Opinion
No. CV 03 0070629
March 19, 2004
MEMORANDUM OF DECISION RE DEFENDANT DAVID A. FUSS'S MOTION FOR SUMMARY JUDGMENT #108
The present lawsuit was brought against EarthFirst of New England, LLC and its sole member David A. Fuss. The complaint alleges breach of contract and negligence. The motion before the court is David A. Fuss's motion for summary judgment.
Specifically, the suit against Fuss questions the extent to which the sole member of a limited liability company can be held personally responsible 1) for the contracts of the company and 2) for his own negligent acts while working on behalf of the company. The court holds that he may not be held personally liable for the contracts of the limited liability company but may be liable for his own acts of negligence.
FACTS:
The plaintiff, Dennis Gelinas, executed two home improvement contracts with EarthFirst of New England, LLC, David A. Fuss, member. EarthFirst of New England, LLC, a registered limited liability company in Connecticut, changed its name in August 2002 and is now known as EarthFirst Excavation, LLC. Furthermore, EarthFirst Excavation, LLC is a licensed new home construction contractor and licensed home improvement contractor. Hereinafter EarthFirst of New England, LLC and EarthFirst Excavation, LLC will be referred to as EarthFirst.
The first contract, executed on August 26, 2001, called for EarthFirst to "[e]xcavate for driveway per site plan and apply 6" of gravel to driveway. Clear trees and remove stumps from site. Install silt fence, clear site for driveway, house and septic." The second contract, the contract of February 22, 2002, obligated EarthFirst to install a septic system, excavate foundations for the house and garage, backfill the house foundation and excavate a utility trench and waterline trench. Both contracts were signed by Dennis Gelinas, homeowner, and David A. Fuss, member of EarthFirst of New England, LLC.
The signature lines on each contract read as follows:
____________________________ /s/
Earth First of New England, LLC
DAVID A. FUSS, MEMBER LLC
____________________________ /s/
HOMEOWNER.
Further evidence of the contractual relationship comes from EarthFirst invoices. On four different occasions EarthFirst billed the plaintiffs for work to be done or that it had completed. Each invoice was on EarthFirst letterhead and was signed by defendant Fuss as "member LLC."
There are no allegations that either contract violated the Home Improvement Act, General Statutes § 20-418 et. seq. Furthermore, the plaintiffs do not seek to hold Fuss liable by piercing the corporate veil.
LAW First and Second Counts
The first and second counts of the complaint allege breach of the August 26, 2001 and February 22, 2002 contracts, respectively. The defendant argues that General Statutes §§ 34-133 and 34-134 shield him from being held personally liable on the contracts of the limited liability company.
On the face of the complaint, each of these counts appear to be directed solely toward the defendant EarthFirst. Furthermore, during argument on this motion the plaintiffs' attorney stated that defendant Fuss, in his individual capacity, was never intended to be a part of the first and second counts.
The pertinent sections of the complaint read:
" FIRST COUNT 1) On or about August 26th, 2001, the Plaintiffs and the Defendant, Earth First of New England, LLC, acting by the Defendant David A. Fuss, entered into a contract for the construction of . . ." " SECOND COUNT 1) On or about February 22d 2002, the Plaintiffs and the Defendant Earth First of New England, LLC, acting by the Defendant David A. Fuss, entered into a contract for the construction of . . ."
The court finds the following regarding the first and second counts of the complaint.
"The Connecticut Limited Liability Company Act, General Statutes §§ 34-100 to 34-242, inclusive, was adopted in 1993 and is generally similar to the model act promulgated in 1995 by the Uniform Laws Commissioners. The allure of the limited liability company is its unique ability to bring together in a single business organization the best features of all other business forms — properly structured, its owners obtain both a corporate-styled liability shield and the pass-through tax benefits of a partnership." (Internal quotation marks omitted.) PB Real Estate, Inc. v. DEM II Properties, 50 Conn. App. 741, 742, 719 A.2d 73 (1998).
Section 34-133 addresses liability of members to third parties, as applied here the liability of Fuss to Gelinas. Section 34-133 states: "Except as provided in subsection (b) of this section [concerning professional services not applicable to the present case] a person who is a member or manager of a limited liability company is not liable, solely by reason of being a member or manager, under a judgment, decree or order of a court, or in any other manner, for a debt, obligation or liability of the limited liability company, whether arising in contract, tort or otherwise or for the acts or omissions of any other member, manager, agent, or employee of the limited liability company." General Statutes § 34-133. Moreover, a member, individually, is not a proper party to suit on a breach of contract claim unless "the object of the proceeding is to enforce a member's or manager's right against or liability to the limited liability company." General Statutes § 34-134.
Furthermore, the defendant's statutory argument dovetails with the rule of agency law that states: "the agent is not liable where, acting within the scope of his authority, he contracts with a third party for a known principal." (Internal quotation marks omitted.) Rich-Taubman Associates v. Commissioner of Revenue Services, 236 Conn. 613, 619, 674 A.2d 805 (1996).
