Bernblum v. The Grove Collaborative, LLC
AC44177
| Conn. App. Ct. | Apr 19, 2022Background
- From Oct 2012–Feb 2013 Bernblum negotiated a lease for space at 770 Chapel St.; draft leases named The Grove as tenant and 770 Chapel Street, LLC (not formed until Aug 2013) as landlord. Bernblum negotiated on behalf of that intended LLC, not in his individual capacity.
- The Grove (Ballard) requested improvements (including a $7,300 wall contract). Bernblum paid for the wall work after assurance of reimbursement; he also performed other repairs/renovations he estimated at $68,000–$78,000.
- Bernblum delivered a final proposed lease in Feb 2013; Ballard orally said he would sign once his accountant returned. No lease was executed; Bernblum allowed The Grove access for a Feb 25, 2013 public event; The Grove later removed its items and operated elsewhere and made no payments.
- Bernblum sued individually (revised complaint filed 2016) alleging breach of contract, breach of lease, fraud, detrimental reliance (promissory estoppel), and negligent misrepresentation against The Grove and Ballard. After a bench trial the court entered judgment for Bernblum on most counts (except fraud) and awarded damages.
- Trial court relied on partial performance to except an oral lease from the statute of frauds and found detrimental reliance and negligent misrepresentation. Defendants moved to reconsider; motion denied; defendants appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to sue on contract, lease, and "detrimental reliance" claims | Bernblum (as property owner) had standing individually to enforce the lease/promise and recover damages | Bernblum negotiated for and contemplated 770 Chapel Street, LLC as landlord; he was not a party or intended beneficiary, so any injury is derivative and the LLC (not him) is the proper party | Court held Bernblum lacked standing for breach of contract, breach of lease, and detrimental reliance; those counts must be dismissed and should have been prosecuted by the LLC |
| Negligent misrepresentation — reasonable reliance and causation | Bernblum relied on Ballard’s Feb 2013 promise to sign the lease; subsequent expenditures were made in reliance | Most renovations and payments predated Ballard’s Feb statement; plaintiff failed to prove expenditures followed the promise or were caused by it | Held plaintiff failed to prove reasonable reliance; negligent misrepresentation judgment reversed and defendants entitled to judgment on those counts |
| Statute of frauds / partial performance exception | Partial performance (improvements, access/occupancy, grand opening) removed oral agreement from statute of frauds | No signed writing; statute of frauds applies | Appellate court did not decide the statute of frauds issue on the merits because standing disposed of the contract claims; trial court had invoked partial performance but those contract counts were reversed for lack of standing |
| Individual liability of Ballard | Bernblum treated Ballard as personally liable on the claims | Ballard acted as The Grove’s representative; individual liability not established | Appellate court did not resolve this claim after reversing other counts and remanded with directions to dismiss certain counts; individual-liability issue not reached on appeal |
Key Cases Cited
- Kelly v. Kurtz, 193 Conn. App. 507 (2019) (a plaintiff lacks standing when alleged harms are derivative of an injury to another entity)
- Channing Real Estate, LLC v. Gates, 326 Conn. 123 (2017) (LLC is a separate legal entity; members generally cannot sue individually for company injuries)
- Ganim v. Smith & Wesson Corp., 258 Conn. 313 (2001) (standing requires a direct interest; focus on proper party to seek relief)
- Coppola Constr. Co. v. Hoffman Enters. Ltd. P’ship, 309 Conn. 342 (2013) (elements of negligent misrepresentation and requirement of justifiable reliance)
- BRJM, LLC v. Output Sys., Inc., 100 Conn. App. 143 (2007) (contracts entered on behalf of unformed entities can be enforceable against the individual who acted)
- Saunders v. Briner, 334 Conn. 135 (2019) (recognizes a limited exception for single-member LLCs; not applicable to multi-member LLCs)
- Scarfo v. Snow, 168 Conn. App. 482 (2016) (member’s alleged injury that flows only through the LLC is derivative and does not confer individual standing)