Bernblum v. The Grove Collaborative, LLC ( 2022 )

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STEVEN BERNBLUM v. THE GROVE
COLLABORATIVE, LLC, ET AL.
(AC 44177)
Bright, C. J., and Prescott and Clark, Js.
Syllabus
The plaintiff sought to recover damages from the defendants, B and G Co.,
for, inter alia, breach of contract relating to his negotiations with B over
a potential lease of certain commercial property by G Co., B’s limited
liability company. The negotiations began in October, 2012, and several
proposed lease agreements were drafted by the plaintiff’s attorney and
exchanged by the parties. All of the proposed leases listed G Co. as the
sole tenant and C Co., a limited liability company that was not formed
by the plaintiff until August, 2013, as the sole landlord. During the course
of lease negotiations, B expressed a need for certain improvements to
be made to the space, specifically, the construction of additional walls.
The plaintiff paid for the construction of those additional walls on an
assurance by G Co. that he would be reimbursed, and the final version
of the proposed lease contained a provision pursuant to which the
tenant would have been required to reimburse the landlord for the wall
construction by way of additional rent. The plaintiff also made several
additional repairs and improvements to the property. In February, 2013,
the plaintiff delivered a final version of the proposed lease to B. Although
B made an oral representation to the plaintiff that he intended to sign
it once his accountant returned from a trip, the lease was never executed.
Despite the absence of a finalized lease, the plaintiff provided G Co.
with access to the property later in February, 2013, to conduct a grand
opening event. Soon thereafter, G Co. removed items it had brought
into the space and began operating its business out of another property,
and the defendants never made any payments to the plaintiff. Following
a bench trial, the court rendered judgment for the plaintiff on the counts
of the revised complaint sounding in breach of contract, breach of
lease, detrimental reliance, and negligent misrepresentation, and for the
defendants on the fraud counts. The trial court subsequently denied the
defendants’ motion to reconsider/reargue. On the defendants’ appeal to
this court, held:
1. The plaintiff lacked standing to bring the counts of the complaint sounding
in breach of contract, breach of lease, and detrimental reliance: the
plaintiff did not have a direct interest in the litigation with respect to
those counts because no contractual relationship existed, or was ever
contemplated, between the plaintiff in his individual capacity and the
defendants, as the plaintiff was not a party to any of the underlying
proposed lease agreements and the plaintiff was, instead, negotiating
solely on behalf of C Co.; moreover, the plaintiff brought the underlying
action not on behalf of C Co., as the real party in interest, but in his
own name individually.
2. The trial court improperly rendered judgment for the plaintiff on the
counts of the complaint sounding in negligent misrepresentation, the
plaintiff having failed to meet his burden of proof on those counts: the
plaintiff failed to establish that his asserted expenditures for improve-
ments to the property were made to his detriment in reasonable reliance
on B’s statement, in February, 2013, that he would sign the lease once
his accountant returned, because, although the trial court admitted into
evidence copies of checks reflecting payments that the plaintiff attrib-
uted to the cost of the repairs and improvements to the space, the vast
majority of those checks predated B’s February, 2013 statement, and,
therefore, it could not reasonably be inferred from the checks that
the plaintiff made the improvements in reliance on the February, 2013
representation by B; moreover, although there was evidence that B made
statements during negotiations about changes that he would have liked
to have seen made to the property and entered into a contract for
the construction of additional walls, which the plaintiff paid for, those
requests by B were not alleged to be the negligent misrepresentation
on which the plaintiff reasonably relied to his detriment.
Argued December 6, 2021—officially released April 19, 2022
Procedural History
Action to recover damages for, inter alia, breach of
contract, and for other relief, brought to the Superior
Court in the judicial district of New Haven, and tried
to the court, Baio, J.; judgment in part for the plaintiff,
from which the defendants appealed to this court.
Reversed in part; judgment directed.
Robert M. Frost, Jr., with whom, on the brief, was
Erica A. Barber, for the appellants (defendants).
Earle Giovanniello, for the appellee (plaintiff).
Opinion
PRESCOTT, J. In this action arising out of negotia-
tions over a potential commercial lease, the defendants,
The Grove Collaborative, LLC (The Grove), and its sole
member, Slate Ballard, appeal from the judgment of the
trial court, rendered following a bench trial, in favor of
the plaintiff, Steven Bernblum, and from the court’s
denial of the defendants’ motion to reconsider/reargue.1
The defendants claim on appeal that the court improp-
erly (1) concluded that the plaintiff had standing to
bring those counts of the complaint sounding in breach
of contract, ‘‘breach of lease,’’ and ‘‘detrimental reliance’’
(contract counts), because he, individually, was not a
party to any purported lease or the lease negotiations
that underlie the allegations with respect to those
counts2 and (2) concluded that the plaintiff had estab-
lished those counts sounding in negligent misrepresen-
tation.3 We conclude that the plaintiff lacked standing
to bring the contract counts and that he failed to meet
his burden of proof with respect to the negligent misrep-
resentation counts. Accordingly, we reverse in part and
affirm in part the judgment of the court.
The following procedural history and facts, which
either were found by the court and set forth in its
memorandum of decision or are undisputed in the record,
are relevant to our resolution of the present appeal.
Starting in October, 2012, the plaintiff and Ballard began
negotiations regarding a potential lease by The Grove
of certain commercial space located in a building at
770 Chapel Street in New Haven. The Grove operated
a ‘‘coworking space’’ at another location in New Haven
that subleased private office space to other businesses,
provided dedicated desk space to individuals, and rented
out space for events. The 770 Chapel Street property
is a multistory building composed of various suites and,
at the time of the lease negotiations, was owned by
the plaintiff. Portions of the building were occupied by
tenants, but other areas were not in rentable condition.
