Bastan v. RJM & Associates, LLC

Robert Moravek, Sr., was the sole member of RJM & Associates, LLC (RJM) (defendant). RJM contracted with Charles Bastan (plaintiff) to build a house. RJM failed to pay its obligations on the contract with Bastan, and Bastan filed suit against RJM. One count in Bastan’s complaint sought to impose personal liability individually on Moravek. Bastan alleged personal liability based on the fact that Moravek was the controlling member of RJM, and arguing that (1) Moravek treated RJM funds as his own and paid virtually all his personal expenses from the RJM account, and (2) Moravek drained RJM’s assets, leaving RJM without the ability to meet its obligations. Bastan alleged that Moravek’s actions ceased RJM’s independence and that to allow the fantasy of the separate identities of RJM and Moravek would defeat the interest of justice. Moravek argued RJM was member operated and that piercing the limited-liability-company (LLC) veil was not possible, because Connecticut's statutory scheme allowed individuals to manage the LLC. Moravek provided law-review articles supporting the proposition that piercing the LLC veil was difficult for member-managed LLCs. Moravek argued that as a member-managed LLC, RJM could not be subject to piercing the LLC veil under the identity theory that there was a unity of interest in and ownership of the LLC such that the independence of the LLC ceased, because the LLC statute allowed members to act as individuals to manage the LLC.