Court Opinion

ID: 2822274
Source: CourtListenerOpinion
Date Created: 2015-07-30 21:14:00.337299+00
Date Added: 2024-06-11T11:31:06.078553
License: Public Domain

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                  YOUNGMAN v. SCHIAVONE

   GRUENDEL, J., dissenting. In affirming the judgment
of the trial court, the majority concludes that the court
did not abuse its discretion when it denied the motion
to substitute filed by the plaintiffs, Carl Youngman and
Leslie Charm. I disagree, and write separately because
I believe that the court abused its discretion in two
respects. First, the court improperly ruled on the motion
to dismiss filed by the defendants Joel Schiavone and
Gary Bello1 before ruling on the plaintiffs’ motion to
substitute. Second, although the court went on to con-
sider the motion to substitute, in doing so, it misapplied
the substantive requirements of General Statutes § 52-
109. I, therefore, respectfully dissent from the majority
opinion and would reverse the judgment of the court
for further proceedings according to law.
                             I
  I first address the court’s determination that it could
not consider the plaintiffs’ motion to substitute because
the plaintiffs lacked standing. As our court has pre-
viously held that § 52-109 extends jurisdiction to the
extent necessary to rule on a motion to substitute, I
would conclude that the court’s ruling was incorrect
and, thus, an abuse of discretion.
   The following procedural history is relevant to the
present appeal. On May 31, 2013, one day after the
plaintiffs filed a motion to substitute, the defendants
filed a motion to dismiss for lack of subject matter
jurisdiction on the basis that the individual plaintiffs
did not have standing because the harms alleged in
the complaint were suffered by Quinnipiac Riverview
Properties, LLC (Riverview). Nearly five months later,
the court granted the defendants’ motion to dismiss
after concluding that the plaintiffs lacked standing in
their individual capacities. The court then denied the
plaintiffs’ motion to substitute. On April 14, 2014, the
court issued a memorandum of decision regarding its
denial of the plaintiffs’ motion to substitute, stating that
‘‘[b]ecause the plaintiffs did not have standing to bring
this action, the court was deprived of subject matter
jurisdiction to hear the claims or any motions, includ-
ing the motion to substitute, of the plaintiffs.’’ (Empha-
sis added.) It is this conclusion that I believe
requires reversal.
  This court previously has interpreted § 52-109 as
authorizing a limited extension of jurisdiction for the
purpose of considering a motion to substitute, even
when the named plaintiff otherwise lacks standing.
Rana v. Terdjanian, 136 Conn. App. 99, 109, 46 A.3d
175, cert. denied, 305 Conn. 926, 47 A.3d 886 (2012).
The rationale behind this conclusion is that for ‘‘§ 52-
109 . . . to have the ameliorative purpose for which it
was intended . . . the statute is meant to give the trial
courts jurisdiction for the limited purpose of determin-
ing if the action should be saved from dismissal by
the substitution of plaintiffs.’’ (Internal quotation marks
omitted.) Id., 111. ‘‘The legislature’s provision of this
statutory remedy would be completely undermined by
any rule requiring the immediate dismissal for lack of
subject-matter jurisdiction of any action commenced
in the name of the wrong person as plaintiff. The statute,
as an exercise of the legislature’s constitutional author-
ity to determine [our court’s] jurisdiction; [Conn. Const.,
art. V, § 1]; must be seen as an extension of that jurisdic-
tion for the limited purpose of deciding a proper motion
to substitute.’’ (Internal quotation marks omitted.) Id.,
111–12, quoting DiLieto v. County Obstetrics & Gyne-
cology Group, P.C., Superior Court, judicial district of
Waterbury, Complex Litigation Docket, Docket No.
X02-CV-970150435S (January 31, 2000) (26 Conn. L.
Rptr. 345), rev’d on other grounds, 265 Conn. 79, 828
A.2d 31 (2003).
   In the present case, the court determined that,
because the plaintiffs lacked standing, it was precluded
from entertaining any of their motions, including the
motion to substitute. This reasoning is in direct opposi-
tion to our case law, which has concluded that § 52-
109 extends the court’s subject matter jurisdiction to
the extent necessary to consider the plaintiffs’ motion
to substitute. As the majority notes, the court first was
required to determine whether the statutory criteria for
substitution had been met. If the motion was granted,
then the standing issue would be remedied and the case
could proceed with Riverview stepping into the shoes
of the plaintiffs. F.P., Inc. v. Collegium & Wethersfield,
Ltd. Partnership, 33 Conn. App. 826, 830–31, 639 A.2d
527, cert. denied, 229 Conn. 917, 642 A.2d 1211 (1994).
