In this regard, 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.)   Conboy v. State, 292 Conn. 642, 651, 974 A.2d 669 (2009).  “In contrast, if the complaint is supplemented by undisputed facts established by affidavits submitted in support of the motion to dismiss ․ other types of undisputed evidence ․ and/or public records of which judicial notice may be taken ․ the trial court, in determining the jurisdictional issue, may consider these supplementary undisputed facts and need not conclusively presume the validity of the allegations of the complaint ․ Rather, those allegations are tempered by the light shed on them by the [supplementary undisputed facts].”  (Citations omitted;  emphasis in original;  internal quotation marks omitted.)  Id., 651–52.

The defendant challenges the plaintiff's standing to pursue the claims of professional negligence against Argazzi for work he performed as attorney for Fountain Pointe on two grounds.   First, the plaintiff lacks standing to sue Argazzi in her individual capacity as he owed her no duty.   Second, the plaintiff lacks standing to sue Argazzi derivatively on behalf of Fountain Pointe due to a clear and irreconcilable conflict of interest.

“Standing is the legal right to set judicial machinery in motion.   One cannot rightfully invoke the jurisdiction of the court unless he 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 ․ When standing is put in issue, the question is whether the person whose standing is challenged is a proper party to request an adjudication of the issue.   Standing requires no more than a colorable claim of injury;  a [party] ordinarily establishes standing by allegations of injury.   Similarly standing exists to attempt to vindicate arguably protected interests ․

“Standing is established by showing that the party claiming it is authorized by statute to bring suit or is classically aggrieved ․ The fundamental test for determining aggrievement encompasses a well-settled twofold determination:  first, the party claiming aggrievement must successfully demonstrate a specific, personal and legal interest in [the subject matter of the challenged action], as distinguished from a general interest, such as is the concern of all members of the community as a whole.   Second, the party claiming aggrievement must successfully establish that this specific personal and legal interest has been specially and injuriously affected by the [challenged action] ․ Aggrievement is established if there is a possibility, as distinguished from a certainty, that some legally protected interest ․ has been adversely affected.”  (Emphasis added;  citations omitted;  internal quotation marks omitted.)  AvalonBay Communities Inc. v. Orange, 256 Conn. 557, 567–68, 775 A.2d 284 (2001).

As stated in n.6 above, the plaintiff has made no claims against Argazzi in her individual capacity, but has brought the action derivatively on behalf of Fountain Pointe.   All allegations against Argazzi relate strictly to legal services Argazzi performed for Fountain Pointe, not to any legal services performed for the plaintiff as an individual.   Argazzi performed no professional services on behalf of the plaintiff, he was never retained or engaged by her, and no attorney-client relationship was formed by Argazzi with Liliana Calpitano.   She has no standing, individually, to assert a claim against Argazzi.

The defendant, Argazzi, contests the plaintiff's standing to bring the derivative claims on behalf of Fountain Pointe.   He contends that the plaintiff has an irreconcilable conflict that renders her unsuitable to bring her purported derivative action.

The plaintiff brought this action pursuant to General Statutes § 52–572j, which provides:  “(a) Whenever any corporation or any unincorporated association fails to enforce a right which may properly be asserted by it, a derivative action may be brought by one or more shareholders or members to enforce the right, provided the shareholder or member was a shareholder or member at the time of the transaction of which he complained or his membership thereafter devolved on him by operation of law ․ The derivative action may not be maintained if it appears that the plaintiff does not fairly and adequately represent the interests of the shareholders or members similarly situated in enforcing the right of the corporation or association.”

Although § 52–572j does not on its face apply to limited liability companies, derivative actions for members of an LLC are available.  Wasko v. Farley, 108 Conn.App. 156, 947 A.2d 978, cert. denied, 289 Conn. 922, 958 A.2d 155 (2008);  Ward v. Gamble, Superior Court, judicial district of Hartford, Docket No. CV 08 5017829 (July 23, 2009) (48 Conn.L.Rptr. 286).   General Statutes § 33–721 addresses the issue of standing as it relates to derivative proceedings involving corporations.  “A shareholder may not commence or maintain a derivative proceeding unless the shareholder:  (1) Was a shareholder of the corporation at the time of the act or omission complained of ․;  and (2) fairly and adequately represents the interest of the corporation in enforcing the right of the corporation.”

