Opinion
CV156054157S
12-01-2015
Omar Pollock et al. v. 69-75 Daggett Street et al
UNPUBLISHED OPINION
MEMORANDUM OF DECISION RE MOTION TO DISMISS (#101)
Robin L. Wilson, J.
FACTS
The instant matter concerns the application of Connecticut's long-arm statute to reach a nonresident defendant. On April 14, 2015, the plaintiffs, Omar Pollock, Astrid Albernos, Boca Merchant Group, Inc., Jerry Britt, Jason Cromwell, Daniel Doricchi, James Gordeuk, Andrew Austin Gullans, Shannon Jobbagy, Annie Nguyen, David Sandler, and Jae Sherman, commenced this action by service of process on the defendants, 69-75 Daggett Street, LLC, Honey Damaghi, and Mariusz Makus. In a revised complaint, dated June 24, 2015, the plaintiffs allege the following facts. 69-75 Daggett Street, LLC is a Connecticut Limited Liability Company that owns a building located at 69-75 Daggett Street in New Haven, Connecticut (the property). Damaghi is the member and manager of 69-75 Daggett Street, LLC, living in the State of New York but maintaining an office in New Haven. Makus is the agent, servant, and employee of the other defendants. The plaintiffs are tenants of the building on the property.
The plaintiffs further allege that, from March 12, 2015, to the present, the defendants have intentionally and maliciously locked the plaintiffs out of the building for substantial periods of time during each and every day. During that same period of time, the defendants have repeatedly and maliciously threatened to seize, confiscate, and destroy all of the personal property of the plaintiffs located within the building. Based on the defendants' actions, the plaintiffs have filed an eighteen-count complaint alleging numerous claims and seeking relief for their injuries.
On May 7, 2015, Damaghi filed a motion to dismiss, along with a supporting memorandum of law and affidavit, on the ground that the court lacks personal jurisdiction over her. The plaintiffs filed a memorandum in opposition to the motion to dismiss on June 13, 2015. Arguments and witness testimony were presented at an evidentiary Standard Tallow hearing on August 24, 2015. Following the hearing, the plaintiffs and Damaghi submitted supplemental briefs in support of their respective positions.
Standard Tallow Corp. v. Jowdy, 190 Conn. 48, 52-53, 459 A.2d 503 (1983) " When . . . the jurisdictional basis is not clear on the face of the record because service is had under the long-arm statutes, additional facts establishing the 'minimum contacts' required by due process may need to be shown. It has not been the practice in this state to require these minimum contacts to be made part of the allegations in the complaint." Therefore, " an evidentiary hearing is necessary because a court cannot make a critical factual jurisdictional finding based on memoranda and documents submitted by the parties" on just a motion to dismiss). See also Conboy v. State, 292 Conn. 642, 652-54, 974 A.2d 669 (2009).
DISCUSSION
" A motion to dismiss shall be used to assert: (1) lack of jurisdiction over the subject matter; (2) lack of jurisdiction over the person; (3) insufficiency of process; and (4) insufficiency of service of process." Practice Book § 10-30(a). " [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." (Internal quotation marks omitted.) Santorso v. Bristol Hospital, 308 Conn. 338, 350, 63 A.3d 940 (2013). " 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). " A court deciding a motion to dismiss must determine not the merits of the claim or even its legal sufficiency, but rather, whether the claim is one that the court has jurisdiction to hear and decide." (Internal quotation marks omitted.) Hinde v. Specialized Education of Connecticut, Inc., 147 Conn.App. 730, 740-41, 84 A.3d 895 (2014).
In the motion to dismiss, Damaghi argues that her membership in a Connecticut limited liability company that conducts business within the state, without more, does not establish the minimum contacts necessary to invoke personal jurisdiction over her. In support of that argument, Damaghi submitted a sworn affidavit, stating, in relevant part, that she is a resident of the State of New York, does not transact business in Connecticut, has not committed a tortious act in Connecticut, and does not own, use, or possess any real property in Connecticut. She also submitted land records from the City of New Haven for the property (Exhibit 1), as well as another property owned by a limited liability company of which Damaghi is a member (Exhibit 2).
In opposition, the plaintiffs argue that, contrary to Damaghi's assertions, she had numerous contacts within the state, whether through her business interests or the actions of her agents. In support of their argument, the plaintiffs submitted the following evidence: the Connecticut Secretary of State filing for 69-75 Daggett Street, LLC (Exhibit A); the sale contract for the property (Exhibit B); and a land record notice for the joining of two parcels in New Haven (Exhibit C).
