Preview
NNH-CV23-6136054-S ) SUPERIOR COURT
)
EITAN RUBIN; REUVEN GIDANIAN; ) J.D. OF NEW HAVEN
E.R. HOLDINGS, LLC (dissolved and winding up); )
L.E. VENTURES, LLC (dissolved and winding up);) AT NEW HAVEN
WHALLEY GROUP, LLC )
(dissolved and winding up) )
Plaintiffs )
)
v. )
)
BARNETT BRODIE; COREVEST AMERICAN )
FINANCE LENDER, LLC F/K/A COLONY )
AMERICAN FINANCE LENDER, LLC; )
LAWRENCE LEVINSON; RBC DE, LLC; )
RBC DE2, LLC; REICHMAN BRODIE REAL )
ESTATE, LLC; RILEY GROUP DE, LLC; )
RILEY GROUP DE2, LLC; )
SPERRY GROUP DE, LLC; SPERRY GROUP )
DE2, LLC; TZ DE, LLC; TZ DE2, LLC; )
5 ARCH FUNDING CORP. )
Defendants ) April 17, 2024
PLAINTIFFS’ MEMORANDUM OF LAW IN SUPPORT OF
OBJECTION TO DEFENDANT COREVEST’S MOTION TO DISMISS
The plaintiffs submit this Memorandum of Law in support of their Objection to the
defendant CoreVest’s Motion to Dismiss and accompanying Memorandum of Law filed on March
20, 2024 (Docket Entry Nos. 115.00 and 116.00). CoreVest’s Memorandum of Law in Support of
its Motion to Dismiss (No. 116.00) incorporates by reference the arguments contained in the
motions to dismiss and supporting memoranda of law previously filed by its co-defendants and by
its co-counsel (Docket Entry Nos. 101.00, 102.00, 103.00. 104.00, 105.00 and 106.00); see Docket
Entry No. 116.00 at page 2. It also adds some further argument on the prior pending action doctrine
and on the issue of standing (No. 116.00 at pp.4-8)
RIDGELY WHITMORE BROWN, Lawyer
15 Fifth Street · Stamford, Connecticut · 06905 · Juris No. 401656
(203) 918-1563 · fax (203) 595-5582 · email: RidgeBrown@Ridgelylaw.com
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1. The court must deny the motions to dismiss to the extent that they are based on the “prior
pending action doctrine” because the case claimed to be prior has gone to judgment and is
therefore not “pending” within the meaning of the doctrine. Even if it were, CoreVest has
failed to demonstrate that the two cases are sufficiently similar to warrant application of
the doctrine. Finally, even if the doctrine were to apply, CoreVest has failed to show that
the doctrine requires dismissal rather than consolidation or other action within the
discretion of the court.
a. The prior pending action doctrine is inapplicable because, inter alia, the
action claimed to be a prior pending action has gone to judgment and is no
longer “pending” within the meaning of the doctrine even if it is now before
the Appellate Court on appeal.
CoreVest argues that this action should be dismissed pursuant to the “prior pending action”
doctrine because of a prior case that is currently on appeal before the Appellate Court (Docket
Entry No. 116.00 at pp. 4-7). That claim is contrary to controlling precedent both as to the
threshold issue of the doctrine’s applicability and as to how it should be considered if it were
applied. A pending appeal is not a “prior pending action” within the meaning of the doctrine;
Chomko v. Patmon, 20 Conn. App. 159, 161 (1989). This well-established rule that the prior
pending action rule does not apply if the first action is on appeal implicitly recognizes that judicial
economy is not served by dismissing a second action when the claimed “prior” action has already
been litigated at the trial level. Because the action that the defendants in this case claim as a “prior
pending action” is now on appeal, per Chomko, the prior pending action doctrine does not apply at
all, and the court must reject the defendants’ argument in their Motions to Dismiss to the extent
that they rely on that doctrine; see also Salem Park, Inc, v. Town of Salem, 149 Conn. 141, 144
RIDGELY WHITMORE BROWN, Lawyer
15 Fifth Street · Stamford, Connecticut · 06905 · Juris No. 401656
(203) 918-1563 · fax (203) 595-5582 · email: RidgeBrown@Ridgelylaw.com
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(1961). There is an important practical aspect to this rule. If the case claimed to be “prior” is on
appeal, then the court cannot order the relief that it could if both cases were pending, such as
consolidation of the cases, or dismissal of the prior case if it decides that judicial economy will be
better served than by dismissal of the latter case; see, e.g. Bayer v. Showmotion, Inc., 292 Conn.
381, 396 (2009).
The defendant CoreVest has argued in its brief that Salem Park and Chomko do not hold
that the prior pending action is inapplicable if a case has gone to judgment and is on appeal.
CoreVest’s argument mischaracterizes the holdings in both those decisions. CoreVest argues that
Salem Park simply held that the proper way to attack a case that has previously gone to judgment
and is on appeal is by raising a special defense of res judicata. That is what the Salem Park court
advised, but only after it held, as a matter of law, that the prior pending action doctrine did not
apply to a prior case that had gone to judgment, even if it was on appeal. “Therefore, when the plea
in abatement was filed here, Cooper was not a ‘pending’ action in the proper use of that term.
Cooper had gone to judgment, and the appropriate way to have raised that judgment as a defense
was by an answer to the effect that the issues in Salem Park were res judicata.” Salem Park, Inc.
149 Conn. at 144.
CoreVest also argues that Chomko does not hold that the prior pending action is
inapplicable to a case that has gone to judgment and is on appeal because the defendant in that case
agreed that it would not. That is not true. The defendant in that case did concede that the prior
pending action doctrine did not apply. However, in noting that concession, the Chomko court
stated, in no uncertain terms, that it was required to do so because that was what the law required.
“[A]s the defendants concede, the plaintiff is correct in his assertion that a pending appeal is not a
RIDGELY WHITMORE BROWN, Lawyer
15 Fifth Street · Stamford, Connecticut · 06905 · Juris No. 401656
(203) 918-1563 · fax (203) 595-5582 · email: RidgeBrown@Ridgelylaw.com
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prior pending action within the meaning of the prior pending action doctrine…; Chomko 20 Conn.
App. at 161.
CoreVest’s reliance on Beaudoin v. Town Oil Co., 207 Conn. 575 (1988) is also misplaced
because the “prior” case in Beaudoin was still pending at the trial court. The plaintiff in the second
case in Beaudoin had not filed an appeal in the first case but had filed only a notice of intent to
appeal the striking of its third-party complaint in the prior action. “The plaintiff had the
opportunity, of which she availed herself, to protect her rights by a timely filing of her notice of
intent to appeal the striking by the trial court of her earlier motion to implead Town Oil in the
original action instituted by the Shubbucks.”; Beaudoin 207 Conn. at 589-590. The primary action
in the first case remained pending when the second case was decided by the Supreme Court.
Beaudoin held that the prior pending action doctrine should apply to dismiss the second case for
three reasons: 1) the impleader statute was enacted to avoid a multiplicity of actions; 2) the issue of
indemnification in the second case would be rendered moot if a verdict was entered for the
defendant/third party plaintiff in the primary action in the first case; and 3) the policy against
piecemeal appeals would be undermined if a second case were permitted that asserted the same
issue adjudicated by an interlocutory order in the first case; Beaudoin 207 Conn. at 588-590.
Those three reasons were consistent with the prior pending action doctrine’s general policy of
avoiding a waste of judicial resources in a second action when full adjudication of all the issues in
a prior case pending in the trial court could render the issues in the second case moot. Beaudoin
does not, therefore, implicitly overrule the general rule set forth in Salem Park and affirmed in
Chomko that, once a prior case has gone to judgment, it is no longer “pending” for the purposes of
the doctrine. At most, it simply holds that if a complaint seeking to implead a third party is struck
in a prior case, that case is still “pending” for the purposes of the prior pending action doctrine if
RIDGELY WHITMORE BROWN, Lawyer
15 Fifth Street · Stamford, Connecticut · 06905 · Juris No. 401656
(203) 918-1563 · fax (203) 595-5582 · email: RidgeBrown@Ridgelylaw.com
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the primary action in that first case has not gone to judgment by the time a second case is
commenced. Unlike Beaudoin, the case that the defendants in this case claim is “prior pending”, is
on appeal and there are no proceedings in that case currently before the trial court. Because
Beaudoin does not abrogate the general rule of Salem Park and because there are no pending
proceedings before the trial court in the first case, the court should reject defendants’ reliance on
that decision.
b. The two actions are insufficiently similar to warrant application of the
doctrine.
Even if the prior pending action did apply, this case is not “virtually similar” to the prior
action. The current action contains 44 new counts that were not plead in the first action; see
Counts 1, 4, 7, 10, 13, 16, 21-24, 27-30, 33-36, 39-42, 47-50, 53-56, and 87-100. These counts
allege new causes of action such as statutory theft, negligent misrepresentation, unjust enrichment,
fraudulent transfers, and breaches of statutory obligations under the applicable statutes governing
limited liability companies. They all require the pleading and proof of new and different elements
than the causes of action plead in the first action. They seek new and different remedies. Many of
them seek compensation or statutory remedies for fraudulent transfers of specific properties, each
of which require proof of different facts. They all seek adjudication of new “rights” that were not
plead in the first action. Therefore, dismissal of this suit will not promote judicial economy
because those causes of action were not raised in the first case. Dismissing this action will not save
the court from adjudicating two “virtually similar” cases. It will simply impede the ability of the
plaintiffs to have their common law and statutory rights adequately adjudicated. Moreover, parties
have a right to plead in the alternative.
RIDGELY WHITMORE BROWN, Lawyer
15 Fifth Street · Stamford, Connecticut · 06905 · Juris No. 401656
(203) 918-1563 · fax (203) 595-5582 · email: RidgeBrown@Ridgelylaw.com
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c. Even if the court decided that the cases are “virtually similar” then it
should exercise its discretion to permit this case to proceed.
Even if the cases are “virtually similar” the court still has the discretion to permit this suit
to proceed; see Rousseau v. Weinstein, 204 Conn. App. 833, 845-846, 254 (2021); Gaudio v.