The contracts at issue are clear and unambiguous as to who the contracting parties were. The first paragraph in each contract states that this is an agreement "by and between EarthFirst of New England, LLC, David A. Fuss, member, P.O. Box 202, Brooklyn, CT, County of Windham, State of Connecticut, referred to herein as the `Contractor,' and Dennis Gelinas, Town of Killingly, State of CT, referred to herein as `Homeowner.' "Moreover, the signature line caption reiterates that Fuss is acting as an agent of EarthFirst as it reads: "EarthFirst of New England, LLC, DAVID A. FUSS, MEMBER LLC." Last, the invoices mailed to the plaintiff identify the billing party as "EARTHFIRST OF NEW ENGLAND, LLC" and are signed by "David A. Fuss, member LLC."
The defendant has met his burden of showing the absence of any material fact regarding Fuss's personal liability on the contracts and the plaintiff has failed to submit any evidence establishing the existence of any disputed fact as to Fuss's personal liability. The defendant David A. Fuss is entitled to judgment as a matter of law since 1) the shield of §§ 34-133 and 34-134 protect him from suit and 2) he did not contract with Gelinas as an individual, but rather as a member/agent of EarthFirst. The motion for summary judgment is granted to defendant Fuss on the first and second counts.
Third Count
The third count of the complaint alleges that Fuss, in his individual capacity, negligently performed the work that EarthFirst contracted with Gelinas to accomplish. The defendant argues that due to his status as a member of the company he cannot be found liable for negligence without the plaintiff first piercing the corporate veil. The defendant further contends that the plaintiffs have not alleged any facts that would support piercing the corporate veil.
The threshold issue is whether, due to his status as a member, Fuss is protected by the limited liability shield. In Scribner v. O'Brien, Inc., 169 Conn. 389, 363 A.2d 160 (1975), the supreme court was presented with facts similar to the present case and on the issue of liability held: "It is true that the agent is not liable where, acting within the scope of his authority, he contracts with a third party for a known principal . . . 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." (Citations omitted.) Id., 404. Although the Scribner court was addressing a situation where the defendant was an officer of a corporation, the court finds that the holding is equally applicable to a limited liability company since an hallmark of the limited liability company is its "corporate-styled liability shield." PB Real Estate, Inc. v. DEM II Properties, supra, 50 Conn. App. 742. Therefore, Fuss is a proper party to the third count, the plaintiff does not have to pierce the corporate veil and the defendant is not protected by §§ 34-133 or 34-134. See also Nadler v. Grayson Construction Co., Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. CV 02-0190015 (April 15, 2003, Adams, J.) ( 34 Conn. L. Rptr. 482) ("Although there is no case law interpreting [§ 34-134], its plain language implies that a manager or a member [of a limited liability company] is a proper defendant in an action that is not based solely on his status as a member or a manager.")
The plaintiff's third count alleges that Fuss was negligent. "Issues of negligence are ordinarily not susceptible of summary adjudication but should be resolved by trial in the ordinary manner." (Internal quotation marks omitted.) Fogarty v. Rashaw, 193 Conn. 442, 446, 476 A.2d 582 (1984). Nevertheless, "[t]he existence of a duty is a question of law and only if such a duty is found to exist does the trier of fact then determine whether the defendant violated that duty in the particular situation at hand" (Internal quotation marks omitted.) Gould v. Mellick Sexton, 263 Conn. 140, 153, 819 A.2d 216 (2003). Thus, if no duty is found to exist then it is proper to grant summary judgment.
"The 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." (Citation omitted.) Coburn v. Lenox Homes, Inc., 186 Conn. 370, 375, 441 A.2d 620 (1982).
In this case, the defendant EarthFirst owed the plaintiffs a contractual and a common-law duty. EarthFirst's contractual duty arises under Section I of each contract. Section I of each contract states that the "[c]ontractor shall be responsible for the following in addition to the workmanlike performance for the work done on the above stated premises." On a common-law basis, EarthFirst has a duty to "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. 400.
"The same standard of care that applies to a corporation [or limited liability company] also applies to an officer, manager, or agent of a corporation [or limited liability company] who individually approves, directs, or actively participates or cooperates in the negligent conduct." Hoang v. Arbess, 80 P.3d 863, 870, cert. denied, 2003 Colo. LEXIS 954 (Colo.Ct.App. 2003). See also Scribner v. O'Brien, Inc., supra, 169 Conn. 389. (In this negligence claim, the court applied the same standard of care to the corporate officer sued in his personal capacity as it had applied to the corporation.)
In Fuss's answer to the complaint, he admits that he directed the affairs of EarthFirst and that he is the person who performed the work contracted for by EarthFirst under the two contracts. Due to this admission, Fuss is found to have owed the plaintiffs the same contractual and common-law duties that EarthFirst owed to the plaintiffs.
However, there is a genuine issue of material fact regarding whether Fuss breached his duty to the plaintiffs. This is a decision that must be left to the trier of fact. Gould v. Mellick Sexton, supra, 263 Conn. 153.
Fuss has not met his burden of showing that there is an absence of material fact regarding negligence. Therefore, the motion for summary judgment is denied.
CONCLUSION
Based on the foregoing, defendant David A. Fuss's motion for summary judgment is granted as to the first and second counts. The defendant's motion for summary judgment on count three is denied.
Foley, J.