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*********************************************** 
SAUNDERS v. BRINER—CONCURRENCE AND DISSENT

ROBINSON, C. J., with whom McDONALD and MULLINS, Js., join, concurring in part and dissenting in part.

I respectfully disagree with part I B of the majority

opinion, which concludes that the plaintiff, Roger L.

Saunders, had standing to bring counts four, six, nine

and ten of the second amended complaint, asserting

direct claims of breach of fiduciary duty and breach of

the implied covenant of good faith and fair dealing

against the defendants Clark Briner and Revere Capital,

LLC, a Texas limited liability company (LLC).1

I conclude that the plaintiff lacks standing because the bridge

loan to Revere Investments, LLC (Revere Investments),

in connection with Revere Investments’ loan to LR

Global (LR Global bridge loan) that gave rise to these

claims was made by Saunders Capital, LLC (Saunders

Capital), which is an LLC of which the plaintiff was the

sole member and manager, meaning that any injury was

suffered by the LLC rather than the plaintiff personally—even though it was the plaintiff who had provided

the funds at issue to Saunders Capital.2

In so concluding,

I respectfully disagree with the majority’s decision to

follow § 7.01 (d) of the American Law Institute’s Principles of Corporate Governance: Analysis and Recommendations (Principles of Corporate Governance) and

adopt a single member LLC exception to the general rule

prohibiting members of such companies from bringing

direct actions to recover for harms suffered entirely

by the company. See 2 A.L.I., Principles of Corporate

Governance: Analysis and Recommendations (1994)

§ 7.01 (d), p. 17; see also, e.g., Channing Real Estate,

LLC v. Gates, 326 Conn. 123, 138, 161 A.3d 1227 (2017).

In my view, the majority’s decision to adopt this single

member exception to the general rule invades our legislature’s primary role in the formulation of public policy—in an arena that is purely statutory. Additionally,

the majority’s approach may open the door to gamesmanship with the LLC corporate form. Because I conclude that the plaintiff lacked standing to bring counts

four, six, nine and ten of the second amended complaint, I respectfully dissent from part I B of the majority opinion.

I agree at the outset with the majority’s recitation of

the facts and procedural history of this case. I also

note that it is well settled that the ‘‘issue of standing

implicates a court’s subject matter jurisdiction and is

subject to plenary review. . . . 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 distin-
guished 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].’’ (Citation omitted; internal quotation

marks omitted.) Channing Real Estate, LLC v. Gates,

supra, 326 Conn. 137.

By way of background, I ‘‘begin . . . with the nature

of LLCs and the law that governs them. Our common

law does not recognize LLCs, which were first created

by statute in Connecticut in 1993. Public Acts 1993, No.

93-267. An LLC is a distinct type of business entity that

allows its owners to take advantage of the pass-through

tax treatment afforded to partnerships while also providing them with limited liability protections common

to corporations. See, e.g., 51 Am. Jur. 2d 818, Limited

Liability Companies § 1 ([2d Ed.] 2011); see also General

Statutes [Rev. to 2017] § 34-133 (setting forth members’

limited liability protections). The [Connecticut Limited

Liability Company Act, General Statutes (Rev. to 2017)

§ 34-100 et seq.] establishes the right to form an LLC

and all of the rights and duties of the LLC, as well as

all of the rights and duties of members and assignees.

It permits the members to supplement these statutory

provisions by adopting an operating agreement to govern the LLC’s affairs. See, e.g., General Statutes [Rev.

to 2017] § 34-140 (c) (permitting members to adopt

operating agreement governing LLC’s affairs, provided

agreement is consistent with act).’’ Styslinger v. Brewster Park, LLC, 321 Conn. 312, 317–18, 138 A.3d 257

(2016); accord General Statutes § 34-243 et seq. (provisions of Connecticut Uniform Limited Liability Company Act, effective July 1, 2017).

In Channing Real Estate, LLC, we followed the decision of the Appellate Court in O’Reilly v. Valletta, 139

Conn. App. 208, 214, 55 A.3d 583 (2012), cert. denied,

308 Conn. 914, 61 A.3d 1101 (2013), and observed that

an LLC ‘‘is a distinct legal entity whose existence is

separate from its members. . . . [An LLC] has the

power to sue or to be sued in its own name; see General

Statutes [Rev. to 2017] §§ 34-124 (b) and 34-186; or may

be a party to an action brought in its name by a member

or manager. See General Statutes [Rev. to 2017] § 34-

187.3 A member or manager, however, may not sue in

an individual capacity to recover for an injury based

on a wrong to the [LLC].’’ (Footnote in original; internal

quotation marks omitted.) Channing Real Estate, LLC

v. Gates, supra, 326 Conn. 137–38; see also General

Statutes (Rev. to 2017) § 34-134 (‘‘[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’’). In Channing Real Estate,

