Court Opinion

ID: 4464491
Source: CourtListenerOpinion
Date Created: 2019-12-16 13:02:28.11412+00
Date Added: 2024-06-11T14:25:41.685403
License: Public Domain

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      SAUNDERS v. BRINER—CONCURRENCE AND DISSENT

   ROBINSON, C. J., with whom McDONALD and MUL-
LINS, 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 con-
clude 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 person-
ally—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 Princi-
ples of Corporate Governance: Analysis and Recom-
mendations (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 legis-
lature’s primary role in the formulation of public pol-
icy—in an arena that is purely statutory. Additionally,
the majority’s approach may open the door to games-
manship with the LLC corporate form. Because I con-
clude that the plaintiff lacked standing to bring counts
four, six, nine and ten of the second amended com-
plaint, I respectfully dissent from part I B of the major-
ity 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 [chal-
lenged 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 pro-
viding 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 gov-
ern 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. Brew-
ster Park, LLC, 321 Conn. 312, 317–18, 138 A.3d 257
(2016); accord General Statutes § 34-243 et seq. (provi-
sions of Connecticut Uniform Limited Liability Com-
pany Act, effective July 1, 2017).
   In Channing Real Estate, LLC, we followed the deci-
sion 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 man-
ager 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 inter-
est 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 defen-
dant. 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 Appel-
late 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 Construc-
tion 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
Wash. App. 1, 23–24, 352 P.3d 807, review denied, 184 Wash.
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 schol-
arly commentator agrees, writing that ‘‘a member can-
not 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 Corpora-
tion 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 indi-
vidual recovery, if it finds that to do so will not (i)
unfairly expose the corporation or defendants to a mul-
tiplicity 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 princi-
pally 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 Gov-
ernance, 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 misappropria-
tion. 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 Judi-
cial 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 ‘incor-
porated’ 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 counter-
claims in a derivative action. . . . Also, in a direct
action, each side must normally bear its own legal
expenses, and the plaintiff, if successful, cannot ordi-
narily look to the corporation for attorney’s fees. Such
a rule seems more appropriate in cases that fundamen-
tally involve disputes between a limited number of ‘part-
ners’ in a closely held firm.’’ (Citation omitted.) Princi-
ples 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 Fran-
chise 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 busi-
ness 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 defen-
dants’ 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/Ameri-
can Law Institute approach to close corporation stand-
ing. 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 partner-
ships.’’ Bagdon v. Bridgestone/Firestone, Inc., supra,
383–84. The Seventh Circuit emphasized that the ‘‘prem-
ise 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 understand-
able that not all states have joined the parade.’’ (Empha-
sis 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 share-
holder claims. Adherence to the general rule without
this proposed exception prevents multiplicity of law-
suits 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 commer-
cial rules promotes predictability. If shareholders and
the corporation desire to vary commercial rules by con-
tract, 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 Sim-
mons 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 partici-
pants—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 legisla-
ture,’’ 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 share-
holder from asserting a claim belonging to the corpora-
tion based on the fact that this is a subchapter S, [closely
held] corporation,’’ rendering parties ‘‘more like part-
ners 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 pur-
poses, 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 liabil-
ity 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 stand-
ing 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 dam-
ages, 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 plain-
tiff] 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 defen-
dant] was the sole owner of the business he was neces-
sarily 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 stand-
ing to bring a claim under a business practice discrimi-
nation 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 corpo-
rate veil is pierced, [the] appellant gained protection
from the decision. . . . Indeed, the avoidance of per-
sonal 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 Wash. 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 share-
holders.’’ [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 Construc-
tion Co., supra, 758 N.W.2d 890 (deferring to legislature
to create remedy for business practice discrimination
when party is single member LLC); compare Commis-
sioner of Public Safety v. Freedom of Information Com-
mission, 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 enact-
ment of [a statutory provision governing law enforce-
ment 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 defen-
dant’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 defen-
dants, 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 bene-
fit 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 axi-
omatic 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 sharehold-
ers, 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 quo-
tation 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 recog-
nize 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 major-
ity 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 princi-
ples 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 . . . .’’).