Opinion
X03HHDCV176074602S
06-19-2017
Mandell & Blau, M.D.'s, P.C. v. Hartford Healthcare Corp. et al
UNPUBLISHED OPINION
MEMORANDUM OF DECISION RE DEFENDANTS' MOTIONS TO DISMISS (##110.00, 111.00 & 113.00)
Ingrid L. Moll, Judge.
Before the court are the motions to dismiss filed by the three defendant groups: (1) Midstate Radiology Associates, LLC (" Midstate") (#110.00); (2) Hartford HealthCare Corporation, the Hospital of Central Connecticut, Central Connecticut Health Alliance, Inc. d/b/a CenConn Healthcorp., CenConn Services, Inc., and New Britain MRI Limited Partnership (" MRI LP") (collectively, " Hartford HealthCare Defendants") (#111.00); and (3) New Britain Radiological Associates, P.C. (" NBRA") (#113.00). All of the defendants move for dismissal for lack of subject matter jurisdiction, pursuant to Practice Book § 10-30, based on the alleged lack of standing of the plaintiff, Mandell & Blau, M.D.'s, P.C. (" Mandell & Blau" or " plaintiff"). Alternatively, the Hartford HealthCare Defendants and NBRA move for a stay pending arbitration pursuant to General Statutes § 52-409.
Having considered the parties' submissions and the arguments of counsel, the court concludes that Mandell & Blau has standing to assert the claims set forth in the complaint dated January 6, 2017. The court further orders, pursuant to § 52-409, that a stay of this action shall enter pending arbitration among Mandell & Blau, NBRA, and MRI LP. A stay of these proceedings shall go into effect, without a separate order, upon the court's adjudication of Mandell & Blau's pending motion for preliminary injunction.
BACKGROUND
The following facts are alleged in the complaint and/or appear in the documentation submitted in support of or in opposition to the defendants' motions to dismiss. The plaintiff, Mandell & Blau, is a professional corporation consisting of doctors specializing in radiology. Mandell & Blau has been providing radiological services at the Hospital for Central Connecticut (" HCC"), which comprises the former New Britain General Hospital (" New Britain General") and Bradley Memorial Hospital. Defendant NBRA also provides radiology services at the HCC. Defendant Hartford HealthCare Corporation (" HHC") owns and operates multiple hospitals, including Hartford Hospital, HCC, Midstate Medical Center, Windham Hospital, and Backus Hospital. Defendant Midstate provides radiological services at Midstate Medical Center.
Over twenty-five years ago, Mandell & Blau and NBRA entered into an agreement with New Britain General (the predecessor to the HCC) to provide radiological services in regard to an MRI center at New Britain General, with Mandell & Blau and NBRA acting together to provide such MRI radiological services, effectively as partners or joint venturers.
Defendant Cenconn Services, Inc. (" CSI") was formed by New Britain General and Cenconn Healthcorp., in part to serve as the landlord and to lease space at New Britain General and specifically in connection with the MRI facility at issue. Defendant MRI LP was formed by New Britain General to serve as the sublandlord of the space at issue. MRI LP initially subleased space to Mandell & Blau and NBRA.
At all times relevant hereto, the State of Connecticut, through the Office of Health Care Access, formerly known as the Commission on Hospitals and Healthcare, has controlled the right to utilize MRI equipment by virtue of what is referred to as a certificate of need. On April 18, 1989, such a certificate was granted to MRI LP, NBRA, and Mandell & Blau by way of a stipulated settlement among those parties. The certificate includes a provision precluding the change of control and operation of the MRI facility without the consent of the state.
In 2005, Mandell & Blau and NBRA formed Radiology Services of Central Connecticut, LLC (" RSCC") " to provide a simplified mechanism for contracting with the [HCC] and other affiliates of the Central Connecticut Health Alliance, Inc. for the exclusive provision of professional radiology services." Mandell & Blau and NBRA each own a 50% interest in RSCC. In connection with the formation of RSCC, Mandell & Blau and NBRA entered into the following agreements: (1) Operating Agreement; and (2) Agreement By and Between New Britain Radiological Associates, P.C. and Mandell & Blau, M.D.'s, P.C. dated May 17, 2007 (" Business Agreement"). The Operating Agreement and Business Agreement were signed by the respective presidents of Mandell & Blau and NBRA. Although the Operating Agreement is not dated, Joel Gelber, M.D., who is the president of NBRA, states in his March 16, 2017 affidavit, which was submitted as Exhibit A to NBRA's memorandum of law (#114.00), that " [o]n or about May 17, 2007, Mandell & Blau and NBRA entered into the Operating Agreement of [RSCC] . . ." Thus, it appears that the Operating Agreement and the Business Agreement were executed simultaneously.