The space at issue in the present case was located in
the rear of the third floor.
Several proposed lease agreements were drafted by
the plaintiff’s attorney and exchanged by the parties.
Despite the fact that the plaintiff personally owned the
770 Chapel Street property at the time of the lease
negotiations, all of the proposed leases listed The Grove
as the sole tenant and 770 Chapel Street, LLC, an as
yet to be formed limited liability company,4 as the sole
landlord. Printed under the signature lines on each of
the proposed leases exchanged by the parties were the
names of The Grove and 770 Chapel Street, LLC, only.
The plaintiff quitclaimed title to 770 Chapel Street to
770 Chapel Street, LLC, on December 3, 2013.
During the course of lease negotiations, Ballard
expressed a need for certain improvements to be made
to the space—namely, the construction of some addi-
tional walls. Ballard entered into a separate contract
with DiStasio Building & Remodeling (DiStasio) to con-
struct those walls for $7300 (wall contract), which was
paid for by the plaintiff on an assurance by The Grove
that he would be reimbursed. During the time that the
parties engaged in lease negotiations, the plaintiff also
made additional repairs to the space and continued with
ongoing improvements to the property, also utilizing
DiStasio for these renovations. When asked at trial to
describe these repairs/improvements, the plaintiff stated:
‘‘Any holes in walls were repaired and there were holes
in the walls. The whole place was painted with several
coats of paint. The ceiling, parts of the ceiling [were]
replaced. Electrical was brought up to what he needed.
We built a . . . large room for him called a—I think it
was called a training room. . . . We put in a kitchen-
ette. We totally recarpeted the place, changed the front
door, a lot of minor repairs.’’ The plaintiff estimated that
these repairs/improvements cost him between $68,000
and $78,000.
The plaintiff was not able to produce invoices or
payment records at trial with respect to the repairs/
improvements because those invoices purportedly had
been destroyed. Instead, the trial court admitted into
evidence copies of checks reflecting payments that the
plaintiff and his daughter/partner attributed to the cost
of the repairs and improvements to the space. With
respect to the condition of the premises that The Grove
was offered to lease, all versions of the proposed lease
indicated that the landlord, 770 Chapel Street, LLC,
would ‘‘be responsible to furnish the [t]enant with a
‘vanilla box’ . . . .’’ The plaintiff testified at trial on
cross-examination that this term meant that ‘‘everything
is painted white, you have carpeting, and a ceiling, heat,
utilities, electric.’’ Although the final version of the pro-
posed lease contained a provision pursuant to which
the tenant would have been required to reimburse the
landlord by way of additional rent for the wall contract
with DiStasio, none of the proposed leases provided for
reimbursement related to any of the additional repairs/
improvements referenced by the plaintiff, all of which
were undertaken by him without his having obtained
a signed lease or collecting any deposit from the defen-
dants, and most of which arguably would have been
required to conform the space to the so-called ‘‘vanilla
box’’ he would have needed to provide any tenant.
In February, 2013, the plaintiff delivered a final ver-
sion of the proposed lease to Ballard. The terms included
the rental by The Grove of 6782 square feet of the
property, which included approximately 404 square feet
of common area. The duration of the proposed lease
was for a stated period of five years. The base rent for
the first year was to be $5500 per month plus an addi-
tional $608.33 per month as reimbursement for the con-
struction of the additional walls built by DiStasio.5 Dur-
ing the second year, rent was set to increase to $6782
per month. Rent would also increase by 3 percent in
years three and five of the lease. The Grove also would
pay as additional rent a pro rata share of the property’s
real estate taxes, fire and liability insurance, and util-
ity costs.
The proposed landlord and tenant never executed
this final proposed lease or any other written lease
agreement, despite an oral representation by Ballard
to the plaintiff after receiving the February, 2013 final
proposed lease that he intended to sign it once his
accountant had returned from a trip. Nevertheless,
despite the absence of a finalized lease, later in Febru-
ary, 2013, the plaintiff provided The Grove with access
to the property to conduct a February 25, 2013 ‘‘grand
opening’’ or ribbon cutting event that was highly publi-
cized and well attended by other businesses and munici-
pal leaders, including the mayor. Soon after that grand
opening event, however, The Grove, without further
discussions with the plaintiff, removed the items it had
brought into the space prior to the event and began
operating its business out of another property in the
same neighborhood. The defendants never made any
payments to the plaintiff.
After The Grove vacated the space, the plaintiff con-
tinued to advertise the space through brokers and the
Internet in an attempt to lease it to another tenant.
The space eventually was leased to SeeClickFix, which
previously had been a client of The Grove.6
In January, 2014, the plaintiff commenced the under-
lying action in his name individually. The operative ten
count revised complaint was filed on November 7, 2016.
Counts one through five were against The Grove, and
sounded in, respectively, breach of contract, ‘‘breach
of lease,’’ fraud, ‘‘detrimental reliance,’’ and negligent
misrepresentation.7 Counts six through ten alleged iden-
tical counts against Ballard individually. The defendants
filed an answer that effectively disputed the material
elements of the complaint.
At trial, the defendants argued during summation that
the parties never had reached a meeting of the minds
as to all material terms of the proposed lease and no
version of the proposed lease was ever signed by the
parties. The defendants also argued that the plaintiff
did not properly mitigate his damages. Finally, the
defendants argued that 770 Chapel Street, LLC, was the
entity listed as the landlord in the proposed lease, not
the plaintiff, and that that entity had not been estab-
lished at the time relevant to this matter.