I
" When . . . the jurisdictional basis is not clear on the face of the record because service is had under the long-arm statutes, additional facts establishing the 'minimum contacts' required by due process may need to be shown. It has not been the practice in this state to require these minimum contacts to be made a part of the allegations in the complaint." (Footnotes omitted.) Standard Tallow Corporation v. Jowdy, 190 Conn. 48, 52-53, 459 A.2d 503 (1983). " [W]here 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 . . . 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." (Citations omitted; footnote omitted; internal quotation marks omitted.) Conboy v. State, 292 Conn. 642, 652-54, 974 A.2d 669 (2009). " A preliminary evidentiary hearing ordinarily will suffice where the jurisdictional issue is distinct and severable from the merits of the action, for example, when personal jurisdiction is called into question." Id., 653 n.15.
At the August 24, 2015 Standard Tallow hearing, the parties presented testimony from the following witnesses: Damaghi; Hertzel Owaedeyah, Damaghi's husband; Neile Pressman, a former tenant of 69-75 Daggett Street; and James Gordeuk, another former tenant of 69-75 Daggett Street and a plaintiff in this case. In the course of the hearing, the plaintiffs noted that there are filings on the Secretary of State website for numerous other limited liability companies of which Damaghi is either the sole member or one of two members. The court takes judicial notice of those filings.
The testimony and evidence offered by the parties establishes the following facts. Damaghi entered into a contract of sale for 69-75 Daggett Street on July 12, 2004. The Secretary of State filing for 69-75 Daggett Street, LLC indicates that it was registered on November 23, 2004. The New Haven land records indicate that 69-75 Daggett Street, LLC took ownership of the property on December 7, 2004, and remains the present owner of the property. It also maintains an office on the premises, which is listed as the primary business address for numerous other limited liability companies of which Damaghi is a member. No evidence was presented regarding the circumstances surrounding the sale of the property to 69-75 Daggett Street, LLC, and there is nothing indicating how Damaghi transferred ownership of the property to the limited liability company. Moreover, there is no evidence indicating that 69-75 Daggett Street, LLC existed at any time between July 12, 2004 and November 22, 2004.
There was conflicting evidence regarding whether 69-75 Daggett Street took title to the property in November 2004 or December 2004. For the purposes of this memorandum, the court gives Damaghi the benefit of recognizing the earlier date as the effective ownership date.
It was also demonstrated that Damaghi, herself, has not made any business trips to Connecticut and, aside from possessing the sole authority to contact the property's utility providers, has not managed the day-to-day operations of 69-75 Daggett Street, LLC at any point since its formation. Instead, Owaedeyah, who is not a member, an employee, or an authorized representative of 69-75 Daggett Street, LLC, makes frequent visits to the property to look in on his wife's business interests. Owaedeyah has made regular trips to the property for the entire period that it has been owned by 69-75 Daggett Street, LLC. Moreover, the tenants of the property, Pressman and Gordeuk, each testified that Owaedeyah was introduced to them as the owner of the property, and that they discussed issues related to their tenancy with him.
Other facts relevant to the court's determination of jurisdiction will be discussed below.
II
" If the defendant challenging the court's personal jurisdiction is a foreign corporation or a nonresident individual, it is the plaintiff's burden to prove the court's jurisdiction." Cogswell v. American Transit Ins. Co., 282 Conn. 505, 515, 923 A.2d 638 (2007). In this context, " the court must undertake a two part inquiry to determine the propriety of its exercising such jurisdiction over the defendant. The trial court must first decide whether the applicable state long-arm 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." (Internal quotation marks omitted.) Kenny v. Banks, 289 Conn. 529, 533, 958 A.2d 750 (2008).
Damaghi's argument relies, in large part, on the application of the fiduciary shield doctrine, which provides that " a nonresident individual's status as a paid officer or employee of a corporation over which Connecticut has personal jurisdiction is insufficient to confer jurisdiction over the nonresident individual where no allegations or evidence is submitted indicating that the individual has transacted business in Connecticut in an individual capacity and on his or her own behalf." Cadle Co. v. Sydorowycz, Superior Court, Docket No. CV-00-0597714 (June 5, 2001, Hennessy, J.) (30 Conn.L.Rptr. 202, 204). This court has previously considered the application of the fiduciary shield doctrine and concluded that it " does not bar the assertion of long arm jurisdiction over individual defendants merely because they are members of a limited liability company. Connecticut's legislature used New York's long arm statute as a model for the text of § 52-59b . . . Just as the fiduciary shield doctrine has no basis in New York law, the doctrine finds no place in the text or underlying policy of [General Statutes] § 52-59b." (Citation omitted; internal quotation marks omitted.) Garcia v. Two By Six, LLC, Superior Court, judicial district of New Haven, Docket No. CV-04-5000021-S (January 29, 2010, Wilson, J.) (49 Conn.L.Rptr. 363, 365).
" [U]nder [General Statutes] § 52-59b(a)(1), a court possesses personal jurisdiction over a nonresident individual with respect to a cause of action arising from any business transacted in this state by that individual." Ryan v. Cerullo, 282 Conn. 109, 118, 918 A.2d 867 (2007).
