CHRIS K. STURM et al. v. HARB DEVELOPMENT, LLC, et al., SC 18447

Judicial District of New Britain


     Corporations; Piercing of Corporate Veil; Whether Plaintiffs Sufficiently Pleaded Causes of Action Against Member of Limited Liability Company in his Individual Capacity; Whether Trial Court Should have Pierced Corporate Veil; Whether New Home Construction Contractors Act Provides Private Right of Action. The plaintiffs entered into a contract with Harb Development, LLC, (company) for the construction of a new home.  Claiming that the home was not properly constructed, the plaintiffs brought this action against the company and against its principal, John Harb, in his individual capacity.  As to Harb, the plaintiffs alleged negligence, fraudulent and negligent misrepresentation, violations of the Connecticut Unfair Trade Practices Act, General Statutes § 42-110a et seq. (CUTPA); and violations of the New Home Construction Contractors Act, General Statutes § 20-417a et seq. (NHCCA).  Harb moved to strike the counts against him, claiming that the plaintiffs made essentially the same allegations against him that they made against the company and that the plaintiffs failed to allege facts to support any theory for piercing the corporate shield that protects members of the company from liability for the company's actions.  In response, the plaintiffs argued that Harb is not shielded from liability for his own wrongful conduct and that they made sufficient allegations of separate, wrongful conduct by Harb in his individual capacity.  The trial court granted the motion to strike.  The court found that all of the plaintiffs' allegations against Harb arose out of his management of the company and that, under General Statutes § 34-133, a member or manager of a limited liability company is not liable for the conduct of the company solely by reason of being a member or manager.  The court further found that the plaintiffs did not plead any facts showing that Harb could be found individually liable under either (1) the instrumentality rule, pursuant to which a member or manager of a limited liability company can be held personally liable for corporate actions that, in economic reality, are those of the member or manager; or (2) the identity rule, where the member or manager has such a unity of interest and ownership that the independence of the limited liability company, in effect, has ceased or had never begun.  The court then noted that the NHCCA count should be stricken for the additional reason that the act does not provide consumers a private right of action.  It also found that the fraudulent and negligent misrepresentation counts should be stricken because the plaintiffs failed to allege all of the required elements for those causes of action.  The plaintiffs challenge the trial court's decision in this appeal.