Gaudio, 23 Conn. App. 287, 297 (1990) (concluding on basis of equitable principles that count
of subsequent action improperly dismissed despite fact that allegations in that count may be
virtually identical to allegations in prior pending action), cert. denied, 217 Conn. 803 (1990); and
BCBS Goshen Realty, Inc. v. Planning & Zoning Commission, 22 Conn. App. 407, 409
(1990) (flexibility of prior pending action doctrine permits dismissal of prior action, rather than
dismissal of subsequent action).
If the court does not dismiss this action and the Appellate Court affirms the dismissal in
the first case then only this case will be on the docket, there will be no duplication of adjudication
and the plaintiffs will avoid any possible prejudice that may result from having both cases
dismissed. If, however, the court does dismiss this action and the Appellate Court affirms the
dismissal of the first case then the plaintiffs may be prejudiced by having both cases dismissed.
If the court does not dismiss this action and the Appellate Court reverses the dismissal of the first
action, then the court can consolidate both actions, a remedy that has been found to be
appropriate in many cases where the prior pending action doctrine is asserted; see, e.g. Mola v.
Home Depot U.S.A., Inc., 2000 WL 486864, Superior Court, Judicial District of Stamford–
Norwalk, Docket No. CV 98 0167635, April 7, 2000, Karazin, J.) (27 Conn. L. Rptr. 60).
If the dismissal in the first case is reversed on appeal, consolidation of the two cases
would conserve judicial resources, avoid inconsistent results, and do complete justice between the
RIDGELY WHITMORE BROWN, Lawyer
15 Fifth Street · Stamford, Connecticut · 06905 · Juris No. 401656
(203) 918-1563 · fax (203) 595-5582 · email: RidgeBrown@Ridgelylaw.com
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parties. The court should allow this case to proceed so that it can be adjudicated if the dismissal
of the prior case is affirmed on appeal, or consolidated with that case if its dismissal is reversed.
II. The actions were properly authorized on behalf of the three plaintiff LLCs by written
approval and/or consent of members having the requisite percentage interest to do so.
1. The suit was properly authorized on behalf of ER Holdings, LLC and L.E. Ventures,
LLC by written approval of members having at least a 70% interest of each of those
LLCs as provided by their respective Operating Agreements.
The Operating Agreements of E.R. Holdings and L.E. Ventures both clearly state that the
members having at least 70% in interest have the sole power to authorize suit on behalf of each of
those LLCs (see Docket Entry No. 102.00, Operating Agreement of ER Holdings and Operating
Agreement of L.E. Ventures attached to brief of defendants Brodie et. al.) Section 2.3(C) in E.R.
Holdings, LLC has the identical clause as Section 2.3(C) in L.E. Ventures, LLC. They each state:
2.3 Rights and powers of the Manager shall include the right and power to
manage all day to day activities of the Company, but shall not include any of
the following, which may only be done with the written approval (which
may include an email) of the aggregate members holding Seventy percent
(70%) of the equity interest in the Company (as shown on Exhibit A):
…
(C) …compromise, arbitrate or otherwise adjust claims in favor of or against
the Company and to commence or defend against litigation with respect to
the Company or any assets of the Company as deemed advisable, all or any
of the above matters being at the expense of the Company; and to execute,
acknowledge and deliver any and all instruments to effect any and all of the
foregoing.
The complaint alleges in the counts pleading causes of action for ER Holdings and LE
Ventures that each was authorized by the requisite vote of their members; for E.R. Holdings, see
RIDGELY WHITMORE BROWN, Lawyer
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(203) 918-1563 · fax (203) 595-5582 · email: RidgeBrown@Ridgelylaw.com
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Complaint, Counts 45, 47, 49, 51, 53, 55, 57, 69, 71, 73, 75, 83, 85, 91, 99, 101, and 103; for LE
Ventures, see Complaint, Counts 31, 33, 35, 37, 39, 41, 43, 77, 79, 83, 85, and 89.
In this case Corevest has not presented any evidence controverting ER Holdings’ and LE
Ventures’ allegations of proper authorization by members having the requisite interest in those
LLCs. Its failure to present any such evidence requires that the court deny its motion to dismiss
with respect to ER Holdings and LE Ventures to the extent that it is based on lack of standing.
The Operating Agreement for ER Holdings shows that Eitan Rubin and Reuven Gidanian
have 100% interest in the principal and 70% interest in the profit of ER Holdings. The plaintiffs
have submitted together with this objection the affidavits of Eitan Rubin and Reuven Gidanian
attesting to the fact that they signed authorizations for this suit by ER Holdings together with true
copies of the authorizations attached (Exhibits 1F, 1G and 1H, and 3B and 3C). The plaintiffs have
submitted uncontroverted documentary evidence establishing that this suit was properly
authorized by ER Holdings, by 70% vote of its members. Therefore, the court must deny
CoreVest’s Motion to Dismiss to the extent that it is based on lack of standing by ER Holdings;
see Willow Funding Co., L.P. v. Grencom Associates, 246 Conn. 615, 623, 717 A.2d 1211 (1998).
The Operating Agreement for L.E. Ventures, LLC shows that Eitan Rubin has a 70 %
interest in that LLC (Exhibit I) (see Operating Agreement of L.E. Ventures attached as Exhibit 1I
to affidavit of Eitan Rubin). The plaintiffs have also submitted the affidavit and signed resolutions
of Eitan Rubin authorizing this suit on behalf of L.E. Ventures (Exhibits 1J and 1K). The
uncontroverted evidence shows that this suit on behalf of L.E. Ventures has also been properly
authorized and therefore, the trial court must deny CoreVest’s Motion to Dismiss to the extent that
RIDGELY WHITMORE BROWN, Lawyer
15 Fifth Street · Stamford, Connecticut · 06905 · Juris No. 401656
(203) 918-1563 · fax (203) 595-5582 · email: RidgeBrown@Ridgelylaw.com
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it is based on lack of standing by L.E. Ventures; Willow Funding Co., L.P. v. Grencom Associates,
246 Conn. at 623.
2. The suit was properly authorized on behalf of The Whalley Group, LLC by the
consent of members having at least two-thirds in interest of The Whalley Group as
required by C.G.S.§ 34-255f(c)(3)(A) the applicable provision of the Connecticut
Uniform Limited Liability Act (CULLCA) Connecticut General Statutes (C.G.S.)
§§34-243 to 34-299.
The defendants claim that authorization of this suit on behalf of the plaintiff The Whalley
Group, LLC can only be made by the defendant Barnett Brodie pursuant to Paragraph 4.2(l) of the
Whalley Group Operating Agreement authorizing Brodie as manager to commence legal actions
on behalf of the LLC (See Docket Entry No. 102.00, at pp. 14-16). The relevant language states
that “the Manager shall have the power and authority on behalf of the Company, to:….(l) bring or
defend, pay, collect, compromise, arbitrate, resort to legal action, or otherwise adjust claims or
demands of or against the Company…” (Docket No. 102.00, Exhibit A, at pp. 6-7). The
defendants’ claims are incorrect because their construction of the clause to give sole authority to
the defendant Brodie to commence this suit on behalf of The Whalley Group against himself and
entities controlled by him based on his egregious malfeasance would be contrary to the reasonable
expectations of the parties, would violate the implied covenant of good faith and fair dealing and
would be contrary to the public policy of the state. Accordingly, the authority to commence this
suit is governed by C.G.S.§ 34-255f(c)(3)(A) which states that acts outside the ordinary course of
business must be authorized by “affirmative vote or consent of two thirds in interest of the
members”. The resolutions and affidavits attached hereto establish that such affirmative vote and
consent has been made, see Exhibits 1E, 1H, 1K and 3C.
RIDGELY WHITMORE BROWN, Lawyer
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(203) 918-1563 · fax (203) 595-5582 · email: RidgeBrown@Ridgelylaw.com
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The rights of the parties are governed by the Connecticut version of the Uniform Limited
Liability Act, the Connecticut Uniform Limited Liability Company Act (CULLCA), which
became effective July 1, 2017 (P.A. 16-97) and is found at Connecticut General Statutes (C.G.S.)
§§34-243 to 34-299. CULLCA expressly provides that it is to be applied retroactively to govern
limited liability companies formed under the previous statute, the Connecticut Limited Liability
Company Act (CLLCA) (previously found at C.G.S.§§34-100 to 34-242), enacted in 1993
(P.A.93-267, S1-6). C.G.S. § 34-243i., captioned “Effective date. Application to existing
relationships” states “(a) Except as provided in subsection (b) of this section, on and after July 1,
2017, sections 34-243 to 34-283d, inclusive, govern all limited liability companies.” Pursuant to
C.G.S. §34-243a(12), a “[l]imited liability company” subject to CULLCA “…means an entity
formed under sections 34-243 to 34-283d, inclusive, or which becomes subject to said sections
under …section 34-243i…”. Therefore, although the Operating Agreements of the three plaintiff
LLCs were entered into prior to CULLCA, the LLCs are, nevertheless, governed by CULLCA
(see Docket No. 103.00, Exhibits A, B, and C filed with the complaint); see. e.g. Fischer v.
People's United Bank, N.A., 216 Conn. App. 426, 433 fn.4 (2022), cert. denied 346 Conn. 904
(2023), (upholding trial court’s determination that authority to commence suit on behalf of
Connecticut limited liability company was governed by C.G.S. §34-255(f) of CULLCA even
though the company was formed and its operating agreement executed under the prior CLLCA).
Because CULLCA applies, the requirements and authority of C.G.S. §34-255f govern the
authority to commence suit unless the Operating Agreement contains a provision that controls the
issue. Although C.G.S. §34-243d(a) provides that the operating agreement governs the affairs of
the company, CGS §34-243d(b) states that where the operating agreement does not cover a
specific matter, the provisions of C.G.S. §§34-243 to 34-283d govern; “(b) To the extent the
RIDGELY WHITMORE BROWN, Lawyer
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(203) 918-1563 · fax (203) 595-5582 · email: RidgeBrown@Ridgelylaw.com
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operating agreement does not provide for a matter described in subsection (a) of this section, the
provisions of sections 34-243 to 34-283d, inclusive, govern the matter.”
The issue is whether the clause stating that the manager has authority to commence “legal
action” applies to causes of action on behalf of The Whalley Group against the manager himself
and/or entities controlled by him; i.e. whether the parties intended to give the manager the
authority to decide whether to commence suit on behalf of the LLC against himself for, inter alia,
his alleged breach of contract, breach of fiduciary duty, and statutory theft. If it does not, then,
pursuant to CGS §34-243d(b) the provisions of CULLCA governing the authorization to
commence suit will apply.