Section 5.2 of the Operating Agreement provides in part: " Neither Member shall contract directly with New Britain General Hospital without the consent of the other Member for so long as there is in effect a contract between the Company [RSCC] and the Hospital." Section 6.2 of the Operating Agreement, entitled " Major Decisions, " provides in part: " The agreement of both Members shall be required to: . . . K . commence litigation, arbitration, mediation or similar proceedings, except that either Member may enforce the terms of the Contract . . ." (Emphasis in original.) The term " Contract" is not defined in the Operating Agreement. The term " Contract" is described, however, in the contemporaneously executed Business Agreement as the " exclusive contract" that RSCC " will enter . . . with the Hospital of Central Connecticut . . . for the provision of all Services at locations of the Hospital and affiliates . . ." (Business Agreement at 1.)
On June 28, 2010, MRI LP (which is controlled by HHC) and RSCC entered into a Sublease Agreement, with MRI LP as Sublandlord and RSCC as Subtenant, relating to the lease space at issue at 100 Grand Street in New Britain. The Sublease describes RSCC as " a joint venture of two (2) groups of physicians, each of which employs physicians specializing in diagnostic imaging and radiology . . ." The Sublease states the following: " WHEREAS, RSCC wishes to sublease the Premises, lease the Equipment, and obtain certain staffing and other support from the Partnership and conduct, through the physician group members of RSCC (the 'RSCC Members '), independent professional medical imaging practices limited to MRI at the Premises pursuant to the terms hereof." (Emphasis in original.) The Sublease was amended on September 1, 2014.
The Sublease makes reference to " a Radiology Services Agreement dated as of May 18, 2007 between the Hospital [HCC] and RSCC." Amendment No. 1 to the Sublease dated September 1, 2014 references a " certain Radiology Agreement dated as of May 1, 2013 between the Hospital and RSCC." Neither of these agreements has been discussed or submitted by any of the parties in connection with the motions to dismiss.
The Business Agreement, as well as the Sublease, make clear that Mandell & Blau and NBRA would function as separate radiology practices in connection with the operation of RSCC, including conducting the respective practices under their own names and maintaining separate signage at the MRI facility. Moreover, under the Sublease, " [e]ach of the RSCC Members" has specific obligations in connection with the provision of MRI services at the HCC. (See, e.g., Sublease at 2, § § 3 & 4.)
MRI LP, through CSI as general partner, recently gave notice to Mandell & Blau that the Sublease is terminated, effective June 27, 2017.
Mandell & Blau commenced this action on or about January 13, 2017. The complaint asserts five counts: (1) breach of fiduciary duty (Count One); (2) civil conspiracy (Count Two); (3) tortious interference (Count Three); (4) breach of covenant of good faith and fair dealing (Count Four); and (5) violation of the Connecticut Unfair Trade Practices Act (" CUTPA"), General Statutes § 42-110a et seq. (Count Five). Mandell & Blau contends that the reason for termination--a purported need for subspecialists--is a ruse, as Mandell & Blau already has subspecialists providing such services. Mandell & Blau alleges that the HHC, directly and through the other defendants, seeks to centralize all of the MRI radiology services in its hospitals directly or indirectly under defendant Midstate and through one of its affiliated doctors. Mandell & Blau further alleges that the defendants intend to have the MRI space and equipment taken over effectively by NBRA and then ultimately consolidated into an MRI group that will incorporate all MRI radiology groups that are and have been providing radiology services at the various hospitals owned and controlled by HHC. Mandell & Blau also complain that consent was not secured from the State relating to a change of control and management regarding the MRI facility at issue.
On March 15, 2017, Midstate filed its motion to dismiss for lack of subject matter jurisdiction with an appended memorandum (#110.00). On April 12, 2017, Mandell & Blau filed its objection thereto (#116.00). On April 21, 2017, Midstate filed its reply (#120.00).
On March 16, 2017, the Hartford HealthCare Defendants filed their motion to dismiss for lack of standing or, in the alternative, a motion to stay in favor of arbitration (#111.00), as well as a supporting memorandum and accompanying affidavit (#112.00). On April 12, 2017, Mandell & Blau filed its response thereto (#118.00). On April 27, 2017, the Hartford HealthCare Defendants filed a supplemental memorandum in further support of their motion (#122.00).
On March 16, 2017, NBRA filed its motion to dismiss for lack of standing or alternatively to stay action and compel arbitration (#113.00) and supporting memorandum (#114.00). On April 12, 2017, Mandell & Blau filed its response thereto (#117.00).
The court heard oral argument on April 24, 2017.
