MEMORANDUM OF DECISION MOTION TO STRIKE ( #113)

LOPEZ, JUDGE.

On August 24, 2004, the plaintiff, Laureen Pompilli, filed a five-count complaint against the defendants, Pro-line Painting, LLC (Pro-line) and Kenneth Veitch. This action arises out of Pro-line's failure to perform home improvement services on the property of the plaintiff according to an oral contract, and damages that resulted to the floor and the walls of the property while Pro-line was undertaking to discharge the contract.

Count one alleges a breach of contract on the part of Pro-line, the operator and owner of a home improvement business, due to its failure to perform home improvement services pursuant to its agreement and the resulting damage to the plaintiff's residence. Count two alleges a claim of quantum meruit as to Pro-line, based on the allegation that the plaintiff made a partial payment of $5,000 which conferred a benefit on Pro-line without it having to fully perform the services to which it agreed. Count three alleges a violation of the Home Improvement Act (HIA), General Statutes § 20-418 et seq., on the part of Pro-line, due to its failure to reduce to writing the agreement. Count four alleges negligence as to Pro-line, and count five alleges that Kenneth Veitch is the alter ego of Pro-line and seeks to pierce the corporate veil to hold Veitch personally liable for the corporation's actions.

On February 16, 2005, the defendants filed a motion to strike count five of the complaint, accompanied by a memorandum in support. The plaintiff did not file a memorandum in opposition.

"The purpose of a motion to strike is to contest the legal sufficiency of the allegations of any complaint . . . to state a claim upon which relief can be granted." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003). In ruling on a motion to strike, the trial court examines the complaint "construed in favor of the plaintiffs, to determine whether the [pleading party has] stated a legally sufficient cause of action; (internal quotation marks omitted.) Dodd v. Middlesex Mutual Assurance Co., 242 Conn. 375, 378, 698 A.2d 859 (1997); [and] the court is limited to the facts alleged in the complaint." (Internal quotation marks omitted.) Faulkner v. United Technologies Corp., 240 Conn. 576, 580, 693 A.2d 293 (1997). "[I]f facts provable in the complaint would support a cause of action, the motion to strike must be denied." (Internal quotation marks omitted.) Broadnax v. New Haven, 270 Conn. 133, 173, 851 A.2d 1113 (2004). "[G]rounds other than those specified [in the complaint] should not be considered by the trial court in passing upon a motion to strike . . ." (Internal quotation marks omitted.) Gazo v. Stamford, 255 Conn. 245, 259, 765 A.2d 505 (2001). "On a motion to strike, the trial court's inquiry is to ascertain whether the allegations in each count, if proven, would state a claim on which relief could be granted . . . A motion to strike is properly granted if the complaint alleges mere conclusions of law that are not supported by the facts alleged." (Citations omitted; internal quotation marks omitted.) In re Michael D., 58 Conn.App. 119, 122-23, 752 A.2d 1135, cert. denied, 254 Conn. 911, 759 A.2d 505 (2000).

Pro-line and Veitch move to strike count five on the ground that the plaintiff fails to allege any supporting facts that Veitch is the "alter ego of defendant corporation." In support of the motion, they argue that the plaintiff's allegation that Pro-line is the alter ego of Veitch, consists entirely of legal conclusions and as such, is legally insufficient to state a claim. They maintain that the plaintiff's blanket allegation that Veitch as the alter ego of Pro-line is, and has been conducting, managing and controlling the affairs of the corporation since its incorporation as though it were his own business, is unsupported by facts necessary to demonstrate the requisite control. They further maintain, equally unsupported by the facts, that the plaintiff's allegation that Veitch accepted $5,000 and did not deposit the funds into Pro-line's checking account thereby commingling funds rightfully belonging to Pro-line is and would be legally insufficient to pierce the corporate veil if this were found to be an allegation of fact. Lastly, they argue that, the plaintiff has not alleged conduct that creates a unity of interest, and none of the alleged facts satisfy any element of either the instrumentality rule or the identity rule for piercing the corporate veil.