The Operating Agreement, like every contract, must be interpreted in a manner consistent
with the reasonable expectations of the parties. The applicable law at the time The Whalley Group
Operating Agreement was executed did not provide a common law right for a derivative action, or
a statutory right for a derivative action under the CLLCA; Saunders v. Briner, 334 Conn. 135
(2019). Therefore, The Whalley Group would have had no judicial recourse for Brodie’s
malfeasance if the clause were interpreted to give him sole authority to authorize this suit. The
parties to the agreement clearly contemplated that the agreement would be a contract. A contract
is, by definition, an enforceable agreement. An agreement that gives one of the parties a unilateral
right to determine whether the other party can enforce it against himself is not an enforceable
agreement and is not a contract. Moreover, there is nothing in the agreement to suggest that the
parties were waiving any of their other common law and statutory rights relating to the manager’s
performance. Construing Paragraph 4.2(l) of The Whalley Group Operating Agreement to grant
Brodie the authority of whether to authorize suit against himself and entities controlled by him and
RIDGELY WHITMORE BROWN, Lawyer
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suits in which his tortious actions are implicated cannot be within the “reasonable expectations” of
the parties. “The contract must be viewed in its entirety, with each provision read in light of the
other provisions ... and every provision must be given effect if it is possible to do so.” Harbour
Pointe, LLC v. Harbour Landing Condominium Assn., Inc., 300 Conn. 254, 260–61 (2011).
Moreover, the court “… will not construe a contract's language in such a way that it would lead to
an absurd result. See Waesche v. Redevelopment Agency, 155 Conn. 44, 51, (1967)” Welch v.
Stonybrook Gardens Co-op., Inc., 158 Conn. App. 185, 198 (2015). “[T]he terms of a contract must
be read in the context of the entire contract, and the terms will not be so strictly construed as to lead
to a harsh and absurd result.” Clements v. Pete's Auto Sales & Servs., LLC, 2023 WL 3194518
(Superior Court of Connecticut, Judicial District of New London at New London, Docket No.
KNL-CV21-6053291S, April 28, 2023, Jacobs, J.). Courts have refused to construe contracts
according to the literal meaning of their terms when such interpretation would effectively
immunize one party from liability for breach of the contract or other tortious actions that would
defeat the purpose of the contract; see, e.g. Kowalsky v. B & D Properties, LLC, 2018 WL 7573176
(Superior Court of Connecticut, Judicial District of Fairfield at Bridgeport, FBTCV166060095,
October 13, 2018, Alfred J. Jennings, Jr., Judge Trial Referee) and Capitalsource Finance, LLC v.
Hartford Downtown Revival, LLC, 2017 WL 2539222 (Superior Court of Connecticut, Judicial
District of Hartford at Hartford, HHDCV126037665S., May 16, 2017, Moukawsher, J.).
Finally, any such interpretation would be contrary to the public policy manifested in the
act governing limited liability companies, the uniform fraudulent transfer act, CUTPA, and
statutory theft, and the common law rights for breach of fiduciary duty, fraud and negligent
misrepresentation. “[I]t is well established that contracts that violate public policy are
unenforceable.” Solomon v. Gilmore, 248 Conn. 769, 774, 731 A.2d 280 (1999). “[T]he ultimate
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determination of what constitutes the public interest must be made considering the totality of the
circumstances of any given case against the backdrop of current societal expectations.” (Internal
quotation marks omitted.) Hanks v. Powder Ridge Restaurant Corp., 276 Conn. 314, 330 (2005).
Exculpatory contractual provisions are subject to particular scrutiny; see, e.g. Hyson v. White
Water Mountain Resorts Of Connecticut, Inc., 265 Conn. 636, 643 (2003) (“[t]he law does not
favor contract provisions which relieve a person from his own negligence ....”). In reviewing such
provisions against a public policy challenge, the court can look for guidance to the six factors
announced in the frequently cited decision of Tunkl v. Regents of the University of California, 60
Cal.2d 92, 98-101, 383 P.2d 441, 32 Cal. Rptr. 33 (1963)
The primary factor to be considered by the court in considering the public policy exception
in this case is that the defendants’ interpretation of The Whalley Group clause giving Brodie the
sole authority to commence suit on behalf of that LLC in this case would effectively exculpate
him and the defendant LLCs controlled by him from the egregious conduct that forms the basis for
the counts that are plead against them, including statutory theft, fraud, breach of common law
fiduciary duty, breach of contract, breach of the implied covenant of good faith and fair dealing,
and statutory violations of CULLCA, CUFTA, and CUTPA. If, as stated in Hyson v. White Water
Mountain Resorts Of Connecticut, Inc., “[t]he law does not favor contract provisions which
relieve a person from his own negligence ....” then how much more so does it not favor a
contractual provision that effectively relieves a person from intentional and willful misconduct
that results in substantial financial harm to others, in violation of well-established common law
and statutory duties ? Yet, that is exactly the effect of the defendants’ interpretation of Paragraph
4.2(l) of The Whalley Group, LLC’s Operating Agreement. Such a result would simply render
ineffective the public policies underlying the enforcement of those duties and, therefore, the court
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should hold that the contractual provision relied on by the defendants does not apply to this suit.
Any other treatment would be tantamount to letting Ponzi include “Ponzi schemes allowed” in
operating agreements.
There are other factors to be considered; see Tunkl factors 1 and 6 “[1] [The agreement]
concerns a business of a type generally thought suitable for public regulation;…and “[6] … [A]s a
result of the transaction, the person or property of the purchaser is placed under the control of the
seller, subject to the risk of carelessness by the seller or his agents.” Hanks v. Powder Ridge Rest.
Corp., 276 Conn. at 328, 885 A.2d at 743 (2005). Limited liability companies are creatures of
statute and, as such, are “generally thought suitable for public regulation”. While the purposes of
the limited liability company are to give managers and managing members protection from
liability and to permit them certain pass through tax benefits there is nothing in the statutory
scheme that can be remotely interpreted as permitting managers to violate the traditional common
law fiduciary obligations to investing members who, otherwise would be “subject to the risk of
carelessness”, not to mention malfeasance, by the manager. To the contrary, the legislature has
indicated its concern to prevent such malfeasance by replacing the previous statute (CLLCA) with
a new statute that expressly prevents LLC Operating Agreements from abrogating, inter alia, the
implied covenant of good faith and fair dealing and rights to sue for breach of fiduciary duty
violate C.G.S.§ 34-243d(c)(6). Therefore, the statutory scheme manifests a clear public policy in
favor of guarding against malfeasance by managers of Connecticut LLCs. That policy would be
undermined if an Operating Agreement giving the manager the sole right to commence suit on
behalf of the LLC were construed to include legal actions alleging his own fraud, breach of
fiduciary duty, etc. Such a construction would violate the public policy of the state as expressed in
RIDGELY WHITMORE BROWN, Lawyer
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(203) 918-1563 · fax (203) 595-5582 · email: RidgeBrown@Ridgelylaw.com
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its common law and statutory rights. Accordingly, CoreVest’s argument to the contrary must be
rejected.
In addition, any such interpretation of Paragraph 4.2(l) would violate C.G.S.§ 34-
243d(c)(6), which provides that the Operating Agreement cannot abrogate the obligation of good
faith and fair dealing. The obligation of good faith and fair dealing requires the parties to the
agreement not to construe it or do anything under its terms to defeat the reasonable expectations of
the parties; see Geysen v. Securitas Sec. Servs. USA, Inc., 322 Conn. 385, 399 (2016) “[I]t is
axiomatic that the ... duty of good faith and fair dealing is a covenant implied into a contract or a
contractual relationship.... In other words, every contract carries an implied duty requiring that
neither party do anything that will injure the right of the other to receive the benefits of the
agreement....” It cannot reasonably be maintained that the parties contemplated that Brodie
would have the exclusive right to authorize any suit against himself on behalf of The Whalley
Group. An interpretation to the contrary would give Brodie the power to shield himself from any
liability toward The Whalley Group and that would significantly injure its right to receive the
benefits of the Operating Agreement.
Because the Operating Agreement provision of The Whalley Group authorizing Brodie as
manager to commence suit on behalf of The Whalley Group cannot be read as applying to a suit
against himself and entities controlled by him for the various counts in this suit including, inter
alia, statutory theft, fraud, breach of fiduciary duty, then the applicable provisions of CULLCA
must apply. There is no section of CULLCA that expressly refers to authorization of suit for
Connecticut LLCs other than the section governing derivative actions. Therefore, the only section
that would apply is C.G.S. §34-255f (c) of CULLCA which provides for decisions not in the
RIDGELY WHITMORE BROWN, Lawyer
15 Fifth Street · Stamford, Connecticut · 06905 · Juris No. 401656
(203) 918-1563 · fax (203) 595-5582 · email: RidgeBrown@Ridgelylaw.com
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ordinary course of business for “manager-managed” limited liability companies. It specifically
states that “(c) In a manager-managed limited liability company, the following rules apply: …(3)
The affirmative vote or consent of two-thirds in interest of the members is required to: (A)
Undertake an act outside the ordinary course of the company's activities and affairs; …” Because
the Operating Agreement of The Whalley Group does not contain any provision concerning acts
undertaken outside the ordinary course of the company’s activities and affairs, then pursuant to
CGS §34-243d(b), the terms of C.G.S.§ 34-255f(c)(3)(A) apply to such acts, and notwithstanding
the terms of The Whalley Group Operating Agreement, require that such acts be authorized by
“affirmative vote or consent of two thirds in interest of the members”.
A suit against the manager for breach of fiduciary duty and other malfeasance is an act
taken outside the ordinary course of the business of the LLC’s affairs, unless one were to claim
that the manager’s defrauding the LLC and its investors through transparent self-dealing was
within the reasonable contractual expectations of the parties when they entered into The Whalley
Group Operating Agreement. Therefore, the authorization of the suit against Brodie and the other
defendants was governed by C.G.S. §34-255f (c) and not by Paragraph 4.2(l) of the Operating
Agreement.
