## Facts

- Robert J. Moravek, Sr. was the sole member of RJM & Associates, LLC (RJM).
- RJM contracted with Charles Bastan to build a house.
- Bastan alleged RJM failed to pay obligations arising from the construction contract.
- Bastan sued RJM and, in a separate count, sought to impose personal liability on Moravek.
- Bastan alleged Moravek dominated and controlled RJM and used that control to treat RJM’s money as his own.
- Bastan alleged Moravek paid virtually all of his personal expenses from RJM’s account.
- Bastan alleged Moravek drained RJM’s assets, leaving RJM unable to meet its contractual obligations.
- Bastan alleged Moravek’s conduct ended RJM’s separate existence in practice, and that recognizing RJM and Moravek as separate would defeat the interest of justice.
- Moravek moved to strike the personal-liability count, arguing that because Connecticut’s LLC statute permits member management and provides limited liability, a member-managed LLC’s veil should not be pierced based on a “unity of interest/ownership” theory.
- Moravek submitted law-review commentary to support the view that veil-piercing should be difficult to apply to member-managed LLCs.

## Issues

1. Whether Connecticut law permits veil-piercing theories (including the identity and instrumentality rules) to be asserted against a member of a member-managed LLC despite statutory limited-liability protections.
2. Whether Bastan’s allegations that Moravek commingled LLC and personal finances and stripped the LLC of assets stated a legally sufficient basis to pursue personal liability at the motion-to-strike stage.

## Decision

- The court denied Moravek’s motion to strike the count seeking to impose personal liability on him.
- The court concluded that traditional veil-piercing doctrines may apply to an LLC and are not barred simply because the LLC is member-managed under Connecticut’s statutory scheme.
- The court held that, taking the pleaded facts as true and construing them in Bastan’s favor, the allegations of treating LLC funds as personal funds and draining the LLC’s assets were sufficient to allow the veil-piercing claim to proceed.

## Legal Principles

- A motion to strike tests only the legal sufficiency of the challenged pleading; the court assumes the truth of well-pleaded facts and reads them in the nonmovant’s favor.
- Connecticut’s limited-liability protections for LLC members do not operate as an absolute bar to equitable doctrines that impose personal liability when the entity form is misused.
- Veil-piercing may be pursued under recognized Connecticut approaches, including:
  - the instrumentality rule (control used to commit a wrong that causes the plaintiff’s loss), and
  - the identity rule (a unity of interest and ownership so complete that the entity’s independence has ceased, and treating the entity as separate would sanction a wrong or result in injustice).
- Statutory authorization for member management does not, by itself, defeat an identity-rule theory; the key question is whether the member’s conduct treated the LLC as a mere alter ego and whether separation would lead to an unjust result.
- Allegations of commingling, payment of personal expenses from company accounts, and stripping the company of assets so it cannot meet obligations are the type of facts that can support veil-piercing if proven.

## Conclusion

Bastan v. RJM & Associates, LLC held that Connecticut’s LLC limited-liability statute does not categorically prevent veil-piercing claims against a member of a member-managed LLC, and the Superior Court therefore denied Moravek’s motion to strike where the complaint alleged he used RJM’s accounts for personal expenses and drained RJM’s assets, leaving it unable to pay its contractual obligations.


Bastan v. RJM & Associates, LLC, 2001 Ct. Sup. 7733 (2001)