Opinion
No. CV 08-5024983
October 7, 2009
MEMORANDUM OF DECISION
On December 8, 2008, the plaintiffs, Pasquariello Electric Corporation and Pasquariello Mechanical Corporation, LLC, filed a complaint against fifteen defendants, including Ronald L. Caplan, PMC/Abell, LLC, and PMC-NESCO Associates, LLC. In all twenty-two counts of the complaint, the plaintiffs allege the following identical facts. The plaintiffs are Connecticut limited liability companies that provide electrical and mechanical construction services. The defendant, Ronald L. Caplan, is a real estate developer who regularly conducts business through the use of business entities in several states, including Connecticut. Caplan is a Pennsylvania resident. Caplan is a member of, investor in or creditor of various business entities named as defendants. Caplan personally finances, oversees and manages various real estate projects for the business entities. He also directs intercompany loans and money transfers among the various business entities without regard to corporate formalities. The business entities are not fully funded, capitalized or sufficiently staffed to conduct business as separate entities. Instead, they are merely paper companies that allow Caplan to conduct business in his individual capacity and escape liability. Caplan has commingled his personal funds with those of the business entities, used business entity funds as his own, failed to keep accurate corporate financial records and commingled costs among projects. Furthermore, Caplan and his business partner, Nyberg, completely dominate the finances, corporate policy and business practices of the business entities.
The defendants in this action are College Street, LLC; College Street Construction, LLC; College Street Management LLC; 117 Wooster LLC; 19 Jackson Street Associates, LLC; 1217 Whitney Avenue Associates LLC; 901 Main Street Associates LLC; Chapel Mall Development LLC; Chapel Square Development, LLC; Philadelphia Management Corp.; PMC Property Group, Inc.; PMC/Abell, LLC; PMC-NESCO Associates, LLC (business entities) as well as Ronald L. Caplan and David Nyberg.
For purposes of this motion, Ronald L. Caplan, PMC/Abell, LLC and PMC-NESCO Associates, LLC will be known as the defendants.
The plaintiffs further allege that for several years, the plaintiffs have provided electrical and mechanical contracting services, labor and materials to various commercial properties owned and/or managed by Caplan and the business entities. Caplan directs the plaintiffs to provide services to various projects and bill their work to certain projects and/or business entities. On occasion, the plaintiffs have been told to bill their work to projects and/or business entities other than those for which the services were provided. The plaintiffs have always completed and fulfilled their obligations to the defendants. The defendants, however, have refused to pay the plaintiffs for their work on various projects, including payment for work performed on the PMC/Abell, LLC and PMC-NESCO Associates, LLC projects in Baltimore, Maryland. Caplan has repeatedly promised and assured the plaintiffs that they would receive payment for the outstanding amounts due. Nevertheless, he refuses to pay the plaintiffs and continues to use his control of the business entities to avoid payment of debts owed to the plaintiffs.
According to the return of service, Marshal John J. Murray served process on the defendants by mailing via certified mail, return receipt requested, a copy of the writ, summons and complaint to the defendants' last known addresses on November 26, 2008. A supplemental return of service dated December 9, 2008, indicates that the certified mail green card originally sent to PMC/Abell, LLC and PMC-NESCO Associates, LLC was signed and returned to Marshal Murray, and then filed with the court.
On January 28, 2009, the defendants filed a motion to dismiss on the grounds of personal jurisdiction and insufficiency of service of process. The defendants submitted a memorandum of law in support of their motion. To demonstrate a lack of personal jurisdiction, the defendants have submitted to the court the affidavits of Caplan.
On March 31, 2009, the plaintiffs flied a memorandum of law in opposition to the motion. In support, the plaintiffs submitted to the court the affidavits of Joseph P. Yamin and Kenneth Horton as well as copies of checks payable to the plaintiff from PMC-NESCO Associates, LLC and PMC/Abell, LLC drawn from Philadelphia banks.
Yamin's affidavit authenticates a letter from Christopher M. McKeon, attorney for the defendants and several of the business entities. In his letter, McKeon states: "As you know, our office represents PMC Property Group, Inc., College Sweet Management, LLC, David Nyberg, Ronald L. Caplan, and numerous entities (collectively, the "Nyberg/Caplan Entities") which own properties upon which your clients, Pasquariello Electric Corp. ("PEC") and Pasquariello Mechanical Corp. ("PMC") have performed electrical and mechanical contracting work." This statement alone, a single sentence whereby an attorney names his clients, is not enough to raise an issue of disputed fact as to whether the court has personal jurisdiction over Ronald L. Caplan in his individual capacity.
