211 Conn.App. 311
Conn. App. Ct.2022Background
- This is a family dispute over the Bongiorno commercial businesses and real estate; George and his brother formed the businesses and interests were later transferred to George’s four children (each 25%).
- Plaintiffs (Marie, George originally, and daughter Bridjay) sued in 2012 seeking dissolution, claims for oppression, breach of fiduciary duty, fraud, unjust enrichment, and other relief; George later withdrew and Marie was twice challenged on standing.
- A prior appeal resulted in dismissal of some of Marie’s claims for lack of demonstrated membership; Marie was later cited in as a plaintiff and alleged she held an economic interest entitling her to distributions.
- After a bench trial, the trial court ruled for defendants on all counts; as to Marie the court relied on four independent grounds: res judicata, no proved post-transfer distributions, no proved dissolution entitling to distributions, and that any injury was derivative (no individual standing).
- The court found Bridjay had individual standing only for a books-and-records claim (which she abandoned) and otherwise had only derivative/member remedies; it rejected her oppression and dissolution claims on the merits and because CULLCA (§ 34-243 et seq.) was inapplicable to pre–July 1, 2017 events.
- On appeal the court dismissed Marie’s appeal as moot (she failed to challenge all independent bases) and dismissed Bridjay’s burden-shifting claim as moot; it declined to exercise supervisory authority to apply Manere/ CULLCA and affirmed the judgment in other respects.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether trial court erred by disposing of Marie’s breach of fiduciary duty claims as res judicata / lack of direct standing | Marie: res judicata was incorrect and she has an economic interest giving her standing to sue individually | Defendants: res judicata and, alternatively, no post-transfer distributions, no dissolution, and any injury is derivative so Marie lacks individual standing | Appeal dismissed as moot — Marie failed to challenge all independent bases; court lacked jurisdiction to grant relief |
| Whether burden should have shifted to managers (Frank & Maurice) to prove good faith on Bridjay’s fiduciary claims | Bridjay: fiduciary relationship + allegations of fraud/self-dealing required burden shift to defendants to prove fair dealing by clear and convincing evidence | Defendants: Bridjay lacks individual standing for most claims and, alternatively, failed to prove breach so burden did not shift | Appeal as to burden-shifting is moot because Bridjay did not challenge the independent standing ground; no relief granted |
| Whether Manere/ CULLCA’s "reasonable expectations" standard applies to Bridjay’s oppression/dissolution claims | Bridjay: Manere’s reasonable-expectations test should apply; court should reverse or order new trial | Defendants: CULLCA does not apply retroactively; this suit began in 2012 and plaintiffs offered no post–July 1, 2017 evidence | Court declined to exercise supervisory authority; Manere/CULLCA not applied; judgment affirmed on oppression/dissolution claims |
| Whether members may bring direct individual claims vs. must use derivative/member-initiated procedures | Plaintiffs (Marie/Bridjay): some alleged harms are personal/economic and support direct suits (Marie as economic transferee) | Defendants: harms are to the LLCs/members generally and are derivative; member-initiated action or statutory procedures control | Trial court found most claims derivative/lacked individual standing; appellate relief unavailable where independent grounds unchallenged |
Key Cases Cited
- Manere v. Collins, 200 Conn. App. 356 (Conn. App. 2020) (adopted the "reasonable expectations" test for oppression under CULLCA § 34-267)
- Saunders v. Briner, 334 Conn. 135 (Conn. 2019) (CLLCA provides member-initiated procedure as substitute for derivative suits)
- Bongiorno v. J & G Realty, LLC, 162 Conn. App. 430 (Conn. App. 2016) (prior ruling on Marie’s claimed membership/standing)
- Sosa v. Robinson, 200 Conn. App. 264 (Conn. App. 2020) (standing must be resolved before reaching merits)
- Styslinger v. Brewster Park, LLC, 321 Conn. 312 (Conn. 2016) (winding up linked to dissolution under LLC law)
- State v. Lester, 324 Conn. 519 (Conn. 2017) (unchallenged independent grounds render an appeal moot)