John Giano v. Vanna Salvatore et al. (2014)

MEMORANDUM OF DECISION RE MOTION TO DISMISS, # 227

The defendant, TD Bank, N.A. (“TD Bank”), moves to dismiss the plaintiff's claims against it contained in the complaint dated June 15, 2010, filed by the plaintiffs, John Giano, asserting the court lacks subject matter jurisdiction.   For the reasons stated below, the court grants TD Bank's motion to dismiss.

FACTS

The present action arises out of a financial dispute between the co-owners and officers of Villa Construction, Inc., LaCasa Developers, LLC, and LaCasa Construction, LLC (the LLCs).  The plaintiff, John Giano, filed a sixteen-count complaint against Vanna Salvatore, Paul Raczynski, and TD Bank alleging a variety of statutory and common-law claims involving the improper transfer and distribution of property and assets belonging to the LLCs.¹ Specifically, as to TD Bank, the plaintiff's complaint alleges that the defendant maintained certain business relations, bank accounts, and other financial instruments with the LLCs, and that the defendant, in violation of Connecticut statutes, regulations, and law, permitted transactions in the foregoing accounts and financial instruments without the required consent or approval of the plaintiff.   The improper transactions alleged include withdrawal of monies from the foregoing accounts, honoring checks, financial instruments, and the prohibition of activity on behalf of the plaintiff in relation to those accounts and financial instruments.

On September 13, 2013, TD Bank filed a motion to dismiss for lack of subject matter jurisdiction on the ground that the plaintiff lacks proper standing to bring the present action and that, in any event, the claims have since been rendered moot.   On November 15, 2013, the plaintiff filed an objection to TD Bank's motion to dismiss arguing that prior court rulings and court actions taken by TD Bank operate as the law of the case, thereby establishing subject matter jurisdiction, and that the claims are not moot since the plaintiff has specifically alleged violations of Connecticut statutes, regulations, and law concerning the maintenance and operation of bank accounts belonging to the LLCs. On November 26, 2013, TD Bank filed its reply reasserting its position that the plaintiff lacks standing and that the claims have been rendered moot.

DISCUSSION

TD Bank first seeks dismissal on the ground that the plaintiff lacks standing to bring the present action against TD Bank. TD Bank argues that the plaintiff cannot seek to vindicate the rights of the LLCs in his individual capacity, and that any such action may only be brought in the form of a derivative suit on behalf of the LLCs. The plaintiff counters that subject matter jurisdiction has already been found by the court and has become the law of the case.   The plaintiff specifically points to prior court rulings and court actions taken by TD Bank as proof of subject matter jurisdiction including, but not limited to, the original filing of TD Bank's answer and special defense, a court order granting TD Bank's request for leave to file an amended answer and special defenses, TD Bank's participation in a pretrial conference and its inclusion in the scheduling order produced therefrom, a court order denying TD Bank's motion for a protective order, and other related court actions that have included TD Bank. TD Bank replies that these rulings by the court and actions taken by TD Bank never explicitly resulted in a finding on whether subject matter jurisdiction exists in the case as to TD Bank ² and that neither prior rulings by the court implicating TD Bank nor any waiver and consent by TD Bank may confer subject matter jurisdiction over the case.

“Pursuant to the rules of practice, a motion to dismiss is the appropriate motion for raising a lack of subject matter jurisdiction.”  St. George v. Gordon, 264 Conn. 538, 545, 825 A.2d 90 (2003).  “[A] motion to dismiss ․ properly attacks the jurisdiction of the court, essentially asserting that the plaintiff cannot as a matter of law and fact state a cause of action that should be heard by the court.”  (Internal quotation marks omitted.)   Santorso v. Bristol Hospital, 308 Conn. 338, 350, 63 A.3d 940 (2013).

“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 a case over which it is without jurisdiction ․ The subject matter jurisdiction requirement may not be waived by any party, and also may be raised by a party, or by the court sua sponte, at any stage of the proceedings ․” (Emphasis added.   Internal quotation marks omitted.)  Keller v. Beckenstein, 305 Conn. 523, 531–32, 46 A.3d 102 (2012).  “Once the question of subject matter jurisdiction has been raised, cognizance of it must be taken and the matter passed upon before [the court] can move one further step in the cause;  as any movement is necessarily the exercise of jurisdiction.”  (Internal quotation marks omitted.)   Schaghticoke Tribal Nation v. Harrison, 264 Conn. 829, 839 n.6, 826 A.2d 1102 (2003).