The plaintiffs also attached a print-out of the PMC Property Group, Inc./Philadelphia Management Corporation website, which boasts that they offer apartments in New Haven and Hartford, Connecticut. This is, however, immaterial because neither PMC Property Group or Philadelphia Management Corporation have challenged the court's personal jurisdiction.
On March 31, 2009, the plaintiffs filed a motion for permission to take the deposition of Ronald L. Caplan should the court find there are factual questions that need to be resolved concerning the jurisdictional issues raised in the motion to dismiss. On that same day, the plaintiffs also filed a motion to cite in Caplan, PMC/Abell, LLC, and PMC-NESCO Associates, LLC as party defendants pursuant to Practice Book § 9-22 should the court grant the defendants' motion to dismiss for insufficient service of process. Neither matter was briefed by the parties. The defendants did not file an objection to the plaintiffs' motions. The matter was heard on short calendar on July 20, 2009.
Practice Book § 11-10 provides: "A memorandum of law briefly outlining the claims of law and authority pertinent thereto shall be filed and served by the movant with the following motions and requests: (1) motions regarding parties filed pursuant to Sections 9-18 through 9-22 . . ." "The requirement . . . is not merely discretionary, but must be followed where a seasonable objection to the failure of the movant to comply with the rule is raised by the opposing party." (Internal quotation marks omitted.) Schiavone v. SAL of New London, LLC, Superior Court, judicial district of New London, Docket No. CV 06 4005245 (March 7, 2006, Jones, J.) (denying a motion to add a new party where plaintiff failed to submit a memorandum of law). The defendants, however, did not object.
I MOTION TO DISMISS
"A motion to dismiss . . . properly attacks the jurisdiction of the court, essentially asserting that the plaintiff cannot as a matter of law and fact state a cause of action that should be heard by the court . . . A motion to dismiss tests, inter alia, whether, on the face of the record, the court is without jurisdiction." (Internal quotation marks omitted.) Caruso v. Bridgeport, 285 Conn. 618, 627, 941 A.2d 266 (2008). "The motion to dismiss shall be used to assert . . . (2) lack of jurisdiction over the person, . . . and (5) insufficiency of service of process." Practice Book § 10-31(a). "The motion to dismiss . . . admits all facts which are well pleaded, invokes the existing record and must be decided upon that alone . . . Where, however . . . the motion is accompanied by supporting affidavits containing undisputed facts, the court may look to their content for determination of the jurisdictional issue . . ." (Internal quotation marks omitted.) Cogswell v. American Transit Ins. Co., 282 Conn. 505, 516, 923 A.2d 638 (2007).
A Personal Jurisdiction
"When a defendant files a motion to dismiss challenging the court's jurisdiction, a two part inquiry is required. The trial court must first decide whether the applicable state longarm statute authorizes the assertion of jurisdiction over the [defendant]. If the statutory requirements [are] met, its second obligation [is] then to decide whether the exercise of jurisdiction over the [defendant] would violate constitutional principles of due process." Knipple v. Viking Communications, Ltd., 236 Conn. 602, 606, 674 A.2d 426 (1996). When "the defendant challenging the court's personal jurisdiction is a foreign corporation or nonresident individual, it is the plaintiff's burden to prove the court's jurisdiction." (Internal quotation marks omitted.) Cogswell v. American Transit Ins. Co., supra, 282 Conn. 515.
In his memorandum of law in support of the motion, Caplan argues that he is not subject to the jurisdiction of the court because he is a Pennsylvania resident and does not transact business in a personal capacity in Connecticut. He asserts that he only transacts business in Connecticut in his corporate capacity and that he is not subject to personal jurisdiction under the fiduciary shield doctrine. In support, Caplan offers his affidavit where he states that he has never conducted business in the state of Connecticut for personal reasons; he does not own any real property in the state of Connecticut; and he "only travel[s] to Connecticut to conduct business on behalf of any corporation, limited liability company or partnership in which [he] ha[s] an interest."
