Laura Pullicino v. John A. Jensen, Jr.

Reset A A Font size: Print

Superior Court of Connecticut.

Laura Pullicino v. John A. Jensen, Jr.

CV136019108S

Decided: December 27, 2013

MEMORANDUM OF DECISION RE MOTION TO DISMISS # 103

ISSUE

Whether the court should grant the defendant's motion to dismiss the complaint on the grounds that the court lacks subject matter jurisdiction and the plaintiff lacks standing to assert the claims set forth in the complaint.

FACTS

On April 3, 2013, the plaintiff, Laura Pullicino, commenced this enforcement action by service of process on the defendant, John A. Jensen, Jr. In her complaint, the plaintiff alleges the following facts.   The defendant, as owner, chairman and director of Pelham Sloan, Inc. (Pelham), hired the plaintiff as the Supply Chain Manager in June 2007.   On October 12, 2008, the defendant, as owner, chairman and director of Pelham, terminated the plaintiff's employment.   The plaintiff filed an affidavit of illegal discriminatory practice with the Commission on Human Rights and Opportunities (CHRO) on November 8, 2008, alleging that Pelham had terminated her employment because of her physical disability.

On September 9, 2009, counsel for Pelham advised the CHRO that Pelham had “shut down” operations and that all assets were disposed of in the spring of that year.   The plaintiff's CHRO complaint was certified for a public hearing on October 8, 2010, at which the plaintiff, the plaintiff's counsel, and counsel for the CHRO were present.   The defendant did not attend, nor did any representative of Pelham attend.   An order of default was entered against Pelham on April 27, 2011.   On February 8, 2012, a hearing in damages was held, at which the defendant was not present.   The CHRO issued a final decision on May 11, 2012, awarding the plaintiff $76,793 in damages.   On June 26, 2012, the Superior Court, Agati, J., ordered a judgment without trial to enforce the CHRO award against Pelham.   The defendant, as owner, chairman and director of Pelham, has not made any payment to the plaintiff and claims that Pelham is without funds to pay its liabilities.

The plaintiff further alleges that the defendant personally funded Pelham's start-up costs and ongoing operating costs such that he had a “unity of interest and ownership” with the corporation.   The “[d]efendant and Pelham's identities are one and the same.”   Moreover, the defendant used Pelham “as an instrumentality or shield to avoid personal financial liability” and committed fraud by “stripping the corporation of its ability to pay its liabilities in the ordinary course of business.”

On April 15, 2009, Jaotech, USA, Inc. (Jaotech), filed its certificate of incorporation with the Secretary of State and the defendant was elected director, chairman, and non-executive director.   The defendant subsequently “liquidated all Pelham's assets by selling the assets to Jaotech” and personally benefitted from the transaction professionally and financially.   The plaintiff claims that “because of the identity between the defendant and Pelham,” she is entitled to recover the awarded damages against the defendant.

The defendant filed a motion to dismiss the complaint on July 24, 2013, accompanied by a supporting memorandum of law.   On August 30, 2013, the plaintiff filed an objection and a memorandum of law accompanied by exhibits.   The matter was heard by the court at short calendar on November 12, 2013.

DISCUSSION

“[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).  “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).  “The motion to dismiss ․ admits all facts which are well pleaded, invokes the existing record and must be decided upon that alone.”   (Internal quotation marks omitted.)  Ferreira v. Pringle, 255 Conn. 330, 346, 766 A.2d 400 (2001).  “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).   In addition, “because the issue of standing implicates subject matter jurisdiction [lack of standing] 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).

The defendant argues that the court “lacks subject matter jurisdiction and that the plaintiff lacks standing to assert the claims set forth in the complaint.”   Specifically, the defendant argues that the plaintiff failed to exhaust her administrative remedies by not adding the defendant to the CHRO complaint or otherwise pursuing her claim against the defendant in the administrative action.   Moreover, the defendant argues that because he was not a party in noncompliance with the CHRO's final decision, he cannot be subject to a judgment under General Statutes § 46a–95.   Finally, the defendant argues that the plaintiff's claim is barred because the statute of limitations for piercing the corporate veil has expired.   The plaintiff argues in opposition that piercing the corporate veil is the only equitable remedy available to her and that her claim is not barred because the applicable statute of limitations under General Statutes § 52–584 for enforcement actions has not run.   The court will address the statute of limitations argument first, and then discuss the arguments regarding failure to exhaust administrative remedies and piercing the corporate veil.