STANDARD OF REVIEW
In considering a motion to dismiss, the court " take[s] the facts to be those alleged in the complaint, including those facts necessarily implied from the allegations, construing them in a manner most favorable to the pleader . . . A motion to dismiss admits all facts well pleaded and invokes any record that accompanies the motion, including supporting affidavits that contain undisputed facts . . . If a resolution of a disputed fact is necessary to determine the existence of standing when raised by a motion to dismiss, a hearing may be held in which evidence is taken . . ." (Citations omitted; internal quotation marks omitted.) May v. Coffey, 291 Conn. 106, 108-09, 967 A.2d 495 (2009).
" A motion to dismiss tests, inter alia, whether, on the face of the record, the court is without jurisdiction." (Internal quotation marks omitted.) MacDermid, Inc. v. Leonetti, 310 Conn. 616, 626, 79 A.3d 60 (2013). " The plaintiff bears the burden of proving subject matter jurisdiction, whenever and however raised." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. New London, 265 Conn. 423, 430 n.12, 829 A.2d 801 (2003).
" When a trial court decides a jurisdictional question raised by a pretrial motion to dismiss on the basis of the complaint alone, it must consider the allegations of the complaint in their most favorable light . . . In this regard, a court must take the facts to be those alleged in the complaint, including those facts necessarily implied from the allegations, construing them in a manner most favorable to the pleader." (Internal quotation marks omitted.) Conboy v. State, 292 Conn. 642, 651, 974 A.2d 669 (2009). " In contrast, if the complaint is supplemented by undisputed facts established by affidavits submitted in support of the motion to dismiss . . . other types of undisputed evidence . . . and/or public records of which judicial notice may be taken . . . the trial court, in determining the jurisdictional issue, may consider these supplementary undisputed facts and need not conclusively presume the validity of the allegations of the complaint . . . Rather, those allegations are tempered by the light shed on them by the supplementary undisputed facts . . . If affidavits and/or other evidence submitted in support of a defendant's motion to dismiss conclusively establish that jurisdiction is lacking, and the plaintiff fails to undermine this conclusion with counteraffidavits . . . or other evidence, the trial court may dismiss the action without further proceedings . . . If, however, the defendant submits either no proof to rebut the plaintiff's jurisdictional allegations . . . or only evidence that fails to call those allegations into question . . . the plaintiff need not supply counteraffidavits or other evidence to support the complaint, but may rest on the jurisdictional allegations therein." (Citations omitted; emphasis in original; footnote omitted; internal quotation marks omitted.) Id. at 651-52.
" It is well established that, if a party is found to lack standing, the court is without subject matter jurisdiction to determine the cause . . . [S]tanding is the legal right to set judicial machinery in motion. One cannot rightfully invoke the jurisdiction of the court unless he or she has, in an individual or representative capacity, some real interest in the cause of action, or a legal or equitable right, title or interest in the subject matter of the controversy . . . Nevertheless, standing is not a technical rule intended to keep aggrieved parties out of court; nor is it a test of substantive rights. Rather it is a practical concept designed to ensure that courts and parties are not vexed by suits brought to vindicate nonjusticiable interests and that judicial decisions which may affect the rights of others are forged in hot controversy, with each view fairly and vigorously represented . . . These two objectives are ordinarily held to have been met when a complainant makes a colorable claim of direct injury he has suffered or is likely to suffer, in an individual or representative capacity. Such a personal stake in the outcome of the controversy . . . provides the requisite assurance of concrete adverseness and diligent advocacy . . . Standing . . . requires no more than a colorable claim of injury . . ." (Citations omitted; internal quotation marks omitted.) Citibank, N.A. v. Lindland, 310 Conn. 147, 161-62, 75 A.3d 651, 660 (2013). " It is well established that, in determining whether a court has subject matter jurisdiction, every presumption favoring jurisdiction should be indulged." (Internal quotation marks omitted.) Keller v. Beckenstein, 305 Conn. 523, 532, 46 A.3d 102 (2012).
DISCUSSION
A
As a threshold matter, the court first considers an issue it raised sua sponte, namely, the ripeness of the plaintiff's claims. By way of background, during the court's examination of the defendants' motions to dismiss, the court raised with the parties the following concern:
Because the plaintiff's claims appear to stem from a future event, namely, the June 27, 2017 effective date of a termination of the Sublease, the court is concerned that even if it concludes that Mandell & Blau has standing, the question of ripeness, which implicates the court's subject matter jurisdiction, remains unresolved.(#127.00.) At the court's request, the parties submitted supplemental briefs on the issue of ripeness. (##129.00-132.00.) " [T]he rationale behind the ripeness requirement is to prevent the courts, through avoidance of premature adjudication, from entangling themselves in abstract disagreements . . . Accordingly, in determining whether a case is ripe, a trial court must be satisfied that the case before [it] does not present a hypothetical injury or a claim contingent upon some event that has not and indeed may never transpire . . ." (Alterations in original; citation omitted; internal quotation marks omitted.) Chapman Lumber, Inc. v. Tager, 288 Conn. 69, 86-87, 952 A.2d 1 (2008). Having considered the parties' submissions and the authorities cited therein, the court is satisfied that the plaintiff's claims are ripe.
