Opinion ID: 2441662
Heading Depth: 1
Heading Rank: 1

Heading: tort liability of a member of a limited liability company

Text: We first address whether the trial court properly struck all counts of the complaint against the defendant on the basis that, in order to establish the defendant's personal liability, the plaintiffs were required to plead facts sufficient to pierce the corporate veil. [7] The plaintiffs contend that the trial court improperly required them to plead facts sufficient to warrant piercing the corporate veil in order to hold the defendant personally liable. Put another way, the plaintiffs claim that the trial court misconstrued the complaint, failing to understand that their claim is that the defendant is personally and individually liable in tort despite being a member or manager of Harb Development, and it therefore is not necessary to pierce the corporate veil in order to establish his personal liability. [8] The defendant responds that he is immune from liability on these grounds because of the protection against personal liability found in § 34-133(a). [9] More specifically, because the allegations against him not only arise from his membership in or management of Harb Development but also appear to be substantially similar to the allegations against Harb Development, the defendant contends that the plaintiffs must allege facts sufficient to warrant piercing the corporate veil. We agree with the plaintiffs. We begin our analysis with a brief review of Connecticut law concerning the individual liability in tort of a corporate agent or officer. It is well established that an officer of a corporation does not incur personal liability for its torts merely because of his official position. Where, however, an agent or officer commits or participates in the commission of a tort, whether or not he acts on behalf of his principal or corporation, he is liable to third persons injured thereby.... Thus, a director or officer who commits the tort or who directs the tortious act done, or participates or operates therein, is liable to third persons injured thereby, even though liability may also attach to the corporation for the tort. (Citations omitted; internal quotation marks omitted.) Ventres v. Goodspeed Airport, LLC, 275 Conn. 105, 141-42, 881 A.2d 937 (2005), cert. denied, 547 U.S. 1111, 126 S.Ct. 1913, 164 L.Ed.2d 664 (2006); see also Kilduff v. Adams, Inc., 219 Conn. 314, 331-32, 593 A.2d 478 (1991) ([i]t is black letter law that an officer of a corporation who commits a tort is personally liable to the victim regardless of whether the corporation itself is liable); Scribner v. O'Brien, Inc., 169 Conn. 389, 404, 363 A.2d 160 (1975) (It is also true that an officer of a corporation does not incur personal liability for its torts merely because of his official position. Where, however, an agent or officer commits or participates in the commission of a tort, whether or not he acts on behalf of his principal or corporation, he is liable to third persons injured thereby.). This court recently affirmed the imposition of individual tort liability, without requiring the piercing of the corporate veil, in Ventres v. Goodspeed Airport, LLC, supra, 275 Conn. at 105, 881 A.2d 937. In that case, Timothy Mellon, who was the sole member of the defendant airport company, ordered that the trees and shrubbery interfering with the airport's flight paths be cleared from a slope belonging to a neighboring land trust, an action that constituted a trespass on the land trust's property and caused the trust to lose the value of the trees. Id., at 110-13, 881 A.2d 937. This court affirmed the judgment of the trial court holding Mellon personally liable for ordering the clearing of the land, despite his claim that he acted solely as a corporate official when he issued the order. Id., at 142, 881 A.2d 937. Because there was ample evidence in the record that Mellon had ordered the clearing, this court determined that he personally had committed a tort. Id. As a result, [i]t [was] immaterial whether Mellon was acting in his individual capacity or on behalf of the corporation. Id., at 142-43, 881 A.2d 937. Additionally, this court previously upheld the imposition of individual tort liability on a corporate officer in a construction context in Scribner v. O'Brien, Inc., supra, 169 Conn. at 389, 363 A.2d 160. In that case, the plaintiffs contracted with both Harry O'Brien, the president of the defendant corporation, and the corporation, for the construction and purchase of a new house. Id., at 392-93, 363 A.2d 160. O'Brien personally owned the lot on which the house was built and the corporation was to build the new home. Id. Soon after the plaintiffs moved into the house, the gravel driveway began retaining water, which caused the driveway to sink substantially and the garage to flood. Id., at 394, 363 A.2d 160. O'Brien failed to remedy the problem, and the plaintiffs filed suit against both O'Brien individually and the corporation. This court affirmed the judgment of the trial court holding O'Brien individually liable in negligence for the damage incurred by the plaintiffs, reasoning that O'Brien was present at the property [during construction] on a daily basis, that he undertook to supervise the construction, and