418 Meadow Street Associates, LLC v. One Solution Services, LLC
In determining whether two members who jointly held a 50 percent interest had standing to initiate a lawsuit on behalf of a limited liability company without the consent of its third member who held the remaining 50 percent, the appropriate inquiry under Connecticut General Statues §34-187(b), is whether the third member "has an interest in the outcome of the suit that is adverse to the interest of the limited liability company," rather than the interest of other members of the company. Barbara and Steven Levine were the original owners of 418 Meadow Street Associates, LLC. Steven Levine sold his 50 percent interest to Michael Weinshel and Mark Wynnick, making them joint owners with Barbara Levine. Weinshel and Wynnick brought this action on behalf of 418 Meadow Street to recover damages from One Solution Services, LLC, for breach of their lease agreement. The defendant filed an answer with special defense, alleging that the action was brought without the proper authority of its members and therefore, the plaintiff lacked standing to maintain the action. The court entered a default judgment against the defendant and following a hearing in damages awarded the plaintiff $66,508.40 in damages. The defendant appealed. The Appellate Court reversed the judgment and remanded the case, finding that the court erred in denying the defendant's motion to open the default judgment and failing to address the issue of standing to determine if it had subject matter jurisdiction. On remand, the trial court rejected the defendant's claim that the two members of 418 Meadow Street lacked standing to bring the action without the consent of the third member who held a 50 percent interest. The defendant appealed. The Appellate Court reversed the judgment and remanded the case. The trial court erred in finding that Weinshel and Wynnick had standing to bring the action without Barbara Levine's consent because of animosity amongst them. The trial court's analysis of whether Barbara Levine's interest was "adverse" under C.G.S. §34-187(b) was defective because it focused on animosity between her and the two other members rather than on whether her interest was adverse to the interest of 418 Meadow Street.