DocketNumber: No. CV96 0151172 S
Citation Numbers: 1996 Conn. Super. Ct. 6954
Judges: RYAN, J.
Filed Date: 12/18/1996
Status: Non-Precedential
Modified Date: 4/18/2021
In count six of the revised complaint, the plaintiff alleges that he was employed by DTI on a part-time basis from July, 1992, to November, 1993, and that DTI breached an oral employment contract because it "failed, neglected and refused to pay plaintiff the reasonable value of plaintiff's services." The plaintiff also alleges that Sorbo at all times acted on behalf of DTI, including orally promising to pay the plaintiff for his services. Moreover, the plaintiff claims that "Sorbo completely dominated DTI's finances, policies and business practices in CT Page 6955 respect to the employment of plaintiff in that Sorbo alone gave plaintiff a business card which read: `Achille Presti, Director of Engineering'; Sorbo alone determined the projects on which plaintiff worked; Sorbo alone promised payment for his services to plaintiff; there was no other officer of DTI involved in the business other than Sorbo; Sorbo alone decided to make a couple of payments to plaintiff totalling $3,400; Sorbo alone decided to use funds in the name of DTI to lease or purchase an automobile rather than pay compensation to plaintiff . . ." In addition, the plaintiff alleges that Sorbo performed these acts to perpetrate the wrong of failing to pay the plaintiff his wages, and that these "wrongful acts" caused the plaintiff, among other injuries, to lose the opportunity to find other employment, to forego collecting unemployment compensation and to deplete his savings.
Count eight is for a similar breach of an oral employment contract for the period from November, 1993, to July, 1994, during which the plaintiff was employed at DTI full time as "Director of Engineering." The plaintiff repeats all the allegations of count six, adding only that "Sorbo alone insisted that the defendants needed plaintiff to work full time." In both counts six and eight, the plaintiff alleges that Sorbo was president and sole shareholder of DTI, that DTI is now dissolved for failing to file with the secretary of state two successive annual reports and that Sorbo was the "alter ego of DTI in that Sorbo completely dominated the corporation in its decision-making including decisions concerning all funds that were expended, all engineering projects undertaken, all employees hired, all compensation established for employees, all customers with whom the corporation would deal and what expenses would be paid for himself and his family."
In their corrected memorandum of law, the defendants argue that Sorbo cannot be personally liable for a contract he made for DTI while acting in his capacity as officer of that corporation. Further, the defendants argue that the facts that the plaintiff has alleged are insufficient to pierce the corporate veil. As such, the defendants argue that the plaintiff has no legally sufficient theory under which to hold Sorbo personally liable. The plaintiff, in his memorandum in opposition, argues that he has alleged facts sufficient to support a theory of piercing the corporate veil and to withstand a motion to strike, and that the facts in the present case resemble those of Saphir v. Neustadt,
"The purpose of a motion to strike is to contest . . . the legal sufficiency of the allegations of any complaint. . . ." (Internal quotation marks omitted.) Gordon v. Bridgeport HousingAuthority,
"[A] fundamental attribute of the corporate form is that it shields the shareholders, directors and officers from personal liability . . . ." Campisano v. Nardi,
"Under the instrumentality rule, a shareholder, director, or officer of a corporate entity can be held personally liable for corporate actions that, in economic reality, are those of the individual . . . . We have consistently held that the instrumentality rule requires proof of three elements: (1) [c]ontrol, not mere majority or complete stock control, but complete domination, not only of finances but of policy and business practice in respect to the transaction attacked so that the corporate entity as to this transaction had at the time no separate mind, will or existence of its own; (2) that such control must have been used by the defendant to commit fraud or wrong, to perpetrate the violation of a statutory or other positive legal duty, or a dishonest or unjust act in contravention of the plaintiff's rights; and (3) that the aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of." (Citations omitted. CT Page 6957 Internal quotation marks omitted.) Season-All Industries, Inc. v.R. J. Grosso, Inc.,
The defendants challenge the plaintiff's compliance with the first and second prongs of the instrumentality test by contending that "it hasn't been adequately alleged that DTI lacked a separate mind, will and existence apart from Sorbo" or that "Sorbo committed a fraud or wrong in his position as [p]resident of DTI." In order to determine whether the plaintiff has pleaded sufficiently to hold Sorbo liable as DTI's alter-ego, each requirement of the test will be addressed separately.
First, the plaintiff must have alleged that Sorbo completely dominated the finances, policy and practices of DTI with respect to the transaction attacked. The plaintiff's allegations must be factual, as opposed to conclusory, Novametrix Medical Systems,Inc. v. BOC Group, Inc., supra,
Secondly, the plaintiff must allege that the control exercised by Sorbo was used to commit a fraud or wrong, which may CT Page 6958 include the perpetration of a statutory violation or "a dishonest or unjust act in contravention of the plaintiff's rights."Season-All Industries, Inc. v. R. J. Grosso, Inc., supra,
Finally, the plaintiff must show that Sorbo's dominance and breach of duty proximately caused the plaintiff's injuries. The plaintiff alleges that Sorbo's promise to pay and wrongful withholding of his wages has caused him to forego unemployment insurance and the opportunity to work elsewhere, to deplete his savings, and to lose the interest from those savings. There are sufficient allegations to meet the third prong of the test for piercing the corporate veil.
"[O]n a motion to strike the plaintiff's allegations must be taken in his favor, not to his detriment." Schmidt v. YardneyElectric Corp.,
RYAN, J.