LLC, we concluded that an individual defendant lacked

standing to assert a counterclaim alleging a violation
of the Connecticut Unfair Trade Practices Act (CUTPA),

General Statutes § 42-110a et seq., against the plaintiff

because the facts established that the defendant had

‘‘not demonstrated a specific, personal, and legal interest separate from that of Front Street Commons,’’ an

LLC of which he was a member. Channing Real Estate,

LLC v. Gates, supra, 138. We explained that ‘‘Front

Street Commons owned the property that was at issue

during the parties’ negotiations. Front Street Commons

would have been a party to the proposed option and

operating agreements. Front Street Commons allegedly

lost financial assistance from the plaintiff and suffered

lost rental income. From these facts, it is clear that the

injuries the defendant alleges in the CUTPA count of

his counterclaim, if any, are those allegedly suffered by

Front Street Commons specifically, and not the defendant. Front Street Commons is [an LLC] and is therefore

a distinct legal entity from the defendant, who is simply

a member of that entity. Because a member of [an LLC]

cannot recover for an injury allegedly suffered by the

[LLC], we conclude that the defendant lacks standing

to pursue a claim alleging a violation of CUTPA.’’ Id.;

accord Wilcox v. Webster Ins., Inc., 294 Conn. 206,

219–20, 982 A.2d 1053 (2009) (concluding that General

Statutes [Rev. to 2009] § 34-134 did not bar claims

against insurance company by members of LLC to

whom insurance policies had been issued because their

status as named insureds under policies gives them

standing).

Although this issue remains one of first impression

for this court, I observe first that, in Padawer v. Yur,

142 Conn. App. 812, 818, 66 A.3d 931, cert. denied, 310

Conn. 927, 78 A.3d 145 (2013), our Appellate Court,

consistent with the analysis in our subsequent decision

in Channing Real Estate, LLC, held that a sole member

of an LLC lacks standing to bring an action for harm

suffered only by the LLC.4 Courts in other jurisdictions,

with near uniformity, have held similarly to the Appellate Court in Padawer. See, e.g., Direct List, LLC v.

Kessler, Docket No. 15-cv-2025-WQH-JLB, 2018 WL

3327802, *1–2 (S.D. Cal. July 6, 2018); Home Title Co.

of Maryland, Inc. v. LaSalla, 257 So. 3d 640, 644–45

(Fla. App. 2018); Turner v. Andrew, 413 S.W.3d 272,

276 (Ky. 2013); Zeigler v. Housing Authority, 118 So.

3d 442, 450 (La. App. 2013); Krueger v. Zeman Construction Co., 758 N.W.2d 881, 890 (Minn. App. 2008), aff’d,

781 N.W.2d 858 (Minn. 2010); Freedom Financial

Group, Inc. v. Woolley, 280 Neb. 825, 834, 792 N.W.2d

134 (2010); Sherman v. Boston, 486 S.W.3d 88, 94–95

(Tex. App. 2016); Woods View II, LLC v. Kitsap, 188

Wn. App. 1, 23–24, 352 P.3d 807, review denied, 184 Wn.

2d 1015, 360 P.3d 818 (2015); accord Elizabeth Retail

Properties LLC v. KeyBank National Assn., 83 F. Supp.

3d 972, 987–88 (D. Or. 2015) (applying Oregon law and

concluding that single member of LLC had standing

because defamation and loss of business reputation
claims caused injuries to her that went beyond those

suffered by LLC). But see Stoker v. Bellemeade, LLC,

272 Ga. App. 817, 822, 615 S.E.2d 1 (2005) (‘‘we find no

reason to require the [plaintiffs] to derivatively assert

the breach of fiduciary duty claims in the context of

the closely held LLCs in the present case’’), rev’d in

part on other grounds, 280 Ga. 635, 631 S.E.2d 693

(2006); Marx v. Morris, 386 Wis. 2d 122, 148–49, 925

N.W.2d 112 (2019) (‘‘[C]orporate principles of standing

do not apply to LLCs. Specifically, in the matter before

us, injuries to North Star [an LLC] and to its members

are not mutually exclusive because financial injury to

North Star flows through to its members just as an

injury would if North Star were a partnership rather

than an LLC. Therefore, the question is not whether the

alleged injury is to the LLC or to its individual members.