The Whalley Group has submitted together with its objection the affidavits of Eitan Rubin
and George Rohr with copies of signed resolutions attached showing that they have authorized
this suit on behalf of The Whalley Group (Exhibits 1 and 2). The affidavits contain also copies of
the George Rohr’s power of attorney appointing Eitan Rubin as his attorney in fact authorized to
act on his behalf in litigation matters, and a proxy by Mr. Rohr authorizing Eitan Rubin to vote
Mr. Rohr’s interest in The Whalley Group. The evidence submitted indicates quite clearly that the
RIDGELY WHITMORE BROWN, Lawyer
15 Fifth Street · Stamford, Connecticut · 06905 · Juris No. 401656
(203) 918-1563 · fax (203) 595-5582 · email: RidgeBrown@Ridgelylaw.com
- 16-
members having at least two-thirds in interest of The Whalley Group have authorized this action
in compliance with C.G.S. §34-255f (c). CoreVest has not submitted anything to controvert that
evidence. Accordingly, CoreVest’s motion to dismiss must be denied to the extent it claims that
The Whalley Group lacks standing to commence and prosecute this action.
III. The plaintiffs Eitan Rubin and Reuven Gidanian have standing to prosecute the causes
of action alleged herein on behalf of the plaintiff LLCs and against the defendants as
derivative causes of action.
As an alternative to their claim that this suit was properly authorized by members having
the requisite interests in the plaintiff LLCs, the plaintiffs have adequately alleged that, if for any
reason, the court were to conclude that Brodie had sole authority to authorize this action that any
demand on Brodie and the plaintiff LLCs required by C.G.S. §34-271c would be futile.
C.G.S. §34-271c requires that, to commence any derivative action the plaintiffs must either
make demand on the LLC and have that demand refused or must allege that such demand would
be futile and the reasons why it would be futile. The specific language of the statute is as follows:
“Derivative action. Pleading. In a derivative action, the complaint must state with particularity: (1)
The date and content of plaintiff's demand and the response by the managers or other members to
the demand; or (2) why the demand should be excused as futile.”
The plain and unambiguous language of C.G.S. §34-271c indicates that the only
requirements for bringing a derivative action on behalf of a Connecticut limited liability company
are that demand was made and refused, or that such demand would be futile. In determining
whether the plaintiffs have adequately alleged futility of demand under the statute, a court must
interpret it according to the usual rules of statutory construction MTGLQ Investors, L.P. v.
RIDGELY WHITMORE BROWN, Lawyer
15 Fifth Street · Stamford, Connecticut · 06905 · Juris No. 401656
(203) 918-1563 · fax (203) 595-5582 · email: RidgeBrown@Ridgelylaw.com
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Hammons, 196 Conn. App. 636, 646 (2020). The court must look first to the plain language of the
statute; see Connecticut General Statutes (C.G.S.) § 1-2z; “Plain meaning rule. The meaning of a
statute shall, in the first instance, be ascertained from the text of the statute itself and its
relationship to other statutes. If, after examining such text and considering such relationship, the
meaning of such text is plain and unambiguous and does not yield absurd or unworkable results,
extratextual evidence of the meaning of the statute shall not be considered.”). Moreover, “[t]his
court is “not permitted to supply statutory language that the legislature may have chosen to omit.”
(Internal quotation marks omitted.) Mayer v. Historic District Commission, 325 Conn. 765, 776
(2017). “[C]ourts may not by construction supply omissions ... or add exceptions merely because
it appears that good reasons exist for adding them. Tuxis Ohr's Fuel, Inc. v. Administrator,
Unemployment Compensation Act, 309 Conn. 412, 435 (2013).
Derivative actions on behalf of business entities are intended in part to give shareholders
or members the ability to authorize suits against directors or members and managers for
misfeasance or malfeasance causing harm to the entity when those directors or managers have the
sole right to authorize legal action on behalf of the corporation or company. The rationale for
doing so is obvious; see May v. Coffey, 291 Conn. 106, 113–114 (2009): “If the duties of care and
loyalty which directors owe to their corporations could be enforced only in suits by the
corporation, many wrongs done by directors would never be remedied.” (Citations omitted;
internal quotation marks omitted.)
However, our Supreme Court has held that there is no common law right to a derivative
action on behalf of a Connecticut limited liability company nor was such an action authorized
under the previous statute that governed Connecticut limited liability companies, the CLLCA
RIDGELY WHITMORE BROWN, Lawyer
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(203) 918-1563 · fax (203) 595-5582 · email: RidgeBrown@Ridgelylaw.com
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(Connecticut Limited Liability Company Act); see Saunders v. Briner 334 Conn. 135 (2019).
Therefore, prior to the enactment of C.G.S. §34-271c, as part of the Connecticut Uniform Limited
Liability Act (CULLCA; effective date July 1 2017), members of Connecticut limited liability
companies had no right to authorize suit on behalf of the company against managers or other
members for actions causing harm to the company.
The plain terms of C.G.S. §34-271c give such a right to members of limited liability
companies who had no such right under prior law. It is, therefore, a remedial statute. As such, it is
to be construed liberally in favor of those for whom it is intended to benefit and exceptions to its
terms are to be construed narrowly; see Doe v. Town of W. Hartford, 328 Conn. 172, 182 (2018)
and Meribear Prods., Inc. v. Frank, 340 Conn. 711, 739 (2021).
Its apparent purpose of C.G.S. §34-271c is similar to the purpose of all other statutes or
common law principles authorizing derivative actions on behalf of a business entity; to permit the
members of a limited liability company to authorize a suit against managers or other persons and
excuse demand made upon those who otherwise have authority to decide to commence such suit
when such demand would be futile and to give such a right as had been recognized previously by
several courts with respect to limited liability companies and corporations; see, e.g. Ward v.
Gamble, 2009 WL 2781541, Superior Court, Judicial District of Hartford, Docket No. CV 08
5017829 (July 23, 2009) (48 Conn. L. Rptr. 286); Calpitano v. Rotundo et al., 2011 WL 3672092,
Superior Court, Judicial District of New Britain, CV 11–6008972 (August 3, 2011) [52 Conn. L.
Rptr. 464]; and Rocco v. Furrer et al., 2013 WL 5879523, Superior Court, Judicial District of
Middlesex, Docket No. CV 136009192 (October 17, 2013).
RIDGELY WHITMORE BROWN, Lawyer
15 Fifth Street · Stamford, Connecticut · 06905 · Juris No. 401656
(203) 918-1563 · fax (203) 595-5582 · email: RidgeBrown@Ridgelylaw.com
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Brodie and the other defendants have claimed that the defendant Brodie is manager of each
of the plaintiff LLCs and as such has the sole authority to commence suit on their behalf; (see
Brodie’s Affidavit attached to brief of defendants Brodie et. al. at p.26; Docket No. 102.00).
However, in each count sounding as a derivative cause of action, the plaintiff LLCs have
specifically and adequately alleged futility of demand on Brodie as manager of each of the
plaintiff LLCs by pleading that he is a defendant in this action and, as such, he would not
authorize suit against himself and potentially incur liability; see Counts 20, 22,24, 26, 28, 30, 32,
34, 36, 38, 40, 42, 44, 46, 48, 50, 52, 54, 56, 58, 60, 62, 64, 66, 68, 70, 72, 74, 76, 78, 80, 82, 84,
86, 88, 90, 92, 94, 96, 98, 100, 102, and 104. They have also alleged that he would not authorize
suit against any of the defendant LLCs because they are controlled by him. Further, they have
alleged that all of the causes of action against himself and against all the defendants in this case
arise out of alleged wrongful misconduct by Brodie and therefore would implicate him. The
defendants have not made any claim or submitted any evidence to contradict the plaintiffs’ claims
that the defendant LLCs are controlled by Brodie. The defendants have also not submitted any
evidence to contradict the plaintiffs’ allegations of futility of demand. The plaintiffs are entitled to
rely on these jurisdictional allegations unless the defendants introduce evidence to controvert
them; Conboy v. State, 292 Conn. 642, 651-652 (2009). In the absence of such evidence and
construing the complaint in the most favorable light toward indulging a finding of proper
jurisdiction, the court must take as true the allegations that Brodie is manager of the plaintiff
LLCs and has a controlling interest in all of the defendant LLCs, including Reichman Brodie;
Conboy v. State, 292 Conn. at 651-652.
The allegations of each of the counts pleading a derivative action sufficiently plead futility of
demand on Brodie because of his self-interest and status as defendant and his control of the
RIDGELY WHITMORE BROWN, Lawyer
15 Fifth Street · Stamford, Connecticut · 06905 · Juris No. 401656
(203) 918-1563 · fax (203) 595-5582 · email: RidgeBrown@Ridgelylaw.com
- 20-
defendant LLCs. Connecticut courts that have examined the issue have consistently held that an
LLC manager’s status as defendant in a suit is sufficient to establish futility under C.G.S. §34-
271c; see, e.g. Haworth Country Club, LLC v. Newberry Village Holdings, LLC, 2022 WL
1201907, Superior Court, Judicial District of Hartford, Complex Litigation Docket, Docket No.
CV-19-6134954 (April 14, 2022, Noble, J.); Guiza v. 291-293 Greenwich Ave., LLC, 2020 WL
6121446, Superior Court, Judicial District of Stamford-Norwalk, Docket No. CV-20-6046647-S
(September 22, 2020, Genuario, J.). In doing so, they used the same standard that was applied to
LLCs before CULLCA by analogy to that required for derivative suits against stock corporations.
Under that standard, a manager’s interest in the suit made any demand futile.; see, e.g. Budney v.
Budney Indus., Inc., 2014 WL 2021998, (Superior Court Judicial District of New Britain, No.
CV136023734, April 11, 2014) (where the court reviewed the case law on futility of demand for
derivative actions commenced on behalf of Connecticut LLCs in articulating the futility exception
and its rationale:
“Formal demand on the directors has been held to be
presumptively futile and unnecessary in the following
situations: (1) where the directors acquiesce in or are parties to
the alleged wrongdoing; … (2) where the directors are accused
of a patent breach of their fiduciary duties and are named as
defendants; … (3) where the directors have profited from the
transaction underlying the litigation and are named as
defendants; … and (4) where the directors and controlling
shareholders are antagonistic and adversely interested.”
