Styslinger v. Brewster, Park, LLC
138 A.3d 257
| Conn. | 2016Background
- Brewster Park, LLC is a Connecticut LLC with two members: Michael Weinshel and Joyce Styslinger. Joyce assigned her membership interest to William C. Styslinger III as part of a divorce settlement.
- Under Conn. Gen. Stat. §§ 34-170 and 34-172, the assignee (Styslinger) is entitled to distributions but is not a member and cannot exercise membership rights unless admitted by the remaining member (Weinshel).
- Styslinger demanded distributions and inspection of books; Weinshel refused. Styslinger sued claiming fiduciary breaches and sought (1) dissolution, (2) appointment of a receiver to wind up affairs and distribute assets, and (3) other relief.
- The defendants moved to dismiss, arguing an assignee lacks statutory standing to seek dissolution or winding up under the Connecticut Limited Liability Company Act (the act). The trial court dismissed and the denial of reconsideration was appealed to the Supreme Court.
- On appeal Styslinger abandoned a claim to force dissolution and argued instead that the act allows an assignee to seek winding up and distribution without prior dissolution. The Supreme Court considered statutory text and structure and rejected that argument.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an assignee of an LLC membership interest has standing to obtain a court-ordered winding up and distribution absent dissolution | Styslinger: §34-208 and equitable principles permit an assignee to seek winding up and distribution even without dissolution | Defendants: The act ties winding up to dissolution; only members (or persons on their behalf) may trigger dissolution and winding up | Held: No. The act requires a dissolution event before winding up; assignees lack standing to force winding up absent dissolution |
| Whether §34-208 authorizes an assignee to commence winding up (not just to request court to perform winding up after dissolution) | Styslinger: §34-208(a) allows an assignee to apply to court to carry out winding up regardless of dissolution | Defendants: §34-208(a) applies only after dissolution to permit the court to step in if members/managers are wrongful | Held: §34-208(a) governs who may carry out winding up after dissolution; it does not authorize an assignee to trigger winding up prior to dissolution |
| Whether equitable/common-law principles can supplement the act to give an assignee standing | Styslinger: equity should provide standing to prevent wrongful conduct by members | Defendants: The act displaces common-law/equitable rules where it provides a statutory scheme; here it limits assignee rights | Held: Equitable principles are displaced by the act’s clear scheme limiting assignee rights; they do not confer standing to force winding up |
| Whether complaint’s general prayer preserved claims for other relief (e.g., damages) | Styslinger: The complaint’s catchall prayer preserved unspecified relief including damages | Defendants: The complaint lacked a specific prayer for damages; catchall is insufficient notice | Held: Catchall prayer insufficient; plaintiff did not specifically plead other relief such as money damages, so dismissal was proper |
Key Cases Cited
- Wilcox v. Webster Ins., Inc., 294 Conn. 206 (discussion of standing and subject-matter jurisdiction)
- Hartford/Windsor Healthcare Properties, LLC v. Hartford, 298 Conn. 191 (principles of statutory construction and reading related statutes together)
- Mukon v. Gollnick, 151 Conn. App. 126 (winding up follows dissolution; statutory scheme)
- Solomon v. Hall-Brooke Foundation, Inc., 30 Conn. App. 129 (catchall prayer is insufficient to plead money damages)
- Stern v. Connecticut Medical Examining Board, 208 Conn. 492 (requirement that pleadings specify relief sought)
- In re Carlisle Etcetera LLC, 114 A.3d 592 (Del. Ch.) (explaining Delaware court’s equitable recognition of assignee standing under different statutory scheme)