Judge refuses to remove claims against Northland CEO

WATERBURY — Superior Court Judge Linda K. Lager has refused to remove the claims against Larry Gottesdiener, chief executive officer of Northand Investment Corp., in a suit filed on behalf of former Church Street South housing tenants.

Lager did, however, dismiss the claims against two entities: Northland Fund II LP and Northland Fund II Partners LLC.

“The allegations in the operative complaint and the reasonable inferences to be drawn therefrom, viewed in the light most favorable to the plaintiffs, suffice to allege Gottesdiener’s personal liability, subject to trial proof of Gottesdiener’s direct involvement in the conduct alleged,” Lager wrote.

She said a motion to strike a defendant from a suit obligates the court “to examine the allegations of the complaint in the light most favorable to the plaintiffs.”

Attorney David Rosen filed a class-action suit against Northland in 2016, charging that Gottesdiener and the two other business creations allowed the complex to fall into disrepair so they then could raze the apartments and use the land for a better return.

Rosen represents 271 tenants, while six are named as plaintiffs. Contractors are demolishing all the apartments on the 13-acre site.

Northland bought the property in 2008 and by end of 2015, the tenants were moving out after many spent time temporarily in hotels because of the condition of the buildings.

The plaintiffs allege that as a result of the conduct of the defendants, the tenants suffered physical and emotional injuries, loss of personal property and other losses.

Lager wrote that the “court’s role is not to decide whether the evidence will support the cause of action but only to determine whether the allegations are legally sufficient to state the cause of action.”

The class-action status is expected to come up when the court resumes hearing the case Aug. 30 in Waterbury.

The two corporate entities and Gottesdiener said the complaint fails to allege sufficient facts to impose liability

Rosen claims that Northland Fund II LP and Northland Fund II Partners LLC were “shell defendants” which “cannot insulate Northland from liability under the general law of corporations and partnerships.”

Lager wrote that usually a corporate structure protects shareholders and corporate leaders. The doctrine of “piercing the corporate veil” allows a court to disregard the corporate structure.

The multiple Northland entities were established in Delaware.

“Delaware law favors coporate structures,” Lage wrote in her ruling. Quoting another case:

“It should be noted at the outset that persuading a Delaware Court to disregard the corporate entity is a difficult task. The legal entity of a corporation will not be disturbed until sufficient reason appears,” according to the Delaware case.

Quoting another case, Lager wrote that the “fraud or injustice must consist of something more than the alleged wrong in the complaint and relate to a misuse of the corporate structure.”

The bottom line is Lager found that the plaintiffs failed to meet the requirements to “pierce the corporate veil” to connect the multiple Northland entities to wrongdoing.

The suit seeks to hold Gottesdiener personally liable for the conditions at Church Street South.

The plaintiffs’ suit says there are differences between the corporate protections for Northland Fund II LP and Northland Fund II Partners LLC, and the law governing Gottesdiener.

They said Connecticut law applies to the CEO and there are no “piercing the corporate veil” stipulations.

The plaintiffs charge that Gottesdiener, from the beginning, was involved in the purchase and day-today management of Church Street South, including moving families to motels.

It states that he and the other officers knew that in order to provide “decent, safe and sanitary” housing, the complex needed a lot of work.

The defendants say there are not enough specific facts to back those allegations.

Lager pointed out that at this stage, “the court must deal only with the sufficiency of the allegations and not their accuracy as the court must presume compliance with the Practice Book .... requirement that there is ‘good ground’ to support the allegations of the complaint.”