that he failed to act with reasonable care in that undertaking. Whether O'Brien was acting in his individual capacity or as an officer and agent of the [corporation], he is still liable to the plaintiffs for his participation in the negligence complained of.... [A]n officer of a corporation does not incur personal liability for its torts merely because of his official position. Where, however, an agent or officer commits or participates in the commission of a tort, whether or not he acts on behalf of his principal or corporation, he is liable to third persons injured thereby. (Citations omitted.) Id., at 403-404, 363 A.2d 160. Despite this well established common-law tort exception, the defendant contends that we should follow the trial court's reasoning and construe § 34-133(a) [10] as requiring the plaintiffs to allege facts sufficient to pierce the corporate veil. We disagree because the defendant misconstrues the statute when he claims that § 34-133(a), which establishes the corporate shield for a limited liability company, is limited only by § 34-133(b). [11] As a result, the defendant asserts that fulfilling the mandate of § 34-133(b) is the only means of establishing personal liability in the context of a limited liability company. Section 34-133(b) provides in part that any member, manager, agent or employee of a limited liability company rendering professional services ... shall be personally liable and accountable only for negligent or wrongful acts or misconduct committed by him, or by any person under his direct supervision and control, while rendering professional services on behalf of the limited liability company to the person for whom such professional services were being rendered.... Because contractors do not provide `[p]rofessional service[s]', as defined in General Statutes § 34-101(23), [12] the defendant contends that contractors therefore do not fall within the statutory exception to the corporate veil. The defendant's analysis fails, however, to acknowledge our well established common-law exception to individual liability in a corporate context for an individual's tort liability. First, the language of § 34-133(a) itself is favorable to common-law exceptions. According to that statute, a member or manager of a limited liability company is not liable, solely by reason of being a member or manager.... (Emphasis added.) General Statutes § 34-133(a). Thus, although being a member or manager does not impose liability, the statute's use of the term solely opens the door to other types of liability, such as common-law liability. Indeed, we recently have noted, in construing Delaware's similarly worded corporate veil statute, [13] that `[s]olely' is defined to mean `to the exclusion of alternate or competing things....' Webster's Third New International Dictionary. Thus, the statute plainly provides that a limited liability company member cannot be held liable for the malfeasance of a limited liability company by virtue of his membership in the limited liability company alone; in other words, he must do more than merely be a member in order to be liable personally for an obligation of the limited liability company. The statute thus does not preclude individual liability for members of a limited liability company if that liability is not based simply on the member's affiliation with the company. Weber v. U.S. Sterling Securities, Inc., 282 Conn. 722, 732, 924 A.2d 816 (2007). Second, our conclusion that tort liability remains a viable exception despite the enactment of §§ 34-133 and 34-134 is supported by Ventres v. Goodspeed Airport, LLC, supra, 275 Conn. at 145, 881 A.2d 937, in which this court determined that § 34-134 [14] evinces no legislative intent to eliminate the right to impose liability on a member or manager of a limited liability company who has engaged in or participated in the commission of tortious conduct. Rather, the statute merely codifies the well established principle that an officer of a corporation does not incur personal liability for its torts merely because of his official position. (Internal quotation marks omitted.) We explained that the right to hold corporate actors liable for personal torts, regardless of their corporate position, is a common-law right. Id. Although the legislature may eliminate a common law right by statute, the presumption that the legislature does not have such a purpose can be overcome only if the legislative intent is clearly and plainly expressed. (Internal quotation marks omitted.) Id. This analysis is equally applicable to § 34-133, which was adopted in the same Public Act as § 34-134, and thus shares that same legislative history. [15] See Public Acts 1993, No. 93-267, §§ 19 and 20. [16] Accordingly, we similarly conclude that the legislature did not limit common-law tort liability for corporate actors through the adoption of § 34-133(b). The trial court thus improperly concluded that the plaintiffs were required to allege facts sufficient to pierce the corporate veil with regard to all of the counts of the complaint alleged against the defendant in his individual capacity. The trial court improperly failed to consider the common-law tort exception that the plaintiffs chose to invoke as the basis for their individual