Following the two day trial before the court, Baio,
J., the court issued a memorandum of decision on May
8, 2020, rendering judgment in favor of the defendants
on the plaintiff’s fraud count, but in favor of the plaintiff
on all remaining counts of the complaint. The court
analyzed the breach of contract and breach of lease
counts together. It stated in relevant part: ‘‘In this mat-
ter, there was evidence to support that the parties had
time to negotiate the terms and conditions of the lease
and did engage in negotiations. The evidence demon-
strates that the parties engaged in substantive discus-
sions related to the lease agreement, the plaintiff was
provided with ample opportunity to inspect the prem-
ises, engaged in business planning based upon the pro-
posed lease and both proceeded to negotiate and final-
ize the agreement. The lease, however, was never executed,
although the evidence supports that [Ballard] represented
that he intended to sign the lease upon his accountant’s
return from a trip.’’ (Emphasis added.) Rather than pro-
viding additional analysis regarding whether and on
what legal theory an enforceable oral or written con-
tract was formed and between whom, the court instead
turned to the defendants’ arguments that any claim of
breach of contract or breach of lease would be barred
by the statute of frauds. The court acknowledged that
‘‘[a]bsent a signed writing to establish the existence of
this agreement, this action is barred by the statute of
frauds.’’
The court, referencing the final proposed lease offered
by the plaintiff in support of his contractual claims,
concluded that ‘‘the document submitted by the plaintiff
fails to satisfy the basic requirement of the statute of
frauds that the written agreement be signed by the party,
or the agent of the party to be charged. See [General
Statutes] § 52-550. The document, therefore, upon initial
examination, violates the statute of frauds, and any
action brought on the contract would be barred unless
any exception applies.’’ (Internal quotation marks omit-
ted.) The court agreed with the plaintiff’s contention,
however, that the parties’ contract was ‘‘excepted from
the statute of frauds on the basis of partial performance,’’
explaining that ‘‘[a]cts on the part of a promisee may
be sufficient to take an oral contract out of the statute
of frauds’’ and that a ‘‘contract is enforceable, despite
the statute, when, subsequent to the making of the
contract, there has been conduct that amounts to part
performance.’’ (Emphasis added; internal quotation
marks omitted.) The court agreed with the plaintiff that
‘‘the defendants’ actions in requesting and directing var-
ious improvements and occupancy of the premises con-
stitute[d] partial performance of the terms of the lease,
creating an exception to the statute of frauds.’’ The
court thus concluded: ‘‘[T]he evidence demonstrates by
a fair preponderance of the evidence that there was
partial performance of the lease agreement which would
except it from the statute of frauds and render the agree-
ment enforceable, at least for the one year.’’ (Emphasis
added.)
In addition to apparently concluding that the defen-
dants had breached an oral lease agreement that was
excepted from the statute of frauds, the court also con-
cluded that ‘‘[t]he plaintiff has met the burden of proof
on the claims against each of the two defendants based
on detrimental reliance.’’ The court stated: ‘‘Separate from
the breach of lease claims, the plaintiff submits that
the defendants benefitted at the expense of the plaintiff
through [their] representation that they intended to
lease the premises and the actions taken to support
that representation resulting in the plaintiff making sub-
stantial improvements as requested by the defendants.’’
The court agreed with the plaintiff, stating as follows:
‘‘[T]he plaintiff alleges that in reliance on the defendants’
representations, the plaintiff began renovating the prem-
ises in order to tailor it to the defendants’ specific needs,
refrained from showing the premises to anyone else,
and as a result of the defendants’ representations, the
plaintiff put his efforts into renovating the premises
and suspended work on the common areas in order to
get the premises ready for the defendant[s]. Renovation
of the common area is necessary in order to have the
building ready to show to other prospective tenants. . . .
The plaintiff claims reliance on the defendants’ state-
ments, conduct and commitments and that the defen-
dants moved into the premises and used it. . . .
‘‘During the period at issue, the defendants were able
to market their business, participate in a large, public
grand opening event attended by business people and
local leaders, and the plaintiff incurred expenses for
improvements all directed by the defendant[s], who
vacated without notice. The defendants argue that the
plaintiff benefitted as well, as the premises were in such
a state of disrepair that the premises became market-
able by the improvements. The defendants also submit
that the grand opening event showcased the premises
and provided advertising for the plaintiff, and the plain-
tiff did end up with a tenant for at least a one year
term, and the tenant was one of the subtenants of the
defendants. While each makes valid points, the fact
remains that the plaintiff was not able to market the
premises during the time when he thought in good faith
that he had a lease agreement with the defendants.
Hence, even if the grand opening event may have pro-
vided an advertising opportunity, the plaintiff could not
use it as such for the premises in question. Additionally,
while there is validity to the argument that the plaintiff
may have benefitted from the improvements made, the
fact remains that the improvements, or at least these
specific improvements, may not have been made but
for the arrangement with the defendants. The improve-
ments were made based on the express understanding
that this was part of the agreement with the defendants.
To the extent there is any claim that the improvements
were some benefit to the plaintiff, this argument is more
appropriately considered in relation to the claim for
damages if liability is found.’’ (Citations omitted; inter-
nal quotation marks omitted.)
Finally, the court rejected the plaintiff’s claim of fraud
or intentional misrepresentation, but, in summary fash-
ion, concluded that the plaintiff nevertheless had met
his burden of proof with respect to the negligent misrep-
resentation counts. Without analysis or discussion, the
court concluded that the evidence submitted had estab-
lished that The Grove, through its representative Bal-
lard, misrepresented that it would lease the space and
the plaintiff had relied on that representation to his
detriment.
With respect to damages, the court awarded the plain-
tiff a total of $73,318.87. That total consisted of compen-
satory damages of $73,299.96, which is equal to the
amount of base rent that the plaintiff would have been
due for the first year under the final proposed lease
plus reimbursement for the $7300 wall contract; plus
an additional $78,018.91 as restitution for the ‘‘buildout’’
of the space; less the $78,000 in rent that the plaintiff
collected in mitigation of his damages.