The plaintiffs argue, in their memorandum in opposition to the motion, that Caplan has conducted business in Connecticut in his personal capacity. In support, they offer Horton's affidavit in which he states that he has "regularly conducted business with Caplan in his personal capacity in Connecticut." Specifically, he states: "[the plaintiffs] did not deal with Mr. Caplan in a limited capacity with respect to any single corporation or limited liability company of which he was an officer or member. I understood him to be acting in his own personal capacity. He would identify the services he wanted performed, identify where he wanted them performed and tell me where to send my invoices."
PMC/Abell, LLC and PMC-NESCO Associates, LLC argue the court lacks jurisdiction over them because they are Maryland limited liability companies and do not own real estate or conduct business in Connecticut. In support, the defendants offer the affidavits of Caplan wherein he states that PMC/Abell, LLC and PMC-NESCO Associates, LLC are single-asset limited liability companies, each owning a single piece of real property in Baltimore, Maryland. They exist solely to own and operate their respective single asset properties. Neither PMC/Abell, LLC nor PMC-NESCO Associates, LLC own any real property or transact business in Connecticut.
In their memorandum in opposition, the plaintiffs argue that the defendants are subject to the jurisdiction of the court because they entered into agreements with the plaintiffs in Connecticut. In support thereof, the plaintiffs submit Horton's affidavit in which he states that the agreements with PMC/Abell, LLC and PMC-NESCO, LLC were made with Caplan in Connecticut and that "[a]ll billings came from Connecticut and payments were made to PEC at its offices in Connecticut. Communication between Caplan and PEC regularly concerning those projects occurred here in Connecticut." The plaintiffs attached, as exhibits, copies of two checks from PMC/Abell, LLC and PMC-NESCO Associates, LLC made out to Pasquariello Electric Corporation at its Connecticut address.
Connecticut's longarm statute authorizes personal jurisdiction over nonresident defendants and foreign partnerships. General Statutes § 52-59b(a) provides in relevant part that "a court may exercise personal jurisdiction over any nonresident individual [or] foreign partnership . . . who in person or through an agent: (1) Transacts any business within the state . . ." The statute does not expressly apply to limited liability companies. Nevertheless, superior court opinions have interpreted § 52-59b to apply both to nonresident individuals and foreign limited liability companies. See, e.g., Lauria v. Mennes, Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. CV 07 5003950 (October 2, 2007, Adams, J.). In the absence of any controlling authority or a more specific longarm statute applicable to limited liability companies, it is proper to apply § 52-59b to foreign limited liability companies. The issue in the present case becomes whether the defendants transact any business in Connecticut.
The question of whether § 52-59b applies to a foreign limited liability company is "not free from doubt." Nadler v. Grayson Construction Co., Inc., Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. CV 02 0190015 (April 15, 2003, Adams, J.) ( 34 Conn. L. Rptr. 482). This issue is unclear because "[w]hereas Connecticut corporation law includes a special longarm statute applicable to foreign corporations [General Statutes § 33-929(f)], there is no comparable provision in the Connecticut Limited Liability Company Act, General Statutes §§ 34-100 through 34-242." Id. The defendants' notion, however, that General Statutes § 34-225, which addresses only service of process, is the operative statute for purposes of determining personal jurisdiction over a foreign limited liability company is unsupported.
While the longarm statute does not define what is meant in this context by "transacts any business," the Connecticut Supreme Court has elaborated upon its requirements. "[W]e construe the term `transacts any business' to embrace a single purposeful business transaction." Zartolas v. Nisenfeld, 184 Conn. 471, 474, 440 A.2d 179 (1981). "In determining whether the plaintiffs' cause of action arose from the defendants' transaction of business within this state, we do not resort to a rigid formula. Rather, we balance considerations of public policy, common sense, and the chronology and geography of the relevant factors." Id., 477. "A purposeful business transaction is one in which the defendant has engaged in some form of affirmative conduct allowing or promoting the transaction of business within the forum state." (Internal quotation marks omitted.) Zemina v. Petrol Plus, Inc., Superior Court, judicial district of New Haven, Docket No. CV 97 128590 (March 3, 1998, Levin, J.) ( 22 Conn. L. Rptr. 94).
