418 Meadow St. Assocs., LLC v. Clean Air Partners, LLC., No. 18699.

• Decision Date: 22 May 2012
• Docket Number: No. 18699.
• Citation: 304 Conn. 820,43 A.3d 607
• Court: Connecticut Supreme Court
• Parties: 418 MEADOW STREET ASSOCIATES, LLC v. CLEAN AIR PARTNERS, LLC.

304 Conn. 820

43 A.3d 607

418 MEADOW STREET ASSOCIATES, LLC

v.CLEAN AIR PARTNERS, LLC.

No. 18699.

Supreme Court of Connecticut.

Argued Jan. 6, 2012.

Decided May 22, 2012.

Andrew M. McPherson, with whom, on the brief, was William J. Kupinse, Jr., for the appellant (plaintiff).

Michael J. Leventhal, Westport, for the appellees (defendants).

ROGERS, C.J., and NORCOTT, PALMER, ZARELLA, McLACHLAN and HARPER, Js.

ZARELLA, J.

This case requires us to define the contours of the term “adverse” in General Statutes § 34–187(b), which excludes the vote of a member of a limited liability company authorizing the company to bring a lawsuit when that member has an interest in the outcome of the lawsuit that is adverse to the company's interest. On appeal, the plaintiff, 418 Meadow Street Associates, LLC, claims that the Appellate Court incorrectly concluded that the trial court properly had determined that the plaintiff lacked standing to bring the present action against the defendant, Clean Air Partners, LLC.¹ The plaintiff argues specifically that the Appellate Court incorrectly concluded that the trial court properly had interpreted § 34–187(b) narrowly and that, under a correct interpretation of the statute, the plaintiff has the requisite authorization and standing to bring the present action. The defendant responds that the Appellate Court properly upheld the trial court's interpretation of the statute and deferred to its findings of fact, which support the determination that the plaintiff lacked standing. The defendant also advances an alternative ground for affirmance of the Appellate Court's judgment, namely, that the plaintiff did not bring the present action in accordance with its operating agreement, and, therefore, the action was not properly authorized. We conclude that the Appellate Court improperly affirmed the trial court's judgment because an “adverse” interest, as that term is used in § 34–187(b),823is not limited to circumstances in which a member has a direct, adverse proprietary interest. Accordingly, we reverse the judgment of the Appellate Court.

The record reveals the following procedural history and relevant facts as found by the trial court. The plaintiff, a Connecticut limited liability company, owns and manages a commercial office building located at 418 Meadow Street in the town of Fairfield. From at least 1998 until 2005, Steven Levine and Barbara Levine, who are spouses, held equal ownership interests in the plaintiff. In 2005, Steven Levine sold his 50 percent interest to Michael Weinshel, with Barbara Levine retaining her 50 percent interest. Thereafter, Weinshel sold a 16.67 percent interest to Mark Wynnick, retaining a 33.33 percent interest. Thus, at the time the present action was commenced, the plaintiff was owned by Barbara Levine, Weinshel and Wynnick, who respectively held 50 percent, 33.33 percent, and 16.67 percent interests in the plaintiff.

The defendant leases and occupies space in the plaintiff's building, and pays monthly rent to the plaintiff for use of the space. Steven Levine has a 20 percent ownership interest in the defendant.²Barbara Levine holds no proprietary interest in the defendant. At some point during the defendant's occupancy of the plaintiff's building, a dispute arose between the plaintiff and the defendant over the scope of the lease and payment of rent.³ This dispute resulted in Weinshel and Wynnick bringing the present action, in the name of the plaintiff, against the defendant to enforce the lease and to collect rent. Barbara Levine expressly disapproved of bringing a lawsuit against the defendant, notified Weinshel and Wynnick of her disapproval, and did not vote to bring the action.

As a special defense to the plaintiff's complaint, the defendant asserted that the plaintiff lacked corporate authority to bring the action and, therefore, lacked standing. The defendant claimed that the plaintiff's operating agreement provides that the plaintiff shall not undertake certain activities, including the bringing of a lawsuit, without the approval of members holding a majority ownership interest in the plaintiff.⁴ Because Barbara Levine did not consent to retaining counsel or to bringing the lawsuit, and because Weinshel and Wynnick collectively hold only a 50 percent interest in the plaintiff, there was no approval by members holding a majority ownership interest. Thus, the defendant argued, the plaintiff lacked standing to maintain the present action.