Even though the court raised the issue of ripeness sua sponte, the court applies the same standard as though the issue had been raised by a motion to dismiss. See State v. Marsh & McLennan Companies, Inc., 286 Conn. 454, 464, 944 A.2d 315, 321 (2008) (" When a . . . court decides a jurisdictional question raised by a pretrial motion to dismiss, it must consider the allegations of the complaint in their most favorable light . . . In this regard, a court must take the facts to be those alleged in the complaint, including those facts necessarily implied from the allegations, construing them in a manner most favorable to the pleader . . . The motion to dismiss . . . admits all facts which are well pleaded, invokes the existing record and must be decided upon that alone." [internal quotation marks omitted]).
First, " [c]laims premised on future events may of course be justiciable, despite their contingent nature, where the events, though contingent, are inevitable . . . Indeed, even when the occurrence of such future events, though not inevitable, is reasonably likely, such a reasonable likelihood is typically sufficient to transform a merely theoretical, nonjusticiable controversy into an actual, justiciable dispute which is ripe for adjudication." Bingham v. Dep't of Public Works, 51 Conn.Supp. 590, 599-600, 16 A.3d 865 (2009) (citing cases) (dismissing plaintiffs' claims as " not yet ripe for adjudication" because they were based solely on " theoretical possibilities"), aff'd per curiam , 127 Conn.App. 461, 15 A.3d 213 (2011). Construing the facts alleged in the complaint in a manner most favorable to the plaintiff, the court concludes that the future June 27, 2017 effective date of the termination of the Sublease appears not only reasonably likely, but inevitable. Accordingly, the so-called contingent nature of such future event does not render the plaintiff's claims unripe.
This conclusion is bolstered by the fact that the defendants have objected to the plaintiff's motion for temporary injunction, which seeks to maintain the status quo and preclude the " displacement of plaintiff's possessory interest, individually and through its shareholder doctors until further order of the court." (#121.00 (motion); ##133.00-135.00 (objections).)
Second, the court is also persuaded that Mandell & Blau's claims are not strictly dependent on the future effective date of the termination of the Sublease, but rather are based in part on conduct that has already occurred. By way of example only, Mandell & Blau asserts that NBRA has breached its fiduciary duty owed to it by entering into discussions and a tacit agreement with the other defendants to take over the MRI facility at issue and exclude Mandell & Blau from providing services there. Mandell & Blau also alleges that the other defendants have aided and abetted NBRA in that breach.
Third, " [p]ursuant to Connecticut's ripeness jurisprudence, as long as it is clear that a plaintiff has suffered an injury sufficient to give rise to the cause of action alleged, a lack of certainty as to the precise scope of damages will not prevent the claim from being justiciable." Chapman Lumber, Inc., 288 Conn. at 87-88; id. at 89 (" we conclude that even though the amount of the plaintiff's injury was not known with certainty, that circumstance did not render its claims against the defendant unripe and nonjusticiable"); see also Weiner v. Clinton, 100 Conn.App. 753, 760, 919 A.2d 1038 (2007) (" an inability to establish the exact amount of damages is indicative of a defect in a plaintiff's capacity to prove his or her case, not of a deficiency in the court's subject matter jurisdiction").
In sum, the court is satisfied that the case does not suffer from a lack of ripeness.
B
All defendants move to dismiss this action for lack of subject matter jurisdiction based on their claim that Mandell & Blau lacks standing. Specifically, the defendants argue that (1) this action is a simple landlord-tenant dispute regarding the termination and/or nonrenewal of a lease, and (2) this matter must be dismissed because Mandell & Blau seeks to enforce the rights of the tenant, RSCC, a nonparty to this action. Mandell & Blau argues that it has standing because, pursuant to § 6.2 of the Operating Agreement, it has the right to enforce the Sublease. It further argues that it has alleged misconduct targeted directly at it and direct harms suffered by it, not merely derivatively as a member of RSCC. For the reasons stated below, the court concludes that Mandell & Blau has standing to pursue the claims asserted in the complaint.
" 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 classical 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 distinguished 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 challenged action . . . Aggrievement is established if there is a possibility, as distinguished from a certainty, that some legally protected interest . . . has been adversely affected . . ." (Citations omitted; internal quotation marks omitted.) Wilcox v. Webster Ins., Inc., 294 Conn. 206, 214-15, 982 A.2d 1053 (2009).