Rather, the question is simply whether the individual

member bringing the action has suffered an injury to

a legally protected interest.’’). A prominent, local scholarly commentator agrees, writing that ‘‘a member cannot sue in an individual capacity to recover for any

injury based on a wrong to the LLC, even if the LLC

has only one member.’’ M. Ford, Connecticut Corporation Law and Practice (2d Ed. 2017 Supp.) § 13.03 (H),

p. 13-20; see also 51 Am. Jur. 2d, supra, § 45, p. 894

(‘‘[a] member of an [LLC] may not sue in an individual

capacity to recover for an injury the basis of which is

a wrong to the LLC’’).

The majority, however, adopts an exception to this

well settled general rule that is premised on § 7.01 (d)

of the American Law Institute’s Principles of Corporate

Governance, which blurs the line between derivative

and direct actions in certain cases involving closely

held corporations.5 Section 7.01 (d) allows a trial court

to ‘‘treat an action raising derivative claims as a direct

action, exempt it from those restrictions and defenses

applicable only to derivative actions, and order an individual recovery, if it finds that to do so will not (i)

unfairly expose the corporation or defendants to a multiplicity of actions, (ii) materially prejudice the interests

of creditors of the corporation, or (iii) interfere with a

fair distribution of the recovery among all interested

persons.’’6 Principles of Corporate Governance, supra,

§ 7.01 (d), p. 17. The commentary explains that § 7.01

(d) is premised on the decision of the United States

Court of Appeals for the Ninth Circuit in Watson v.

Button, 235 F.2d 235 (9th Cir. 1956), ‘‘which found that

the usual policy reasons requiring an action that principally alleges an injury to the corporation to be treated

as a derivative action are not always applicable to the

closely held corporation.’’ Principles of Corporate Governance, supra, § 7.01, comment (e), p. 21; see Watson

v.Button, supra, 237 (Under Oregon law, ‘‘[s]uits against

directors for violations of fiduciary duties are equitable

in nature,’’ and the plaintiff could seek permission to

proceed directly because he and the defendant ‘‘were
the only stockholders at the time of the misappropriation. The corporate creditors are adequately protected

since [the two parties] are jointly responsible for the

corporate liabilities.’’).

In adopting this principle, the American Law Institute

also found persuasive the Massachusetts Supreme Judicial Court’s decision in Donahue v. Rodd Electrotype

Co. of New England, Inc., 367 Mass. 578, 328 N.E.2d 505

(1975), which had observed that ‘‘the close corporation

bears striking resemblance to a partnership,’’ and that

‘‘the close corporation is often little more than an ‘incorporated’ or ‘chartered’ partnership’’; id., 586; in holding

that stockholders in a close corporation owe each other

a fiduciary duty akin to that of partners. Id., 592–93;

see Principles of Corporate Governance, supra, § 7.01,

comment (e), pp. 21–23. The American Law Institute

considered that particular context and observed that,

‘‘[i]n some circumstances, characterizing the action as

direct will also be fairer to the defendants, as when

the defendants wish to file a counterclaim against the

plaintiff, because the general rule is to prohibit counterclaims in a derivative action. . . . Also, in a direct

action, each side must normally bear its own legal

expenses, and the plaintiff, if successful, cannot ordinarily look to the corporation for attorney’s fees. Such

a rule seems more appropriate in cases that fundamentally involve disputes between a limited number of ‘partners’ in a closely held firm.’’ (Citation omitted.) Principles of Corporate Governance, supra, § 7.01, comment

(e), p. 22.

I respectfully disagree with the majority’s decision

to adopt the Watson v. Button/American Law Institute

approach to close corporation standing to hold that

the plaintiff had standing to raise the claims alleged in

counts four, six, nine and ten of the second amended

complaint.7 First, I do not believe that approach applies

at all with respect to the factual predicate underlying

those counts because it ‘‘is almost always employed in

purely intracorporate disputes.’’ Mathis v. ERA Franchise Systems, Inc., 25 So. 3d 298, 302 (Miss. 2009); see

id., 301–302 (declining to apply doctrine when plaintiff’s

action was ‘‘filed against his current and former business partners’’ and ‘‘four defendants who are not and

have never been owners or members’’ of business at

issue, creating potential for multiplicity of actions and

interference with distribution of recovery). As the

majority acknowledges in footnote 38 of its opinion,

distinguishing our decisions in May v. Coffey, 291 Conn.