If the motion was denied, the court then properly could
grant a dismissal on the basis that the plaintiffs lacked
subject matter jurisdiction. By failing first to consider
the motion to substitute, the court misapplied the law
and thus, abused its discretion.2 Hayward v. Hayward,
53 Conn. App. 1, 8, 752 A.2d 1087 (1999) (‘‘[o]ur review
of a trial court’s exercise of the legal discretion vested
in it is . . . whether [it] correctly applied the law and
could reasonably have reached the conclusion that it
did’’ [emphasis added; internal quotation marks
omitted]).
                             II
  I next turn to the court’s application of § 52-109. Not-
withstanding the court’s prior determination that it
lacked subject matter jurisdiction, the court in fact did
proceed to consider the motion to substitute. In denying
the motion, the court concluded that a pure mistake of
established law could not form the basis of the plaintiffs’
requested substitution. I disagree and conclude that,
under the statute and our relevant case law, the court
did not properly apply the correct legal standard in
denying the motion to substitute.
   Section 52-109 requires the court to conduct a two
part inquiry. First, the court must determine whether
the case was commenced by the wrong party through
mistake. The term ‘‘mistake’’ in our case law has been
defined as ‘‘an honest conviction, entertained in good
faith and not resulting from the plaintiff’s own negli-
gence that she is the proper person to commence the
[action].’’ (Internal quotation marks omitted.) DiLieto
v. County Obstetrics & Gynecology Group, P.C., 297
Conn. 105, 151, 998 A.2d 730 (2010).3 Second, the court
must inquire as to whether the proposed substitution
is necessary for the determination of the real matter in
dispute. Id., 150.
   In denying the plaintiffs’ motion to substitute, the
court noted that it was established law that the entity,
Riverview, was the proper plaintiff to bring this action.
Although it is true that ‘‘[a] member may not sue in an
individual capacity to recover for an injury the basis of
which is a wrong to the limited liability company’’;
Wasko v. Farley, 108 Conn. App. 156, 170, 947 A.2d 978,
cert. denied, 289 Conn. 922, 958 A.2d 155 (2008); a
member may sue directly when the claim alleged is
separate and distinct from that of other members. See
Guarnieri v. Guarnieri, 104 Conn. App. 810, 823–24,
936 A.2d 254 (2007) (concluding shareholder of corpora-
tion had requisite standing to bring action on counts
where no shareholder was similarly situated).
   A review of the plaintiffs’ complaint demonstrates
that some of the claims allege individual harms. In the
first count of the operative complaint, the plaintiffs
alleged that they, individually, contributed funds for
the purpose of purchasing real property. Although the
property was intended to be held by Riverview’s prede-
cessor, Missy 2, LLC, the plaintiffs alleged that, on the
day of the transaction, Schiavone took title to the prop-
erty. In the fourth count, the plaintiffs alleged a breach
of the covenant of good faith and fair dealing as to them
as individuals. Each of these claims alleged harms that
were separate and distinct from any harm to the limited
liability company. Without reaching a determination on
these issues, I acknowledge that there exists a reason-
able legal basis from which the plaintiffs could have
believed they were the proper parties to bring the
action. See Kortner v. Martise, 312 Conn. 1, 10, 91 A.3d
412 (2014) (‘‘[s]tanding . . . requires no more than a
colorable claim of injury’’ [internal quotation marks
omitted]); see also Yanow v. Teal Industries, Inc., 178
Conn. 262, 281–82, 422 A.2d 311 (1979) (‘‘well settled
that if the injury is one to the plaintiff as a stockholder,
and to him individually . . . where an alleged fraud
. . . has affected the plaintiff directly, the cause of
action is personal and individual’’). As a result, reason-
able diligence would not have apprised the plaintiffs
of their mistake.4 See DiLieto v. County Obstetrics &
Gynecology Group, supra, 26 Conn. L. Rptr. 350 (non-
negligent mistake is one made despite party’s exercise
of reasonable diligence to know truth). The foregoing
analysis serves as an example where a mistaken belief
in law can form the basis of a nonnegligent mistake
under the statute. The court, therefore, abused its dis-
cretion when it incorrectly applied the law by sum-
marily concluding that a mistake of law could not form
a basis for substitution.