The court finds in examining the allegations of the
complaint demand upon the LLC would be futile. First, it is
alleged that the plaintiff has a fifty percent membe
Preview
NNH-CV23-6136054-S ) SUPERIOR COURT ) EITAN RUBIN; REUVEN GIDANIAN; ) J.D. OF NEW HAVEN E.R. HOLDINGS, LLC (dissolved and winding up); ) L.E. VENTURES, LLC (dissolved and winding up);) AT NEW HAVEN WHALLEY GROUP, LLC ) (dissolved and winding up) ) Plaintiffs ) ) v. ) ) BARNETT BRODIE; COREVEST AMERICAN ) FINANCE LENDER, LLC F/K/A COLONY ) AMERICAN FINANCE LENDER, LLC; ) LAWRENCE LEVINSON; RBC DE, LLC; ) RBC DE2, LLC; REICHMAN BRODIE REAL ) ESTATE, LLC; RILEY GROUP DE, LLC; ) RILEY GROUP DE2, LLC; ) SPERRY GROUP DE, LLC; SPERRY GROUP ) DE2, LLC; TZ DE, LLC; TZ DE2, LLC; ) 5 ARCH FUNDING CORP. ) Defendants ) April 17, 2024 PLAINTIFFS’ MEMORANDUM OF LAW IN SUPPORT OF OBJECTION TO DEFENDANT COREVEST’S MOTION TO DISMISS The plaintiffs submit this Memorandum of Law in support of their Objection to the defendant CoreVest’s Motion to Dismiss and accompanying Memorandum of Law filed on March 20, 2024 (Docket Entry Nos. 115.00 and 116.00). CoreVest’s Memorandum of Law in Support of its Motion to Dismiss (No. 116.00) incorporates by reference the arguments contained in the motions to dismiss and supporting memoranda of law previously filed by its co-defendants and by its co-counsel (Docket Entry Nos. 101.00, 102.00, 103.00. 104.00, 105.00 and 106.00); see Docket Entry No. 116.00 at page 2. It also adds some further argument on the prior pending action doctrine and on the issue of standing (No. 116.00 at pp.4-8) RIDGELY WHITMORE BROWN, Lawyer 15 Fifth Street · Stamford, Connecticut · 06905 · Juris No. 401656 (203) 918-1563 · fax (203) 595-5582 · email: RidgeBrown@Ridgelylaw.com - 1- 1. The court must deny the motions to dismiss to the extent that they are based on the “prior pending action doctrine” because the case claimed to be prior has gone to judgment and is therefore not “pending” within the meaning of the doctrine. Even if it were, CoreVest has failed to demonstrate that the two cases are sufficiently similar to warrant application of the doctrine. Finally, even if the doctrine were to apply, CoreVest has failed to show that the doctrine requires dismissal rather than consolidation or other action within the discretion of the court. a. The prior pending action doctrine is inapplicable because, inter alia, the action claimed to be a prior pending action has gone to judgment and is no longer “pending” within the meaning of the doctrine even if it is now before the Appellate Court on appeal. CoreVest argues that this action should be dismissed pursuant to the “prior pending action” doctrine because of a prior case that is currently on appeal before the Appellate Court (Docket Entry No. 116.00 at pp. 4-7). That claim is contrary to controlling precedent both as to the threshold issue of the doctrine’s applicability and as to how it should be considered if it were applied. A pending appeal is not a “prior pending action” within the meaning of the doctrine; Chomko v. Patmon, 20 Conn. App. 159, 161 (1989). This well-established rule that the prior pending action rule does not apply if the first action is on appeal implicitly recognizes that judicial economy is not served by dismissing a second action when the claimed “prior” action has already been litigated at the trial level. Because the action that the defendants in this case claim as a “prior pending action” is now on appeal, per Chomko, the prior pending action doctrine does not apply at all, and the court must reject the defendants’ argument in their Motions to Dismiss to the extent that they rely on that doctrine; see also Salem Park, Inc, v. Town of Salem, 149 Conn. 141, 144 RIDGELY WHITMORE BROWN, Lawyer 15 Fifth Street · Stamford, Connecticut · 06905 · Juris No. 401656 (203) 918-1563 · fax (203) 595-5582 · email: RidgeBrown@Ridgelylaw.com - 2- (1961). There is an important practical aspect to this rule. If the case claimed to be “prior” is on appeal, then the court cannot order the relief that it could if both cases were pending, such as consolidation of the cases, or dismissal of the prior case if it decides that judicial economy will be better served than by dismissal of the latter case; see, e.g. Bayer v. Showmotion, Inc., 292 Conn. 381, 396 (2009). The defendant CoreVest has argued in its brief that Salem Park and Chomko do not hold that the prior pending action is inapplicable if a case has gone to judgment and is on appeal. CoreVest’s argument mischaracterizes the holdings in both those decisions. CoreVest argues that Salem Park simply held that the proper way to attack a case that has previously gone to judgment and is on appeal is by raising a special defense of res judicata. That is what the Salem Park court advised, but only after it held, as a matter of law, that the prior pending action doctrine did not apply to a prior case that had gone to judgment, even if it was on appeal. “Therefore, when the plea in abatement was filed here, Cooper was not a ‘pending’ action in the proper use of that term. Cooper had gone to judgment, and the appropriate way to have raised that judgment as a defense was by an answer to the effect that the issues in Salem Park were res judicata.” Salem Park, Inc. 149 Conn. at 144. CoreVest also argues that Chomko does not hold that the prior pending action is inapplicable to a case that has gone to judgment and is on appeal because the defendant in that case agreed that it would not. That is not true. The defendant in that case did concede that the prior pending action doctrine did not apply. However, in noting that concession, the Chomko court stated, in no uncertain terms, that it was required to do so because that was what the law required. “[A]s the defendants concede, the plaintiff is correct in his assertion that a pending appeal is not a RIDGELY WHITMORE BROWN, Lawyer 15 Fifth Street · Stamford, Connecticut · 06905 · Juris No. 401656 (203) 918-1563 · fax (203) 595-5582 · email: RidgeBrown@Ridgelylaw.com - 3- prior pending action within the meaning of the prior pending action doctrine…; Chomko 20 Conn. App. at 161. CoreVest’s reliance on Beaudoin v. Town Oil Co., 207 Conn. 575 (1988) is also misplaced because the “prior” case in Beaudoin was still pending at the trial court. The plaintiff in the second case in Beaudoin had not filed an appeal in the first case but had filed only a notice of intent to appeal the striking of its third-party complaint in the prior action. “The plaintiff had the opportunity, of which she availed herself, to protect her rights by a timely filing of her notice of intent to appeal the striking by the trial court of her earlier motion to implead Town Oil in the original action instituted by the Shubbucks.”; Beaudoin 207 Conn. at 589-590. The primary action in the first case remained pending when the second case was decided by the Supreme Court. Beaudoin held that the prior pending action doctrine should apply to dismiss the second case for three reasons: 1) the impleader statute was enacted to avoid a multiplicity of actions; 2) the issue of indemnification in the second case would be rendered moot if a verdict was entered for the defendant/third party plaintiff in the primary action in the first case; and 3) the policy against piecemeal appeals would be undermined if a second case were permitted that asserted the same issue adjudicated by an interlocutory order in the first case; Beaudoin 207 Conn. at 588-590. Those three reasons were consistent with the prior pending action doctrine’s general policy of avoiding a waste of judicial resources in a second action when full adjudication of all the issues in a prior case pending in the trial court could render the issues in the second case moot. Beaudoin does not, therefore, implicitly overrule the general rule set forth in Salem Park and affirmed in Chomko that, once a prior case has gone to judgment, it is no longer “pending” for the purposes of the doctrine. At most, it simply holds that if a complaint seeking to implead a third party is struck in a prior case, that case is still “pending” for the purposes of the prior pending action doctrine if RIDGELY WHITMORE BROWN, Lawyer 15 Fifth Street · Stamford, Connecticut · 06905 · Juris No. 401656 (203) 918-1563 · fax (203) 595-5582 · email: RidgeBrown@Ridgelylaw.com - 4- the primary action in that first case has not gone to judgment by the time a second case is commenced. Unlike Beaudoin, the case that the defendants in this case claim is “prior pending”, is on appeal and there are no proceedings in that case currently before the trial court. Because Beaudoin does not abrogate the general rule of Salem Park and because there are no pending proceedings before the trial court in the first case, the court should reject defendants’ reliance on that decision. b. The two actions are insufficiently similar to warrant application of the doctrine. Even if the prior pending action did apply, this case is not “virtually similar” to the prior action. The current action contains 44 new counts that were not plead in the first action; see Counts 1, 4, 7, 10, 13, 16, 21-24, 27-30, 33-36, 39-42, 47-50, 53-56, and 87-100. These counts allege new causes of action such as statutory theft, negligent misrepresentation, unjust enrichment, fraudulent transfers, and breaches of statutory obligations under the applicable statutes governing limited liability companies. They all require the pleading and proof of new and different elements than the causes of action plead in the first action. They seek new and different remedies. Many of them seek compensation or statutory remedies for fraudulent transfers of specific properties, each of which require proof of different facts. They all seek adjudication of new “rights” that were not plead in the first action. Therefore, dismissal of this suit will not promote judicial economy because those causes of action were not raised in the first case. Dismissing this action will not save the court from adjudicating two “virtually similar” cases. It will simply impede the ability of the plaintiffs to have their common law and statutory rights adequately adjudicated. Moreover, parties have a right to plead in the alternative. RIDGELY WHITMORE BROWN, Lawyer 15 Fifth Street · Stamford, Connecticut · 06905 · Juris No. 401656 (203) 918-1563 · fax (203) 595-5582 · email: RidgeBrown@Ridgelylaw.com - 5- c. Even if the court decided that the cases are “virtually similar” then it should exercise its discretion to permit this case to proceed. Even if the cases are “virtually similar” the court still has the discretion to permit this suit to proceed; see Rousseau v. Weinstein, 204 Conn. App. 833, 845-846, 254 (2021); Gaudio v. Gaudio, 23 Conn. App. 287, 297 (1990) (concluding on basis of equitable principles that count of subsequent action improperly dismissed despite fact that allegations in that count may be virtually identical to allegations in prior pending action), cert. denied, 217 Conn. 803 (1990); and BCBS Goshen Realty, Inc. v. Planning & Zoning Commission, 22 Conn. App. 407, 409 (1990) (flexibility of prior pending action doctrine permits dismissal of prior action, rather than dismissal