LLC v. LLC (2014)

MEMORANDUM OF DECISION RE MOTION FOR AN AWARD OF ATTORNEYS FEES, COSTS AND EXPENSES (# 113)

By memorandum of decision dated December 5, 2013, [57 Conn. L. Rptr. 265] the court dismissed this action, finding that the plaintiff had no standing to pursue it.  “If a party is found to lack standing, the court is without subject matter jurisdiction to determine the cause.”  (Citations and internal quotation marks omitted.)  Pond View, LLC v. Planning & Zoning Commission, 288 Conn. 143, 155 (2008).   The defendants have now moved for an award of attorneys fees, costs and expenses.

“Ordinarily, a successful litigant is not entitled to an award of attorneys fees ․ This rule is known as the ‘American rule.’  ․ Connecticut recognizes, however, the exceptions to this rule.   A successful litigant is entitled to an award of attorneys fees if they are provided by contract;  ․ by statute;  ․ or as an aspect of punitive damages.”  (Citations and internal quotation marks omitted.)  Jones v. Ippoliti, 52 Conn.App. 199, 209 (1999).

The defendants claim that an award of attorneys fees is allowed under the Operating Agreement.   They cite Article 12.8 of the Agreement.   It states:  “Any dispute between the parties arising out of or relating to the Agreement shall be settled by arbitration conducted in the municipality where the Company's office is located (or as close thereto as possible) in accordance with the Commercial Arbitration Rules, as applicable, of the American Arbitration Association and judgment upon the award, which shall be binding and conclusive upon the parties hereto, may be entered in any court having jurisdiction thereof.   Liability for related legal expenses and costs shall be determined by the arbitrators, it being understood that it is the intention of the parties hereto that any breaching party shall reimburse the other party for all costs and expenses, including, without limitation, attorneys fees, incurred with respect to the enforcement of this Agreement.”  (Emphasis added.)

The plaintiff argues that the provision regarding attorneys fees is only applicable after a determination that a party has breached the agreement, which was not done here.   Also, it claims that the court, since it dismissed the matter for lack of subject matter jurisdiction, has no authority to make such an award.   As to the first argument, the agreement clearly states that the resolution of an issue of attorneys fees “shall be determined by the arbitrators” and that the intention is “that any breaching party shall reimburse the other party.”  “Whether the arbitrability of a dispute is a question for the court or for the arbitrators depends upon the language of the contract.”  College Plaza, Inc. v. Harlaco, Inc., 152 Conn. 707 (1965).   The Agreement here clearly leaves the determination of attorneys fees to arbitration.   In addition, the court agrees with the plaintiff that there has been no determination of any breach by it, such that it would be subject to a claim for fees.   In the Koffman case, cited by the defendants, the contract did not contain a provision similar to the one in the Agreement here, but the lease there provided that either party could recover legal expenses from the defaulting party.   Koffman Associates v. Panache Plus, Inc., Superior Court, Judicial District of Stamford–Norwalk Docket No. 8707–987 (Melville, J., Oct. 31, 1990).   In any event, if as the defendants claim, the initiation of this suit was itself a breach of the Agreement, then the defendants may pursue their claims for fees incurred as a result through arbitration.

As to the plaintiff's claim that the court lacks jurisdiction to award attorneys fees, the court agrees.   Here the court found that it lacked jurisdiction to adjudicate the plaintiff's claims.   The decision in Lindo v. Lindo, 48 Conn.App. 645, 652 (1998), cited by the defendants, is not applicable because there the court concluded that since “the trial court (1) maintained continuing jurisdiction during the pendency of the appeal, (2) was statutorily authorized to award attorneys fees, and (3) did not rule on the merits of the case, it did not act improperly in awarding attorneys fees to the plaintiff.”   Here, there has been no appeal of the court's decision dismissing the case and the appeal period has passed, therefore the court has no continuing jurisdiction as in Lindo.   In Paranteau v. DeVita, 208 Conn. 515 (1988), the Court held “that a judgment on the merits is final for purposes of appeal even though the recoverability or amount of attorneys fees for the litigation remains to be determined.”

Therefore the defendants' Motion for an Award of Attorneys Fees, Costs and Expenses is denied.

Jane S. Scholl

Scholl, Jane S., J.