General Statutes § 52-59b(a) provides, in relevant part: " As to a cause of action arising from any of the acts enumerated in this section, a court may exercise personal jurisdiction over any nonresident individual, foreign partnership or foreign voluntary association, or over the executor or administrator of such nonresident individual, foreign partnership or foreign voluntary association, who in person or through an agent: (1) Transacts any business within the state; (2) commits a tortious act within the state, except as to a cause of action for defamation of character arising from the act; (3) commits a tortious act outside the state causing injury to person or property within the state, except as to a cause of action for defamation of character arising from the act, if such person or agent (A) regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the state, or (B) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce; (4) owns, uses or possesses any real property situated within the state . . ."
" [A]lthough the term '[t]ransacts any business' is not defined by statute, we previously have construed the term to embrace a single purposeful business transaction." (Internal quotation marks omitted.) Id., 119. " 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.) Garcia v. Two By Six, LLC, supra, 49 Conn.L.Rptr. 365. " In determining whether the [plaintiff's] 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." Ryan v. Cerullo, supra, 282 Conn. 122.
At the Standard Tallow hearing, there was substantial testimony concerning the operation of the building as a rental property prior to and during the period it was owned by 69-75 Daggett Street, LLC. As a preliminary matter, based on the evidence and testimony presented, the court finds that Damaghi owned the property as an individual from at least July 12, 2004 to November 22, 2004, during which period 69-75 Daggett Street, LLC did not exist. Notably, an individual who enters into a contract on behalf of a limited liability company, but prior to the formation of that company, may be held personally liable under that contract. " According to the Restatement (Third) of Agency, unless the parties otherwise agree, a person who enters into a contract purportedly as an agent, with the knowledge that the person purportedly represented does not exist, will become a party to the contract if it is intended that the third party be bound thereby. 2 Restatement (Third), Agency § 6.04 and comment (b), pp. 55-56 (2006). This rule is applicable to the situation presented here in which an individual contracted with a third party on behalf of an entity that had not yet been legally formed. See id., comment (c), p. 57. If the parties assent that the contract shall be binding, the individual purporting to act on behalf of the unformed entity will be held personally liable under the contract ." (Emphasis added.) BRJM, LLC v. Output Systems, Inc., 100 Conn.App. 143, 153, 917 A.2d 605, cert. denied, 282 Conn. 917, 925 A.2d 1099 (2007). " We further analogize the present case involving a limited liability company to situations in which contracts are entered into by promoters on behalf of corporations prior to their legal existence. It is well established that [a] corporation can acquire rights and subject itself to duties with respect to preincorporation matters . . . Additionally, our legislature expressly has provided for personal liability for those who knowingly enter into contracts on behalf of corporations prior to their legal formation. See General Statutes § 33-638. This legislative provision presupposes the capacity of individuals to enter into binding agreements on behalf of unformed corporations." (Citations omitted; footnote omitted; internal quotation marks omitted.) Id., 153-54. Thus, the subsequent formation of 69-75 Daggett Street, LLC and transfer of ownership will not shield Damaghi from the consequences of actions she took as a promoter.
Additional testimony supports the inference that Damaghi purchased the property with tenants in the building. In particular, Gordeuk testified that he was a tenant of 69-75 Daggett Street from the years 1984 through 2010. There was no testimony concerning who ran the business during the period Damaghi owned the building as an individual and Gordeuk resided as a tenant therein. Nevertheless, it is reasonable to infer that Damaghi continued to operate it as a rental property during that period, which, in turn, supports a finding that Damaghi has transacted business within Connecticut.
Damaghi's transaction of business and the operation of 69-75 Daggett Street, LLC once it took ownership of the property is similar in effect, if not in form, to that of the defendants in Garcia v. Two By Six, LLC . In that case, one of the defendants, a nonresident and member of a limited liability company, by making frequent trips to Connecticut for business purposes and personally managing aspects of the subject business, was found to have transacted business within the meaning of § 52-59b(a)(1). Garcia v. Two By Six, LLC, supra, 49 Conn.L.Rptr. 366. Damaghi seeks to distinguish Garcia from the record at bar because Damaghi does not personally travel to Connecticut for business or manage the property. Rather, such tasks are performed by the employees of 69-75 Daggett Street, LLC and her husband, Owaedeyah.
