COMMERCIAL LAW: Appellate Court addresses commercial litigation and theft issues, as well as piercing of corporate veil

In a decision officially released June 5, 2012, The Connecticut Appellate Court states in part:

ROBINSON, J.

The defendant, Harry Terdjanian, appeals from the trial court’s judgment rendered in favor of the substitute plaintiff, Rana Automaster, LLC, 1 for conversion, statutory theft and a violation of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq., and from the court’s subsequent award of offer of judgment interest and attorney’s fees. The defendant claims that the court improperly (1) denied his motions to dismiss the action, (2) determined that the defendant had committed statutory theft under General Statutes § 52-564, (3) awarded the plaintiff attorney’s fees, (4) concluded that the defendant was not shielded from liability by his limited liability company, (5) determined that the defendant converted funds and (6) determined that the defendant violated CUTPA. We disagree and, accordingly, affirm the judgment of the trial court.

The following facts and procedural history are relevant to our review. In 2001, the defendant, through a limited liability company, owned two auto repair businesses, each operating under the name Automaster Service Center. One business was located in Wethersfield; the other was located in Southington. American Express Company (American Express) authorized the defendant’s businesses to accept American Express credit card payments and assigned each business its own unique ‘‘establishment number.’’ 2

In July, 2001, the plaintiff purchased the Wethersfield business from the defendant. After the sale, the defendant neglected to advise American Express of the sale and to cancel the establishment number assigned to the Wethersfield business. The plaintiff meanwhile obtained its own authorization from American Express to accept American Express credit card payments, and American Express issued the plaintiff a new establishment number for the Wethersfield business. Because the defendant never cancelled the old establishment number associated with the Wethersfield business, the plaintiff continued to receive statements associated with the old establishment number from American Express. Nevertheless, because the company that processed payments from American Express to the plaintiff had the plaintiff’s correct establishment number and associated bank account number, no issues initially arose as a result of the failure to cancel the old establishment number.

The plaintiff, however, changed credit card processing companies in August, 2006. Anees U. Rana, who operated the Wethersfield business for the plaintiff, completed the application required by the new processing company. In so doing, Rana mistakenly referred to one of the statements containing the defendant’s old establishment number and listed that old establishment number on the application as the establishment number for the current Wethersfield business. Because of that mistake, between August, 2006, and July, 2007, the new processing company deposited American Express payments for work done at the plaintiff’s Wethersfield business into the defendant’s bank account because that was the account associated with the old establishment number. Rana did not notice the error until May, 2007, at which time he contacted American Express. After conducting an investigation, American Express acknowledged that payments had been deposited erroneously into the defendant’s bank account. American Express was able to transfer $961.31 associated with a June 14, 2007 payment from the defendant’s account to the plaintiff’s account, but it advised the plaintiff that it was not authorized to make any additional transfers because of its standard agreement with American Express merchants.

Rana contacted the defendant seeking repayment of $5133.95 in additional deposits that the processing company erroneously had paid into the defendant’s bank account. Rana provided the defendant with documentation for the erroneous deposits, including statements from American Express, and met with the defendant on several occasions to resolve the matter and to secure repayment of the misdirected funds. The defendant, however, would not agree to reimburse the plaintiff.

In March, 2008, Rana commenced this action against the defendant in small claims court as a self-represented party. In July, 2008, the defendant had the matter transferred to the regular docket of the Superior Court pursuant to Practice Book § 24-21. Rana obtained counsel, who filed a four count complaint alleging conversion, statutory theft, unjust enrichment and a CUTPA violation. 3 On April 21, 2010, Rana filed an offer to settle his claims against the defendant for $5000 pursuant to General Statutes § 52-192a, but the defendant did not accept the offer within the applicable statutory time frame.

The case was tried to the court over the course of three days between October 6 and November 9, 2010. On the second day of trial, during cross-examination of Rana by the defendant, it was brought to light that the operative complaint incorrectly alleged that Rana had obtained the Wethersfield business from the defendant in 2006, when, in fact, the business had been obtained in 2001 by the plaintiff, not by Rana. Rana further testified that his wife, Farhana Y. Syed, was the plaintiff’s sole member, and that he operated the business and was the plaintiff’s agent for service. After the close of Rana’s case-in-chief, the court, citing General Statutes §§ 34-134 4 and 34-187, 5 raised, sua sponte, the issue of whether Rana had standing to bring the action on behalf of his wife’s limited liability company. 6 The court gave counsel until October 22, 2010, to filea memorandum explaining ‘‘how it is that [Rana] has standing to bring this action in his individual capacity.’‘

* * *

For additional information regarding this case, see:  http://www.jud.ct.gov/external/supapp/Cases/AROap/AP136/136AP378.pdf