   Further, the majority’s conclusion is incongruent
with our precedent in Rana v. Terdjanian, supra, 136
Conn. App. 99. In Rana, the original plaintiff, Anees U.
Rana, brought an action against the defendant, Harry
Terdjanian, after a limited liability company owned by
Rana’s wife purchased a business from Terdjanian. Id.,
103–104. During trial, Rana testified under cross-exami-
nation that the business purchased from the defendant
was actually owned by his wife’s limited liability com-
pany. Id., 104. When the court raised, sua sponte, the
issue of whether Rana had standing to bring the action,
Rana filed a motion to substitute his wife’s company
as the plaintiff. Id., 104–105. In support of the motion,
Rana stated that he had held a good faith belief that
he was a part owner of the limited liability company
and that he ran all managerial aspects of that business.
Id., 105. In addition, Rana’s counsel stated that, based
on representations made to him, he held a good faith
belief that Rana was the proper party to bring this
action. Id. The trial court concluded that Rana had
commenced the action by mistake, in ignorance of stat-
utory authority, and granted the motion to substitute.
Id., 112. This court, in affirming the trial court, con-
cluded that the substitution remedied the prior standing
issue and that it was ‘‘legally and logically correct’’ to
grant the plaintiff’s motion to substitute. Id., 112–13.
In the present case, the plaintiffs and their attorney
similarly believed that the plaintiffs were the proper
parties to bring the action. Moreover, the plaintiffs in
the present case actually had an ownership interest
in the company and alleged that they, personally, had
invested money in the business. In conclusion, I see
no relevant distinction in these cases to warrant two
different outcomes.
  Finally, the trial court’s analysis cannot be reconciled
with the established principle, enunciated in Federal
Deposit Ins. Corp. v. Retirement Management Group,
Inc., 31 Conn. App. 80, 84, 623 A.2d 517, cert. denied,
226 Conn. 908, 625 A.2d 1378 (1993), that ‘‘[o]ur rules
of practice . . . permit the substitution of parties as
the interests of justice require.’’ (Emphasis added.) Fur-
thermore, ‘‘[t]hese rules are to be construed as to alter
the harsh and inefficient result that attach to the mis-
pleading of parties at common law.’’ Id.; see also
Hagearty v. Ryan, 123 Conn. 372, 375–76, 195 A. 730
(1937). ‘‘[I]t is well established that remedial statutes
such as § 52-109 must be liberally construed in favor
of those whom the legislature intended to benefit.’’
(Internal quotation marks omitted.) DiLieto v. County
Obstetrics & Gynecology Group, P.C., supra, 297 Conn.
149. Although the proper standard of review is an abuse
of discretion, ‘‘the court’s discretion should be exer-
cised mindful of the policy preference to bring about
a trial on the merits of a dispute whenever possible and
to secure for the litigant his day in court. . . . The
design of the rules of practice is both to facilitate busi-
ness and to advance justice; they will be interpreted
liberally in any case where it shall be manifest that a
strict adherence to them will work surprise or injus-
tice. . . . Rules are a means to justice, and not an end
in themselves . . . .’’ (Citation omitted, emphasis
added, internal quotation marks omitted.) Millbrook
Owners Assn., Inc. v. Hamilton Standard, 257 Conn.
1, 16, 776 A.2d 1115 (2001). I, therefore, disagree with
the majority’s conclusions that the court’s denial of the
plaintiffs’ motion to substitute and its dismissal of the
action was not an abuse of discretion.
      For the foregoing reasons, I respectfully dissent.
  1
     The plaintiffs named Joel Schiavone, Gary Bello, and Fair Haven Heights
Realty, LLC, as defendants. The action was withdrawn as to Fair Haven
Heights Realty, LLC. In this opinion, I refer to Schiavone and Bello collec-
tively as the defendants and individually by name where appropriate.
   2
     The majority concludes that the court did not abuse its discretion because
it later went on to consider the plaintiffs’ motion. After a careful review of
the record, I am not convinced that the trial court properly considered the
plaintiffs’ motion in light of its prior ruling, granting the defendants’ motion
to dismiss.