That Owaedeyah is managing the property instead of Damaghi does not defeat the court's exercise of personal jurisdiction. Section 52-59b(a) extends the court's jurisdiction to a nonresident through their agent when the agent transacts business within the state. Even in the absence of a formal agency designation between spouses, " [a] course of conduct . . . may give rise to the apparent authority of one spouse to act on behalf of the other . . . [A spouse] habitually permitted by [the other spouse] to attend to some of [his or her] business matters may be found to have authority to transact all of [his or her] business affairs . . . An act routinely performed by one spouse for the other may give rise to apparent authority for that spouse to perform the same or a closely related act." (Internal quotation marks omitted.) Middlesex Mutual Assurance Co. v. Komondy, 120 Conn.App. 117, 122, 991 A.2d 587 (2010). Despite the absence of any explicit grant of authority from Damaghi to Owaedeyah for him to manage her business interests at the property, his course of conduct in looking in on his wife's business interests is sufficient to give rise to an apparent agency relationship between them. Thus, this court finds based on the evidence presented at the hearing that, Owaedayeh transacted business within Connecticut as an agent of Damaghi.
In light of this court's rejection of the fiduciary shield doctrine, Damaghi cannot prevent the exercise of personal jurisdiction merely because of her status as a member of a limited liability company. Rather, it is appropriate to " balance considerations of public policy, common sense, and the chronology and geography of the relevant factors" in arriving at a determination of whether the plaintiffs' claims arise from Damaghi's transaction of business within Connecticut. See Ryan v. Cerullo, supra, 282 Conn. 122. Therefore, based on her ownership of the property as an individual from July 12, 2004 through November 22, 2004, her transaction of business during that time, and subsequent transaction of business through her agents, Damaghi has the minimum contacts within Connecticut necessary for the court's jurisdiction to reach her through the operation of the long-arm statute.
III
" Once minimum contacts have been established, '[t]he second stage of the due process inquiry asks whether the assertion of personal jurisdiction comports with " traditional notions of fair play and substantial justice" --that is, whether it is reasonable under the circumstances of the particular case. See [ International Shoe Co. v. Washington, supra, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945)] . . . [Therefore] [w]hile the exercise of jurisdiction is favored where the plaintiff has made a threshold showing of minimum contacts at the first stage of the inquiry, it may be defeated where the defendant presents 'a compelling case that the presence of some other considerations would render jurisdiction unreasonable.' [ Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985)]." Cogswell v. American Transit Ins. Co., supra, 282 Conn. 525.
" The United States Supreme Court has noted that, 'the foreseeability that is critical to due process analysis is not the mere likelihood that a product will find its way into the forum State. Rather, it is that the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there.' World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980). 'In defining when it is that a potential defendant should " reasonably anticipate" out-of-state litigation, the [Supreme] Court frequently has drawn from the reasoning of Hanson v. Denckla, 357 U.S. 235, 253 [78 S.Ct. 1228, 2 L.Ed.2d 1283] (1958): " The unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum State. The application of that rule will vary with the quality and nature of the defendant's activity, but it is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." This " purposeful availment" requirement ensures that a defendant will not be haled into a jurisdiction solely as a result of " random, " " fortuitous, " or " attenuated" contacts . . . or of the " unilateral activity of another party or a third person" . . .' (Citations omitted.) Burger King Corp. v. Rudzewicz, supra, 471 U.S. 474-75." Cogswell v. American Transit Ins. Co., supra, 282 Conn. 529-30. Thus, " a nonresident individual who has not entered this state physically nevertheless may be subject to jurisdiction in this state under § 52-59b(a)(1) if that individual has invoked the benefits and protection of Connecticut's laws by virtue of his or her purposeful Connecticut related activity . . ." (Internal quotation marks omitted.) Ryan v. Cerullo, supra, 282 Conn. 120.
In light of Damaghi's actions as an individual and through her agents, as discussed above, this court concludes that she has purposefully availed herself of the privilege of conducting activities within Connecticut. See, e.g., Garcia v. Two By Six, LLC, supra, 49 Conn.L.Rptr. at 367 (defendant's deliberate and purposeful contacts made it foreseeable that he would be haled into court). Notably, Damaghi is the sole member of 69-75 Daggett Street, LLC, a defendant that is unquestionably subject to the jurisdiction of the court. See Under Par Associates, LLC v. Wash Depot A., Inc., 47 Conn.Supp. 319, 328, 793 A.2d 300 (2001) (court's jurisdiction over defendant-corporation bolstered exercise of jurisdiction over defendant-CEO, who could reasonably expect to be haled into court to testify in his capacity as an officer). Damaghi is also the sole member or one of two members in numerous other limited liability companies in Connecticut, man of which have registered business addresses at 69-75 Daggett Street. It is entirely foreseeable that her status as a member of those limited liability companies would cause her to make an appearance in a Connecticut court. Therefore, Damaghi's being haled into court is foreseeable, reasonable, and otherwise consistent with traditional notions of fair play and substantial justice.
CONCLUSION
For the foregoing reasons, the plaintiffs have demonstrated Damaghi's minimum contacts within Connecticut, and that she has purposefully availed herself of the benefits and protections of this state. Therefore, Damaghi's motion to dismiss on the ground that the court may not assert personal jurisdiction over her is denied.