On May 28, 2020, the defendants filed a motion to
reconsider and/or reargue. The defendants asserted that
(1) no contract between the plaintiff in his individual
capacity and the defendants existed, and, thus, the
plaintiff lacked standing to prosecute the present
action; (2) no judgment should have entered against
Ballard individually on the contract counts because the
plaintiff presented no evidence that Ballard had acted
in his individual capacity rather than as a principal of
The Grove; (3) recovery under the tort theory of negli-
gent misrepresentation was barred by the economic
loss doctrine; (4) the court incorrectly concluded that
the plaintiff had proven the elements of negligent mis-
representation; (5) any recovery on a theory of detri-
mental reliance was unavailable given the court’s find-
ing of an enforceable contract; and (6) the court
improperly calculated damages. The plaintiff objected
to the defendants’ motion, arguing, in relevant part, that
the court’s decision was supported by the evidence and
that, as ‘‘the owner of the subject premises,’’ he had
‘‘standing to assert his claims for breach of the lease
agreement and negligent misrepresentation.’’
The court issued a decision denying the motion for
reconsideration/reargument and sustaining the plain-
tiff’s objection to the motion. The court stated in rele-
vant part: ‘‘The court understands that the defendants
disagree with some of the court’s decision, however,
that is not a basis for a motion for reconsideration, nor
is the desire to present arguments or evidence not pre-
sented at the time of trial. . . . As to the defense argu-
ment relating to the status of the plaintiff the same was
disputed, with arguments and evidence on both sides.
The court did not accept the defense argument.’’ This
appeal followed.
I
The defendants claim that the court improperly con-
cluded that the plaintiff had standing to bring the under-
lying action despite the undisputed fact that he, individ-
ually, was not a party to any of the proposed lease agree-
ments or the negotiations that form the basis of the
allegations in the complaint. We agree with the defen-
dants that the plaintiff lacked standing to prosecute the
present action with respect to the contract counts of
the complaint.
We begin with our standard of review and general legal
principles. ‘‘Standing is the legal right to set judicial
machinery in motion. One cannot rightfully invoke the
jurisdiction of the court unless he [or she] has, in an
individual or representative capacity, some real interest
in the cause of action, or a legal or equitable right, title
or interest in the subject matter of the controversy.
. . . [If] a party is found to lack standing, the court
is consequently without subject matter jurisdiction to
determine the cause. . . . We have long held that
because [a] determination regarding a trial court’s sub-
ject matter jurisdiction is a question of law, our review
is plenary. . . . In addition, because standing impli-
cates the court’s subject matter jurisdiction, the issue
of standing is not subject to waiver and may be raised at
any time.’’ (Internal quotation marks omitted.) Hilario’s
Truck Center, LLC v. Rinaldi, 183 Conn. App. 597, 603,
193 A.3d 683, cert. denied, 330 Conn. 925, 194 A.3d 776(2018).
‘‘[A]s a general rule, a plaintiff lacks standing unless
the harm alleged is direct rather than derivative or indi-
rect. . . . [I]f the injuries claimed by the plaintiff are
remote, indirect or derivative with respect to the defen-
dant’s conduct, the plaintiff is not the proper party to
assert them and lacks standing to do so. [If], for exam-
ple, the harms asserted to have been suffered directly
by a plaintiff are in reality derivative of injuries to a
third party, the injuries are not direct but are indirect,
and the plaintiff has no standing to assert them.’’
(Emphasis added; internal quotation marks omitted.)
Kelly v. Kurtz, 193 Conn. App. 507, 540, 219 A.3d 948(2019).
‘‘The requirement of directness between the injuries
claimed by the plaintiff and the conduct of the defen-
dant also is expressed, in our standing jurisprudence,
by the focus on whether the plaintiff is the proper party
to assert the claim at issue. In order for a plaintiff to
have standing, it must be a proper party to request
adjudication of the issues.’’ (Internal quotation marks
omitted.) Ganim v. Smith & Wesson Corp., 258 Conn.
313, 347, 780 A.2d 98 (2001).
It is axiomatic that ‘‘[a] limited liability company is
a distinct legal entity whose existence is separate from
its members. . . . [It] has the power to sue or to be
sued in its own name . . . or may be a party to an
action brought in its name by a member or manager.
. . . A member or manager, however, may not sue in
an individual capacity to recover for an injury based
on a wrong to the limited liability company.’’ (Citation
omitted; emphasis added; internal quotation marks
omitted.) Kelly v. Kurtz, supra, 193 Conn. App. 540; see
also Channing Real Estate, LLC v. Gates, 326 Conn. 123,
138, 161 A.3d 1227 (2017) (member of limited liability
company cannot recover for injury allegedly suffered
by member’s company and, accordingly, lacks standing
to bring claim in individual capacity); but cf. Saunders
v. Briner, 334 Conn. 135, 181, 221 A.3d 1 (2019) (recog-
nizing limited exception applicable only to single mem-
ber limited liability companies).