I.

STATUTE OF LIMITATIONS

The parties disagree on the applicable statute of limitations.   The defendant argues that this is a tort case because “piercing the corporate veil is tantamount to general tort.”   As the defendant correctly points out, the statutes of limitations for torts cases under General Statutes §§ 52–577 and 52–584 is three years.   The plaintiff argues that this is an action to collect a prior judgment and therefore the statute of limitations is twenty years, as stated in General Statutes § 52–598.

Section 52–584 states, in relevant part, that “[n]o action to recover damages for injury to the person, or to real or personal property, caused by negligence, or by reckless or wanton misconduct ․ shall be brought but within two years from the date when the injury is first sustained or discovered ․ and except that no action may be brought more than three years from the date of the act or omission complained of ․” Section 52–577 provides:  “No action founded upon a tort shall be brought but within three years from the date of the act or omission complained of.”   However, § 52–598 provides, in relevant part:  “No execution to enforce a judgment for money damages rendered in any court of this state may be issued after the expiration of twenty years from the date the judgment was entered and no action based upon such a judgment may be instituted after the expiration of twenty-five years from the date the judgment was entered ․”

The present action is for enforcement of a prior judgment from the CHRO by piercing the corporate veil of Pelham, the company against which the judgment was entered.   When presented with facts and history similar to the present case, the court in CHRO v. Travel & Tour Services, Inc., Superior Court, judicial district of Hartford, Docket No. CV–92–0519557–S (July 12, 1994, Hennessey, J.), decided that § 52–598 was applicable and twenty years was the appropriate statute of limitations.1  The court relied on an opinion from the Court of Appeals for the Second Circuit, Wm. Passalacqua Builders, Inc. v. Resnick Developers South, Inc., 933 F.2d 131 (2d Cir.1991), which, when presented with the same issue of piercing the corporate veil in the context of an enforcement action, the court in Wm. Passalacqua decided the case in favor of jurisdiction with § 52–598 as the applicable statute of limitations.   The court in Wm. Passalacqua stated that “if the plaintiffs in this case can prove the defendants are in fact the alter ego of Developers, defendants' jurisdictional objection evaporates because the previous judgment is then being enforced against entities who were, in essence, parties to the underlying dispute;  the alter egos are treated as one entity.”  Wm. Passalacqua Builders, Inc. v. Resnick Developers South, Inc., supra, 142–43.

The Second Circuit assumed there was jurisdiction over the entity in the underlying action that resulted in the prior judgment and concluded that there could not be a jurisdictional dispute for the individual acting as the alter ego for the entity.   That is the exact situation the court is presented with in this case.   If the plaintiff can show that Pelham is the alter ego of the defendant and there was no dispute that jurisdiction over Pelham in the original CHRO proceeding was proper, then there was also jurisdiction over the defendant at the original CHRO proceeding.   The court holds that the twenty-year statute of limitations in § 52–598 is applicable to this case.   The defendant, in his motion to dismiss, acknowledges these two cases,2 but claims that “neither the Second Circuit nor the ․ Connecticut Superior [court] that relied on the Second Circuit engaged in anything more than a cursory analysis of which statute of limitations should apply.”   This statement, however, is insufficient to distinguish the cases and to convince the court that they are inappropriate to rely on.   The enforcement action is thus not barred by the statute of limitations.

II.

FAILURE TO EXHAUST ADMINISTRATIVE REMEDIES AND PIERCING THE CORPORATE VEIL

“Under our exhaustion of administrative remedies doctrine, a trial court lacks subject matter jurisdiction over an action that seeks a remedy that could be provided through an administrative proceeding, unless and until that remedy has been sought in the administrative forum ․ In the absence of exhaustion of that remedy, the action must be dismissed.”  (Internal quotation marks omitted.)  Levine v. Sterling, 300 Conn. 521, 528, 16 A.3d 664 (2011).   With regard to CHRO claims and disputes, General Statutes § 46a–100 provides that “[a]ny person who has timely filed a complaint with the [CHRO] in accordance with section 46a–82 and who has obtained a release from the commission in accordance with section 46a–83a or 46a–101, may also bring an action in the superior court ․” Section 46a–101(a) also provides that “[n]o action may be brought in accordance with section 46a–100 unless the complainant has received a release from the commission in accordance with the provisions of this section.”