In the context of a motion to dismiss, however, "where a jurisdictional determination is dependent on the resolution of a critical factual dispute, it cannot be decided on a motion to dismiss in the absence of an evidentiary hearing to establish jurisdictional facts." Conboy v. State, 292 Conn. 642, 652, 974 A.2d 669 (2009). "Likewise, if the question of jurisdiction is intertwined with the merits of the case, a court cannot resolve the jurisdictional question without a hearing to evaluate those merits . . . An evidentiary hearing is necessary because a court cannot make a critical factual [jurisdictional] finding based on memoranda and documents submitted by the parties." (Citation omitted; internal quotation marks omitted.) Id., 653-54. "When the jurisdictional facts are intertwined with the merits of the case, the court may in its discretion choose to postpone resolution of the jurisdictional question until the parties complete further discovery or, if necessary, a full trial on the merits has occurred." Id., 653, n. 16. "In almost every setting where important decisions turn on questions of fact, due process requires an opportunity to confront and cross-examine adverse witnesses." (Internal quotation marks omitted.) Standard Tallow Corp. v. Jowdy, 190 Conn. 48, 56, 459 A.2d 503 (1983).
The issue of whether the defendants transact business in Connecticut is factual and cannot be determined by the record alone. The affidavits submitted by the parties are at odds with each other. A genuine issue of material fact exists as to whether the defendants transacted business in Connecticut. Because of this, the court cannot make a critical factual jurisdictional finding based on memoranda and documents submitted by the parties and must hold an evidentiary hearing to determine the issue or otherwise wait to trial. The court may decide to postpone resolution of the jurisdictional questions until the parties complete further discovery or a full trial on the merits has occurred. Such an action may be necessary in light of the allegations that the court should pierce the corporate veil with respect to Caplan. A full trial on the issue of whether Caplan was, in fact, the alter ego of any business entities may be essential to the jurisdictional issue as well as the merits of the case.
Once the defendant submitted its affidavits, it is incumbent on the plaintiff to dispute the facts contained therein. See Amore v. Frankel, 228 Conn. 358, 368-69, 636 A.2d 786 (1994). In the present case, the defendants submitted affidavits stating that Caplan does not conduct business in his personal capacity and that PMC/Abell, LLC and PMC-NESCO Associates, LLC exist solely to operate a single asset property in Baltimore and do not conduct business in Connecticut. The plaintiffs then disputed these facts by submitting Horton's affidavit in which he stated that Caplan conducts business in his personal capacity in Connecticut and that PMC/Abell, LLC and PMC-NESCO Associates, LLC negotiated with and sent payment to the plaintiffs in Connecticut. Because the affidavits contradict each other, we cannot make a critical factual determination based on the parties' submissions. See Conboy v. State, supra, 292 Conn. 653-54.
Even if the court were to take the copies of the checks offered by the plaintiffs as undisputed evidence, there is no support in the case law for the proposition that mailing payment alone is sufficient to support jurisdiction. Instead, in order to weigh towards a finding that the defendant conducted business, the checks would have to be drawn on a Connecticut bank. Cf Solano v. Calegari, 108 Conn.App. 731, 949 A.2d 1257 (no jurisdiction where funds were transferred between brokerage accounts outside of Connecticut despite negotiations in Connecticut), cert. denied, 289 Conn. 943, 959 A.2d 1010 (2008); Hart, Nininger Campbell Associates, Inc. v. Rogers, 16 Conn.App. 619, 625, 548 A.2d 758 (1988) (jurisdiction proper where, inter alia, nonresident individuals had payroll checks drawn on Connecticut bank and mailed to defendants from Connecticut address).
In its memorandum in opposition to the motion to dismiss, the plaintiffs essentially argue that Caplan's affidavits merely contain legal conclusions without specific supporting facts. It is well-settled that conclusory statements are not admissible to establish an issue of fact. See Buell Industries, Inc. v. Greater New York Mutual Ins. Co., 259 Conn. 527, 557, 791 A.2d 489 (2002). In the present case, however, when considering the factual circumstances at hand, it is difficult to think of any other way for the defendants to say that they did not conduct business in Connecticut. Furthermore, Caplan's statements that PMC/Abell, LLC and PMC-NESCO Associates, LLC are single asset companies who exist solely to operate a single asset in Baltimore support the statements that they do not conduct business in Connecticut.