" The requirement of directness between the injuries claimed by the plaintiff and the conduct of the defendant also is expressed, in our standing jurisprudence, by the focus on whether the plaintiff is the proper party to assert the claim at issue . . . Thus, to state these basic propositions another way, if the injuries claimed by the plaintiff are remote, indirect or derivative with respect to the defendant's conduct, the plaintiff is not the proper party to assert them and lacks standing to do so. When, for example, the harms asserted to have been suffered directly by a plaintiff are in reality derivative of injuries to a third party, the injuries are not direct but are indirect, and the plaintiff has no standing to assert them . . ." Padawer v. Yur, 142 Conn.App. 812, 817, 66 A.3d 931 (2013).
The court concludes that Mandell & Blau satisfies the requirements of classical aggrievement and, therefore, has standing to assert its claims. First, Mandell & Blau has alleged a specific, personal and legal interest in the challenged actions of the defendants. It alleges that it is a professional corporation consisting of doctors who specialize in radiology and that it has been providing such services at HCC for many years. It further alleges being owed a fiduciary duty by NBRA regarding the provision of MRI services at HCC.
Second, Mandell & Blau also satisfies the second prong of the test for determining classical aggrievement because it alleges that its interests have been and will be injuriously affected by the defendants' actions. Specifically, Mandell & Blau alleges that the defendants' activities will result in its exclusion with regard to the provision of MRI services at HCC, thereby causing it substantial damages. Because the court concludes that Mandell & Blau satisfies the requirements for classical aggrievement, it has standing to pursue its claims.
Mandell & Blau also argues that it has standing because, according to § 6.2(K) of the Operating Agreement, it has the contractual authority to " enforce the terms of the Contract." As discussed above, the term " Contract" is not defined in the Operating Agreement, but is described in the contemporaneously executed Business Agreement as the " exclusive contract" that RSCC " will enter . . . with the Hospital of Central Connecticut . . . for the provision of all Services at locations of the Hospital and affiliates . . ." (Business Agreement at 1.) In its objection to Midstate's motion to dismiss, Mandell & Blau argues that the " Contract" is the Sublease. (#116.00 at 11.) As a matter of contract interpretation, however, it appears that the term " Contract" in § 6.2(K) of the Operating Agreement refers to the " Radiology Services Agreement dated as of May 18, 2007 between the Hospital [HCC] and RSCC" (which is referenced in the Sublease). According to this reference, the Radiology Services Agreement was dated May 18, 2007, which is one day after the execution of the Operating Agreement, whereas the Sublease was executed in June 2010. Based on the foregoing, the court concludes that § 6.2(K) of the Operating Agreement (conferring authority on one of the members of RSCC to " enforce the terms of the Contract") is not a source of standing for Mandell & Blau vis-à-vis the Sublease. In any event, the court need not address this argument further because the complaint, even construed broadly, neither alleges a breach of contract claim against HCC nor identifies any provision of any contract between RSCC and HCC that Mandell & Blau is trying to enforce. See footnote 1 of this opinion.
Notwithstanding the foregoing analysis, the defendants attempt to paint a picture using a very narrow brush to argue that Mandell & Blau's claims essentially distill to a breach of lease agreement, where Mandell & Blau is not a party to the lease (i.e., the Sublease). The defendants contend that Mandell & Blau fails to allege a direct injury. In this connection, the defendants argue at length that Mandell & Blau's claims violate the well-settled rule that a member or manager of an LLC may not sue individually to recover for an injury incurred by the LLC. The court is not persuaded by these contentions.
As an initial matter, Mandell & Blau does not allege a breach of contract claim (i.e., a breach of the Sublease) against any of the defendants. That is, Mandell & Blau does not purport to state a breach of contract (or other) claim on behalf of RSCC, the Subtenant. This is but one factor that distinguishes the present case from various cases on which the defendants rely for the unremarkable proposition that " [a] member . . . may not sue in an individual capacity to recover for an injury based on a wrong to the limited liability company." O'Reilly v. Valletta, 139 Conn.App. 208, 214, 55 A.3d 583 (2012); see also, e.g., Padawer v. Yur, 142 Conn.App. 812, 818, 66 A.3d 931 (2013).