106, 967 A.2d 495 (2009), and Fink v. Golenbock, 238

Conn. 183, 680 A.2d 1243 (1996), the counts considered

in part I B of the majority opinion do not present an

intracorporate dispute, insofar as we consider whether

the plaintiff sustained an injury separate and distinct

from his own LLC, Saunders Capital, rather than one

distinct from the other members of Revere Investments

and Revere High Yield, GP, LLC (Fund GP).8 Rather than
presenting an occasion to make significant changes to

corporate law in Connecticut, I believe that the present

case is nothing more than a simple ‘‘wrong plaintiff’’

case—which might well explain why the plaintiff did

not attempt to rely on the Watson v. Button/American

Law Institute approach in his brief and why the defendants’ reply brief simply reiterates their reliance on

Padawer v. Yur, supra, 142 Conn. App. 817–18.9

Second, I find more persuasive the analysis of those

courts that have rejected the Watson v. Button/American Law Institute approach to close corporation standing. The leading decision on this point is Bagdon v.

Bridgestone/Firestone, Inc., 916 F.2d 379 (7th Cir.

1990), cert. denied, 500 U.S. 952, 111 S. Ct. 2257, 114

L. Ed. 2d 710 (1991), in which the United States Court

of Appeals for the Seventh Circuit rejected, as a matter

of Delaware law, the expansion of the ‘‘special injury’’

doctrine articulated in Watson v. Button, supra, 235

F.2d 237, ‘‘into a general exception for closely held

corporations, treating them as if they were partnerships.’’ Bagdon v. Bridgestone/Firestone, Inc., supra,

383–84. The Seventh Circuit emphasized that the ‘‘premise of this extension may be questioned. Corporations

are not partnerships. Whether to incorporate entails a

choice of many formalities. Commercial rules should

be predictable; this objective is best served by treating

corporations as what they are, allowing the investors

and other participants to vary the rules by contract if

they think deviations are warranted. So it is understandable that not all states have joined the parade.’’ (Emphasis in original.) Id., 384; see also Frank v. Hadesman &

Frank, Inc., 83 F.3d 158, 162 (7th Cir. 1996) (declining

to adopt American Law Institute’s § 7.01 [d] as matter

of Illinois law).

Similarly, the Virginia Supreme Court ‘‘decline[d] to

adopt a closely held corporation exception to the rule

requiring that suits for breach of fiduciary duty against

officers and directors must be brought derivatively on

behalf of the corporation and not as individual shareholder claims. Adherence to the general rule without

this proposed exception prevents multiplicity of lawsuits by shareholders. A recovery by the corporation

protects all shareholders as well as creditors. Finally,

as expressed in Bagdon [v. Bridgestone/Firestone, Inc.,

supra, 916 F.2d 384], consistent application of commercial rules promotes predictability. If shareholders and

the corporation desire to vary commercial rules by contract, they are free to do so.’’ Simmons v. Miller, 261

Va. 561, 576, 544 S.E.2d 666 (2001). Indeed, the Virginia

Supreme Court has extended this analysis from Simmons to the LLC context. See Remora Investments,

LLC v. Orr, 277 Va. 316, 323–24, 673 S.E.2d 845 (2009)

(intracompany dispute between manager and member

of LLC).

Beyond undermining the advantages of predictability
and stability, the majority’s approach also relieves the

plaintiff of the consequences of his business decision

to proceed through his LLC, thereby giving him ‘‘the

best of both business entities: limited liability provided

by a corporate structure and direct compensation for

corporate losses. That cushy position is not one the

law affords. Investors who created the corporate form

cannot rend the veil they wove. . . . Recovery by the

corporation ensures that all of the corporate participants—stockholders, trade creditors, employees and

others will recover according to their contractual and

statutory obligations. . . . We have consistently held

that a corporation is an entity separate and distinct from

its shareholders. ‘‘ (Citations omitted; internal quotation

marks omitted.) Landstrom v. Shaver, 561 N.W.2d 1,

14 (S.D. 1997); see also Wessin v. Archives Corp., 592

N.W.2d 460, 466 (Minn. 1999) (rejecting American Law

Institute’s approach to abandon the ‘‘direct-derivative

distinction for closely held corporations’’ because,

although ‘‘closely held corporations have been

described as partnership[s] in corporate guise . . . a

closely held corporation is still a corporation with all

of the rights and limitations proscribed by the legislature,’’ and ‘‘[a] uniform, fair and predictable mechanism

for enforcing claims of the corporation is important for

the corporation and all of the shareholders’’ [citations

omitted; emphasis added; internal quotation marks

omitted]); Keller v. Estate of McRedmond, 495 S.W.3d

852, 881–82 (Tenn. 2016) (rejecting argument seeking

‘‘an exception to the general rule prohibiting a shareholder from asserting a claim belonging to the corporation based on the fact that this is a subchapter S, [closely

held] corporation,’’ rendering parties ‘‘more like partners in a partnership who are harmed individually when

the corporation is harmed,’’ because, ‘‘where parties

have deliberately chosen to do business in corporate

form for other reasons such as tax or accounting purposes, they cannot disregard the corporate form at their

convenience’’ [citations omitted; internal quotation

marks omitted]).