The plaintiff, in response, claimed that it had standing and was properly authorized to bring the action because Barbara Levine had an interest in the outcome of the action that was adverse to the interest of the plaintiff by virtue of her husband's ownership interest in the defendant. Relying on § 34–187(b),⁵ the plaintiffcontended that Barbara Levine's vote was properly excluded when Weinshel and Wynnick decided to bring an action against the defendant because she had an interest in the outcome of the action that was adverse to the plaintiff's due to her husband's interest in the defendant and due to another pending action in which Weinshel and Wynnick had filed a counterclaim alleging mismanagement by Barbara Levine.⁶ According to the plaintiff, because Weinshel's and Wynnick's interests comprised the majority ownership interests under these circumstances, the lawsuit against the defendant was properly authorized.

After holding a hearing on the plaintiff's complaint and receiving posttrial briefs on the defendant's special defense that the plaintiff lacked standing, the trial court issued a memorandum of decision. The trial court interpreted the meaning of “an interest ... adverse to the interest of the limited liability company”; General Statutes § 34–187(b); and concluded that a member must have a proprietary, or ownership, interest in the defendant in order for his or her vote to be excluded under § 34–187(b). Finding that “Barbara Levine [was] not a party to the action and [that] she [did] not have a proprietary interest in [the defendant]”; (emphasis added); the trial court concluded that “[s]he [could not] be assigned an interest in the case simply because she is the wife of a co-owner of the defendant.” The court determined that “the plaintiff lack[ed] standing because Barbara Levine's interest [was] insufficient to disqualify her as a voting member” and rendered judgment for the defendant.⁷

The plaintiff appealed to the Appellate Court from the trial court's judgment, arguing that the trial court improperly found that the plaintiff lacked standing to maintain this action. The Appellate Court noted that, “[a]lthough the determination that a plaintiff lacks standing is a conclusion of law that is subject to plenary review, [the court] conduct[s] that plenary review ... in light of the trial court's findings of fact, which ... will not [be] overturn [ed] unless they are clearly erroneous.... A finding is clearly erroneous when either there is no evidence in the record to support it, or the reviewing court is left with the definite and firm conviction that a mistake has been made.” (Citation omitted; internal quotation marks omitted.) 418 Meadow Street Associates, LLC v. Clean Air Partners, LLC, 123 Conn.App. 416, 421, 1 A.3d 1194 (2010).

The Appellate Court, applying the foregoing standard of review, concluded that “the record support[ed] the [trial] court's finding that Barbara Levine had no individual proprietary interest in the outcome of the action adverse to the plaintiff's interest and that her husband's ownership interest was not significant enough to assign her with an interest adverse to the outcome of the action based on their personal relationship alone.” (Emphasis added.) Id., at 422, 1 A.3d 1194. The Appellate Court concluded further that, “[a]t the time the vote was taken to pursue litigation, Barbara Levine was not facing claims against her by Weinshel and Wynnick, and, therefore, the [trial] court could have found that those claims, which were nonexistent at the time the present case was filed, did not create an adverse interest to the outcome of the action. Accordingly, the [trial] court's decision was not erroneous in light of the record.” ⁸Id., at 423, 1 A.3d 1194.

Thereafter, this court granted the plaintiff's petition for certification to appeal, limited to the following issue: “Did the Appellate Court properly conclude that the plaintiff lacked standing to bring this action, since one of its member's votes should not have been excluded pursuant to ... § 34–187(b) on the ground that she had ‘an interest in the outcome of the suit that is adverse to the interest of the [plaintiff]?’ ” 418 Meadow Street Associates, LLC v. Clean Air Partners, LLC, 298 Conn. 932, 5 A.3d 490 (2010). Additional facts will be set forth as necessary.

I

The issue in this appeal is whether the Appellate Court properly concluded that the plaintiff lacked standing on the basis of its interpretation of § 34–187(b).⁹ We conclude that the Appellate Court improperly interpreted the statute, and, therefore, we reverse the judgment of the Appellate Court.

The plaintiff's appeal requires us to interpret § 34–187(b), specifically, the meaning of the phrase, “an interest in the outcome of the suit that is adverse to the interest of the limited liability company....” In other words, we must determine when a member's interest is sufficiently adverse to the limited liability company's interest such that the member's vote is excluded pursuant to § 34–187(b).¹⁰

We begin with the applicable standards of review. First, issues of statutory construction are questions of law over which we exercise plenary review. E.g., Stewart v. Watertown, 303 Conn. 699, 710, 38 A.3d 72 (2012). “The principles that govern statutory construction are well established. When construing a statute, [o]ur fundamental objective is to ascertain and give effect to the apparent intent of the legislature.... In other words, we seek to...