Furthermore, ‘‘[i]t is well settled that one who [is] nei-
ther a party to a contract nor a contemplated beneficiary
thereof cannot sue to enforce the promises of the con-
tract. . . . Under this general proposition, if the [non-
party] is neither a party to, nor a contemplated benefi-
ciary of, [the] agreement, [it] lacks standing to bring
[its] claim for breach of [contract].’’ (Internal quotation
marks omitted.) Nassra v. Nassra, 180 Conn. App. 421,
431, 183 A.3d 1198 (2018).8
Turning to the present appeal, whether the plaintiff
had standing to initiate the action in this case hinges
on whether the facts in the record demonstrate that he
had a direct interest in the litigation, meaning an interest
that was not remote, indirect or simply derivative of
an injury to another party.9 On the basis of our review
of the record and arguments of the parties, we conclude
that the plaintiff did not have a direct interest in the
litigation with respect to those counts of the complaint
sounding in breach of contract, ‘‘breach of lease,’’ or
‘‘detrimental reliance.’’10
No contractual relationship between the plaintiff in
his individual capacity and the defendants existed or
was ever contemplated.11 The plaintiff was not a named
party to the contract with respect to any of the underly-
ing proposed lease agreements, and he was negotiating
solely on behalf of his contemplated and soon to be
formed limited liability company, 770 Chapel Street,
LLC. Each of the four proposed leases that were
exchanged between the parties and admitted into evi-
dence listed The Grove as the sole tenant and 770
Chapel Street, LLC, of which the plaintiff was one of
two members, as the sole landlord. Indeed, from the
virtual outset of the party’s negotiations, it was evident
that the lessor was to be 770 Chapel Street, LLC, and
not the plaintiff individually. The plaintiff, however, did
not commence the underlying action in a representative
capacity in the name of 770 Chapel Street, LLC, but in
his own name individually. The fact that it was 770
Chapel Street, LLC, as the then owner of the subject
property, rather than the plaintiff, that later mitigated
any potential contract damages by entering into a lease
with SeeClickFix is further evidence that 770 Chapel
Street, LLC, and not the plaintiff individually, was the
proper party to pursue damages for any alleged harm
resulting from the defendants’ purported breach of their
alleged contractual or quasi-contractual obligations.
Although not dispositive of the standing issue, this
court’s discussion in Wasko v. Farley, 108 Conn. App.
156, 947 A.2d 978, cert. denied, 289 Conn. 922, 958 A.2d
155 (2008), is nonetheless instructive. In that case, the
plaintiff, a dentist who had brought a personal injury
action following a motor vehicle accident, appealed
from the underlying judgment claiming, inter alia, that
the trial court had failed to properly charge the jury on
damages related to the cost of hiring an additional den-
tal assistant to do work in her dental practice that
her injuries prevented her from doing. Id., 167–68. This
court agreed with the trial court that, because the dental
practice was organized as a limited liability company,
the costs associated with hiring the dental assistant
were wholly attributable to the business, not to the
plaintiff individually, and, therefore, those costs could
only be recovered by the business, which was not a
party to the action before the trial court. Id., 170–71.
This court recognized, as previously stated, that a lim-
ited liability company is a legal entity whose existence
is separate and distinct from that of its members and
that, as such, a member lacks standing to sue in an
individual capacity to recover damages incurred by the
limited liability company. Id., 170. The court concluded:
‘‘The plaintiff brought this action in her individual
capacity—the limited liability company was not a party.
Damages incurred by the limited liability company,
therefore, were not at issue in the case. Accordingly, the
court properly declined to instruct the jury on damages
resulting from additional costs incurred by the plain-
tiff’s dental practice.’’ Id., 170–71. Thus, implicit in the
court’s holding in Wasko is that a plaintiff lacks standing
to seek damages for harm suffered by a company associ-
ated with the plaintiff. See id.; see also Scarfo v. Snow,
168 Conn. App. 482, 497–504, 146 A.3d 1006 (2016).12
In short, the only contemplated parties to any poten-
tial lease, written or oral, underlying the breach of con-
tract, ‘‘breach of lease’’ and ‘‘detrimental reliance’’ counts
were The Grove and 770 Chapel Street, LLC. The plain-
tiff brought the underlying action not on behalf of 770
Chapel Street, LLC, as the real party in interest, but in
his own name individually. Accordingly, the plaintiff
lacked standing to prosecute those counts.13 The court
should have dismissed them on that basis and, there-
fore, improperly rendered judgment for the plaintiff
and denied the defendants’ postjudgment motion to
reconsider/reargue, seeking to set aside the judgment.
II
The defendants next claim that the court improperly
rendered judgment against them on those counts sound-
ing in negligent misrepresentation because the plaintiff
failed to satisfy his burden of proof with respect to
all necessary elements of the tort. In particular, the
defendants assert that the plaintiff failed to demonstrate
that the repairs and improvements made to the space
during lease negotiations were done on the basis of
reasonable reliance on a factual misrepresentation
made by the defendants. This, the defendants argue, is
because the only asserted factual misrepresentation for
which evidence was admitted was Ballard’s statement
in February, 2013, that he would sign the final proposed
lease once his accountant returned. That representa-
tion, however, came after the repairs and improvements
largely already were underway or completed as reflected
in the dates on the checks submitted into evidence by
the plaintiff as proof of damages. We agree with the
defendants that, viewing the evidence in the light most
favorable to sustaining the court’s judgment, the plain-
tiff failed to establish that his asserted expenditures
were made to his detriment in reasonable reliance on
this representation, and this failure of proof requires
reversal of the court’s judgment with respect to the
negligent misrepresentation counts.
‘‘[Our Supreme Court] has long recognized liability
for negligent misrepresentation. . . . The governing
principles are set forth in . . . § 552 of the Restatement
Second of Torts [1977]: One who, in the course of his
business, profession or employment . . . supplies
false information for the guidance of others in their
business transactions, is subject to liability for pecuni-
ary loss caused to them by their justifiable reliance
upon the information, if he fails to exercise reasonable
care or competence in obtaining or communicating the
information. . . . [T]he plaintiff need not prove that
the representations made by the [defendants] were
promissory. It is sufficient . . . that the representa-
tions contained false information. . . . There must be
a justifiable reliance on the misrepresentation for a
plaintiff to recover damages.’’ (Emphasis omitted; inter-
nal quotation marks omitted.) Bellsite Development,
LLC v. Monroe, 155 Conn. App. 131, 151, 122 A.3d 640,
cert. denied, 318 Conn. 901, 122 A.3d 1279 (2015).