Moreover, as the Appellate Court observed in

Padawer v. Yur, supra, 142 Conn. App. 817–18, the

majority’s approach to standing is directly inconsistent

with General Statutes (Rev. to 2017) § 34-134, which

provides that ‘‘[a] member or manager of a limited liability company is not a proper party to a proceedings 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.’’ Consistent with

the statutory analysis in Padawer, the Nebraska

Supreme Court has observed that the approach to standing endorsed by the majority would ‘‘allow a member

of an LLC to use the corporate form as a shield to
protect itself from personal liability for acts taken by

an LLC while still allowing an individual to collect damages, such as lost profits, incurred by the LLC.’’ Freedom

Financial Group, Inc. v. Woolley, supra, 280 Neb. 834;

see id. (The court rejected the argument of the plaintiff,

the sole member of the LLC, that it had standing to

bring a professional negligence action against the LLC’s

attorneys because, ‘‘[a]s a member of an LLC, [the plaintiff] is not a proper party to this suit, because [the

defendant’s] alleged liability is to [the LLC] and any

potential damages would also belong to [the LLC]. [The

plaintiff] may not attempt to use the corporate form of

the LLC to shield itself from liability and then use the

same corporate form as a sword to recover damages

or enforce liability to the LLC.’’).

Similarly, in concluding that the sole member of a

trucking business structured as an LLC lacked standing

to bring an action for lost profits, the Kentucky Supreme

Court rejected the argument that, ‘‘because [the defendant] was the sole owner of the business he was necessarily the real party in interest, a status that allowed

him to properly advance the lost profits claim in his

own name rather than in the name of the LLC.’’ Turner

v. Andrew, supra, 413 S.W.3d 276. The court emphasized

that the ‘‘LLC and its solitary member . . . are not

legally interchangeable. Moreover, an LLC is not a legal

coat that one slips on to protect the owner from liability

but then discards or ignores altogether when it is time

to pursue a damage claim. The law pertaining to [LLCs]

simply does not work that way.’’10 Id.; see Krueger v.

Zeman Construction Co., supra, 758 N.W.2d 889–90

(The court concluded that an LLC member lacked standing to bring a claim under a business practice discrimination statute because it was the LLC, ‘‘and not [the]

appellant personally, [that] entered into a contract with

[the] respondent. . . . Because a member of [an LLC]

is protected from personal liability for the company’s

acts, debts, liability, and obligations, unless the corporate veil is pierced, [the] appellant gained protection

from the decision. . . . Indeed, the avoidance of personal liability is a legitimate reason for forming [an

LLC]. . . . But [the] appellant also gave up some

rights.’’ [Citations omitted.]); Woods View II, LLC v.

Kitsap, supra, 188 Wn. App. 23–24 (Even though the sole

shareholder personally guaranteed loans, she lacked

standing to seek a remedy for ‘‘consequential damages

that would not have happened but for the primary harm

to [the plaintiff LLC]. A shareholder does not have

standing to recover consequential damages that result

from the harm to her corporation. . . . The fact that

[she] was the sole shareholder of [the plaintiff] does not

change our analysis: a sole shareholder, by necessity,

cannot show an injury distinct from that to other shareholders.’’ [Citation omitted; internal quotation marks

omitted.]).

Particularly because LLCs are entirely creatures of
statute; see, e.g., Styslinger v. Brewster Park, LLC,

supra, 321 Conn. 317; I believe that action in this area

that affects a party’s rights and remedies is a uniquely

legislative function. Because the legislature is active in

this area, given its recent passage of the comprehensive

Connecticut Uniform Limited Liability Company Act,

and because there are natural constituencies that are

well situated to advocate for legislative action in this

area, I believe it best to stay our hand rather than make

a public policy judgment expanding standing in civil

cases involving LLCs. See Krueger v. Zeman Construction Co., supra, 758 N.W.2d 890 (deferring to legislature

to create remedy for business practice discrimination

when party is single member LLC); compare Commissioner of Public Safety v. Freedom of Information Commission, 312 Conn. 513, 550–51 n.35, 93 A.3d 1142