   3
     I concur with the majority that the definition of mistake is overly restric-
tive given the term’s more expansive dictionary definition. See footnote 8
of the majority opinion. Considering the lack of legislative history, it is
difficult to see how, consistent with the mandate of General Statutes § 1-
2z, the proper definition of mistake is ‘‘an honest conviction, entertained
in good faith and not resulting from the plaintiff’s own negligence that she
is the proper person to commence the [action].’’ (Internal quotation marks
omitted.) DiLieto v. County Obstetrics & Gynecology Group, P.C., supra,
297 Conn. 151; cf. Black’s Law Dictionary (9th Ed. 2009) (mistake defined
as ‘‘[a]n error, misconception, or misunderstanding’’).
   Other courts also have struggled with this definition of mistake. In Wilson
v. Zemba, 49 Conn. Supp. 542, 549–50, 896 A.2d 862 (2004), the court stated
that ‘‘it is . . . difficult to imagine a situation in which negligence has not
led to use of the wrong party as the original plaintiff. . . . When the legisla-
ture used the word ‘mistake,’ a common sense appraisal of what they meant
is merely to describe the context in which the statute was to apply—the
lawyer named the wrong plaintiff.’’
   Section 52-109 motions tend to arise in one of three narrow situations.
The first is where the manager or shareholder of an organization brings the
action individually where the proper plaintiff is the entity itself. See Rana
v. Terdjanian, supra, 136 Conn. App. 112 (individual plaintiff commenced
action against defendant for fraud, theft, and conversion related to plaintiff
limited liability company); Lupinacci v. Stamford, 48 Conn. Supp. 1, 2,
823 A.2d 456 (2002) (individual plaintiffs commenced action against town
regarding certain real property owned by limited partnership). Another situa-
tion is where the party who brings a claim is a parent and the harm alleged
is to the minor child. See Wilson v. Zemba, supra, 49 Conn. Supp. 554 (father
named plaintiff when alleged harm was to minor child). The last situation
is where the named plaintiff is the party who entered into the contract or
agreement, but at the time the action is initiated is no longer the party in
interest. See NewAlliance Bank v. Schaeppi, 139 Conn. App. 94, 95–96, 54
A.3d 1058 (2012) (company that was party to contract subsequently merged
to form new entity, which became successor in interest), cert. denied, 307
Conn. 948, 60 A.3d 737 (2013); Zipp v. Florian, judicial district of New
Britain, Docket No. CV-3101980 (November 13, 2006) (plaintiff entered into
lease agreement with defendant but later transferred ownership of property
to limited liability company); DiLieto v. County Obstetrics & Gynecology
Group, supra, 26 Conn. L. Rptr. 351, 356 (plaintiff filed for bankruptcy and
bankruptcy trustee substituted as plaintiff).
   In each of these situations, reasonable efforts to understand the law would
have led the parties involved to file the action under the proper plaintiff.
Thus, it is unclear how courts are to distinguish between negligent and
nonnegligent mistakes. Further complicating the matter is that, I suspect,
in most cases, plaintiffs are relying on the advice of counsel, meaning the
mistake is likely more often that of the lawyer’s, rather than that of the
plaintiff’s. Subjecting a party to dismissal on the basis that they reasonably
relied on the erroneous advice of counsel runs counter to the statute’s
remedial purpose.
   4
     I also note the practical concern that the court’s denial of a motion to
substitute most often will result in the dismissal of the case. In a motion
to substitute, the plaintiff bears the burden of establishing that he or she
is the incorrect party to bring the claim and that a different party should
be substituted. By doing so, the party must admit to the court that they
lack standing. If the court denies the plaintiff’s motion, the logical next step,
given the plaintiff’s admission, is to grant a motion to dismiss on the ground
that the court lacks subject matter jurisdiction. In my view, this further
emphasizes the need for the trial court to apply the substitution statute
liberally in favor of those it was intended to protect. See Okee Industries,
Inc. v. National Grange Mutual Ins. Co., 225 Conn. 367, 373–74, 623 A.2d
483 (1993) (to extent remedial ‘‘statute leaves room for construction, we
have construed its requirements liberally in order to implement the statute’s
remedial purpose’’).