‘‘Traditionally, an action for negligent misrepresenta-
tion requires the plaintiff to establish (1) that the defen-
dant made a misrepresentation of fact (2) that the defen-
dant knew or should have known was false, and (3) that
the plaintiff reasonably relied on the misrepresentation,
and (4) suffered pecuniary harm as a result.’’ (Internal
quotation marks omitted.) Coppola Construction Co.
v. Hoffman Enterprises Ltd. Partnership, 309 Conn.
342, 351–52, 71 A.3d 480 (2013). In other words, in
addition to proving that a defendant negligently made
a misrepresentation of fact, a plaintiff must also demon-
strate that any claimed demonstrable harm was a direct
result of his reasonable reliance on that misrepresenta-
tion. It is the plaintiff’s failure at trial to produce evi-
dence to demonstrate this causal link that is at issue.
Although the court made no express findings with
respect to each element of negligent misrepresentation,
it is implicit in its judgment for the plaintiff that it found
each element had been met. The defendants, in effect,
claim that the court’s implicit finding that the plaintiff
reasonably relied on the alleged misrepresentation is
clearly erroneous because the plaintiff failed to present
evidence sufficient to support such a finding. ‘‘Under
the clearly erroneous standard, we will overturn a fac-
tual finding only if there is no evidence in the record
to support it . . . or [if] although there is evidence to
support it, the reviewing court on the entire evidence
is left with the definite and firm conviction that a mis-
take has been committed.’’ (Internal quotation marks
omitted.) Northeast Builders Supply & Home Centers,
LLC v. RMM Consulting, LLC, 202 Conn. App. 315, 353,
245 A.3d 804, cert. denied, 336 Conn. 933, 248 A.3d
709 (2021).
Here, the theory of the plaintiff was that it made
significant changes and improvements to the premises
in reliance on a false representation by Ballard. The
only factual misrepresentation by Ballard identified by
the plaintiff as a basis for his claim, however, was Bal-
lard’s assurance, made sometime in February, 2013,
after he was presented with the final proposed lease,
that he would sign the lease as proposed once his
accountant had returned from vacation. The evidence
presented at trial demonstrates that the plaintiff began
the renovations, repairs and upgrades to his building,
many of which would have been needed to restore the
building to rentable condition, regardless of whether
the negotiation with The Grove bore fruit, either prior
to or during the extended lease negotiations and before
any assurance by Ballard in February, 2013, that he
would sign the proposed lease. Although there was evi-
dence presented that Ballard made statements during
negotiations about changes that he would have liked
to have seen made to the space and that he contracted
with DiStasio for the building of the additional walls,
which was paid for by the plaintiff, these requests for
changes to the premises were not alleged to be the
negligent misrepresentation on which the plaintiff rea-
sonably relied to his detriment.
Further, the only evidence admitted to prove the
plaintiff’s asserted detrimental reliance on the defen-
dants’ alleged misrepresentation following receipt of
the February, 2013 lease were copies of checks made
to various vendors, thirty-four of which were related
to improvements made to the space at issue. A summary
of those checks was authenticated and entered into
evidence through the testimony of the plaintiff’s daugh-
ter, acting in her capacity as the plaintiff’s partner and
bookkeeper for the plaintiff’s company. The dates on
those checks, however, range from August 21, 2012,
which was prior to the start of lease negotiations,
through March 16, 2013. Accordingly, the vast majority
of the checks predate Ballard’s statement sometime in
late February, 2013, that he would sign the plaintiff’s
latest proposed lease. Although two of the checks are
dated in March, 2013, there was no evidence presented
connecting the dates on the checks to when the plaintiff
initiated the work associated with those payments.
Thus, it cannot reasonably be inferred from the checks
that the plaintiff elected to make the associated
improvements in reliance on the February, 2013 repre-
sentation by Ballard. Rather, the only reasonable infer-
ence to be drawn from this evidence was that the plain-
tiff’s alleged expenditures on the space, whether by
himself personally or on behalf of his soon to be formed
limited liability company, preceded rather than followed
the only alleged misrepresentation.
In short, there simply was no evidence presented from
which the court reasonably could have concluded that
the plaintiff acted to his detriment in reliance on Ballard’s
alleged February, 2013 misrepresentation. Because the
evidence presented was insufficient to establish this
essential element, the court’s implicit finding to the
contrary was clearly erroneous. Accordingly, the court
should have rendered judgment on the merits of the
negligent misrepresentation counts, like the fraud counts,
in favor of the defendants.
The judgment is reversed with respect to counts one,
two, four, five, six, seven, nine and ten of the revised
complaint and the case is remanded with direction to
render judgment dismissing counts one, two, four, six,
seven and nine for lack of standing and for the defen-
dants on counts five and ten; the judgment is affirmed
in all other respects.
In this opinion the other judges concurred.
1
The Grid, a collection of various organizations in New Haven, including
The Grove, that formed to strategize and apply for a state economic develop-
ment grant, was also named as a defendant in the initial complaint, but the
counts against it were dismissed. Because it has not participated in the
present appeal, all references in this opinion to the defendants collectively
are to Ballard and The Grove only.
