Opinion
No. CV 06 5000568 S
December 7, 2007
MEMORANDUM OF DECISION
On December 4, 2007, at the conclusion of the plaintiff's evidence in a bench trial, the defendants moved, under Practice Book § 15-8, for the dismissal of all counts for failure to make out a prima facie case. This memorandum explicates the court's reasoning in granting that motion.
The plaintiff is Stevenson Lumber Suffield, Inc., a supplier of lumber and other building material. In its amended complaint of June 16, 2006, the plaintiff asserts in the first count that Winloc, Inc., breached a contract to pay $26,423.75 for building supplies; in the second count that the same set of facts constitutes unjust enrichment of Winloc; and in the third count that Keith Colli, secretary of Winloc, personally guaranteed Winloc's obligations to the plaintiff and has refused to pay for Winloc's default.
More particularly, paragraph four and five of the first count allege that Winloc entered into the agreement in or about September 2005, and that the materials for which Winloc failed to pay were delivered between September 28, and December 8, 2005. These allegations were incorporated into the second and third counts. The defendants denied that any such contract or unjust enrichment existed or left the plaintiff to its proof.
Thus, it was incumbent upon the plaintiff to prove that Winloc entered into the contract described above in order to establish liability for any breach of the contract on the part of Winloc, Inc., and its guarantor, Keith Colli. Also, the plaintiff needed to prove that some financial benefit was conferred upon Winloc, Inc., in order to succeed on its unjust enrichment claim against Winloc and its guarantor.
In evaluating a motion to dismiss under Practice Book § 15-8, the court must construe all the evidence most favorably toward the plaintiff and draw all logical and reasonable inferences in support of the plaintiff's claims, Stephenson's Connecticut Civil Procedure, 3d ed., Vol. II, § 162f, p. 264. With this favorable view of the plaintiff's evidence, the court must then assess whether a reasonable trier-of-fact, acting solely on the evidence presented, could render a decision for the plaintiff on its claims. Id.
Exhibit A is a Certificate of Dissolution, executed by Winloc, Inc., on March 18, 2005, and filed with the secretary of state's office on June 20, 2005. The plaintiff presented no evidence as to the vitality of Winloc, Inc., as an ongoing corporate entity in the fall of 2005.
The plaintiff did submit evidence, viewed most favorably toward the plaintiff, which supports the factual conclusion that Robert Garfield, d/b/a RG Builders, applied for credit with the plaintiff in order to obtain lumber for the construction of a residence on behalf of a couple who owned the land upon which their home was to be built. The plaintiff disapproved Garfield's application and would only sell supplies to him on a cash basis. George Colli, Jr., attempted to intervene on Garfield's behalf because George Colli, Jr., had a relationship with Garfield's mother.
Because of Garfield's poor credit history, the plaintiff refused to allow him to purchase material on credit despite George Colli's efforts. The plaintiff did agree to furnish Garfield with the desired material if George Colli, Jr., agreed to have these purchases charged to Winloc, Inc., George Colli, Jr., consented to this arrangement, and the plaintiff billed Winloc for Garfield's purchases. The plaintiff's staff were unaware that Winloc, Inc., had been dissolved six months earlier.
On two occasions, previous to dissolution, George Colli, Jr., who was the president of Winloc, Inc., had made similar arrangements for two other builders who had been denied credit by the plaintiff or its predecessor. Winloc paid all of those bills promptly. On the date of dissolution, Winloc owed no money to the plaintiff and had not used its line of credit with the plaintiff since 2002.
The plaintiff contends that the actions of a former officer of a dissolved corporation can contractually bind the corporation in a transaction unrelated to the winding up or settling of corporate affairs. The court disagrees with that contention.
"Upon dissolution of a corporation, its officers and agents cease to be such and no longer have any power or authority to act for or bind it, except as they may be authorized by statute to do so such things as are required to adjust and wind up the corporation's business and affairs." Fletcher Cyclopedia of the Law of Private Corporations, revised 1988, Vol. 16A, § 8117, p. 367. In Connecticut, a "dissolved corporation continues its corporate existence but may not carry on any business except that appropriate to wind up and liquidate its business and affairs . . ." General Statutes § 33-884(a). (Emphasis added.)
By no stretch of the reasonable imagination can incurring new obligations to pay for the future purchases of an unrelated third party, such as Garfield, constitute winding up activity. Viewing the evidence adduced most favorably for the plaintiff, George Colli, Jr., had no power to enter new contracts for the moribund corporation post-dissolution by promising to take on the costs generated by Garfield.
While purporting to act on behalf of an ongoing corporation, George Colli, Jr., may have exposed himself to personal liability for Garfield's purchase, see Campisano v. Nardi, 212 Conn. 282, 290-91 (1989), or to allegations of misrepresentation or fraud. For whatever reasons, the plaintiff chose not to pursue legal recourse against George Colli, Jr., or Garfield.
There is a potential exception to the principle that a dissolved corporation can only lawfully act to wind up its affairs. On occasion, our courts have recognized the possible creation of a de facto corporation which can incur liability as if it possessed fully active, de jure corporate status, see Clark-Franklin-Kington Press v. Romano, 12 Conn.App. 121 (1987). However, the limited circumstances in which a de facto corporation arises are absent in the present case.
In the Clark case, supra, an ongoing corporation was involuntarily dissolved by the secretary of state for failure to file annual reports. The corporate staff made good faith efforts toward reinstatement and believed, erroneously, that de jure corporate status had been restored. The corporation conducted business as usual and entered into contracts with the plaintiff in that case. Upon default of payment, the plaintiff sought to have the shareholders, officers, and directors held personally liable because the dissolved corporation was engaged in activity beyond winding up. Id., 122.
Our Appellate Court affirmed the trial court's finding of a de facto corporation which cloaked the individual defendants with immunity. That Court stated that a "de facto corporation is an association which actually exists for all practical purposes as a corporate body, but which, because of failure to comply with some provision of the law, has no legal right to corporate existence . . ." Id., 125. (Emphasis added.) In the present case, there was absolutely no evidence proffered regarding any technical or accidental curtailment of corporate power. Winloc, Inc., was voluntarily dissolved some six months before the purported agreement. A single, isolated post-dissolution act in the corporate name is insufficient to create a de facto corporation. Haddad v. Francis, 40 Conn.Sup. 567, 572 (1986), affirmed 13 Conn.App. 324 (1988).
Consequently, the evidence fails to make out a prima facie case that a contract between the plaintiff and Winloc, Inc., to pay the costs of Garfield's purchases was formed in the fall of 2005. By the same reasoning, the actions of George Colli, Jr., at that time cannot have conferred any economic benefit upon Winloc, Inc., whose existence was confined to winding up. In addition, no evidence was adduced to show how Winloc, Inc., gained financially by Garfield's ability to obtain supplies. Derivatively, Keith Colli bears no legal obligation, as guarantor for Winloc, Inc., for the post-dissolution promises of George Colli, Jr.
The motion to dismiss is granted as to all three counts.