The defendant argues that because he was not named in the CHRO complaint, the plaintiff has failed to exhaust her administrative remedies.   The plaintiff argues, in response, that the defendant is the alter ego of the corporation named in the CHRO complaint and against whom the judgment was entered.   Therefore, the plaintiff argues that the defendant was de facto and essentially named in the CHRO complaint and the court should pierce the corporate veil of the corporation to enable the plaintiff to recover the money to which she is entitled.

“Courts will ․ disregard the fiction of a separate legal entity to pierce the shield of immunity afforded by the corporate structure in a situation in which the corporate entity has been so controlled and dominated that justice requires liability to be imposed on the real actor ․” (Internal quotation marks omitted.)  Naples v. Keystone Building & Development Corp., 295 Conn. 214, 231, 990 A.2d 326 (2010).   The Supreme Court has recognized two tests from which to determine whether to pierce the corporate veil:  instrumentality test and identity test.3  Breen v. Judge, 124 Conn.App. 147, 152, 4 A.3d 326 (2010).   Under either test, the plaintiff is obligated to show that the individual and the entity had such a unity of interest that the entity had no mind of its own.   See Naples v. Keystone Building & Development Corp., supra, 232.   If the plaintiff is successful, a court will “disregard [the] corporate entity so as to make available the personal assets of the [owner] to satisfy a liability of the entity.”  (Internal quotation marks omitted.)   Doe v. First Step Preschool, Inc., Superior Court, judicial district of Danbury, Docket No. CV–12–5009050–S (January 31, 2013, Doherty, J.).

In the present case, the plaintiff seeks to pierce Pelham's corporate veil.   If she successfully establishes that the defendant is the alter ego of Pelham such that the defendant and Pelham are one in the same and Pelham failed to have a separate mind from that of the defendant, then the defendant was essentially named in the CHRO complaint and the judgment entered against Pelham is a judgment against the defendant.   The plaintiff is not attempting to re-argue the underlying claims of her CHRO complaint.   She is seeking to enforce the judgment previously entered in her favor.   Therefore, the plaintiff has exhausted her administrative remedies such that the court has jurisdiction over the matter.4

CONCLUSION

For the foregoing reasons, the defendant's motion to dismiss is denied.

BY THE COURT

V. ROCHE, J.

FOOTNOTES

FN1. In CHRO v. Travel & Tour Services, Inc., supra, Superior Court, Docket No. CV–92–0519557–S, the plaintiff, the CHRO, filed a petition to enforce an order of a presiding officer of the CHRO against the defendants, Travel and Tour Services and William Kenney.   The CHRO seeks to enforce an order rendered against Travel and Tour Services in favor of the original complainant, Doe. The CHRO alleged that it demanded payment from Travel and Tour Services and the original complainant had not received payment as ordered.   The CHRO alleged that Travel and Tour Services was a sole proprietorship owned and operated by Kenney and that Travel and Tour Services was Kenney's “alter ego” such that there was “a unity of interest and ownership.”   The defendant filed an answer and special defenses.   One special defense raised the issue of the statute of limitations stating that the action was time barred by General Statutes §§ 52–577 and 52–584.   The CHRO disagreed and argued that the action was not a tort action, but rather was an enforcement action governed by General Statutes § 52–598..  FN1. In CHRO v. Travel & Tour Services, Inc., supra, Superior Court, Docket No. CV–92–0519557–S, the plaintiff, the CHRO, filed a petition to enforce an order of a presiding officer of the CHRO against the defendants, Travel and Tour Services and William Kenney.   The CHRO seeks to enforce an order rendered against Travel and Tour Services in favor of the original complainant, Doe. The CHRO alleged that it demanded payment from Travel and Tour Services and the original complainant had not received payment as ordered.   The CHRO alleged that Travel and Tour Services was a sole proprietorship owned and operated by Kenney and that Travel and Tour Services was Kenney's “alter ego” such that there was “a unity of interest and ownership.”   The defendant filed an answer and special defenses.   One special defense raised the issue of the statute of limitations stating that the action was time barred by General Statutes §§ 52–577 and 52–584.   The CHRO disagreed and argued that the action was not a tort action, but rather was an enforcement action governed by General Statutes § 52–598.

