Balzer et al v. Millward et al

Filing 44

ORDER granting 21 Plaintiff's Motion for Prejudgment Remedy in the amount of $26,073.16. Signed by Judge Holly B. Fitzsimmons on 4/21/2011. (Garcia, M.)

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
ROBERT BALZER AND
PAULA BALZER
v.
JOHN MILLWARD, TREVA COOKE,
DYLAN COOKE AND
BLUE FLAME, LLC

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CIV. NO. 3:10CV1740 (SRU)

RULING ON PLAINTIFFS’ APPLICATION
FOR PREJUDGMENT REMEDY
Plaintiffs Robert and Paula Balzer bring this action to
recover damages from defendants John Millward, Treva Cooke, Dylan
Cooke and Blue Flame, LLC, arising out of the breakdown of an
alleged partnership. [Doc. #29, First Amended Complaint].
Plaintiff moves for a prejudgment remedy against Defendant
Blue Flame, LLC in the amount of $26,560.56. [Doc. #21]. A
hearing was held on February 18 and March 25, 2011. [Doc. ##34,
40].
In support of their application for entry of a PJR,
plaintiffs presented the testimony of Treva Cooke, Paula Balzer,
Peter Olson, Robert Balzer, and John Millward; introduced
exhibits 1, 7, 8, 9, 11, 12, 14, 15, 16, 17, 18, 19, 20, 25, 27,
28, 31, 32, 35, 36, 37, 38, 39, 40, 43, 48 and 49; and filed the
affidavit of Paula Balzer. [Doc. ##21-1, 35, 36, 41, 42].
Opposing plaintiffs’ motion, defendants offered exhibits D, G-1,

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H, I, J, K, L, M, N and O, and the testimony of John Millward and
Paula Balzer. [Doc. ##36, 43].

I. PROBABLE CAUSE STANDARD
To grant a motion for prejudgment remedy of attachment, the
court must make a finding of "probable cause." Connecticut
General Statutes § 52-278c(a)(2) requires that the application
include:
An affidavit sworn to by the plaintiff or any
competent affiant setting forth a statement
of facts sufficient to show that there is
probable cause that a judgment in the amount
of the prejudgment remedy sought, or in an
amount greater than the amount of the
prejudgment remedy sought, taking into
account any known defenses, counterclaims or
set-offs, will be rendered in the matter in
favor of the plaintiff.
Connecticut General Statute §52-278d provides that a PJR
hearing is limited to a determination of “whether or not there is
probable cause that a judgment in the amount of the prejudgment
remedy sought, taking into account any defenses, counterclaims or
set-offs, will be rendered in the matter in favor of the
plaintiff.”
“Probable cause,” in the context of a prejudgment remedy,
has been defined by Connecticut courts as “a bona fide belief in
the existence of the facts essential under the law for the action
and such as would warrant a man of ordinary caution, prudence and
judgment, under the circumstances, in entertaining it.”
2

Three S.

Dev. Co. v. Santore, 193 Conn. 174, 175 (1984) (quotation marks
and citation omitted).
In other words, in addressing PJR applications, the “trial
court's function is to determine whether there is probable cause
to believe that a judgment will be rendered in favor of the
plaintiff in a trial on the merits.” Calfee v. Usman, 224 Conn.
29, 36-37 (1992) (citation omitted).

A probable cause hearing

for the issuance of a prejudgment remedy “is not contemplated to
be a full scale trial on the merits of the plaintiff's claim.”
Id. at 37.

The plaintiff need only establish that "there is

probable cause to sustain the validity of the claim." Id.
Probable cause “is a flexible common sense standard.

It does not

demand that a belief be correct or more likely true than false.”
New England Land Co. v. DeMarkey, 213 Conn. 612, 620 (1990)
(citation omitted).

