## Facts

- Robert Manere and Peter Collins formed BAHR, LLC, to purchase and operate a café in Connecticut; Collins held a 60% membership interest and Manere held 40%.
- Both men were the LLC’s sole members and managers, but Collins lived out of state, so Manere ran the café as the on-site manager.
- The members agreed BAHR would pay Manere a weekly manager’s salary.
- Without Collins’s knowledge, Manere increased his own salary payments and used BAHR funds to pay personal expenses.
- Collins later moved closer to the café and began investigating BAHR’s finances after growing concerned about the business’s records and cash flow.
- Collins requested financial records from Manere; Manere did not provide complete documentation, so Collins reconstructed an incomplete financial history from available materials.
- Based on that reconstruction, Collins concluded Manere had misappropriated almost $200,000 in BAHR funds.
- Collins removed Manere as a BAHR manager, terminated Manere’s son from his café employment, stopped payment on checks issued to Manere, and changed the café locks to prevent Manere’s access.
- Manere asserted Collins also stopped Manere’s distributions and refused to provide BAHR documents upon request.
- Manere sued Collins and BAHR in Connecticut state court, including a claim seeking judicial dissolution of BAHR for “oppressive” conduct under Conn. Gen. Stat. § 34-267(a)(5).
- BAHR filed a counterclaim alleging Manere breached fiduciary duties by misusing company funds.
- After a bench trial, the trial court found for Collins and BAHR on Manere’s claims and for BAHR on its counterclaim; Manere appealed.

## Issues

1. Whether BAHR’s counterclaim, based on allegations of Manere’s misuse and diversion of LLC funds, sufficiently pleaded a breach of fiduciary duty claim.
2. Whether the trial court applied the correct statute of limitations to BAHR’s breach of fiduciary duty counterclaim.
3. Whether Collins’s conduct toward Manere (including removal from management, lockout, stopping checks, and alleged withholding of distributions and information) was “oppressive” so as to justify judicial dissolution of BAHR under Conn. Gen. Stat. § 34-267(a)(5).

## Decision

- The appellate court concluded BAHR’s counterclaim was legally sufficient as a breach of fiduciary duty claim based on the substance of the factual allegations.
- The appellate court held the trial court applied the wrong statute of limitations to BAHR’s counterclaim and reversed and remanded for further proceedings applying the proper limitations analysis.
- The appellate court affirmed the trial court’s rejection of Manere’s request for judicial dissolution, holding the evidence supported the finding that Collins’s conduct did not warrant dissolution under § 34-267(a)(5).
- The judgment was affirmed in part, reversed in part, and remanded.

## Legal Principles

- Connecticut pleading rules focus on the facts alleged rather than the title of the cause of action; a claim is treated according to its substance when the allegations describe the existence of a duty, a breach, and resulting harm.
- A breach of fiduciary duty claim commonly sounds in tort for limitations purposes, so courts must apply the limitations statute that governs tort claims rather than automatically applying longer contract-based periods.
- When the statute of limitations is applied to a fiduciary-duty claim involving alleged financial misconduct over time, the trial court must determine what portions of the claim are time-barred under the correct statute and when the cause of action accrued.
- Judicial dissolution under Conn. Gen. Stat. § 34-267(a)(5) is an extraordinary remedy; a court evaluates whether alleged “oppressive” conduct in a closely held LLC justifies ending the entity rather than resolving the dispute through less drastic means.
- In assessing “oppressive” conduct in an owner-managed business, courts may consider the members’ reasonable expectations arising from their arrangement and whether the complained-of actions were tied to a legitimate business reason in response to misconduct.

## Conclusion

In *Manere v. Collins*, the Connecticut Appellate Court upheld the trial court’s refusal to dissolve BAHR, LLC, rejecting the minority member’s oppression theory in light of the trial court’s findings regarding his misuse of company funds and the majority member’s business justification for taking control, but it reversed and remanded on the LLC’s fiduciary-duty counterclaim because the trial court used an incorrect statute of limitations.


Manere v. Collins, 241 A.3d 133 (2020)