of subsequent action). If the court does not dismiss this action and the Appellate Court affirms the dismissal in the first case then only this case will be on the docket, there will be no duplication of adjudication and the plaintiffs will avoid any possible prejudice that may result from having both cases dismissed. If, however, the court does dismiss this action and the Appellate Court affirms the dismissal of the first case then the plaintiffs may be prejudiced by having both cases dismissed. If the court does not dismiss this action and the Appellate Court reverses the dismissal of the first action, then the court can consolidate both actions, a remedy that has been found to be appropriate in many cases where the prior pending action doctrine is asserted; see, e.g. Mola v. Home Depot U.S.A., Inc., 2000 WL 486864, Superior Court, Judicial District of Stamford– Norwalk, Docket No. CV 98 0167635, April 7, 2000, Karazin, J.) (27 Conn. L. Rptr. 60). If the dismissal in the first case is reversed on appeal, consolidation of the two cases would conserve judicial resources, avoid inconsistent results, and do complete justice between the RIDGELY WHITMORE BROWN, Lawyer 15 Fifth Street · Stamford, Connecticut · 06905 · Juris No. 401656 (203) 918-1563 · fax (203) 595-5582 · email: RidgeBrown@Ridgelylaw.com - 6- parties. The court should allow this case to proceed so that it can be adjudicated if the dismissal of the prior case is affirmed on appeal, or consolidated with that case if its dismissal is reversed. II. The actions were properly authorized on behalf of the three plaintiff LLCs by written approval and/or consent of members having the requisite percentage interest to do so. 1. The suit was properly authorized on behalf of ER Holdings, LLC and L.E. Ventures, LLC by written approval of members having at least a 70% interest of each of those LLCs as provided by their respective Operating Agreements. The Operating Agreements of E.R. Holdings and L.E. Ventures both clearly state that the members having at least 70% in interest have the sole power to authorize suit on behalf of each of those LLCs (see Docket Entry No. 102.00, Operating Agreement of ER Holdings and Operating Agreement of L.E. Ventures attached to brief of defendants Brodie et. al.) Section 2.3(C) in E.R. Holdings, LLC has the identical clause as Section 2.3(C) in L.E. Ventures, LLC. They each state: 2.3 Rights and powers of the Manager shall include the right and power to manage all day to day activities of the Company, but shall not include any of the following, which may only be done with the written approval (which may include an email) of the aggregate members holding Seventy percent (70%) of the equity interest in the Company (as shown on Exhibit A): … (C) …compromise, arbitrate or otherwise adjust claims in favor of or against the Company and to commence or defend against litigation with respect to the Company or any assets of the Company as deemed advisable, all or any of the above matters being at the expense of the Company; and to execute, acknowledge and deliver any and all instruments to effect any and all of the foregoing. The complaint alleges in the counts pleading causes of action for ER Holdings and LE Ventures that each was authorized by the requisite vote of their members; for E.R. Holdings, see RIDGELY WHITMORE BROWN, Lawyer 15 Fifth Street · Stamford, Connecticut · 06905 · Juris No. 401656 (203) 918-1563 · fax (203) 595-5582 · email: RidgeBrown@Ridgelylaw.com - 7- Complaint, Counts 45, 47, 49, 51, 53, 55, 57, 69, 71, 73, 75, 83, 85, 91, 99, 101, and 103; for LE Ventures, see Complaint, Counts 31, 33, 35, 37, 39, 41, 43, 77, 79, 83, 85, and 89. In this case Corevest has not presented any evidence controverting ER Holdings’ and LE Ventures’ allegations of proper authorization by members having the requisite interest in those LLCs. Its failure to present any such evidence requires that the court deny its motion to dismiss with respect to ER Holdings and LE Ventures to the extent that it is based on lack of standing. The Operating Agreement for ER Holdings shows that Eitan Rubin and Reuven Gidanian have 100% interest in the principal and 70% interest in the profit of ER Holdings. The plaintiffs have submitted together with this objection the affidavits of Eitan Rubin and Reuven Gidanian attesting to the fact that they signed authorizations for this suit by ER Holdings together with true copies of the authorizations attached (Exhibits 1F, 1G and 1H, and 3B and 3C). The plaintiffs have submitted uncontroverted documentary evidence establishing that this suit was properly authorized by ER Holdings, by 70% vote of its members. Therefore, the court must deny CoreVest’s Motion to Dismiss to the extent that it is based on lack of standing by ER Holdings; see Willow Funding Co., L.P. v. Grencom Associates, 246 Conn. 615, 623, 717 A.2d 1211 (1998). The Operating Agreement for L.E. Ventures, LLC shows that Eitan Rubin has a 70 % interest in that LLC (Exhibit I) (see Operating Agreement of L.E. Ventures attached as Exhibit 1I to affidavit of Eitan Rubin). The plaintiffs have also submitted the affidavit and signed resolutions of Eitan Rubin authorizing this suit on behalf of L.E. Ventures (Exhibits 1J and 1K). The uncontroverted evidence shows that this suit on behalf of L.E. Ventures has also been properly authorized and therefore, the trial court must deny CoreVest’s Motion to Dismiss to the extent that RIDGELY WHITMORE BROWN, Lawyer 15 Fifth Street · Stamford, Connecticut · 06905 · Juris No. 401656 (203) 918-1563 · fax (203) 595-5582 · email: RidgeBrown@Ridgelylaw.com - 8- it is based on lack of standing by L.E. Ventures; Willow Funding Co., L.P. v. Grencom Associates, 246 Conn. at 623. 2. The suit was properly authorized on behalf of The Whalley Group, LLC by the consent of members having at least two-thirds in interest of The Whalley Group as required by C.G.S.§ 34-255f(c)(3)(A) the applicable provision of the Connecticut Uniform Limited Liability Act (CULLCA) Connecticut General Statutes (C.G.S.) §§34-243 to 34-299. The defendants claim that authorization of this suit on behalf of the plaintiff The Whalley Group, LLC can only be made by the defendant Barnett Brodie pursuant to Paragraph 4.2(l) of the Whalley Group Operating Agreement authorizing Brodie as manager to commence legal actions on behalf of the LLC (See Docket Entry No. 102.00, at pp. 14-16). The relevant language states that “the Manager shall have the power and authority on behalf of the Company, to:….(l) bring or defend, pay, collect, compromise, arbitrate, resort to legal action, or otherwise adjust claims or demands of or against the Company…” (Docket No. 102.00, Exhibit A, at pp. 6-7). The defendants’ claims are incorrect because their construction of the clause to give sole authority to the defendant Brodie to commence this suit on behalf of The Whalley Group against himself and entities controlled by him based on his egregious malfeasance would be contrary to the reasonable expectations of the parties, would violate the implied covenant of good faith and fair dealing and would be contrary to the public policy of the state. Accordingly, the authority to commence this suit is governed by C.G.S.§ 34-255f(c)(3)(A) which states that acts outside the ordinary course of business must be authorized by “affirmative vote or consent of two thirds in interest of the members”. The resolutions and affidavits attached hereto establish that such affirmative vote and consent has been made, see Exhibits 1E, 1H, 1K and 3C. RIDGELY WHITMORE BROWN, Lawyer 15 Fifth Street · Stamford, Connecticut · 06905 · Juris No. 401656 (203) 918-1563 · fax (203) 595-5582 · email: RidgeBrown@Ridgelylaw.com - 9- The rights of the parties are governed by the Connecticut version of the Uniform Limited Liability Act, the Connecticut Uniform Limited Liability Company Act (CULLCA), which became effective July 1, 2017 (P.A. 16-97) and is found at Connecticut General Statutes (C.G.S.) §§34-243 to 34-299. CULLCA expressly provides that it is to be applied retroactively to govern limited liability companies formed under the previous statute, the Connecticut Limited Liability Company Act (CLLCA) (previously found at C.G.S.§§34-100 to 34-242), enacted in 1993 (P.A.93-267, S1-6). C.G.S. § 34-243i., captioned “Effective date. Application to existing relationships” states “(a) Except as provided in subsection (b) of this section, on and after July 1, 2017, sections 34-243 to 34-283d, inclusive, govern all limited liability companies.” Pursuant to C.G.S. §34-243a(12), a “[l]imited liability company” subject to CULLCA “…means an entity formed under sections 34-243 to 34-283d, inclusive, or which becomes subject to said sections under …section 34-243i…”. Therefore, although the Operating Agreements of the three plaintiff LLCs were entered into prior to CULLCA, the LLCs are, nevertheless, governed by CULLCA (see Docket No. 103.00, Exhibits A, B, and C filed with the complaint); see. e.g. Fischer v. People's United Bank, N.A., 216 Conn. App. 426, 433 fn.4 (2022), cert. denied 346 Conn. 904 (2023), (upholding trial court’s determination that authority to commence suit on behalf of Connecticut limited liability company was governed by C.G.S. §34-255(f) of CULLCA even though the company was formed and its operating agreement executed under the prior CLLCA). Because CULLCA applies, the requirements and authority of C.G.S. §34-255f govern the authority to commence suit unless the Operating Agreement contains a provision that controls the issue. Although C.G.S. §34-243d(a) provides that the operating agreement governs the affairs of the company, CGS §34-243d(b) states that where the operating agreement does not cover a specific matter, the provisions of C.G.S. §§34-243 to 34-283d govern; “(b) To the extent the RIDGELY WHITMORE BROWN, Lawyer 15 Fifth Street · Stamford, Connecticut · 06905 · Juris No. 401656 (203) 918-1563 · fax (203) 595-5582 · email: RidgeBrown@Ridgelylaw.com - 10- operating agreement does not provide for a matter described in subsection (a) of this section, the provisions of sections 34-243 to 34-283d, inclusive, govern the matter.” The issue is whether the clause stating that the manager has authority to commence “legal action” applies to causes of action on behalf of The Whalley Group against the manager himself and/or entities controlled by him; i.e. whether the parties intended to give the manager the authority to decide whether to commence suit on behalf of the LLC against himself for, inter alia, his alleged breach of contract, breach of fiduciary duty, and statutory theft. If it does not, then, pursuant to CGS §34-243d(b) the provisions of CULLCA governing the authorization to commence suit will apply. The Operating Agreement, like every contract, must be interpreted in a manner consistent with the reasonable expectations of the parties. The applicable law at the time The Whalley Group Operating Agreement was executed did not provide a common law right for a derivative action, or a statutory right for a derivative action under the CLLCA; Saunders v. Briner, 334 Conn. 135 (2019). Therefore, The Whalley Group would have had no judicial recourse for Brodie’s malfeasance