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Ralroc , L.L.C.
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Dealer's Quest , Inc.
Dealer's Quest , Inc.
Carbonello & Desarbo, Inc. v. Dealer's Quest, Inc. et al. (Connecticut 05/12/2003)
The defendant Ralph Ruocco, is alleged to be the sole stockholder and director of Dealer's Quest.
The plaintiff is seeking payment for fruit and produce delivered to the two corporate defendants, and has filed an eight-count complaint. Counts one and three have been withdrawn. The second count is directed against Dealer's Quest alleging that between August 7 and October 6, 2000, the plaintiff sold and delivered to said defendant food and produce [*2] valued at $ 6,066.73 and the plaintiff has not been paid. The fourth count is directed at Superior Steaks and claims that fruit and produce was sold and delivered to said defendant between June 27 and October 31, 2000 in the amount of $ 6,246.00, and that the plaintiff has not been paid. The fifth count names both Dealer's Quest and Ruocco as defendants, and requests, with respect to the $ 6,066.73 claimed in the second count, that the court pierce the corporate veil and hold Ruocco personally liable for said obligation. The fifth count also alleges that Ruocco caused Dealer's Quest to convey all of the assets of Dealer's Quest to Ralroc, LLC without consideration in order to hinder delay and defraud creditors of Ruocco and Dealer's Quest. Ralroc, LLC is a limited liability corporation incorporated by Ruocco in April 2001. In addition, by way of special defenses, Dealer's Quest alleges that a considerable portion of the produce provided by the plaintiff was unusable, and Ruocco alleges that he never purchased any produce from the plaintiff or agreed to make any payments for any item purchased. First, the plaintiff claims that Ruocco should be held personally liable for the obligation incurred by Dealer's Quest. Second, the fifth count alleges that between April 11, 2001 and April 25, 2001, there was a fraudulent transfer of the assets of Dealer's Quest to Ralroc, which is also the claim in the sixth and seventh counts. The plaintiff, in seeking to have Ruocco held liable for the obligation of Dealer's Quest, is asking the court to "pierce the corporate veil." In its memorandum of law the plaintiff claims that the court should pierce the corporate veil of Superior Steaks and Dealer's Quest and hold Ruocco responsible for both obligations. The only testimony relative to the operations of Dealer's Quest came from Ruocco. He was the president and the only stockholder and director of Dealer's Quest. This was a closely held corporation and Ruocco made all of the corporate decisions. He was the only one authorized to sign checks. He occupied an apartment in Groton which was leased to the corporation. He drew no salary, although all of his personal expenses were [*9] charged to his personal credit card and then paid by the corporation. It was his testimony that he had loaned large sums of money to the corporation and that his accountant, Jeffrey Seader, had advised him that any personal bills paid by the corporation would be considered as repayment of his loans to the corporation. He testified that his accountant had the books and records which would show what was owed to him, which he claimed exceeded $ 100,000. He also testified that some of the corporate records of Dealer's Quest had been destroyed following a robbery on March 16, 2002, and that bank statements and checks were thrown away after a couple of years. In its memorandum of law the plaintiff claims that Ruocco had no personal bank accounts. While he had no personal bank accounts at the time of the trial in October 2002, Ruocco did have such accounts while Dealer's Quest was operating the restaurant from 1999 until April 2001. Corporate records of Dealer's Quest were maintained as is reflected by the 1999 and 2000 federal and state corporate tax returns which were in evidence. At the time of the trial the 2001 tax returns had not yet been filed. In April 2001, Dealer's Quest became [*10] insolvent and Ruocco decided to terminate the corporation. He then formed a new entity, Ralroc, LLC which took over the Golden Corral restaurant and began operating it. Ruocco is one of the limited partners and his relationship with Ralroc, LLC appears to be similar to the one he had with Dealer's Quest. As indicated earlier, the only witness who testified concerning the operation of Dealer's Quest was Ruocco. It is clear that Ruocco was the principal figure in the operation of Dealer's Quest, Inc., d/b/a Golden Corral Restaurant. The Corporation did business with the plaintiff for a period of over twenty-one months and for nineteen of these months the corporation paid the bills, although sometimes late. The bills incurred during the last two months of the business relationship remain unpaid and the plaintiff now seeks to hold Ruocco personally responsible. The plaintiff has the [*11] burden of proving that the relationship of Ruocco to Dealer's Quest was such that this court, under either the instrumentality or identity theory, should pierce the corporate veil and hold Ruocco personally responsible for the corporate obligation. Based on the limited evidence presented the court finds that the plaintiff has not met its burden of proof under either theory. As was pointed out in KLM Industries, Inc., even though a corporation has a distinct legal existence, it must act through individuals. A court should not pierce the corporate veil except under exceptional circumstances. Those exceptional circumstances have not been shown in this case. The fifth count also includes a claim that in April 2001 Ruocco caused Dealer's Quest to make a transfer of all of its assets to Ralroc, without consideration and when Dealer's Quest was insolvent, with the deliberate intent to defraud creditors of Ruocco and Dealer's Quest, and that Ralroc received these assets with knowledge of said fraudulent intent and with the intent to assist Ruocco and Dealer's Quest in that fraudulent purpose. The sixth count alleges that Dealer's Quest transferred all of its assets to Ralroc with the [*12] intent of avoiding the plaintiff's debt and that Ralroc, in accepting the assets, conspired with Dealer's Quest to accomplish that purpose. The seventh count alleges that Dealer's Quest transferred all if its assets to Ralroc without consideration with the intent to defraud the plaintiff. By way of relief the plaintiff asks the court to set aside the conveyance of the assets and declare it null and void as to the plaintiff. The plaintiff has failed to prove the various claims in connection with the alleged transfer of assets by Dealer's Quest. The only evidence about assets of Dealer's Quest was that the various fixtures located in the restaurant were owned by Ruocco, that Dealer's Quest owned no physical assets, and that neither Dealer's Quest nor Ruocco transferred any assets to Ralroc. The court also notes that Ralroc is not a defendant in this case. The eighth count is directed at Ruocco and Dealer's Quest. It realleges the entire fifth count and then adds a claim that Ruocco and Dealer's Quest committed an unfair or deceptive trade practice in violation of the Connecticut Unfair Trade Practice Act, § 42-110a et seq., of the Connecticut General Statutes (CUTPA). Accordingly, for the reasons set forth above, judgment may enter on the second count in favor of the plaintiff as against the defendant Dealer's Quest, Inc., in the amount of $ 6,066.73 and in favor of the defendants Ralph Ruocco and Dealer's Quest, Inc. [*14] on the fifth, sixth, seventh and eighth counts.