"Courts will disregard the fiction of [a] separate legal entity when a corporation is a mere instrumentality or agent of another corporation or individual owning all or most of its stock . . . Under such circumstances the general rule, which recognizes the individuality of corporate entities and the independent character of each in respect to their corporate transactions, and the obligations incurred by each in the course of such transactions, will be disregarded, where . . . the interests of justice and righteous dealing so demand . . . The circumstance that control is exercised merely through dominating stock ownership, of course, is not enough . . . There must be such domination of finances, policies and practices that the controlled corporation has, so to speak, no separate mind, will or existence of its own and is but a business conduit for its principal." (Citations omitted; internal quotation marks omitted.) Zaist v. Olson, 154 Conn. 563, 573-74, 227 A.2d 552 (1967). The doctrine of piercing the corporate veil, as applied to corporations, also applies to a limited liability company. See Litchfield Asset Management Corp. v. Howell, 70 Conn.App. 133, 147, 799 A.2d 298, cert. denied, 261 Conn. 911, 802 A.2d 854 (2002).

"The concept of piercing the corporate veil is equitable in nature and courts should pierce the corporate veil only under exceptional circumstances." (Internal quotation marks omitted.) KLM Industries, Inc. v. Tylutki, 75 Conn.App. 27, 33, 815 A.2d 688, cert. denied, 263 Conn. 916, 821 A.2d 770 (2003). An example of this is "where the corporation is a mere shell, serving no legitimate purpose, and used primarily as an intermediary to perpetuate fraud or promote injustice." (Internal quotation marks omitted.) De Leonardis v. Subway Sandwich Shops, Inc., 35 Conn.App. 353, 358-59 n. 3, 646 A.2d 230, cert denied, 231 Conn. 925, 648 A.2d 162 (1994). There is "[n]o hard and fast rule, however, as to the conditions under which the entity may be disregarded can be stated as they vary according to the circumstances of each case." (Internal quotation marks omitted.) Angelo Tomasso, Inc. v. Armor Construction Paving, Inc., 187 Conn. 544, 555-56, 447 A.2d 406 (1982).

Two rules or tests have been developed by the courts to determine whether it is proper to pierce the corporate veil, the instrumentality rule and the identity rule. Zaist v. Olson, supra, 154 Conn. 575-76. "The instrumentality rule requires proof of three elements: (1) [c]ontrol, not mere majority or complete stock control, but complete domination, not only of finances but of policy and business practice in respect to the transaction attacked so that the corporate entity as to this transaction had at the time no separate mind, will or existence of its own; (2) that such control must have been used by the defendant to commit fraud or wrong, to perpetrate the violation of a statutory or other positive legal duty, or a dishonest or unjust act in contravention of plaintiff's legal rights; and (3) that the aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of." (Internal quotation marks omitted.) Season-All Industries, Inc. v. R.J. Grosso, Inc., 213 Conn. 486, 490, 569 A.2d 32 (1990). "[T]he key factor in any decision to disregard the separate corporate entity is the element of control or influence exercised by the individual sought to be held liable for corporate actions." (Internal quotation marks omitted.) Christian Bros., Inc. v. South Windsor Arena, Inc., 7 Conn.App. 648, 651, 509 A.2d 1095 (1986).

The identity rule requires showing that "there was such a unity of interest and ownership that the independence of the corporation had in effect ceased or had never begun, an adherence to the fiction of separate identity would serve only to defeat justice and equity by permitting the economic entity to escape liability arising out of an operation conducted by one corporation for the benefit of the whole enterprise." (Internal quotation marks omitted.) Falcone v. Night Watchman, Inc., 11 Conn.App. 218, 221, 526 A.2d 550 (1987). "The identity rule primarily applies to prevent injustice in the situation where two corporate entities are, in reality, controlled as one enterprise because of the existence of common owners, officers, directors or shareholders and because of the lack of observance of corporate formalities between the two entities." (Internal quotation marks omitted.) Cahaly v. Benistar Property Exchange Trust Co., 73 Conn.App. 267, 284, 812 A.2d 1 (2002), rev'd in part on other grounds, 268 Conn. 264, 842 A.2d 1113 (2004). "Although the identity or alter-ego doctrine has been primarily applied to reach beyond the veil to another corporation, it may also be employed to hold an individual liable." (Emphasis added; internal quotation marks omitted.) Klopp v. Thermal-Sash, Inc., 13 Conn.App. 87, 89 n. 3, 534 A.2d 907 (1987).