(2014) (declining to overrule Freedom of Information

Act case law because ‘‘[t]he circumstances of the enactment of [a statutory provision governing law enforcement disclosure obligations], and the controversy that

continues to this day about the relationship between

criminal investigations and the public’s right to know

under the act, demonstrates that this is the kind of issue

that is squarely on the radar of the legislature and the

various interested entities’’), with State v. Salamon, 287

Conn. 509, 523–24, 949 A.2d 1092 (2008) (In overruling

a prior interpretation of the kidnapping statute, this

court reasoned that ‘‘the issue presented by the defendant’s claim is not one that is likely to have reached the

top of the legislative agenda because the issue directly

implicates only a relatively narrow category of criminal

cases, that is, kidnapping cases in which the restraint

involved is incidental to the commission of another

crime. Moreover, in contrast to other matters that are

subject to legislative regulation, it is uncertain whether

the position that the defendant advocates would attract

interested sponsors with access to the legislature.’’).

Accordingly, I respectfully disagree with the majority’s

conclusion in part I B of its opinion that the plaintiff

had standing with respect to counts four, six, nine and

ten of the second amended complaint.

Because I would reverse the judgment of the trial

court in its entirety, I respectfully concur in part and

dissent in part.

1

I do, however, agree with and join part I A of the majority opinion, which

reverses the judgment of the trial court in favor of the plaintiff on his

derivative claims. Because of my conclusions as to standing, I do not reach

the reimbursement issues considered in part II of the majority opinion.

2

I agree with the majority’s rejection of the plaintiff’s argument that the

defendants’ multiple admissions of liability for the LR Global bridge loan

constituted judicial admissions that afforded him standing. I also agree with

the majority’s determination that the fact that the plaintiff suffered an injury

did not resolve the standing question, which is predicated on whether his

losses were separate and distinct from those suffered by Saunders Capital.

3

‘‘We note that §§ 34-124, 34-186 and 34-187 have been repealed, effective

July 1, 2017. See Public Acts 2016, No. 16-97. We also note, however, that

General Statutes § 34-243h (a), effective July 1, 2017, provides: ‘A limited

liability company has the capacity to sue and be sued in its own name and

the power to do all things necessary or convenient to carry on its activities
and affairs.’ ’’ Channing Real Estate, LLC v. Gates, supra, 326 Conn. 138 n.6.

4

In Padawer, on which the defendants rely heavily, the Appellate Court

followed, inter alia, General Statutes (Rev. to 2017) §§ 34-134 and 34-167

(a), and held that the plaintiff in that case, who was the sole member of an

LLC, lacked standing to bring a breach of contract action because it was

the LLC that was ‘‘the contemplated party to the contract with the defendants, and . . . the assets intended to be transferred through the execution

of that contract were assets belonging to the [LLC], rather than the plaintiff

individually. If the defendants’ alleged breach caused any harm, therefore,

it was to [the] LLC, not to the plaintiff in his individual capacity. Although

the plaintiff is the sole member of [the] LLC, that does not impute ownership

of the [LLC’s] assets to the plaintiff. . . . His position as sole member, also,

does not provide him with standing to recover individually for harm to the

[LLC].’’ (Citation omitted.) Padawer v. Yur, supra, 142 Conn. App. 818.

Although the Appellate Court’s opinion in Padawer did not address the

Principles of Corporate Governance, on which the majority relies, Padawer

has been considered to be Connecticut’s presently controlling decision with

respect to the standing of a sole LLC member. See, e.g., Lundstedt v. People’s

United Bank, Docket No. 3:14-cv-01479 (JAM), 2015 WL 540988, *2 (D. Conn.

February 10, 2015) (following Padawer and concluding, with respect to

claims of illegal overdraft charges, that ‘‘a person who transfers his or her

assets to an LLC has no standing to seek damages when those assets—now

belonging solely to the LLC—are harmed,’’ even though plaintiff was ‘‘sole

manager/member’’ of LLC); Bongiorno v. Capone, 185 Conn. App. 176, 201–

202, 196 A.3d 1212 (‘‘The company is [an LLC] and is, therefore, a distinct

legal entity from the plaintiff, who is simply a member of that entity. Even

after the plaintiff became the sole member of the company, the company

remained a distinct legal entity. Because a member of [an LLC] cannot

recover for an injury allegedly suffered by [such] company, we conclude

that the plaintiff lacked standing to pursue a claim of statutory theft in this

case.’’), cert. denied, 330 Conn. 943, 195 A.3d 1134 (2018); see also Scarfo

v. Snow, 168 Conn. App. 482, 504, 146 A.3d 1006 (2016) (following Padawer

in intracorporate dispute between LLC members). Accordingly, for the benefit of the bar and bench, I believe that the majority’s decision in this case

effectively overrules Padawer and the line of cases that follow it.