“[B]ecause the issue of standing implicates subject matter jurisdiction it may be a proper basis for granting a motion to dismiss ․ [S]ee Practice Book § 10–31(a)(1).”  (Citation omitted.)  Electrical Contractors, Inc. v. Dept. of Education, 303 Conn. 402, 413, 35 A.3d 188 (2012).  “[A] party must have standing to assert a claim in order for the court to have subject matter jurisdiction over the claim ․ 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.”  (Internal quotation marks omitted.)  Giano v. Salvatore, 136 Conn.App. 834, 840–41, 46 A.3d 996, cert. denied, 307 Conn. 926, 55 A.3d 567 (2012).  “If ․ the plaintiff's standing does not adequately appear from all materials of record, the complaint must be dismissed.”  (Internal quotation marks omitted.)  Burton v. Dominion Nuclear Connecticut, Inc., 300 Conn. 542, 550, 23 A.3d 1176 (2011).

“[A]s a general rule, a plaintiff lacks standing unless the harm alleged is direct rather than derivative or indirect ․ The requirement of directness between the injuries claimed by the plaintiff and the conduct of the defendant also is expressed, in our standing jurisprudence, by the focus on whether the plaintiff is the proper party to assert the claim at issue ․ Thus, to state these basic propositions another way, if the injuries claimed by the plaintiff are remote, indirect or derivative with respect to the defendant's conduct, the plaintiff is not the proper party to assert them and lacks standing to do so.   [When], for example, the harms asserted to have been suffered directly by a plaintiff are in reality derivative of injuries to a third party, the injuries are not direct but are indirect, and the plaintiff has no standing to assert them ․

“A limited liability company is a distinct legal entity whose existence is separate from its members ․ [It] has the power to sue or to be sued in its own name;  see General Statutes §§ 34–124(b) and 34–186;  or may be a party to an action brought in its name by a member or manager ․ A member or manager, however, may not sue in an individual capacity to recover for an injury based on a wrong to the limited liability company ․ [A] member or manager of a limited liability company is not a proper party to a proceeding by or against a limited liability company solely by reason of being a member or manager of the limited liability company, except where the object of the proceeding is to enforce a member's or manager's right against or liability to the limited liability company or as otherwise provided in an operating agreement ․” (Citations omitted;  internal quotation marks omitted.)   Padawer v. Yur, 142 Conn.App. 812, 817–18, 66 A.3d 931, cert. denied, 310 Conn. 927, 78 A.3d 145 (2013).

The present case fails to establish subject matter jurisdiction between the plaintiff and TD Bank. The plaintiff's complaint with regard to TD Bank alleges violations of Connecticut law with regard to the management of bank accounts and other financial instruments owned by the LLCs. Specifically, the plaintiff alleges that “[p]laintiff in plaintiff's capacity including as owner and/or officer of defendant Villa Construction, Inc., LaCasa Developers, LLC, [and] LaCasa Construction, LLC, possessed full rights as to all of the accounts, financial instruments and financial information thereof with defendant TD Bank, N.A[.]” (Emphasis added.   Complaint, fifteenth count, ¶ 7.)

At no point does the plaintiff allege an individual or personal business relationship with TD Bank which resulted in a direct injury.   Thus, the injury resulting from the alleged conduct can only be fairly considered a direct injury to the LLCs as owners of the bank accounts and financial instruments in question.   Any resulting injury to the plaintiff is an indirect injury derivative of injuries to the LLCs as distinct legal entities separate from their members and management.   As a member and manager, the plaintiff may only enforce the legal rights of the LLCs in a representative capacity.   Therefore, the plaintiff, in his individual capacity, is not the proper party to bring suit against TD Bank for alleged violations in the maintenance and operation of bank accounts and other financial instruments owned by the LLCs, and lacks proper standing to maintain the present action.