“[T]he Court must evaluate not only the

plaintiff's claim but also any defenses raised by the defendant.”
Haxhi v. Moss, 25 Conn. App. 16, 20 (1991) (citation omitted).
Moreover, “damages need not be established with precision
but only on the basis of evidence yielding a fair and reasonable
estimate.” Burkert v. Petrol Plus of Naugatuck, Inc., 5 Conn.
App. 296, 301 (1985) (citation omitted).

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II. FINDINGS
After considering the evidence presented, the Court finds
the following facts for the limited purpose of deciding the
instant PJR.
Blue Flame, LLC, was started in 2005 by defendants Treva
Cooke and John Millward. (Tr. Feb. 18, 2011 at 4, 72). Blue
Flame, headquartered in Norwalk, CT is in the business of
marketing and live event promotions. In 2008, Treva Cooke
approached Paula Balzer to come to work for Blue Flame.
Feb. 18, 2011 at 12-13).

(Tr.

Paula Balzer and Treva Cooke went to

college together, and throughout the years, worked together on
different ventures. Paula Balzer, with vast experience in
marketing and public relations, began working for Blue Flame in
July 2008 as a “change agent for the company”. (Id. at 16). Her
responsibilities included “helping with the organizational
structure of the company, helping to set up the different
systems, strategy development for both new clients and existing
clients”. (Id.). Plaintiffs allege that in addition to offering
Ms. Balzer employment with Blue Flame, effective October 1, 2008,
Ms. Balzer was made a partner of Blue Flame, LLC. As a partner,
Ms. Balzer was paid a monthly $15,000 net draw. (Id. at 14).
Robert Balzer joined Blue Flame in early 2009 to perform
accounting functions, including bookkeeping, creating and
implementing policies and procedures for bookkeeping, maintaining

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general ledgers, improving accounts receivable and accounts
payable; in all, getting the company in financial shape. (Tr.
Feb. 18, 2011 at 120). Plaintiffs allege that Robert Balzer was
made a partner of Blue Flame LLC in September 2009. As a partner,
Mr. Balzer was paid a biweekly net draw of $3,700.

(Tr. Feb. 18,

2011 at 123).
In October of 2010, the work relationship between the
Balzers and John Millward and Treva Cooke deteriorated. As part
of the falling-out, on October 25, 2010, the Balzers were denied
access to the Blue Flame bank and e-mail accounts. (Tr. Feb. 18,
2011 at 30). Despite defendants’ efforts to disengage the Balzers
from Blue Flame, Paula Balzer saw through two events that Blue
Flame was committed to staging, the first for Google in
California and the second for Duane Reed. (Id. at 31-32). Ms.
Balzer did work on behalf of Blue Flame through November 12,
2010. (Id. at 36). The Google and Duane Reed events brought
revenues to Blue Flame totaling approximately $250,000. (Id.). In
connection with staging the two events, Ms. Balzer incurred
expenses for which she has not been reimbursed. (Id.).
Specifically, Ms. Balzer charged $6,320.08 to her Blue Flame
corporate American Express credit card, out of which $5,832.68
are business expenses.1 [See Pl’s Ex. 35]. She also incurred out-

1

Paula Balzer testified that charges for JetBlue Tickets on
November 10, 2010, which totaled $487.40, were nonbusiness
expenses.
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of-pocket expenses for her work on behalf of Blue Flame totaling
$1,540.48, [Pl’s Ex. 43], for which she was not reimbursed.
Finally, between October 15 and November 12, 2010, Blue Flame did
not pay Ms. Balzer her salary or guaranteed draw, which was
$15,000 a month. (Tr. Feb. 18, 2011 at 165).
From the date of the falling out, through the end of the
month, Mr. Balzer worked on mitigating damages, which included
dealing with complaints from the staff and working on alternative
sources of financing. (Tr. Feb. 18, 2011 at 141-142). Mr. Balzer
was not paid his biweekly draw of $ 3700 for the work he did for
Blue Flame from October 15, 2010 through the end of the month.
(Id. at 136-137).