"Superior Court decisions [do] differ as to what extent a complaint must allege the elements of the instrumentality rule or the identity rule, [nonetheless] the decisions are consistent in holding that, at a minimum, the complaint must allege a sufficient factual basis for a court to pierce the corporate veil." Rosina v. Bilides B. Building Excavating, LLC., Superior Court, judicial district of New Haven, Docket No. CV 02 0462976 (December 3, 2002, Zoarski, J.T.R.) (court granted defendant's motion to strike breach of contract and unjust enrichment claims because the plaintiff failed to provide a factual basis for piercing the corporate veil); Traina Enterprises, Inc. v. Manousos, Superior Court, judicial district of Hartford, Docket No. CV 02 0812996 (March 10, 2003, Wagner, J.T.R.) (court granted the motion to strike because there were not sufficient specific facts alleged that would support the application of either "instrumentality" or "identity" rules). But see Greene v. HMP Industries, Inc., Superior Court, judicial district of Ansonia-Milford at Milford, Docket No. CV00 0072697 (July 18, 2001, Nadeau, J.) (court denied the motion to strike the breach of contract claim because the court found that the allegations were sufficient to meet the requirements of either the instrumentality or the identity rule).

The plaintiff must, therefore allege sufficient facts necessary to plead either the instrumentality rule or the identity rule. In the present case, the portion of the complaint in which the plaintiff purportedly alleges facts sufficient to pierce Pro-line's corporate veil is found in paragraphs two and twenty-two.

Paragraph two states that Veitch has been

"conducting, managing, and controlling the affairs of the corporation since its incorporation, as though it were Defendant's own business, and has used defendant corporation for the purpose of defrauding plaintiff by accepting Five Thousand Dollar ($5,000) in the form of U.S. Currency from Plaintiff, and, upon information and belief, not depositing said funds rightfully belonging to the corporate defendant's checking account thereby commingling said funds rightfully belonging to the corporate defendant with its own funds."

Paragraph twenty-two states that

"[a]s the alter ego of the corporate defendant, through commingling corporate funds with his own funds and failing to observe the formalities required by law of a limited liability company, Defendant Kenneth Veitch is liable to answer for the debts of the corporate defendant limited liability company Pro-line Painting, LLC in that its corporate veil should be pierced."

A review of the allegations indicates that they allege legal conclusions rather than facts sufficient to support the piercing of the corporate veil under either theory. For example, there are no facts that demonstrate Veitch actually exercised "complete domination, not only in finances but of policy and business practice [with] respect to the transaction . . ." (Internal quotation marks omitted.) See Season-All Industries, Inc. v. R.J. Grosso, Inc., supra, 213 Conn. 490. In addition, no facts are alleged that there was a "unity of interest and ownership that the independence of the corporation had in effect ceased or had never begun . . ." (Internal quotation marks omitted.) See Falcone v. Night Watchman, Inc., supra, 11 Conn.App. 221. The complaint only states that Veitch was commingling funds rightfully belonging to the corporate defendant with his own funds without setting forth the requisite control that is required. Even if the allegations that Veitch commingled a single payment made to Pro-line were true, this fact by itself is insufficient to pierce Pro-line's corporate veil. A single incident of commingling of funds does not demonstrate that there was such a "domination of finances . . . that the controlled corporation has, so to speak, no separate mind, will or existence of its own . . ." (Internal quotation marks omitted.) O.J. Mann Electric Services, Inc. v. Kensington, Superior Court, judicial distinct of New Haven at Meriden, Docket No. CV 02 0282281 (December 17, 2004, Frazzini, J.) ( 38 Conn. L. Rptr. 463, 466 n. 7).

This does not mean that the Plaintiff cannot, upon a repleading, allege sufficient facts to state a viable cause of action. However in order to satisfy the instrumentality rule requirement he must meet the test announced in Tomasso, Inc. v. Armor Construction Paving, Inc., supra, 187 Conn. 544, 553. If the Plaintiff relies on the identity rule he must plead that the separate entity is a "fiction" and that the independence of the LLC had either ceased or never begun. Zaist v. Olson, supra, 154 Conn. 563, 575-76.

However, as stated earlier, based upon an examination of the pleadings in this case and construing all facts most favorable to the Plaintiff a cause of action has not been stated.

The motion to strike is therefore granted.

Lopez, J.