5 We summarized our case law articulating the distinction between direct

and derivative actions in May v. Coffey, 291 Conn. 106, 967 A.2d 495 (2009),

observing that: ‘‘In Yanow v. Teal Industries, Inc., 178 Conn. 262, 281–82,

422 A.2d 311 (1979), we stated that [a] distinction must be made between

the right of a shareholder to bring suit in an individual capacity as the sole

party injured, and his right to sue derivatively on behalf of the corporation

alleged to be injured. . . . Generally, individual stockholders cannot sue

the officers at law for damages on the theory that they are entitled to

damages because mismanagement has rendered their stock of less value,

since the injury is generally not to the shareholder individually, but to the

corporation—to the shareholders collectively. . . . In this regard, it is axiomatic that a claim of injury, the basis of which is a wrong to the corporation,

must be brought in a derivative suit, with the plaintiff proceeding secondarily,

deriving his rights from the corporation which is alleged to have been

wronged. . . . It is, however, well settled that if the injury is one to the

plaintiff as a stockholder, and to him individually, and not to the corporation,

as where an alleged fraud perpetrated by the corporation has affected the

plaintiff directly, the cause of action is personal and individual. . . . In such

a case, the plaintiff-shareholder sustains a loss separate and distinct from

that of the corporation, or from that of other shareholders, and thus has

the right to seek redress in a personal capacity for a wrong done to him

individually. . . . Thus, where an injury sustained to a shareholder’s stock

is peculiar to him alone, and does not fall alike upon other stockholders,

the shareholder has an individual cause of action. . . .

‘‘Subsequently, in Smith v. Snyder, [267 Conn. 456, 461, 839 A.2d 589

(2004)], we reaffirmed the general rule that [i]n order for a shareholder to

bring a direct or personal action against the corporation or other shareholders, that shareholder must show an injury that is separate and distinct

from that suffered by any other shareholder or by the corporation. . . . [A]

shareholder—even the sole shareholder—does not have standing to assert

claims alleging wrongs to the corporation.’’ (Citations omitted; internal quotation marks omitted.) May v. Coffey, supra, 291 Conn. 114–15; see also

Fink v. Golenbock, 238 Conn. 183, 200–202, 680 A.2d 1243 (1996) (describing

shareholder derivative action procedure under General Statutes § 52-572j).

I note that the legislature has specifically recognized this distinction in
the new Connecticut Uniform Limited Liability Company Act, which provides

LLC members with the right to bring a direct action but requires the pleading

and proof of ‘‘an actual or threatened injury that is not solely the result of an

injury suffered or threatened to be suffered by the limited liability company.’’

General Statutes § 34-271 (b).

An example of a separate and distinct injury giving rise to direct standing

to sue in the intracorporate LLC context is described in the Appellate Court’s

opinion in the companion case, Wiederman v. Halpert, 178 Conn. App. 783,

796–98, 176 A.3d 1242 (2017), appeal dismissed, 334 Conn. , A.3d

(2019), in which the defendants were alleged to have misappropriated and

converted funds invested by the plaintiff, who was induced to become a 50

percent member in their real estate development LLC. See also Scarfo v.

Snow, 168 Conn. App. 482, 504, 146 A.3d 1006 (2016) (following Padawer

and concluding that plaintiff lacked standing to bring action against only

other member of LLC alleging mismanagement of project because, ‘‘if there

was an injury, that injury was sustained by [the LLC] and then sustained

by the plaintiff [and] [t]hus, the plaintiff’s injury is not direct, and he has

no standing to sue in his individual capacity’’).

6 Consistent with part I A of the majority opinion, I recognize that the

plaintiff’s statutory alternative to a derivative action, which we do not recognize in the LLC context as a matter of statutory or common law, was a

member initiated action pursuant to General Statutes (Rev. to 2017) § 34-

187. But see General Statutes § 34-271a et seq. (provisions of Connecticut

Uniform Limited Liability Company Act, effective July 1, 2017, providing

statutory right to derivative action).