if the clause were interpreted to give him sole authority to authorize this suit. The parties to the agreement clearly contemplated that the agreement would be a contract. A contract is, by definition, an enforceable agreement. An agreement that gives one of the parties a unilateral right to determine whether the other party can enforce it against himself is not an enforceable agreement and is not a contract. Moreover, there is nothing in the agreement to suggest that the parties were waiving any of their other common law and statutory rights relating to the manager’s performance. Construing Paragraph 4.2(l) of The Whalley Group Operating Agreement to grant Brodie the authority of whether to authorize suit against himself and entities controlled by him and RIDGELY WHITMORE BROWN, Lawyer 15 Fifth Street · Stamford, Connecticut · 06905 · Juris No. 401656 (203) 918-1563 · fax (203) 595-5582 · email: RidgeBrown@Ridgelylaw.com - 11- suits in which his tortious actions are implicated cannot be within the “reasonable expectations” of the parties. “The contract must be viewed in its entirety, with each provision read in light of the other provisions ... and every provision must be given effect if it is possible to do so.” Harbour Pointe, LLC v. Harbour Landing Condominium Assn., Inc., 300 Conn. 254, 260–61 (2011). Moreover, the court “… will not construe a contract's language in such a way that it would lead to an absurd result. See Waesche v. Redevelopment Agency, 155 Conn. 44, 51, (1967)” Welch v. Stonybrook Gardens Co-op., Inc., 158 Conn. App. 185, 198 (2015). “[T]he terms of a contract must be read in the context of the entire contract, and the terms will not be so strictly construed as to lead to a harsh and absurd result.” Clements v. Pete's Auto Sales & Servs., LLC, 2023 WL 3194518 (Superior Court of Connecticut, Judicial District of New London at New London, Docket No. KNL-CV21-6053291S, April 28, 2023, Jacobs, J.). Courts have refused to construe contracts according to the literal meaning of their terms when such interpretation would effectively immunize one party from liability for breach of the contract or other tortious actions that would defeat the purpose of the contract; see, e.g. Kowalsky v. B & D Properties, LLC, 2018 WL 7573176 (Superior Court of Connecticut, Judicial District of Fairfield at Bridgeport, FBTCV166060095, October 13, 2018, Alfred J. Jennings, Jr., Judge Trial Referee) and Capitalsource Finance, LLC v. Hartford Downtown Revival, LLC, 2017 WL 2539222 (Superior Court of Connecticut, Judicial District of Hartford at Hartford, HHDCV126037665S., May 16, 2017, Moukawsher, J.). Finally, any such interpretation would be contrary to the public policy manifested in the act governing limited liability companies, the uniform fraudulent transfer act, CUTPA, and statutory theft, and the common law rights for breach of fiduciary duty, fraud and negligent misrepresentation. “[I]t is well established that contracts that violate public policy are unenforceable.” Solomon v. Gilmore, 248 Conn. 769, 774, 731 A.2d 280 (1999). “[T]he ultimate RIDGELY WHITMORE BROWN, Lawyer 15 Fifth Street · Stamford, Connecticut · 06905 · Juris No. 401656 (203) 918-1563 · fax (203) 595-5582 · email: RidgeBrown@Ridgelylaw.com - 12- determination of what constitutes the public interest must be made considering the totality of the circumstances of any given case against the backdrop of current societal expectations.” (Internal quotation marks omitted.) Hanks v. Powder Ridge Restaurant Corp., 276 Conn. 314, 330 (2005). Exculpatory contractual provisions are subject to particular scrutiny; see, e.g. Hyson v. White Water Mountain Resorts Of Connecticut, Inc., 265 Conn. 636, 643 (2003) (“[t]he law does not favor contract provisions which relieve a person from his own negligence ....”). In reviewing such provisions against a public policy challenge, the court can look for guidance to the six factors announced in the frequently cited decision of Tunkl v. Regents of the University of California, 60 Cal.2d 92, 98-101, 383 P.2d 441, 32 Cal. Rptr. 33 (1963) The primary factor to be considered by the court in considering the public policy exception in this case is that the defendants’ interpretation of The Whalley Group clause giving Brodie the sole authority to commence suit on behalf of that LLC in this case would effectively exculpate him and the defendant LLCs controlled by him from the egregious conduct that forms the basis for the counts that are plead against them, including statutory theft, fraud, breach of common law fiduciary duty, breach of contract, breach of the implied covenant of good faith and fair dealing, and statutory violations of CULLCA, CUFTA, and CUTPA. If, as stated in Hyson v. White Water Mountain Resorts Of Connecticut, Inc., “[t]he law does not favor contract provisions which relieve a person from his own negligence ....” then how much more so does it not favor a contractual provision that effectively relieves a person from intentional and willful misconduct that results in substantial financial harm to others, in violation of well-established common law and statutory duties ? Yet, that is exactly the effect of the defendants’ interpretation of Paragraph 4.2(l) of The Whalley Group, LLC’s Operating Agreement. Such a result would simply render ineffective the public policies underlying the enforcement of those duties and, therefore, the court RIDGELY WHITMORE BROWN, Lawyer 15 Fifth Street · Stamford, Connecticut · 06905 · Juris No. 401656 (203) 918-1563 · fax (203) 595-5582 · email: RidgeBrown@Ridgelylaw.com - 13- should hold that the contractual provision relied on by the defendants does not apply to this suit. Any other treatment would be tantamount to letting Ponzi include “Ponzi schemes allowed” in operating agreements. There are other factors to be considered; see Tunkl factors 1 and 6 “[1] [The agreement] concerns a business of a type generally thought suitable for public regulation;…and “[6] … [A]s a result of the transaction, the person or property of the purchaser is placed under the control of the seller, subject to the risk of carelessness by the seller or his agents.” Hanks v. Powder Ridge Rest. Corp., 276 Conn. at 328, 885 A.2d at 743 (2005). Limited liability companies are creatures of statute and, as such, are “generally thought suitable for public regulation”. While the purposes of the limited liability company are to give managers and managing members protection from liability and to permit them certain pass through tax benefits there is nothing in the statutory scheme that can be remotely interpreted as permitting managers to violate the traditional common law fiduciary obligations to investing members who, otherwise would be “subject to the risk of carelessness”, not to mention malfeasance, by the manager. To the contrary, the legislature has indicated its concern to prevent such malfeasance by replacing the previous statute (CLLCA) with a new statute that expressly prevents LLC Operating Agreements from abrogating, inter alia, the implied covenant of good faith and fair dealing and rights to sue for breach of fiduciary duty violate C.G.S.§ 34-243d(c)(6). Therefore, the statutory scheme manifests a clear public policy in favor of guarding against malfeasance by managers of Connecticut LLCs. That policy would be undermined if an Operating Agreement giving the manager the sole right to commence suit on behalf of the LLC were construed to include legal actions alleging his own fraud, breach of fiduciary duty, etc. Such a construction would violate the public policy of the state as expressed in RIDGELY WHITMORE BROWN, Lawyer 15 Fifth Street · Stamford, Connecticut · 06905 · Juris No. 401656 (203) 918-1563 · fax (203) 595-5582 · email: RidgeBrown@Ridgelylaw.com - 14- its common law and statutory rights. Accordingly, CoreVest’s argument to the contrary must be rejected. In addition, any such interpretation of Paragraph 4.2(l) would violate C.G.S.§ 34- 243d(c)(6), which provides that the Operating Agreement cannot abrogate the obligation of good faith and fair dealing. The obligation of good faith and fair dealing requires the parties to the agreement not to construe it or do anything under its terms to defeat the reasonable expectations of the parties; see Geysen v. Securitas Sec. Servs. USA, Inc., 322 Conn. 385, 399 (2016) “[I]t is axiomatic that the ... duty of good faith and fair dealing is a covenant implied into a contract or a contractual relationship.... In other words, every contract carries an implied duty requiring that neither party do anything that will injure the right of the other to receive the benefits of the agreement....” It cannot reasonably be maintained that the parties contemplated that Brodie would have the exclusive right to authorize any suit against himself on behalf of The Whalley Group. An interpretation to the contrary would give Brodie the power to shield himself from any liability toward The Whalley Group and that would significantly injure its right to receive the benefits of the Operating Agreement. Because the Operating Agreement provision of The Whalley Group authorizing Brodie as manager to commence suit on behalf of The Whalley Group cannot be read as applying to a suit against himself and entities controlled by him for the various counts in this suit including, inter alia, statutory theft, fraud, breach of fiduciary duty, then the applicable provisions of CULLCA must apply. There is no section of CULLCA that expressly refers to authorization of suit for Connecticut LLCs other than the section governing derivative actions. Therefore, the only section that would apply is C.G.S. §34-255f (c) of CULLCA which provides for decisions not in the RIDGELY WHITMORE BROWN, Lawyer 15 Fifth Street · Stamford, Connecticut · 06905 · Juris No. 401656 (203) 918-1563 · fax (203) 595-5582 · email: RidgeBrown@Ridgelylaw.com - 15- ordinary course of business for “manager-managed” limited liability companies. It specifically states that “(c) In a manager-managed limited liability company, the following rules apply: …(3) The affirmative vote or consent of two-thirds in interest of the members is required to: (A) Undertake an act outside the ordinary course of the company's activities and affairs; …” Because the Operating Agreement of The Whalley Group does not contain any provision concerning acts undertaken outside the ordinary course of the company’s activities and affairs, then pursuant to CGS §34-243d(b), the terms of C.G.S.