claims against the defendant. The trial court therefore improperly struck all of the counts against the defendant in his individual capacity for the plaintiffs' failure to make allegations sufficient to pierce the corporate veil. In his motion to strike in the trial court, the defendant also claimed that the plaintiffs had failed to allege sufficiently a cause of action for negligence in the fourth count of the complaint. Although the trial court did not reach this issue, the defendant again raises this claim in his brief to this court, and the plaintiffs generally respond in their reply brief. Because both parties have briefed the issue, which presents only a question of law, we will address it in the interest of judicial economy. See, e.g. State v. James, 261 Conn. 395, 410-12, 802 A.2d 820 (2002) (exercising supervisory powers under Practice Book § 60-2, in interest of judicial economy, to decide noncertified issue). We note that our resolution of this issue will apply as well to the third count of the complaint, which alleges that the defendant is personally liable for Harb Development's violation of CUTPA. [17] Although CUTPA is primarily a statutory cause of action; see General Statutes § 42-110b; it equally is recognized that CUTPA claims may arise from underlying causes of action, such as contract violations or torts, provided the additional CUTPA elements are pleaded. See Stearns & Wheeler, LLC v. Kowalsky Bros., Inc., 289 Conn. 1, 9-10 n. 12, 955 A.2d 538 (2008); Kilduff v. Adams, supra, 219 Conn. at 331-32, 593 A.2d 478; see also United States v. Meldish, 722 F.2d 26, 28 (2d Cir.1983) ([u]nfair trade practices found their origin in the common law of torts, and, even today, they usually are treated as civil offenses, see, e.g., 15 U.S.C § 45 [the federal equivalent of CUTPA]), cert. denied, 465 U.S. 1101, 104 S.Ct. 1597, 80 L.Ed.2d 128 (1984). The CUTPA count in the present case rests largely on allegations of negligence. The essential elements of a cause of action in negligence are well established: duty; breach of that duty; causation; and actual injury. (Internal quotation marks omitted.) Jagger v. Mohawk Mountain Ski Area, Inc., 269 Conn. 672, 687 n. 13, 849 A.2d 813 (2004). It is well established within the construction context that a builder must exercise that degree of care which a skilled builder of ordinary prudence would have exercised under the same or similar conditions. Scribner v. O'Brien, Inc., supra, 169 Conn. at 400, 363 A.2d 160. [T]he existence of a duty of care is an essential element of negligence.... A duty to use care may arise from a contract, from a statute, or from circumstances under which a reasonable person, knowing what he knew or should have known, would anticipate that harm of the general nature of that suffered was likely to result from his act or failure to act. (Internal quotation marks omitted.) Pelletier v. Sordoni/Skanska Construction Co., 286 Conn. 563, 578, 945 A.2d 388 (2008). There is no question that a duty of care may arise out of a contract, but when the claim is brought against a defendant who is not a party to the contract, the duty must arise from something other than mere failure to perform properly under the contract. D'Angelo Development & Construction Corp. v. Cordovano, 121 Conn.App. 165, 186, 995 A.2d 79 (2010). Mindful of our obligation to construe pleadings in favor of the plaintiff, we turn to the plaintiffs' allegations of the defendant's negligence in the fourth count of the complaint. Out of the five specifications of negligence in the fourth count, three concern a violation of a contract, namely, a failure of the defendant individually to construct the house according to the terms of the contract, failure to deliver the property in accordance with the contract, and failure to construct the house's dormer according to the contract. The plaintiffs, however, failed to plead anywhere in this negligence count that the defendant personally was a party to the contract, instead pleading only that Harb Development was a party to the contract. These allegations therefore are insufficient to establish that the defendant individually owed a contractual duty to the plaintiffs. The two remaining allegations claim that the defendant failed to install correctly the concrete slab foundation and improperly instructed Harb Development to deviate from the contractual plans. These two allegations similarly fall short in establishing any duty on the part of the defendant. The plaintiffs failed to allege the source of the defendant's duty to install the slab, such as a contract or an established building code. The plaintiffs further neglected to plead the manner in which the defendant instructed and caused Harb Development to deviate from the plans and specifications of the contract. Such an allegation is too general and unspecific to either support the conclusion that the defendant had a duty to avoid such instruction or allow the defendant to anticipate the harm claimed. We therefore conclude that the plaintiffs failed to adequately state a cause of action in the third and fourth counts of the complaint. On remand to the trial court, the defendant's motion to strike should be granted as to these counts for the reasons previously set forth herein. [18]