After further discovery or a full trial on the merits has occurred, the court will then have to decide whether to recognize the fiduciary shield doctrine and determine whether it applies to Caplan. Historically, "the majority of Superior Courts in this state [have] recognize[d] the `fiduciary shield' and apply it where appropriate." West State Mechanical, Inc. v. Paramount Health Resources, Inc., Superior Court, judicial district of Litchfield, Docket No. CV 07 5002640 (March 12, 2008, Marano, J.) ( 45 Conn. L. Rptr. 178). See also Tek-Motive, Inc. v. AFB, Inc., Superior Court, judicial district of New Haven, Docket No. CV 93 0349298 (November 12, 1993, Zoarski, J.). "The trend, however, is to the contrary . . . The more recent cases question whether there is a sensible rationale for the doctrine. They note that our longarm statute was modeled after the New York statute, and New York has rejected the fiduciary shield doctrine. See Kreutter v. McFadden Oil Corp., 71 N.Y.2d 460, 522 N.E.2d 40 (1988). The more recent cases have stressed that any unfairness to the agent is addressed by the due process requirements, in that the demand for the agent's presence in the foreign jurisdiction must be consistent with `fair play and substantial justice,' and that there very easily could be unfair prejudice to the plaintiff if a putative defendant enjoys, in effect, blanket immunity from answering in the jurisdiction where at least some of the transaction in issue occurred." Sobol Family Partnership v. Cushman Wakefield, Superior Court, complex litigation docket at Middlesex, Docket No. X04 CV 04 4003559 (October 28, 2005, Beach, J.). See also University of Bridgeport v. Maxus Leasing Group, Inc., Superior Court, judicial district of Fairfield, Docket No. CV 05 4009423 (June 15, 2006, Gilardi, J.) [ 41 Conn. L. Rptr. 522]; Haynes Construction Co. v. Famm Steel, Inc., Superior Court, judicial district of Ansonia-Milford, Docket No. CV 04 0085304 (April 27, 2005, Moran, J.) [ 39 Conn. L. RPtr. 195]. These decisions find their support in Judge Blue's well-reasoned opinion in Under Par Associates, LLC v. Wash Depot A., Inc., 47 Conn.Sup. 319, 793 A.2d 300 (2001) ( 31 Conn. L. Rptr. 20).
Although the superior courts are split on the issue of whether the fiduciary shield doctrine is valid in Connecticut, the doctrine was rejected in the only case where the plaintiffs alleged that the defendant corporation was an alter ego of the defendant fiduciary. See Ruocco v. Metropolitan Boston Hockey League, Superior Court, judicial district of New Haven, Docket No. CV 07 4024835 (December 7, 2007, Robinson, J.) (rejecting the fiduciary shield doctrine where the plaintiff alleged that the entity was the alter ego of the fiduciary defendants).
Because the court reserves ruling on the issue of whether Connecticut's longarm statute applies until after an evidentiary hearing is held, it need not decide the issue of due process until that time as well.
B Service of Process
The second ground for the defendants' motion to dismiss is insufficiency of service of process. The defendants argue, in their memorandum of law, that service was improper because the procedures established in General Statutes § 52-59b(c) and § 34-225(b) governing service of process on a nonresident individual and foreign limited liability company respectively were not followed. Specifically, they argue that the marshal's return of service with respect to Caplan fails to indicate that service was made upon the secretary of state as required under § 52-59b(c). Additionally, they argue that PMC/Abell, LLC and PMC-NESCO Associates, LLC did not receive "a statement by [the] officer that service is being made pursuant to [ § 34-225(b)]" as required to effectuate proper service of process under the statute.
With respect to Caplan, the marshal's return indicates that "on November 26, 2008, I made due and legal service by leaving a true and attested copy of the within Writ, Summons and Complaint and Statement of Amount In Demand with my doings endorsed thereon with and within the hands of the US Postmaster at Waterbury for mailing, certified mail #7008 1140 5225 6099 return receipt requested addressed to RONALD L. CAPLAN, 700 North Spring Mill Road, Villanova, PA 19085." There is nothing in the marshal's return to indicate that service was made upon the secretary of the state. Furthermore, in their memorandum in opposition to the motion to dismiss, the plaintiffs state: "Admittedly, the Secretary of the State was not served."
The marshal's return states: "And afterwards on November 26, 2008, I made due and legal service by leaving a true and attested copy of the within Writ, Summons and Complaint and Statement of Amount In Demand with my doings endorsed thereon and within the hands of the US Postmaster at Waterbury for mailing, certified mail #7008 1140 0003 5225 6068 return receipt requested addressed to PMC/ABELL, LLC, 1411 Walnut Street, Third Floor, Philadelphia, PA 19102.