§ 34-255f(c)(3)(A) apply to such acts, and notwithstanding the terms of The Whalley Group Operating Agreement, require that such acts be authorized by “affirmative vote or consent of two thirds in interest of the members”. A suit against the manager for breach of fiduciary duty and other malfeasance is an act taken outside the ordinary course of the business of the LLC’s affairs, unless one were to claim that the manager’s defrauding the LLC and its investors through transparent self-dealing was within the reasonable contractual expectations of the parties when they entered into The Whalley Group Operating Agreement. Therefore, the authorization of the suit against Brodie and the other defendants was governed by C.G.S. §34-255f (c) and not by Paragraph 4.2(l) of the Operating Agreement. The Whalley Group has submitted together with its objection the affidavits of Eitan Rubin and George Rohr with copies of signed resolutions attached showing that they have authorized this suit on behalf of The Whalley Group (Exhibits 1 and 2). The affidavits contain also copies of the George Rohr’s power of attorney appointing Eitan Rubin as his attorney in fact authorized to act on his behalf in litigation matters, and a proxy by Mr. Rohr authorizing Eitan Rubin to vote Mr. Rohr’s interest in The Whalley Group. The evidence submitted indicates quite clearly that the RIDGELY WHITMORE BROWN, Lawyer 15 Fifth Street · Stamford, Connecticut · 06905 · Juris No. 401656 (203) 918-1563 · fax (203) 595-5582 · email: RidgeBrown@Ridgelylaw.com - 16- members having at least two-thirds in interest of The Whalley Group have authorized this action in compliance with C.G.S. §34-255f (c). CoreVest has not submitted anything to controvert that evidence. Accordingly, CoreVest’s motion to dismiss must be denied to the extent it claims that The Whalley Group lacks standing to commence and prosecute this action. III. The plaintiffs Eitan Rubin and Reuven Gidanian have standing to prosecute the causes of action alleged herein on behalf of the plaintiff LLCs and against the defendants as derivative causes of action. As an alternative to their claim that this suit was properly authorized by members having the requisite interests in the plaintiff LLCs, the plaintiffs have adequately alleged that, if for any reason, the court were to conclude that Brodie had sole authority to authorize this action that any demand on Brodie and the plaintiff LLCs required by C.G.S. §34-271c would be futile. C.G.S. §34-271c requires that, to commence any derivative action the plaintiffs must either make demand on the LLC and have that demand refused or must allege that such demand would be futile and the reasons why it would be futile. The specific language of the statute is as follows: “Derivative action. Pleading. In a derivative action, the complaint must state with particularity: (1) The date and content of plaintiff's demand and the response by the managers or other members to the demand; or (2) why the demand should be excused as futile.” The plain and unambiguous language of C.G.S. §34-271c indicates that the only requirements for bringing a derivative action on behalf of a Connecticut limited liability company are that demand was made and refused, or that such demand would be futile. In determining whether the plaintiffs have adequately alleged futility of demand under the statute, a court must interpret it according to the usual rules of statutory construction MTGLQ Investors, L.P. v. RIDGELY WHITMORE BROWN, Lawyer 15 Fifth Street · Stamford, Connecticut · 06905 · Juris No. 401656 (203) 918-1563 · fax (203) 595-5582 · email: RidgeBrown@Ridgelylaw.com - 17- Hammons, 196 Conn. App. 636, 646 (2020). The court must look first to the plain language of the statute; see Connecticut General Statutes (C.G.S.) § 1-2z; “Plain meaning rule. The meaning of a statute shall, in the first instance, be ascertained from the text of the statute itself and its relationship to other statutes. If, after examining such text and considering such relationship, the meaning of such text is plain and unambiguous and does not yield absurd or unworkable results, extratextual evidence of the meaning of the statute shall not be considered.”). Moreover, “[t]his court is “not permitted to supply statutory language that the legislature may have chosen to omit.” (Internal quotation marks omitted.) Mayer v. Historic District Commission, 325 Conn. 765, 776 (2017). “[C]ourts may not by construction supply omissions ... or add exceptions merely because it appears that good reasons exist for adding them. Tuxis Ohr's Fuel, Inc. v. Administrator, Unemployment Compensation Act, 309 Conn. 412, 435 (2013). Derivative actions on behalf of business entities are intended in part to give shareholders or members the ability to authorize suits against directors or members and managers for misfeasance or malfeasance causing harm to the entity when those directors or managers have the sole right to authorize legal action on behalf of the corporation or company. The rationale for doing so is obvious; see May v. Coffey, 291 Conn. 106, 113–114 (2009): “If the duties of care and loyalty which directors owe to their corporations could be enforced only in suits by the corporation, many wrongs done by directors would never be remedied.” (Citations omitted; internal quotation marks omitted.) However, our Supreme Court has held that there is no common law right to a derivative action on behalf of a Connecticut limited liability company nor was such an action authorized under the previous statute that governed Connecticut limited liability companies, the CLLCA RIDGELY WHITMORE BROWN, Lawyer 15 Fifth Street · Stamford, Connecticut · 06905 · Juris No. 401656 (203) 918-1563 · fax (203) 595-5582 · email: RidgeBrown@Ridgelylaw.com - 18- (Connecticut Limited Liability Company Act); see Saunders v. Briner 334 Conn. 135 (2019). Therefore, prior to the enactment of C.G.S. §34-271c, as part of the Connecticut Uniform Limited Liability Act (CULLCA; effective date July 1 2017), members of Connecticut limited liability companies had no right to authorize suit on behalf of the company against managers or other members for actions causing harm to the company. The plain terms of C.G.S. §34-271c give such a right to members of limited liability companies who had no such right under prior law. It is, therefore, a remedial statute. As such, it is to be construed liberally in favor of those for whom it is intended to benefit and exceptions to its terms are to be construed narrowly; see Doe v. Town of W. Hartford, 328 Conn. 172, 182 (2018) and Meribear Prods., Inc. v. Frank, 340 Conn. 711, 739 (2021). Its apparent purpose of C.G.S. §34-271c is similar to the purpose of all other statutes or common law principles authorizing derivative actions on behalf of a business entity; to permit the members of a limited liability company to authorize a suit against managers or other persons and excuse demand made upon those who otherwise have authority to decide to commence such suit when such demand would be futile and to give such a right as had been recognized previously by several courts with respect to limited liability companies and corporations; see, e.g. Ward v. Gamble, 2009 WL 2781541, Superior Court, Judicial District of Hartford, Docket No. CV 08 5017829 (July 23, 2009) (48 Conn. L. Rptr. 286); Calpitano v. Rotundo et al., 2011 WL 3672092, Superior Court, Judicial District of New Britain, CV 11–6008972 (August 3, 2011) [52 Conn. L. Rptr. 464]; and Rocco v. Furrer et al., 2013 WL 5879523, Superior Court, Judicial District of Middlesex, Docket No. CV 136009192 (October 17, 2013). RIDGELY WHITMORE BROWN, Lawyer 15 Fifth Street · Stamford, Connecticut · 06905 · Juris No. 401656 (203) 918-1563 · fax (203) 595-5582 · email: RidgeBrown@Ridgelylaw.com - 19- Brodie and the other defendants have claimed that the defendant Brodie is manager of each of the plaintiff LLCs and as such has the sole authority to commence suit on their behalf; (see Brodie’s Affidavit attached to brief of defendants Brodie et. al. at p.26; Docket No. 102.00). However, in each count sounding as a derivative cause of action, the plaintiff LLCs have specifically and adequately alleged futility of demand on Brodie as manager of each of the plaintiff LLCs by pleading that he is a defendant in this action and, as such, he would not authorize suit against himself and potentially incur liability; see Counts 20, 22,24, 26, 28, 30, 32, 34, 36, 38, 40, 42, 44, 46, 48, 50, 52, 54, 56, 58, 60, 62, 64, 66, 68, 70, 72, 74, 76, 78, 80, 82, 84, 86, 88, 90, 92, 94, 96, 98, 100, 102, and 104. They have also alleged that he would not authorize suit against any of the defendant LLCs because they are controlled by him. Further, they have alleged that all of the causes of action against himself and against all the defendants in this case arise out of alleged wrongful misconduct by Brodie and therefore would implicate him. The defendants have not made any claim or submitted any evidence to contradict the plaintiffs’ claims that the defendant LLCs are controlled by Brodie. The defendants have also not submitted any evidence to contradict the plaintiffs’ allegations of futility of demand. The plaintiffs are entitled to rely on these jurisdictional allegations unless the defendants introduce evidence to controvert them; Conboy v. State, 292 Conn. 642, 651-652 (2009). In the absence of such evidence and construing the complaint in the most favorable light toward indulging a finding of proper jurisdiction, the court must take as true the allegations that Brodie is manager of the plaintiff LLCs and has a controlling interest in all of the defendant LLCs, including Reichman Brodie; Conboy v. State, 292 Conn. at 651-652. The allegations of each of the counts pleading a derivative action sufficiently plead futility of demand on Brodie because of his self-interest and status as defendant and his control of the RIDGELY WHITMORE BROWN, Lawyer 15 Fifth Street · Stamford, Connecticut · 06905 · Juris No. 401656 (203) 918-1563 · fax (203) 595-5582 · email: RidgeBrown@Ridgelylaw.com - 20- defendant LLCs. Connecticut courts that have examined the issue have consistently held that an LLC manager’s status as defendant in a suit is sufficient to establish futility under C.G.S. §34- 271c; see, e.g. Haworth Country Club, LLC v. Newberry Village Holdings, LLC, 2022 WL 1201907, Superior Court, Judicial District of Hartford, Complex Litigation Docket, Docket No. CV-19-6134954 (April 14, 2022, Noble, J.); Guiza v. 291-293 Greenwich Ave., LLC, 2020 WL 6121446, Superior Court, Judicial District of Stamford-Norwalk, Docket No. CV-20-6046647-S (September 22, 2020, Genuario, J.). In doing so, they used the same standard that was applied to LLCs before CULLCA by analogy to that required for derivative suits against stock corporations. Under that standard, a manager’s interest in the suit made any demand futile.; see, e.g. Budney v. Budney Indus., Inc., 2014 WL 2021998, (Superior Court Judicial District of New Britain, No. CV136023734, April 11, 2014) (where the court reviewed the case law on futility of demand for derivative actions commenced on behalf of Connecticut LLCs in articulating the futility exception and its rationale: “Formal demand on the directors has been held to be presumptively futile and unnecessary in the following situations: (1) where the directors acquiesce in or are parties to the alleged wrongdoing; … (2) where the directors are accused of a patent breach of their fiduciary duties and are named as defendants; … (3) where the directors have profited from the transaction underlying the litigation and are named as defendants; … and (4) where the directors and controlling shareholders are antagonistic and adversely interested.” The court finds in examining the allegations of the complaint demand upon the LLC would be futile. First, it is alleged that the plaintiff has a fifty percent membe