In Padawer, 142 Conn.App. at 813, a case involving the sale of a retail store, the Appellate Court reversed the judgment of the trial court, concluding that the trial court improperly found that the individual plaintiff had standing to pursue an action seeking redress for alleged harm to his limited liability company. The plaintiff was the sole member of Clare Jones, LLC, a retail business. Id. The plaintiff, in his individual capacity only, commenced an action asserting that the defendants had breached an oral agreement to purchase the store and were unjustly enriched to his detriment. Id. at 814. At trial, there was no evidence that the plaintiff individually owned the store or any assets located therein. Id. The Appellate Court concluded that the plaintiff did not have standing in his individual capacity because the defendants' alleged harm was solely to the LLC, and not to the plaintiff individually. Id. at 818.
Moreover, Mandell & Blau does not sit as a mere owner of an interest in an LLC with nothing more. It alleges that it is a going concern providing radiology services at HCC, which will be eliminated as a result of the defendants' actions. Mandell & Blau alleges its own interests and its own damages, separate from any claim that RSCC might have. " When a party meets the requirements of the test for determining classical aggrievement, it is irrelevant for purposes of standing whether such party also is a member of a limited liability company that may or may not have related claims of its own." Wilcox, 294 Conn. at 220-21; see also id. at 220 n.18 (" These cases [standing for the undisputed proposition that members of a limited liability company do not have standing to bring claims solely belonging to the limited liability company] are inapposite because the plaintiffs in the present case are not seeking to enforce the rights of or to recover damages sustained by American Crushing, but, rather, are seeking to enforce their individual rights under the policies and to recover damages that they individually have sustained" [emphasis in original]).
The defendants' reliance on O'Reilly v. Valletta, 139 Conn.App. 208, 55 A.3d 583, is misplaced. In O'Reilly, the plaintiff was the owner of a limited liability company called HUB, which leased a commercial property for purposes of operating a restaurant. Id. at 209. The Appellate Court concluded that the plaintiff lacked standing to bring a CUTPA claim against a board member of the condominium association that managed the leased premises, based on such member's alleged interference with HUB's efforts to advertise its business on the leased premises. Id. at 210. The Appellate Court concluded that the CUTPA count was " based entirely on [the defendant's] alleged violations of the business rights and expectations of [the plaintiff's] company, HUB, arising from HUB's status as the lessee of the leased premises and the owner and operator of the restaurant thereon." Id. at 215. O'Reilly is readily distinguishable because, unlike here, the challenged conduct was directed at, and the alleged harm was incurred solely by, HUB, and not the plaintiff personally. Id.
In sum, the court concludes that Mandell & Blau has standing to assert the claims set forth in the complaint.
C
In the alternative, NBRA and the Hartford HealthCare Defendants move, pursuant to General Statutes § 52-409, to stay the action pending arbitration.
NBRA's motion also seeks to compel arbitration. The court notes that " [a] § 52-409 order does not compel arbitration; rather, it merely stays the pending civil action until arbitration has been completed." (Emphasis in original.) Success Centers, Inc. v. Huntington Learning Centers, Inc., 223 Conn. 761, 767 n.9, 613 A.2d 1320 (1992); see also id. at 768 (discussing different functions served by § § 52-409 and 52-410). Thus, the court limits its consideration of NBRA's alternative request to the extent it seeks a stay pending arbitration.
The well-established policy of our state is that " arbitration is the favored means of settling differences . . ." (Internal quotation marks omitted.) State v. AFSCME, Council 4, Local 387, AFL-CIO, 252 Conn. 467, 473, 747 A.2d 480 (2000). To that end, § 52-409 provides:
If any action for legal or equitable relief or other proceeding is brought by any party to a written agreement to arbitrate, the court in which the action or proceeding is pending, upon being satisfied that any issue involved in the action or proceeding is referable to arbitration under the agreement, shall, on motion of any party to the arbitration agreement, stay the action or proceeding until an arbitration has been had in compliance with the agreement, provided the person making application for the stay shall be ready and willing to proceed with the arbitration.
General Statutes § 52-409. With regard to the statutory requirement that " the person making application for the stay shall be ready and willing to proceed with the arbitration, " NBRA and the Hartford HealthCare Defendants represent in their respective moving papers that they are ready and willing to proceed with arbitration. (#112.00 at 20; #113.00 at 2.) Thus, the court proceeds to address in turn NBRA's and the Hartford HealthCare Defendants' requests for stay.
1
NBRA
The Operating Agreement between Mandell & Blau and NBRA contains the following arbitration provision:
K. Mediation and Arbitration
If any dispute, claim, disagreement or other matter arising from or relating to this Agreement or the alleged breach of this Agreement cannot be settled within thirty (30) days after any party sends written notice to each other party to this Agreement[, ] the parties shall try in good faith to settle such matter by non-binding mediation in New Britain, Connecticut, which may be administered by the American Health Lawyers Association under its rules which are then in effect. The mediator shall be a disinterested third party. The parties shall submit a written statement of their position to each other and to the mediator within fifteen (15) days after the assignment of said mediator, attend a hearing scheduled by the mediator and pay one-half (1/2) of the cost of such proceeding . . . Time shall be of the essence with respect to each action to be taken under this subsection. If the matter is not resolved by mediation within fifteen days of the hearing with the mediator, then the matter shall be submitted to binding arbitration under the rules of the American Health Lawyers Association. There shall be one arbitrator whose decision shall be enforceable by a court of law as specified in Paragraph 9K hereof.(Emphasis in original.) Operating Agreement at 9-10.