The plaintiff's argument that subject matter jurisdiction has already been found to exist and is, therefore, the law of the case, is unavailing.  “The law of the case doctrine expresses the practice of judges generally to refuse to reopen what [already] has been decided ․ New pleadings intended to raise again a question of law which has been already presented on the record and determined adversely to the pleader are not to be favored ․ Where a matter has previously been ruled upon interlocutorily, the court in a subsequent proceeding in the case may treat that decision as the law of the case ․” (Citations omitted;  internal quotation marks omitted.)  Brown & Brown, Inc. v. Blumenthal, 288 Conn., 646, 656, 954 A.2d 816 (2008).   A review of the present case indicates that at no point has the court ruled upon the issue of whether standing exists between the plaintiff and TD Bank. The filings, court orders, and proceedings referred to by the plaintiff in his brief in no way implicate a decision by the court finding subject matter jurisdiction.   Additionally, since subject matter jurisdiction may not be waived by either party;  Keller v. Beckenstein, supra, 305 Conn. 531;  these prior court rulings and actions by TD Bank cannot operate as waiver or consent to the court's subject matter jurisdiction.

Therefore, the court finds that the plaintiff lacks standing to bring the present action as against TD Bank. Since the lack of standing necessarily implicates the court's subject matter jurisdiction over the case and is dispositive in warranting dismissal, the court need not address the merits of whether the plaintiff's claims against TD Bank have been rendered moot.

CONCLUSION

For the foregoing reasons, TD Bank's motion to dismiss is granted for lack of subject matter jurisdiction.

Swienton, J.

FOOTNOTES

FN1. A review of the complaint indicates that the only count in which the plaintiff specifically seeks relief against TD Bank is count fifteen.   Although the plaintiff addresses his allegations in count one against “the defendants,” it does not appear that this count is directed against TD Bank. Likewise, although the plaintiff claims that count thirteen is addressed to TD Bank, a review of the count indicates that this is a mischaracterization.   Count thirteen alleges that the defendants, Salvatore and Raczynski, “were negligent,” and lists seven subparagraphs in which the conduct of Salvatore and Raczynski is alleged to have violated an applicable standard of care.  (Count thirteen, ¶ 6.)   There are no allegations of any specific acts of negligent conduct on the part of TD Bank..  FN1. A review of the complaint indicates that the only count in which the plaintiff specifically seeks relief against TD Bank is count fifteen.   Although the plaintiff addresses his allegations in count one against “the defendants,” it does not appear that this count is directed against TD Bank. Likewise, although the plaintiff claims that count thirteen is addressed to TD Bank, a review of the count indicates that this is a mischaracterization.   Count thirteen alleges that the defendants, Salvatore and Raczynski, “were negligent,” and lists seven subparagraphs in which the conduct of Salvatore and Raczynski is alleged to have violated an applicable standard of care.  (Count thirteen, ¶ 6.)   There are no allegations of any specific acts of negligent conduct on the part of TD Bank.

FN2. The plaintiff in his objection also points to a prior decision in this matter in Giano v. Salvatore, 136 Conn.App. 834, 841–42, 46 A.3d 996, cert. denied, 307 Conn. 926, 55 A.3d 567 (2012), where the Appellate Court found subject matter jurisdiction to exist.   The decision, however, related to whether subject matter jurisdiction exited between the plaintiff and Vanna Salvatore, and dealt specifically with the issue of whether a release agreement between the plaintiff and Salvatore implicated the plaintiff's standing to bring the action.   The issue did not deal with the issue before this court, which is whether the plaintiff has standing individually to assert a claim on behalf of the LLCs..  FN2. The plaintiff in his objection also points to a prior decision in this matter in Giano v. Salvatore, 136 Conn.App. 834, 841–42, 46 A.3d 996, cert. denied, 307 Conn. 926, 55 A.3d 567 (2012), where the Appellate Court found subject matter jurisdiction to exist.   The decision, however, related to whether subject matter jurisdiction exited between the plaintiff and Vanna Salvatore, and dealt specifically with the issue of whether a release agreement between the plaintiff and Salvatore implicated the plaintiff's standing to bring the action.   The issue did not deal with the issue before this court, which is whether the plaintiff has standing individually to assert a claim on behalf of the LLCs.

Swienton, Cynthia K., J.