"And afterwards on November 26, 2008, I made due and legal service by leaving a true and attested copy of the within Writ, Summons and Complaint and Statement of Amount In Demand with my doings endorsed thereon and within the hands of the US Postmaster at Waterbury for mailing, certified mail #7008 1140 0003 5225 6051 return receipt requested addressed to PMC-NESCO ASSOCIATES, LLC, 1411 Walnut Street, Third Floor, Philadelphia, PA 19102." Again, the return does not indicate that service was made upon the secretary of the state and the plaintiffs admit that no such service was made.
In their objection to the motion to dismiss, the plaintiffs argue that the defendants have been properly served by certified mail, return receipt requested. The plaintiffs also argue that in-hand service was made on Christopher M. McKeon, attorney and agent for the defendants. The plaintiffs further claim that service on the secretary of state is not a prerequisite to suit in this case because the statutes at issue, §§ 34-225(b) and 52-59b(c), make service on the secretary of state permissive. Lastly, the plaintiffs argue that service was proper under § 34-225 because subsection (d) allows for a limited liability company to be served in any other manner permitted by law, and service by certified mail, return receipt requested is permitted by General Statutes § 33-929(b).
The plaintiffs' argument that Attorney Christopher M. McKeon accepted service for the defendants is unpersuasive. The marshal's return indicates that on November 25, 2008, Attorney McKeon accepted in hand service as the agent for service for College Street, LLC; College Street Construction, LLC; College Street Management LLC;
1217 Whitney Avenue Associates LLC; 901 Main Street Associates LLC; Chapel Mall Development LLC; and PMC Property Group, Inc. These business entities have not raised the issue of service of process.
Section 33-929(b) provides: "A foreign corporation may be served by any proper officer or other person lawfully empowered to make service by registered or certified mail, return receipt requested, addressed to the secretary of the foreign corporation at its principal office shown in its application for a certificate of authority or in its most recent annual report if the foreign corporation: (1) Has no registered agent or its registered agent cannot with reasonable diligence be served; (2) has withdrawn from transacting business in this state under section 33-932; or (3) has had its certificate of authority revoked under section 33-936."
[A]n action commenced by . . . improper service must be dismissed." (Internal quotation marks omitted.) Jiminez v. DeRosa, 109 Conn.App. 332, 338, 951 A.2d 632 (2008). "Facts showing the service of process in time, form, and manner sufficient to satisfy the requirements of mandatory statutes in that regard are essential to jurisdiction over the person." (Internal quotation marks omitted.) Bridgeport v. Debek, 210 Conn. 175, 179-80, 554 A.2d 728 (1989). "Where a particular method of serving process is pointed out by statute, that method must be followed . . . Unless service of process is made as the statute prescribes, the court to which it is returnable does not acquire jurisdiction." (Citation omitted.) Board of Education v. Local 1282, 31 Conn.App. 629, 632, 626 A.2d 1314, cert. granted on other grounds, 227 Conn. 909, 632 A.2d 699 (1993).
1 Caplan
Service of process with respect to Caplan is governed by General Statutes § 52-59b(c). Section 52-59b(c) states in relevant part: "Any nonresident individual . . . over whom a court may exercise personal jurisdiction, as provided in subsection (a) of this section, shall be deemed to have appointed the Secretary of the State as its attorney and to have agreed that any process in any civil action brought against the nonresident individual . . . may be served upon the Secretary of the State and shall have the same validity as if served upon the nonresident individual . . .personally. The process shall be served . . . upon the Secretary of the State by leaving with or at the office of the Secretary of the State, at least twelve days before the return day of such process, a true and attested copy thereof, and by sending to the defendant at the defendant's last-known address, by registered or certified mail, postage prepaid, return receipt requested, a like true and attested copy with an endorsement thereon of the service upon the Secretary of the State . . ." Thus, proper service under § 52-59b(c) requires service upon the secretary of state and mailing a copy with an endorsement by the server that process was served upon the secretary of state's office. See Frechette v. Day Kimball Hospital, Superior Court, judicial district of Windham, Docket No. CV 97 0056480 (March 27, 1998, Sferrazza, J.) ( 21 Conn. L. Rptr. 516).