The Business Agreement between Mandell & Blau and NBRA contains a nearly identical arbitration provision, which provides in relevant part:
16. If any dispute, claim, disagreement or other matter arising from or relating to this Agreement or the alleged breach of this Agreement cannot be settled within thirty (30) days after any party sends written notice to each other party to this Agreement[, ] the parties shall try in good faith to settle such matter by non-binding mediation in New Britain, Connecticut, which may be administered by the American Health Lawyers Association under its rules which are then in effect. The mediator shall be a disinterested third party. The Parties shall each submit a written statement of their position to each other and to the assigned mediator within fifteen (15) days after the assignment of said mediator, attend a hearing scheduled by the mediator and pay one-half (1/2) of the cost of such proceeding . . . Time shall be of the essence with respect to each action to be taken under this subsection. If the matter is not resolved by mediation within fifteen days of the hearing with the mediator, then the matter shall be submitted to binding arbitration under the rules of the American Health Lawyers Association. There shall be one arbitrator whose decision shall be enforceable by a court of law.(Business Agreement at 4.) The Operating Agreement and the Business Agreement provide that they shall be construed under and governed by Connecticut law. (Operating Agreement at 10 ¶ M; Business Agreement at 4 ¶ 14.)
Mandell & Blau and NBRA agree that, in the event the court concludes that Mandell & Blau has standing, all of Mandell & Blau's claims against NBRA are subject to the mediation and arbitration provisions set forth above. In light of such agreement, and having reviewed the broad scope of the arbitration provisions against the claims asserted by Mandell & Blau against NBRA, the court grants NBRA's request for stay of all proceedings pending arbitration between them.
2
Hartford HealthCare Defendants
The Hartford HealthCare Defendants move for stay pending arbitration, relying on the arbitration provision of the Sublease. By way of review, the Sublease is an agreement by and between MRI LP (one of the Hartford HealthCare Defendants) and RSCC, of which Mandell & Blau is a member. The Sublease contains the following arbitration provision:
21. Mandatory Mediation and Arbitration
If any dispute, claim, disagreement or other matter arising from or relating to this Agreement or the alleged breach of this Agreement cannot be settled within thirty (30) days after any party sends written notice to the other party to this Agreement, the parties shall try in good faith to settle such matter by non-binding mediation in New Britain, Connecticut, which may be administered by the American Health Lawyers Association under its rules which are then in effect. The mediator shall be a disinterested third party. The parties shall each submit a written statement of their position to each other and to the assigned mediator within fifteen (15) days after the assignment of said mediator, attend a hearing scheduled by the mediator and pay one-half (1/2) of the cost of such proceeding.
If the matter is not resolved by mediation within fifteen (15) days of the hearing with the mediator, then the matter shall be submitted to binding arbitration in New Britain, Connecticut under the rules of the American Health Lawyers Association. There shall be one arbitrator who shall be selected by the parties in accordance with such rules. The arbitrator shall consider all issues before him or her, shall follow the law in reaching a reasoned decision and shall deliver a signed, written opinion setting forth findings of fact, conclusions of law and the rationale for his or her decision. The award of the arbitrator shall be final and binding, and judgment on the award may be entered, confirmed, and enforced in any court having jurisdiction thereof. Each party shall bear its own arbitration costs and expenses and all other costs and expenses of the arbitration shall be divided equally between the parties. Notwithstanding the foregoing, nothing in this paragraph shall preclude either party from seeking interim or provisional relief concerning a dispute hereunder, including but not limited to preliminary injunctive relief, if necessary to protect the interests of such party.
. . . Time shall be of the essence with respect to each action to be taken under this Section 21.(Sublease at 9.) The Sublease further provides that it shall be governed by Connecticut law. (Id. at 8 ¶ 18.)
Even though Mandell & Blau is not a signatory to the Sublease, Mandell & Blau and MRI LP agree that the claims asserted by the former against the latter are subject to the above arbitration provision. Mandell & Blau and the other Hartford HealthCare Defendants do not agree, however, as to the applicability of the above arbitration provision to the claims between them. That is, those Hartford HealthCare Defendants that are not signatories (i.e., all Hartford HealthCare Defendants other than MRI LP) argue that Mandell & Blau's claims against them are subject to arbitration. Mandell & Blau argues that they are not.