2
The defendants also claim with respect to the breach of contract and
‘‘breach of lease’’ counts that the court improperly determined that the
parties entered into an enforceable contract that was not barred by the
statute of frauds. The statute of frauds, which is codified at General Statutes
§ 52-550, provides in relevant part: ‘‘(a) No civil action may be maintained
in the following cases unless the agreement, or a memorandum of the
agreement, is made in writing and signed by the party, or the agent of the
party, to be charged . . . (4) upon any agreement for the sale of real prop-
erty or any interest in or concerning real property; (5) upon any agreement
that is not to be performed within one year from the making thereof . . . .’’
(Emphasis added.) Because we conclude that the plaintiff, in his individual
capacity, was not a party to any lease agreement contemplated by the parties
during negotiations and thus lacks standing to pursue any contractual or
quasi-contractual remedies, we need not address the applicability of the
statute of frauds to the facts of this case.
The defendants also claim that the court improperly rendered judgment
in favor of the plaintiff on the ‘‘detrimental reliance’’ count because such
an alternative theory of recovery should have been barred due to the court’s
finding that a valid and enforceable contract existed. Given our conclusion
that the plaintiff lacked standing to assert any of the contract counts, it is
unnecessary to address the merits of this claim.
Finally, the defendants claim that the court improperly awarded damages
against Ballard in his individual capacity despite the fact that the uncontested
evidence establishes that, at all times relevant, he was acting solely in his
representative capacity on behalf of The Grove. Because we reverse the
judgment of the court on other grounds, we do not reach this claim.
3
The defendants also claim on appeal that the court rejected their argu-
ment that recovery for negligent misrepresentation, a tort theory of liability,
was barred in the present case by the economic loss doctrine, ‘‘a [common-
law] rule limiting a contracting party to contractual remedies for the recovery
of economic losses unaccompanied by physical injury to persons or other
property.’’ (Internal quotation marks omitted.) State v. Lombardo Bros.
Mason Contractors, Inc., 307 Conn. 412, 469 n.41, 54 A.3d 1005 (2012).
Because we conclude that the plaintiff failed to meet his burden of proof
with respect to the negligent misrepresentation counts, it is unnecessary to
address the applicability of the economic loss doctrine.
4
770 Chapel Street, LLC, was formed on August 2, 2013. Its members are
Bernblum and his daughter and business partner, Julie Bernblum. In BRJM,
LLC v. Output Systems, Inc., 100 Conn. App. 143, 917 A.2d 605, cert. denied,
282 Conn. 917, 925 A.2d 1099 (2007), this court, as an apparent matter of
first impression, considered whether a contract entered into on behalf of
a limited liability company prior to that company’s formation was invalid.
Id., 152. This court concluded that ‘‘a contract entered into prior to an
entity’s formation is not void ab initio due to lack of capacity because the
individual entering into the contract on behalf of the unformed entity has
the requisite capacity. It follows that, in the situation of an unformed entity,
the individual serves as the party to the contract although the contract is
entered into in the entity’s name.’’ (Emphasis added.) Id. Accordingly, this
court held that ‘‘contracts entered into by individuals acting on behalf of
unformed entities are enforceable.’’ Id., 153.
This court’s opinion in BRJM, LLC, however, is limited to the issue of
whether a contract fails due to the lack of capacity of one of the contracting
parties if, at the time the contract is executed, one of the parties to the
contract is an unformed limited liability company. We do not read the opinion
to stand for the proposition that, once a company named as a party to a
contract has been duly formed, any individual member of that company
retains standing to bring an action to enforce a contract executed only in
the name of the company. As we note later in this opinion, even after this
court’s decision in BRJM, LLC, appellate courts clearly have rejected such
a proposition. See, e.g., Channing Real Estate, LLC v. Gates, 326 Conn.
123, 138, 161 A.3d 1227 (2017); O’Reilly v. Valletta, 139 Conn. App. 208,
214–16, 55 A.3d 583 (2012), cert. denied, 308 Conn. 914, 61 A.3d 1101 (2013);
Padawer v. Yur, 142 Conn. App. 812, 818, 66 A.3d 931, cert. denied, 310
Conn. 927, 78 A.3d 145 (2013); but see Saunders v. Briner, 334 Conn. 135,
181, 221 A.3d 1 (2019) (recognizing limited single member exception to
general rule prohibiting members of limited liability companies from bringing
direct actions to recover harms suffered by company only). Because 770
Chapel Street, LLC, is a two member company, the Saunders exception is
inapposite.
5
$608.33 multiplied by twelve equals approximately $7300, the amount
of Ballard’s contract with DiStasio.
6
At trial, the plaintiff testified that he was able to rent the space for one
year at $6500 per month for a total of $78,000. The court appears to have
used this amount in its damages calculation as representing the plaintiff’s
mitigation of damages.
7
The operative complaint is not a model of clarity with respect to the
causes of action that the plaintiff sought to assert against the defendants.
The defendants, however, never filed a request to revise or a motion to
strike with respect to the operative revised complaint. The breach of contract
counts assert that the defendants breached the terms of the final proposed
written lease, which it is undisputed never was executed by the parties.
