418 MEADOW STREET ASSOCIATES, LLC v. CLEAN AIR PARTNERS,

LLC, et al., SC 18699

Judicial District of Fairfield

     Limited Liability Companies; Standing; Whether Plaintiff Lacked Standing to Commence Action Because one of its Members was Improperly Excluded from

the Decision to Sue as she was Found to Have an Interest in the Outcome of the Action that was Adverse to the Plaintiff's Interest.  The plaintiff is a limited liability company jointly owned by Barbara Levine, who owns fifty percent, and Michael Weinshel and Mark Wynnick, who own the remaining fifty percent.  Weinshel and Wynnick filed this action on behalf of the plaintiff to enforce a lease agreement against the defendant.  By way of special defense, the defendant claimed that the plaintiff lacked standing because Weinshel and Wynnick did not obtain Levine's approval to sue pursuant to the plaintiff's operating agreement and General Statutes § 34-187, which provides that a suit on behalf of a limited liability company may be brought by any member or members of the company who are authorized to sue by the vote of a majority in interest.  Subsection (b) of § 34-187 provides an exception to the majority vote requirement by excluding the vote of any member or manager who has an interest in the outcome of the suit being brought on behalf of the company that is adverse to the interest of the company.  The plaintiff argued that this exception applied because Levine had an adverse interest in the outcome of the action due to another pending action seeking its dissolution, in which Weinshel and Wynnick filed a counterclaim against her for mismanagement.  The trial court disagreed and ruled that the plaintiff lacked standing.  It determined that the counterclaim against Levine in the dissolution action did not substantiate the claim that Levine had an adverse interest in the outcome of the present case.  It further found that Levine did not have an adverse interest in the outcome of the action simply because her husband owned a twenty percent interest in the defendant, that she never held a property interest in the defendant, and that she could not be assigned an adverse interest based solely on her personal relationship to a part owner of the defendant.  On appeal, the Appellate Court (123 Conn. App. 416) concluded that the record supported the trial court's ruling that the plaintiff lacked standing.  It determined that the trial court properly focused on Levine’s role in the present case and not on her role in the dissolution action in determining that she did not have an adverse interest.  It stated that the language of § 34-187 suggests that the adverse interest must be in the outcome of the action that is being voted on, not in another action with separate issues.  Moreover, it indicated that because the claims against Levine in the dissolution action were filed after the present action was filed, Weinshel and Wynnick did not have any pending claims against her at the time they commenced the present action.  In this appeal, the Supreme Court will determine whether the Appellate Court properly concluded that the plaintiff lacked standing to pursue the present action.