In the context of § 52-59b(c), "[s]ervice by mail upon a person not residing in the state does not ordinarily give rise to personal jurisdiction over that person. Even if the nonresident has actual notice, that does not substitute for in-hand or abode service within the state." Savings Bank of Manchester v. Lane, 44 Conn.Sup. 400, 402, 690 A.2d 462 (1996) (dicta). Furthermore, "the failure to leave process with the Secretary of State's office is no service at all under § 52-59b(c)." Frechette v. Day Kimball Hospital, supra, 21 Conn. L. Rptr. 516. In the present case, the court did not acquire jurisdiction over Caplan because service of process was never made to the secretary of state as expressly required by § 52-59b(c).
The defendants specifically argued in their memorandum of law in support of their motion to dismiss that the marshal's return of service fails to contain an endorsement that service was made upon the secretary of state. Although this defect may not, by itself, deprive this court of personal jurisdiction, it is fatal where, like the current case, the secretary of the state was not served at all. See Frechette v. Day Kimball Hospital, supra, 21 Conn. L. Rptr. 516 (failure to leave process with the secretary of state's office was fatal under § 52-59b(c)); Housatonic Lumber Co. v. Chase, Superior Court, judicial district of Ansonia-Milford, Docket No. CV 92 041022 (February 1, 1993, Gormley, J.) ( 8 Conn. L. Rptr. 295) (failure to include endorsement of service on secretary of state not fatal under § 52-59b(c) where service was actually made on secretary of state).
2 PMC/Abell, LLC and PMC-NESCO Associates, LLC
Both parties agree that General Statutes § 34-225(b) governs service of process on a foreign limited liability company. Section 34-225(b) states in relevant part: "When the Secretary of the State and the Secretary of the State's successors in office have been appointed a foreign limited liability company's agent for service of process, the foreign limited liability company may be served by . . . leaving two true and attested copies of such process . . . at the office of the Secretary of the State or depositing the same in the United States mail, by registered or certified mail, postage prepaid, addressed to said office." The statute thus mandates service on the secretary of the state where a foreign limited liability company is concerned.
The plaintiffs claim, however, that General Statutes § 34-225(d) allows them to serve a limited liability company by certified mail, return receipt requested. Their rationale is that § 34-225(d) permits service on a foreign limited liability company "in any other manner permitted by law" and § 34-929(b) permits service by certified mail, return receipt requested.
Section 34-225(d) provides: "Nothing contained in this section shall limit or affect the right to serve any process, notice or demand required or permitted by law to be served upon a limited liability company in any other manner permitted by law."
The problem with the plaintiffs' argument is that service on the defendants under § 33-929(b) is not a manner permitted by law under § 34-225(d) because § 33-929(b) applies only to corporations. See General Statutes § 33-929(b) ("[a] foreign corporation may be served . . ." (emphasis added)). Since the defendants at issue are foreign limited liability companies, and not foreign corporations, § 34-225(b) applies and service must be made on the secretary of the state. Since no service was made on the secretary of the state in the present case, service of process was improper.
This is unlike the situation with General Statutes § 52-59b, where there was no specific statute applicable to limited liability companies. Here, § 34-225 expressly applies to foreign limited liability companies.
II MOTION TO CITE IN PARTY DEFENDANTS
Because the defendants' motion to dismiss on the grounds of insufficiency of service of process should be granted, the next issue is whether the plaintiffs' motion to cite in Caplan, PMC/Abell, LLC and PMC-NESCO Associates, LLC as party defendants should be granted. In their motion, the plaintiffs argue that citing in the defendants is proper because any defects in service are saved by General Statutes § 52-592, the accidental failure of suit statute. They further argue that granting the motion will "avoid two separate lawsuits which would ultimately need to be consolidated in any event."
Practice Book § 9-22 provides the proper method for adding an additional defendant. Section 9-22 states: "Any motion to cite in or admit new parties must comply with Section 11-1 and state briefly the grounds upon which it is made." Procedurally, "[t]o add an additional party, the plaintiff could, at any time, simply move to add an additional party defendant pursuant to Practice Book § 9-22, amend their complaint and serve whomever they wish to add as a defendant in the action." (Internal quotation marks omitted.) Ganavage v. Naugatuck Valley OB-GYN, Superior Court, judicial district of Waterbury, Docket No. CV 08 5010709 (April 7, 2009, Alvord, J.). "The decision whether to grant a motion for the addition or substitution of a party to legal proceedings rests in the sound discretion of the trial court." (Internal quotation marks omitted.) Fuller v. Planning Zoning Commission, 21 Conn.App. 340, 346, 573 A.2d 1222 (1990). "Factors to be considered include the timeliness of the application, the possibility of prejudice to the other party and whether the applicant's presence will enable to court to make a complete determination of the issues." A. Secondino Son, Inc. v. LoRicco, 19 Conn.App. 8, 14, 561 A.2d 142 (1989).
