Angelo Tomasso, Inc. v. Armor Const. & Paving, Inc.

Decision Date13 July 1982
Citation447 A.2d 406,187 Conn. 544
CourtConnecticut Supreme Court

Edward G. Pizzella, Newington, with whom, on the brief, was Sidney L. Rosenblatt, Newington, for appellants (third party plaintiffs).

R. Bradley Wolfe, Hartford, for appellee (third party defendant).


ARTHUR H. HEALEY, Associate Justice.

These two companion cases were referred to the state referee for hearing and judgment by the Superior Court. In April, 1974, the defendant, Armor Construction & Paving, Inc. (Armor), applied for and was granted by the plaintiffs, Angelo Tomasso, Inc. (Tomasso) and Ashland Oil Company, Inc. (Ashland), a line of credit for the purchase of materials to be used in its business as a paving contractor. The plaintiffs required the defendants Mario Leo and John Wentworth, the president and secretary-treasurer of Armor, respectively, to guarantee personally payment of the accounts plus all costs of collection, including reasonable attorney's fees and interest on any delinquent balance.

In 1975, Armor ordered and received amounts of bituminous concrete and crushed stone from Tomasso and Ashland at prices of $7490.78 and $5054.23, respectively. Armor experienced financial difficulties and ceased operations in February 1976 without making any payments on these accounts. The plaintiffs instituted suit against Armor and the individual defendants, Leo and Wentworth, as guarantors. The Superior Court entered summary judgment in favor of the plaintiffs as to liability only and a hearing was subsequently held on the issue of damages. As a result of this hearing, Leo and Wentworth were held liable for the principal sum of these accounts plus interest, attorney's fees, and costs.

While these cases were pending, the defendants Wentworth and Leo, as third party plaintiffs, with the permission of the court, in each case impleaded a third party defendant, Pierre C. Lemieux, alleging that Armor was in reality a sole proprietorship owned, controlled and operated by the third party defendant, Lemieux, and was the alter ego of said third party defendant and that he "is or may be liable to the third party Plaintiffs" for the amount of the claims alleged in the principal action in each case. To this third party complaint, the third party defendant pleaded by way of a denial, special defense and a counterclaim.

Pursuant to Practice Book § 302, the third party defendant moved for a judgment of dismissal of the third party complaint for failure to make out a prima facie case. The referee granted the motion and stated: "[i]t is found and concluded, in each case, that the cause of action alleged by the third party plaintifs [sic], Wentworth and Leo, against the third party defendant, Lemieux was not prima facie established and the evidence did not justify a judgment in their favor either on legal or equitable grounds in each case." From this judgment, the third party plaintiffs have appealed.

The third party plaintiffs claim error in the trial referee's dismissal of their complaint because they allege that there was sufficient evidence presented at the hearing to establish that the third party defendant, Lemieux, owned and operated Armor and that when they guaranteed payment of the plaintiffs' accounts, they were actually acting as mere agents of their principal, Lemieux. The third party plaintiffs claim that the court should have disregarded the corporate entity and imposed liability on Lemieux to the extent of the third party plaintiffs' liability to the plaintiffs on the guarantee.

"A motion for judgment of dismissal has replaced the former motion for nonsuit for failure to make out a prima facie case. Compare Practice Book § 302 with Practice Book, 1963, § 278; see Lukas v. New Haven, --- Conn. ---, ---, 439 A.2d 949 (42 Conn.L.J., No. 46, pp. 25, 27 n.3) (1981). When such a motion has been granted, the question is whether sufficient facts were proved to make out a prima facie case. Pignatario v. Meyers, 100 Conn. 234, 239-40, 123 A. 263 (1924). To state it another way, a judgment of dismissal is proper 'when the evidence produced by the plaintiff, if fully believed, would not permit the trier in reason to find the essential issues on the complaint in favor of the plaintiff.' Minicozzi v. Atlantic Refining Co., 143 Conn. 226, 230, 120 A.2d 924 (1956). The evidence offered by the plaintiff is to be taken as true and interpreted in the light most favorable to him, and every reasonable inference is to be drawn in his favor. Ace-High Dresses, Inc. v. J. C. Trucking Co., 122 Conn. 578, 579, 191 A. 536 (1937). A party has the same right to submit a weak case as he has to submit a strong one. Fritz v. Gaudet, 101 Conn. 52, 53, 124 A. 841 (1924). See Lukas v. New Haven, supra, --- Conn. at ---, ---, 439 A.2d 949; Crowell v. Palmer, 134 Conn. 502, 505, 58 A.2d 729 (1948); Maltbie, Conn.App.Proc. §§ 215 and 217; Stephenson, Conn.Civ.Proc. (2d Ed.) § 192f." Hinchliffe v. American Motors Corporation, --- Conn. ---, ---, 440 A.2d 810 (43 Conn.L.J., No. 3, pp. 14, 15) (1981).