The ‘‘breach of lease’’ counts also appear to assert a breach of the terms
of the unexecuted written lease but also contains as an additional allegation
that the defendants agreed orally to sign the proposed written lease. The
counts labeled as ‘‘detrimental reliance’’ appear to assert a cause of action
sounding in quasi contract or promissory estoppel. ‘‘[U]nder the doctrine
of promissory estoppel [a] promise which the promisor should reasonably
expect to induce action or forbearance on the part of the promisee or a
third person and which does induce such action or forbearance is binding
if injustice can be avoided only by enforcement of the promise. . . . A
fundamental element of promissory estoppel, therefore, is the existence of
a clear and definite promise which a promisor could reasonably have
expected to induce reliance. Thus, a promisor is not liable to a promisee
who has relied on a promise if, judged by an objective standard, he had no
reason to expect any reliance at all. . . . Additionally, the promise must
reflect a present intent to commit as distinguished from a mere statement
of intent to contract in the future. . . . [A] mere expression of intention,
hope, desire, or opinion, which shows no real commitment, cannot be
expected to induce reliance . . . and, therefore, is not sufficiently promis-
sory.’’ (Emphasis added; internal quotation marks omitted.) T & M Building
Co. v. Hastings, 194 Conn. App. 532, 553–54, 221 A.3d 857 (2019), cert. denied,
334 Conn. 926, 224 A.3d 162 (2020); see also footnote 10 of this opinion.
8
‘‘[T]he fact that a person is a foreseeable beneficiary of a contract is not
sufficient for him to claim rights as a third party beneficiary.’’ (Emphasis
added.) Grigerik v. Sharpe, 247 Conn. 293, 317–18, 721 A.2d 526 (1998); see
also Hilario’s Truck Center, LLC v. Rinaldi, supra, 183 Conn. App. 605(‘‘Although . . . it is not in all instances necessary that there be express
language in the contract creating a direct obligation to the claimed [third-
party] beneficiary . . . the only way a contract could create a direct obliga-
tion between a promisor and a [third-party] beneficiary would have to be
. . . because the parties to the contract so intended. . . . [B]oth con-
tracting parties must intend to confer enforceable rights in a third party
. . . in order to give the third party standing to bring suit.’’ (Citations omit-
ted; internal quotation marks omitted.)); 2 Restatement (Second), Contracts
§ 302, comment (e), p. 443 (1981) (‘‘Performance of a contract will often
benefit a third person. But unless the third person is an intended beneficiary
. . . no duty to him is created.’’). Here, the plaintiff never asserted before
the trial court that he was an intended beneficiary of the lease or any promise
made by the defendants during negotiations, nor is there evidence in the
underlying record that would support such an assertion.
9
The plaintiff does not claim any statutory authority that would have
conferred standing upon him to bring the underlying action nor is there
evidence in the record from which to reach such a conclusion.
10
We have concluded that, for the purpose of considering the plaintiff’s
standing to bring the various causes of actions raised in the complaint, the
‘‘detrimental reliance’’ count, which, as previously noted in footnote 7 of
this opinion, we construe as sounding in promissory estoppel, is properly
viewed through the same jurisprudential lens as those counts sounding in
breach of contract. Promissory estoppel, after all, is a theory of recovery
that permits courts to award damages incurred in reliance on a promise
that is otherwise unenforceable as a contract; see Meadowbrook Center,
Inc. v. Buchman, 149 Conn. App. 177, 194, 90 A.3d 219 (2014); and thus is
quasi-contractual in nature. See 1 Restatement (Second), Contracts § 90, p.
242 (1981); 3 A. Corbin, Contracts (Rev. Ed. 1996) § 8.12, pp. 58–59, 98–101.
Logically, just as only a party to a contract or a contemplated beneficiary
ordinarily has standing to bring an action to enforce a contractual promise;
Tomlinson v. Board of Education, 226 Conn. 704, 718, 629 A.2d 333 (1993);
only a promisee, as the party to whom a promise is addressed, has standing
to seek damages for detrimental reliance on that promise under a theory
of promissory estoppel. Here, because any possible promise to the plaintiff
was made in the context of lease negotiations, and the plaintiff ostensibly
was acting during those negotiations not in his individual capacity but on
behalf of his contemplated limited liability company, he was neither a party
to any contemplated contract nor the party to whom any promise was made
during negotiations.
11
Although the court acknowledged multiple times that no written contract
was executed by the parties, it nevertheless proceeded to award damages
on the basis of what it described as partial performance of an oral lease.
The only parties to any enforceable oral lease agreement, if any, were 770
Chapel Street, LLC, the only landlord that the evidence presented at trial
suggests was contemplated by the parties, and The Grove as the sole puta-
tive tenant.
12
In Scarfo v. Snow, supra, 168 Conn. App. 496–97, the plaintiff, a member
of a limited liability company, claimed he had standing individually to bring,
inter alia, a claim of breach of fiduciary duty against another member of
the company who allegedly had engaged in self-dealing and breached the
company’s operating agreement. The plaintiff argued that he had suffered
‘‘a direct rather than a derivative injury’’ and therefore had standing to
prosecute the tort claim. Id., 496, 504. This court, however, ‘‘disagree[d]
that th[o]se [we]re direct injuries, and . . . conclude[d] that the plaintiff
did not have standing in his individual capacity . . . .’’ Id., 497. Relevant
to the present action, the court stated that ‘‘[a]lthough the plaintiff con-
tend[ed] that he suffered direct injury by the alleged action or inaction of
[the alleged tortfeasor], any benefit he would have received . . . were it
not for the alleged improprieties of [the alleged tortfeasor], would have
flowed to him only through [the limited liability company] . . . . Accord-
ingly, if there was an injury, that injury was sustained by [the limited liability
company] and then sustained by the plaintiff. Thus, the plaintiff’s injury is
not direct, and he has no standing to sue in his individual capacity.’’ Id., 504.
13
We construe the defendants’ standing claim, as it has been briefed, to
be limited to the contract counts of the complaint. Nevertheless, because
standing implicates subject matter jurisdiction and, thus, cannot be waived;
see Equity One, Inc. v. Shivers, 310 Conn. 119, 126, 74 A.3d 1225 (2013);
we also must consider whether the plaintiff lacked standing in his individual
capacity to assert and prosecute the tort counts of the complaint. We are
persuaded from our review of the pleadings and the record that, with respect
to the tort counts, the plaintiff’s allegations pose a colorable claim of direct
injuries to the plaintiff individually sufficient to withstand a challenge to
his standing to prosecute them.