In determining whether a shareholder is an adequate representative of a corporation in a derivative action, “[t]he key is whether the nominal plaintiff's ․ interests and issues [are] coextensive with those of the class of shareholders he seeks to represent, and whether he is able to assure the trial court that as a representative, he will put up a real fight.”  Fink v. Golenbock, 238 Conn. 183, 206, 680 A.2d 1243 (1996).   For the purposes of determining appropriateness of representation, the Supreme Court adopted from the Ninth Circuit a set of factors to consider in such an inquiry:  “(1) [W]hether the named plaintiff is the real party in interest;  (2) the plaintiff's familiarity with the litigation and willingness to learn about the suit;  (3) the degree of control exercised by attorneys over the litigation;  (4) the degree of support given to the plaintiff by other shareholders;  (5) the plaintiff's personal commitment to the action;  (6) the remedies sought by the plaintiff;  (7) the relative magnitude of the plaintiff's personal interests as compared to the plaintiff's interest in the derivative action;  and (8) the plaintiff's vindictiveness toward the other shareholders.”  Id., citing Larson v. Dumke, 900 F.2d 1363 (9th Cir.), cert. denied, 498 U.S. 1012, 111 S.Ct. 580, 112 L.Ed.2d 585 (1990) “․ [T]he ․ factors are nonexclusive and interrelated, and that it is frequently a combination of factors that guides a court in determining whether a plaintiff meets the requirements of fair and adequate representation.”  Id.

In considering the factors set forth above, the court finds that the plaintiff has an irreconcilable conflict which would render her unsuitable to bring this purported derivative action.   In order to address this, the court takes judicial notice of two other legal actions involving the same transaction, and Fountain Pointe's rights to the property which are relevant to the issue of whether the plaintiff can fairly and adequately represent the interests of Fountain Pointe.

Quiet Title Action

Fountain Pointe brought a quiet title action against Liliana Calpitano, individually and as trustee of the Calpitano Living Trust, and Rick Calpitano, in connection with mortgages that the Calpitano Family Living Trust had placed on the property, which is the subject of this lawsuit.  Fountain Pointe, LLC v. Calpitano et al., Superior Court, Judicial District of New Britain, Docket No. CV 10–6004936, affirmed on appeal, 144 Conn.App. 624, 76 A.3d 636 (2103), cert. denied 310 Conn. 928, 78 A.3d 147 (2013).   The court (Swienton, J.) found for Fountain Pointe on its claims against the defendants, specifically finding that Rick Calpitano and Liliana Calpitano had executed and filed false mortgages on the property, that the filing of the mortgages and lis pendens were done with a reckless disregard for the truth and done with malice;  and that as a result, Fountain Pointe had suffered pecuniary damages as a result of the bogus mortgages.   The court further found that the actions of Rick and Liliana resulted in an economic loss to Fountain Pointe of approximately $1.8 million.

The Foreclosure Action

In addition to the quiet title action, the plaintiff initiated a second lawsuit against Fountain Pointe in 2010 seeking to foreclose the bogus mortgages.   Calpitano et al. v. Fountain Pointe, LLC, et al., Superior Court, judicial district of New Britain, Docket No. CV 10–6006235.   On February 5, 2013, the court (Abrams, J.) granted summary judgment in favor of Fountain Pointe, finding that the decision in the quiet title action which found the mortgages to be invalid, had collateral estoppel effect and the court was required to treat the mortgages in the foreclosure action as invalid as well.⁷

The quiet title action, the foreclosure action, and the present action all concern the same subject matter and transaction—the transfer of the property.   The plaintiff vigorously litigated the quiet title action, personally disputing Fountain Pointe's rights to the property.   The plaintiff purports to be representing the interests of Fountain Pointe in this action, at the same time maintaining a personal action attacking Fountain Pointe's rights to the property.   The plaintiff has spent the last three years contesting Fountain Pointe's rights to the property, seeking possession of the property, and monetary damages from Fountain Pointe.   Moreover, it was her actions, taken with “reckless disregard for the truth” that resulted in a $1.8 million economic loss to Fountain Pointe.  Fountain Pointe, LLC v. Calpitano, et al., supra 144 Conn.App. 624.   Given the “relative magnitude” of her personal interest as compared to her interest in the derivative action, Liliana Calpitano is unable to offer this court any assurances that she will fairly and adequately represent Fountain Pointe's interests.⁸

Accordingly, based upon the irreconcilable conflict in maintaining a personal action against Fountain Pointe, the plaintiff lacks standing to pursue her derivative claims against the defendant, Argazzi, concerning his professional services rendered on behalf of Fountain Pointe.

III

CONCLUSION

The motion for summary judgment is granted.   Count ten of the amended complaint dated January 10, 2014, is dismissed.

Swienton, J.

FOOTNOTES

FN1. While this motion was pending, a withdrawal of all counts brought by the plaintiff, Rick Calpitano, was filed, together with a request to amend the complaint.   Although the plaintiff refers to the January 10, 2014, complaint as the “second amended complaint,” it is in fact the first amended complaint.   See n.2..  FN1. While this motion was pending, a withdrawal of all counts brought by the plaintiff, Rick Calpitano, was filed, together with a request to amend the complaint.   Although the plaintiff refers to the January 10, 2014, complaint as the “second amended complaint,” it is in fact the first amended complaint.   See n.2.

