Ryan v. Cerullo

• Decision Date: 17 April 2007
• Docket Number: No. 17540.,17540.
• Citation: 282 Conn. 109,918 A.2d 867
• Court: Connecticut Supreme Court
• Parties: Thomas RYAN et al. v. John J. CERULLO et al.

918 A.2d 867

282 Conn. 109

Thomas RYAN et al. v. John J. CERULLO et al.

No. 17540.

Supreme Court of Connecticut.

Argued January 11, 2006.

Decided April 17, 2007.

Timothy A. Bishop, Stratford, with whom, on the brief, was Michael S. Casey, Shelton, for the appellant (named plaintiff).

Joseph T. Sweeney, with whom was Brian J. Gedicks, Hartford, for the appellees (defendants).

SULLIVAN, C.J., and NORCOTT, KATZ, PALMER and VERTEFEUILLE, Js.¹

PALMER, J.

The named plaintiff, Thomas Ryan,² brought this action against the defendants, John J. Cerullo, a certified public accountant, and Cerullo and Company CPA, P.C. (Cerullo & Company), the accounting firm with which Cerullo is associated, seeking damages for professional malpractice and breach of contract arising out of the defendants' allegedly improper preparation of the plaintiff's New York state personal income tax returns. The defendants filed a motion to dismiss the action for lack of personal jurisdiction, which the trial court granted. The trial court thereupon rendered judgment for the defendants, from which the plaintiff appealed.³ We affirm the judgment of the trial court.

The record reveals the following relevant facts and procedural history. The plaintiff resides in Westport, Connecticut, and is employed as an investment banker in New York City. Cerullo is a resident of New York who, since 1992, has been associated with the accounting firm of Cerullo & Company, a New York corporation with its principal office in Tarrytown, New York, and a satellite office in New York City. The plaintiff retained the defendants to assist him in the preparation of his 1998 and 1999 federal and state personal income tax returns.⁴

Cerullo prepared the plaintiff's Connecticut and New York personal income tax returns for calendar years 1998 and 1999. After those returns were filed, the department of taxation and finance of the state of New York (tax department) determined that the plaintiff, who had maintained an apartment in New York City during that same two year period, did not qualify as a nonresident for tax liability purposes and, therefore, was subject to additional taxation.⁵ As a result of the tax department's determination, the plaintiff ultimately was required to pay an additional $149,654.70 in taxes, penalties and interest to the state of New York.

The plaintiff thereafter filed the present action, alleging that the defendants had committed professional malpractice by failing to advise him regarding his New York state income tax liability. The plaintiff also alleged breach of contract on the basis of the same essential facts.⁶ The defendants filed a motion to dismiss pursuant to Practice Book § 10-31(a)(2),⁷ claiming that the court lacked personal jurisdiction over them. Specifically, Cerullo claimed that the court lacked jurisdiction over him under the long-arm statute applicable to individuals, namely, General Statutes § 52-59b,⁸ and Cerullo & Company claimed that the court lacked jurisdiction over it under this state's corporate longarm statute, namely, General Statutes § 33-929.⁹

In accordance with Practice Book § 10-31(a), the defendants submitted affidavits from Cerullo and Gaspare J. Cerullo, the principal and sole owner of Cerullo & Company, in support of the motion to dismiss. In those affidavits, the affiants asserted, inter alia, that (1) the plaintiff had retained the defendants to advise him in connection with his federal and state personal income tax liabilities for 1998 and 1999, (2) all meetings between the plaintiff and the defendants took place in New York, (3) the professional services rendered by the defendants on behalf of the plaintiff included numerous written and oral communications with various personnel of the audit and collections divisions of the tax department, (4) the vast majority of the defendants' revenues are derived from persons or entities residing or doing business in New York, (5) the defendants do not solicit business in Connecticut, (6) the defendants have derived only minimal revenue from persons or entities located in Connecticut, and (7) the defendants have not regularly engaged in providing accounting services on an interstate basis.