" [A party] can be compelled to arbitrate a dispute only if, to the extent that, and in the manner which, [it] has agreed so to do . . . Because arbitration is based on a contractual relationship, a party who has not consented cannot be forced to arbitrate a dispute." (Alterations in original.) City of New Britain v. AFSCME, Council 4, Local 1186, 304 Conn. 639, 43 A.3d 143 (2012) (quoting MBNA America Bank, N.A. v. Boata, 283 Conn. 381, 386, 926 A.2d 1035 (2007)). However, " traditional principles of state law allow a contract to be enforced by or against nonparties to the contract through 'assumption, piercing the corporate veil, alter ego, incorporation by reference, third-party beneficiary theories, waiver and estoppel . . ." Armetta v. Corvo, No. X04-HHD-CV13-60466165, 2015 WL 5315247, at *3 (Conn.Super. Aug. 11, 2015) (Sheridan, J.) [60 Conn.L.Rptr. 825, ] (quoting Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 631, 129 S.Ct. 1896, 173 L.Ed.2d 832 (2009)). " Equitable estoppel principles are used to compel arbitration by or against a non-signatory. Where a non-signatory has invoked, taken advantage of, or asserted rights under a contract with an arbitration clause, traditional principles of law and equity bind the non-signatory to that contract's arbitration provisions as well. This prevents a party who knowingly exploits an agreement, from taking advantage of the benefits of the contract while simultaneously disavowing its burdens . . ." Armetta,, 2015 WL 5315247, at *3.
For example, in Weyher v. Harrison, No. FST-CV14-6020809S, 2014 WL 4358375, at *4 (Conn.Super. July 23, 2014) [58 Conn.L.Rptr. 629, ], upon which the Hartford HealthCare Defendants rely, the court concluded, based on an estoppel theory, that the plaintiff was obligated to arbitrate his claims against two individual defendants, who were not signatories to an arbitration agreement with the plaintiff. The plaintiff was separately a party to a dissolution action; the arbitration provision at issue was contained in a retention letter entered into by the plaintiff, his then-spouse, an accounting firm retained to provide valuation and forensic accounting services, and both attorneys to the divorcing parties. The individual nonsignatory defendants were a member and employee of the accounting firm. " The gravamen of the claims against [the individual defendants] go to the adequacy of their professional services on behalf of the plaintiff under his contractual arrangement with the Firm, and the amount of money charged for those services. The claims are clearly related to and arise out of the professional 'relationship' between the plaintiff and the Firm under the contract.", Id. at *3. In requiring the plaintiff to arbitrate his claims against such individual defendants, the court reasoned that the plaintiff used the written agreement as the basis for his breach of contract and CUTPA claims against such individuals. Id. " Having done so, he is estopped from claiming that they cannot take advantage of the arbitration clause which is an integral part of that agreement." Id.
Here, the court concludes that Mandell & Blau's claims as to the nonsignatory Hartford HealthCare Defendants are not so intertwined with any contract obligations in the Sublease such that Mandell & Blau is obligated to arbitrate its claims against such nonsignatories. That is, unlike in Weyher, Mandell & Blau's claims against the nonsignatory Hartford HealthCare Defendants are not based on any alleged obligation owed by them under the Sublease. Although Mandell & Blau's theory of the case is that the defendants' alleged scheme has manifested in MRI LP's termination of the Sublease, the court cannot find on this record that there was any agreement between Mandell & Blau on the one hand and any of the other Hartford HealthCare Defendants on the other hand to arbitrate the claims asserted here. Accordingly, the court grants in part the Hartford HealthCare Defendants' alternative request for stay pending arbitration between Mandell & Blau and MRI LP.
CONCLUSION
Based on the foregoing, Midstate's motion to dismiss (#110.00) is denied. The Hartford HealthCare Defendants' motion to dismiss for lack of standing or, in the alternative, motion to stay in favor of arbitration (#111.00) is granted in part and denied in part. Such motion to dismiss is denied to the extent it seeks dismissal for lack of standing. Such motion to stay is granted to the extent it seeks a stay pending arbitration between Mandell & Blau and MRI LP. NBRA's motion to dismiss for lack of standing or alternatively to stay action and compel arbitration (#113.00) is granted in part and denied in part. Such motion to dismiss is denied to the extent it seeks dismissal for lack of standing. Such motion is granted to the extent it seeks a stay pending arbitration between Mandell & Blau and NBRA.
Accordingly, a stay of these proceedings pending arbitration shall go into effect, without a separate order, upon the court's adjudication of the plaintiff's pending motion for preliminary injunction.