FN2. The defendant indicates that Rick Calpitano initiated this action with a complaint dated February 20, 2012, with a return date of March 6, 2012, and then later filed an amended complaint adding Liliana Calpitano as a plaintiff.   The initial complaint was never returned to the court..  FN2. The defendant indicates that Rick Calpitano initiated this action with a complaint dated February 20, 2012, with a return date of March 6, 2012, and then later filed an amended complaint adding Liliana Calpitano as a plaintiff.   The initial complaint was never returned to the court.

FN3. The court notes that an affidavit dated September 27, 2013, submitted, signed, and sworn to by Rick Calpitano states “I am a member and manager of Fountain Pointe, LLC.” (Affidavit, ¶ 2) An affidavit dated September 30, 2013, submitted, signed, and sworn to by Liliana Calpitano states “On January 11, 2007, Rick Calpitano executed a Transfer and Return of Membership Agreement, which transferred his membership in Fountain Pointe LLC to me at the time of a real estate transaction for the sole purpose of executing the necessary documents.   Said membership interest was to revert back to Rick Calpitano after a real estate transaction was complete.”  (Affidavit, ¶ 4) The Appellate Court decision was released on August 6, 2013..  FN3. The court notes that an affidavit dated September 27, 2013, submitted, signed, and sworn to by Rick Calpitano states “I am a member and manager of Fountain Pointe, LLC.” (Affidavit, ¶ 2) An affidavit dated September 30, 2013, submitted, signed, and sworn to by Liliana Calpitano states “On January 11, 2007, Rick Calpitano executed a Transfer and Return of Membership Agreement, which transferred his membership in Fountain Pointe LLC to me at the time of a real estate transaction for the sole purpose of executing the necessary documents.   Said membership interest was to revert back to Rick Calpitano after a real estate transaction was complete.”  (Affidavit, ¶ 4) The Appellate Court decision was released on August 6, 2013.

FN4. Because the defendant, Argazzi, consented to the amended complaint, the court shall treat the motion for summary judgment as it relates to this amended complaint.  FN4. Because the defendant, Argazzi, consented to the amended complaint, the court shall treat the motion for summary judgment as it relates to this amended complaint

FN5. The complaint is titled “Second Amended Complaint,” however, as noted in n.1 and 2 above, the court file does not reflect an amended complaint.   The court will only refer to this complaint as the “amended complaint.”.  FN5. The complaint is titled “Second Amended Complaint,” however, as noted in n.1 and 2 above, the court file does not reflect an amended complaint.   The court will only refer to this complaint as the “amended complaint.”

FN6. In the memorandum in support of the motion for summary judgment, the defendant states that the plaintiffs are asserting their claims both individually and derivatively on behalf of Fountain Pointe, however, there were no allegations in the only complaint returned to court which provide for individual claims against Argazzi.   In fact, the complaint specifically stated that “the plaintiffs [Rick P. Calpitano and Liliana Calpitano] bring this action derivatively on behalf of nominal defendant, Fountain Pointe, LLC pursuant to Connecticut General Statute[s] § 52–572j” (Count ten, ¶ 7, count twenty, ¶ 7).   In their memorandum of law in support of objection for summary judgment, the plaintiffs did not address the claim that they lack standing to bring the action in their individual capacity.   Based upon the supplemental brief, the court finds that the action is being brought by Liliana in her derivative capacity, and therefore, does not need to address the issue of standing as to an individual claim..  FN6. In the memorandum in support of the motion for summary judgment, the defendant states that the plaintiffs are asserting their claims both individually and derivatively on behalf of Fountain Pointe, however, there were no allegations in the only complaint returned to court which provide for individual claims against Argazzi.   In fact, the complaint specifically stated that “the plaintiffs [Rick P. Calpitano and Liliana Calpitano] bring this action derivatively on behalf of nominal defendant, Fountain Pointe, LLC pursuant to Connecticut General Statute[s] § 52–572j” (Count ten, ¶ 7, count twenty, ¶ 7).   In their memorandum of law in support of objection for summary judgment, the plaintiffs did not address the claim that they lack standing to bring the action in their individual capacity.   Based upon the supplemental brief, the court finds that the action is being brought by Liliana in her derivative capacity, and therefore, does not need to address the issue of standing as to an individual claim.

FN7. The plaintiff along with the co-plaintiff in the foreclosure action is appealing the court's decision.   That appeal is currently pending under Docket No. AC 35437..  FN7. The plaintiff along with the co-plaintiff in the foreclosure action is appealing the court's decision.   That appeal is currently pending under Docket No. AC 35437.

FN8. In addition, given the statement made in her affidavit to the court that her membership interest was “for the sole purpose of executing [real estate documents],” the court cannot find that she has a “personal commitment” to the action..  FN8. In addition, given the statement made in her affidavit to the court that her membership interest was “for the sole purpose of executing [real estate documents],” the court cannot find that she has a “personal commitment” to the action.

Swienton, Cynthia K., J.