In the present case, the factors weigh in favor of granting the plaintiffs' motion to cite in the defendants. The application was timely, as it was filed simultaneously with the plaintiffs' objection to the motion to dismiss. There is no suggestion of prejudice to the defendants should the motion be granted. All three defendants at issue had actual notice of this action and share the same counsel as the other defendants. Moreover, the defendants' presence will allow the court to make a complete determination of the issues since the defendants at issue are so closely entwined with the other defendants, and the plaintiffs have alleged commingling of funds and improper billing techniques.
In addition to these factors, § 52-592 would allow the plaintiffs to bring a new action against the defendants anyway. Section 52-592(a) allows a plaintiff to "commence a new action . . . at any time within one year after the determination of the original action" where the original action "has failed one or more times to be tried on its merits because of insufficient service . . . or because the action has been dismissed for want of jurisdiction . . ." Since the plaintiffs' action against the defendants was dismissed for insufficient service of process, the plaintiffs would have one year from the date the motion to dismiss was granted to bring another cause of action against the defendants and properly serve them under § 52-592. This second action would, in all likelihood, be consolidated with the first under Practice Book § 9-5(a). Thus, it appears that, as long as the defendants are properly served, granting the plaintiffs' motion to cite Caplan, PMC/Abell, LLC and PMC-NESCO Associates, LLC would be a more judicially economic way to reach the same result.
Practice Book § 9-5(a) provides: "Whenever there are two or more separate actions which should be tried together, the judicial authority may, upon the motion of any party or upon its own motion, order that the actions be consolidated for trial."
III MOTION FOR PERMISSION TO TAKE THE DEPOSITION
In their motion for permission to take the deposition of Ronald L. Caplan, the plaintiffs argue that they should be permitted to take Caplan's deposition to determine facts relevant to jurisdiction before the evidentiary hearing. The defendants have not opposed this motion.
Practice Book § 13-2 states in relevant part: "In any civil action . . . where the judicial authority finds it reasonably probable that evidence outside the record will be required, a party may obtain in accordance with the provisions of this chapter discovery of information or disclosure, production and inspection of papers, books or documents material to the subject matter involved in the pending action, which are not privileged, whether the discovery or disclosure relates to the claim or defense of the party seeking discovery or to the claim or defense of any other party, and which are within the knowledge, possession or power of the party or person to whom the discovery is addressed. Discovery shall be permitted if the disclosure sought would be of assistance in the prosecution or defense of the action and if it can be provided by the disclosing party or person with substantially greater facility than it could otherwise be obtained by the party seeking disclosure." Since a court has jurisdiction to determine whether it has jurisdiction, discovery of jurisdictional facts is permissible. See Standard Tallow Corp. v. Jowdy, supra, 190 Conn. 57 n. 7.
As to depositions, Practice Book § 13-26 states in relevant part: "[A]ny party who has appeared in a civil action, in any probate appeal, or in any administrative appeal where the judicial authority finds it reasonably probable that evidence outside the record will be required, may, at any time after the commencement of the action or proceeding, in accordance with the procedures set forth in this chapter, take the testimony of any person, including a party, by deposition upon oral examination."
In the present case, the action has commenced and evidence outside the record is necessary to determine whether the court has personal jurisdiction over the defendants. The defendants have not objected to the motion. As such, the plaintiffs should be permitted to take the deposition of Ronald L. Caplan.
CONCLUSION
For the foregoing reasons, this Court: (1) Denies the defendants' motion to dismiss on the ground of a lack of personal jurisdiction; (2) Grants the defendants' motion to dismiss on the ground of insufficiency of service of process; (3) Grants the plaintiffs' motion to cite in party defendants; and (4) Grants the plaintiffs' motion for permission to take the deposition of Ronald L. Caplan.