Viewed in the light most favorable to their case, the third party plaintiffs could be found to have established the following facts at the hearing: Prior to April 1974, one Rick Soucy and the third party plaintiffs, Mario Leo and John Wentworth, were employed by Gem Paving Company. 1 Lemieux was the president and owner of Gem Paving Company, a union contracting company, and controlled or was the principal of CFL, Inc., a construction equipment leasing company. In September 1973, Lemieux told Leo, Wentworth and Soucy that he wanted to form another paving company (Armor) which would be non-union. Lemieux explained what the structure of the new company would be, who the officers, directors and stockholders would be and how Leo and Wentworth would be officers (president and secretary-treasurer, respectively) in name only because they would still be working for him. Apparently, Leo and Wentworth agreed to this arrangement because they feared losing their jobs if they did not consent. 2 However, Leo and Wentworth indicated to their office secretary that they felt that Lemieux had no right to exercise authority over Armor's affairs in the manner that he did.

In September 1973, Lemieux contacted his attorney and instructed him to form the new corporation, Armor. About two months later, Lemieux took Leo, Wentworth and Soucy to his attorney's office where only those three signed the necessary corporate documents. The minutes of the organization meeting and first meeting of directors and the by-laws had been fully prepared prior to this meeting. Leo and Wentworth did not consult with and were not represented by legal counsel, nor had they had any prior contact with Lemieux's attorney as to the contents of the corporate documents. No election of directors or officers was ever held. The corporate documents indicated, however, that Leo, Wentworth and Soucy were directors and officers.

No officers' or shareholders' meetings were held subsequent to this initial meeting and the remaining corporate documents were mailed to Lemieux at the office of Gem Paving. Lemieux then took these documents to Armor's office to obtain Leo's and Wentworth's signatures.

The corporation started out with initial capital of $15,000. Leo, Wentworth and Soucy were each loaned $5000 by Lemieux which they then used to purchase stock. Leo, Wentworth and Soucy were each issued 500 shares of common stock having a par value of $10 per share. Each was required to execute a personal promissory note in the principal sum of $5000 payable to Lemieux. These notes were never paid, nor did Lemieux ever demand payment until March, 1980, four years after Armor ceased operating. 3 Lemieux did not own any stock in Armor, nor was he listed as an officer or director of the corporation.

On February 1, 1974, Leo, Wentworth, Soucy and Lemieux entered into a written agreement wherein Lemieux was to receive twenty-five percent of Armor's annual net profit before taxes until he should receive $300,000 and thereafter such net profits were to be allocated at the rate of fifty-five percent to Lemieux and fifteen percent to each of the others. Under this agreement Lemieux also had the option to purchase that number of shares necessary to give him fifty-five percent of Armor's stock. 4

Lemieux helped to arrange for the necessary bonding through the same bonding agent employed by Gem Paving. It does not appear that Armor could have bid on bonded jobs without the financial backing of Lemieux and all bids had to be approved by him. Armor was not in a financial position either to buy or rent the equipment necessary for the type of construction work contemplated without the assistance of Lemieux acting through CFL, Inc., his equipment leasing company. Lemieux insisted that all of the construction equipment used by Armor be leased from CFL, Inc. and he personally scheduled such equipment.

Between April 1974 and October 1975, Lemieux, who was no longer receiving a salary from Gem Paving Company, or a corporation in which he was a principal, began receiving $700 per week from Armor. In October 1975, when Armor experienced financial difficulties, these payments were reduced to $350 per week. Some of the payments were made by check payable to Lemieux and were labelled "consultant's fees" while other checks were made payable to CFL, Inc. and were labelled "equipment rental." Lemieux visited Armor's office at least once or twice a week. He had access to Armor's checkbook and all of its financial records and required its officers to report to him periodically. Leo, as president, however, signed all the corporate checks, contracts with customers and bid estimates on jobs. 5

In October, 1975, when...

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