FN2. In addition to CHRO v. Travel & Tour Services, Inc., supra, Superior Court, Docket No. CV–92–0519557–S, and Wm. Passalacqua Builders, Inc. v. Resnick Developers South, Inc., supra, 933 F.2d 131, the defendant cites Marine Midland Bank v. Pilgrim Mortgage Corp., Superior Court, judicial district of Stamford, Docket No. CV–97–0159982–S (August 18, 1998, Hickey, J.) [22 Conn. L. Rptr. 688].   However, the facts in that case can be distinguished from the facts in the present case.   The court, therefore, does not need to address the analysis it provides..  FN2. In addition to CHRO v. Travel & Tour Services, Inc., supra, Superior Court, Docket No. CV–92–0519557–S, and Wm. Passalacqua Builders, Inc. v. Resnick Developers South, Inc., supra, 933 F.2d 131, the defendant cites Marine Midland Bank v. Pilgrim Mortgage Corp., Superior Court, judicial district of Stamford, Docket No. CV–97–0159982–S (August 18, 1998, Hickey, J.) [22 Conn. L. Rptr. 688].   However, the facts in that case can be distinguished from the facts in the present case.   The court, therefore, does not need to address the analysis it provides.

FN3. “The instrumentality rule requires, in any case but an express agency, proof of three elements:  (1) Control, not mere majority or complete stock control, but complete domination, not only of finances but of policy and business practice in respect to the transaction attacked so that the corporate entity as to this transaction had at the time no separate mind, will or existence of its own;  (2) that such control must have been used by the defendant to commit fraud or wrong, to perpetrate the violation of a statutory or other positive legal duty, or a dishonest or unjust act in controvention of [the] plaintiff's legal rights;  and (3) that the aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of ․” (Internal quotation marks omitted.)  Naples v. Keystone Building & Development Corp., supra, 295 Conn. 232.  “The identity rule has been stated as follows:  If [the] plaintiff can show that there was such a unity of interest and ownership that the independence of the corporations had in effect ceased or had never begun, an adherence to the fiction of separate identity would serve only to defeat justice and equity by permitting the economic entity to escape liability arising out of an operation conducted by one corporation for the benefit of the whole enterprise.”  (Internal quotation marks omitted.)   Id..  FN3. “The instrumentality rule requires, in any case but an express agency, proof of three elements:  (1) Control, not mere majority or complete stock control, but complete domination, not only of finances but of policy and business practice in respect to the transaction attacked so that the corporate entity as to this transaction had at the time no separate mind, will or existence of its own;  (2) that such control must have been used by the defendant to commit fraud or wrong, to perpetrate the violation of a statutory or other positive legal duty, or a dishonest or unjust act in controvention of [the] plaintiff's legal rights;  and (3) that the aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of ․” (Internal quotation marks omitted.)  Naples v. Keystone Building & Development Corp., supra, 295 Conn. 232.  “The identity rule has been stated as follows:  If [the] plaintiff can show that there was such a unity of interest and ownership that the independence of the corporations had in effect ceased or had never begun, an adherence to the fiction of separate identity would serve only to defeat justice and equity by permitting the economic entity to escape liability arising out of an operation conducted by one corporation for the benefit of the whole enterprise.”  (Internal quotation marks omitted.)   Id.

FN4. The defendant also argues that because he was “not a party in noncompliance with the CHRO's final decision, [he] could not be subject to a judgment under General Statutes § 46a–95.”   This argument is analyzed the same way as his argument that the plaintiff has failed to exhaust her administrative remedies.   If the plaintiff successfully shows that the defendant and Pelham are one in the same, then the defendant is essentially named on the CHRO's final decision.   Repetition of the full analysis is not necessary or warranted..  FN4. The defendant also argues that because he was “not a party in noncompliance with the CHRO's final decision, [he] could not be subject to a judgment under General Statutes § 46a–95.”   This argument is analyzed the same way as his argument that the plaintiff has failed to exhaust her administrative remedies.   If the plaintiff successfully shows that the defendant and Pelham are one in the same, then the defendant is essentially named on the CHRO's final decision.   Repetition of the full analysis is not necessary or warranted.

Roche, Vincent E., J.

Copied to clipboard