7

I acknowledge that, as the majority observes, multiple courts have

adopted the Watson v. Button/American Law Institute approach to close

corporation standing, both before and after its endorsement by the American

Law Institute. See, e.g., Thomas v. Dickson, 250 Ga. 772, 774, 301 S.E.2d 49

(1983); Steelman v. Mallory, 110 Idaho 510, 513, 716 P.2d 1282 (1986); Barth

v. Barth, 659 N.E.2d 559, 562 (Ind. 1995); Mynatt v. Collis, 274 Kan. 850,

872–73, 57 P.3d 513 (2002); Trieweiler v. Sears, 268 Neb. 952, 983, 689 N.W.2d

807 (2004); Durham v. Durham, 151 N.H. 757, 763, 871 A.2d 41 (2005);

Crosby v. Beam, 47 Ohio. St. 3d 105, 109–10, 548 N.E.2d 217 (1989); Aurora

Credit Services, Inc. v. Liberty West Development, Inc., 970 P.2d 1273,

1280–81 (Utah 1998); see also Derouen v. Murray, 604 So. 2d 1086, 1091

n.2 (Miss. 1992) (approving of approach in dicta).

8 As I understand the authorities that embrace the Watson v. Button/

American Law Institute approach, this doctrine would potentially apply to

save a direct action that should have been brought derivatively in the manner

contemplated in part I A of the majority opinion, namely, by the plaintiff

to protect his interests that derive from his 50 percent membership in Revere

Investments and Fund GP. See also footnotes 5 and 6 of this dissenting

opinion.

9

I also note my prudential concerns about the process that resulted in

part I B of the majority opinion. Although the majority opinion is well

researched, it presents a dramatic departure from the parties’ briefs in this

case, which do not address—either directly or tangentially by citation to

applicable case law from other jurisdictions—the applicability of the Watson

v. Button/American Law Institute principles that form the basis of the majority decision. Indeed, the plaintiff, whose brief obliquely appears to seek an

exception from the general rule of Channing Real Estate, LLC v. Gates,

supra, 326 Conn. 123, based on his provision to Saunders Capital of his

personal funds that became the LR Global bridge loan, does not acknowledge

the line of Appellate Court cases; see, e.g., Padawer v. Yur, supra, 142 Conn.

App. 812; relied on by the defendants, that directly forecloses his standing

in this case as the sole member of the LLC. See footnote 4 of this dissenting

opinion. Although we have somewhat more latitude to act independently

of the parties’ briefs in this area in light of its implications on subject matter

jurisdiction; see, e.g., State v. Dort, 315 Conn. 151, 161, 106 A.3d 277 (2014);

Blumberg Associates Worldwide, Inc. v. Brown & Brown of Connecticut,

Inc., 311 Conn. 123, 148–49, 84 A.3d 840 (2014); I would not do so without

supplemental briefing from the parties and the issuance of appropriate

amicus curiae invitations, given the significant effect of the majority opinion

on Connecticut’s body of corporate law, particularly as it relates to our

state’s many close corporations and small LLCs.

10 I disagree with the majority’s reliance on corporate veil piercing principles in support of ‘‘[a]llowing investors to disregard the corporate form in

order to recover for corporate losses owed to them individually . . . .’’ In

rejecting a similar argument that, ‘‘because [the defendant] is the sole owner
of the LLC and the business operated from his residence the LLC can be

disregarded,’’ the Kentucky Supreme Court observed that, ‘‘[w]hile it is true

that there are limited instances where an LLC’s separate entity status may

be disregarded in the interest of equity, this is not one of those cases.’’

Turner v. Andrew, supra, 413 S.W.3d 276. As the Kentucky court observed,

‘‘[p]iercing the corporate veil is an equitable doctrine invoked by courts to

allow a creditor recourse against the shareholders of a corporation. . . .

The doctrine can also apply to [LLCs].’’ (Citation omitted; internal quotation

marks omitted.) Id., 276–77; see, e.g., McKay v. Longman, 332 Conn. 394,

432–33, 211 A.3d 20 (2019) (describing equitable nature and purpose of

corporate veil piercing under Connecticut law). As the Kentucky court notes,

the majority’s approach in essence calls for ‘‘insider reverse [veil] piercing,’’

which would be ‘‘employed in that rare instance where equity is perceived

to require disregard of the entity. Thus, the estate of a sole corporate

shareholder/LLC member may be allowed to recover as an ‘insured’ under

a policy issued to the entity . . . or a sole shareholder or LLC member may

be allowed to claim the protection of a usury statute even though the loan

was to the entity . . . . In all of the limited number of insider reverse [veil]

piercing cases, strong public policy considerations have been at the heart

of the court’s decision.’’ (Citations omitted.) Turner v. Andrew, supra, 277.

I believe that there are no significant public policy reasons to disregard the

corporate form in this case, which simply presents a matter of the wrong

plaintiff bringing the claims at issue. See id. (‘‘[The defendant] created an

LLC and it appears that it was conducting the trucking business at issue.

By law, the only appropriate plaintiff to assert the lost business damages

claim was the LLC . . . .’’).