The plaintiff objected to the motion to dismiss. In support of his objection, the plaintiff claimed that the court had jurisdiction over Cerullo & Company under General Statutes § 33-929(e), which provides that a foreign corporation transacting business in this state without first having obtained a certificate of authority from the secretary of the state in accordance with General Statutes § 33-920¹⁰ "shall be subject to suit in this state upon any cause of action arising out of such business."¹¹ The plaintiff claimed that the court had personal jurisdiction over Cerullo under two separate subdivisions of § 52-59b (a), namely, subdivision (1), which vests the court with jurisdiction over a nonresident individual as to a cause of action arising from any business transacted by that individual in this state, and subdivision (3), which vests the court with jurisdiction over a nonresident individual as to a cause of action arising from, inter alia, the commission of a tortious act outside the state causing injury to a person or property within the state if that individual expects or reasonably should expect the tortious act to have consequences in the state and he or she derives substantial revenue from interstate commerce. See General Statutes § 52-59b (a)(1) and (3)(B).

In accordance with Practice Book § 10-31(b), the plaintiff filed an affidavit in support of his objection to the defendants' motion to dismiss. In his affidavit, the plaintiff alleged, inter alia, that (1) he had retained the defendants to provide accounting services, (2) the defendants negligently had prepared his New York and Connecticut income tax returns, (3) he had suffered damages as a result of the defendants' negligent preparation of his income tax returns, (4) the defendants had derived revenue from their preparation of his Connecticut income tax returns, and (5) the defendants knew that the plaintiff resided in Connecticut and, therefore, should have anticipated that their actions on his behalf would have consequences in Connecticut.

In addition to the affidavits, the trial court held a hearing on the defendants' motion to dismiss. Only Cerullo, however, appeared and testified at that hearing. Although Cerullo's testimony essentially mirrored the allegations contained in his affidavit, he did add that not more than 1 percent of Cerullo & Company's annual income is derived from accounting services "having [some] connection with the state of Connecticut." Cerullo also testified that the vast majority of the plaintiff's income was derived from his employment in New York as an investment banker.

Following the hearing, the trial court concluded that it lacked personal jurisdiction over the defendants under the applicable long-arm statutes. In support of its conclusion, the court stated: "Reviewing the totality of circumstances in this case, it is apparent that the controversy involves preparation of New York state income tax returns by a New York firm for an individual who worked in New York. There is no evidence that the defendants solicited business in Connecticut. [Because] their contacts with this state have been minimal, this court cannot say that the defendants should have anticipated litigation in this forum. . . .

"This court has considered [the] quantity and quality of the contacts involved in this case. There is no evidence that any of the contacts at issue occurred in Connecticut. There is no evidence that the defendants solicited business in Connecticut. There is no evidence that they derived anything but minimal income from Connecticut residents and businesses. The defendants maintain a New York state accounting practice. They met with the . . . plaintiff in New York. All correspondence has been directed to New York state officials.

"This court has also considered the connection between the alleged contacts and the cause of action in this matter, [and] the interests of this forum in the underlying action. The core complaint involved professional malpractice in the preparation of New York state income tax returns. These allegations have no connection to this state. [In addition, the] trial witnesses will be the parties and officials from the . . . tax department." (Citations omitted.) The court thereupon rendered judgment dismissing the plaintiff's action.

On appeal, the plaintiff challenges the determination of the trial court that it does not have personal jurisdiction over both Cerullo & Company and Cerullo under §§ 33-929 and 52-59b, respectively. We reject the plaintiff's claims.¹²

Before addressing the merits of the plaintiff's claim, we note, preliminarily, that "[i]n ruling [on] whether a complaint survives a motion to dismiss, a court must take the facts to be those alleged in the complaint including those facts necessarily implied from the allegations, construing them in a manner most favorable to the pleader. . . . A motion to dismiss tests, inter alia, whether, on the face of the record, the court is without jurisdiction." (Internal quotation marks omitted.) Oliphant v. Commissioner of Correction, 274 Conn. 563, 568, 877 A.2d 761 (2005). Furthermore, "[i]f a challenge to the court's personal jurisdiction is raised by a defendant, either by a foreign corporation or by a nonresident individual, the plaintiff must bear the burden of proving the court's jurisdiction." Knipple v. Viking Communications, Ltd., 236 Conn. 602, 607, 674 A.2d 426 (1996). Finally, a challenge to the jurisdiction of the court presents a question of law over which our review is plenary. See, e.g., Oliphant v. Commissioner of Correction, supra, at 568, 877 A.2d 761.

I

We begin with the plaintiff's contention that the trial court incorrectly concluded that it lacked personal jurisdiction over Cerullo both...