III. DISCUSSION
Plaintiffs allege in Count Two of the complaint that,
“Defendants’ refusal and failure to fulfill their obligations
pursuant to the agreement with the Plaintiffs and their
respective ownership interest in Blue Flalm [sic] is a breach.”
[Doc. #15, ¶26]. “The elements of a breach of contract claim are:
(1) the existence of a contract; (2) a breach of the contract;
and (3) damages resulting from the breach.” Bastanzi, 2005 WL
5543590, at *4

(citing Chem-Tek, Inc. v. Gen. Motors Corp., 816

F. Supp. 123, 131 (D. Conn. 1993) (citing O'Hara v. State, 218
Conn. 628 (1991))).

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1. Existence of a contract (partnership agreement)
The “agreement” referenced in the complaint is an agreement
to form a partnership. Both parties agree that until October 25,
2010, Robert and Paula Balzer performed work for and on behalf of
Blue Flame and that they were compensated and given benefits for
this work. The main issue in dispute is whether the plaintiffs
were made partners in Blue Flame.
It is undisputed that the parties never executed an
operating agreement memorializing a partnership agreement.2
However, contrary to defendants’ position, a “written contract of
partnership is not necessary to the formation of a partnership.”
59A Am. Jur. 2d Partnership § 90.
A partnership is a contractual relation, which may be
implied from conduct and circumstances alone. See 59A Am. Jur. 2d
Partnership § 89. Connecticut General Statutes § 34-314(a)
defines the formation of a partnership as follows: “the
association of two or more persons to carry on as co-owners a
business for profit forms a partnership, whether or not the
persons intend to form a partnership.” The elements of a
partnership as expressed by the courts, generally include,
an association of persons to combine property, money,

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Defendants testified that there were conversations about
partnership and all aspects of partnership but that the parties
never advanced beyond a redline agreement.
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effects, skill, and knowledge under a contract or agreement
to carry out a lawful business enterprise for profit;
co-ownership of the business enterprise; the conduct or
contemplation of business activity; a community of interest
in the business profits, management, and control; and the
sharing of profits and losses from the business enterprise.
59A Am. Jur. 2d Partnership § 131. “The filing of a
partnership tax return is also characterized as creating a
presumption of partnership, as pertinent to establishing its
existence, or as significant evidence of partnership under state
and federal income tax laws that permit a business partnership
return to be filed only on behalf of an enterprise created to
carry on a business.” 59A Am. Jur. 2d Partnership § 191.
In light of the evidence, the Court finds that there is
probable cause to believe that the parties had established a
partnership. The fact that the parties had been working on
drafting and executing a formal operating agreement does not
negate the fact that the Balzers were already partners of Blue
Flame, as evidenced by the equity issued to the Balzers, the
treatment by defendants of the Balzers as partners, and the Blue
Flame partnership tax returns.
The Court finds the Balzers received equity in Blue Flame;
John Millward, in various e-mails, referenced equity that was
“issued” to the Balzers. The first e-mail -subject line:
“partners meeting”- states, “It was my understanding that when we
issued additional equity to Paula that all partners would receive

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the same base pay.” [Pl’s Ex. 8 (emphasis added)]. The second email

-subject line: “Partner Pay”- referencing Robert Balzer’s

equity, states, “We also issued 8% ownership in recognition of
Bob’s efforts”. [Pl’s Ex. 16 (emphasis added)].
The equity issued is reflected in the 2009 partners
distribution analysis that Robert Balzer e-mailed to Treva Cooke
and John Millward. [Pl’s Ex. 9]. The record before the Court
establishes that defendants never denied or called into question
the accuracy of the report.
Most compelling are the 2008 and 2009 tax returns for Blue
Flame, LLC. [Pl’s Ex. 37 and 38]. The 2008 tax return states that
in 2008 Paula Balzer was a partner of Blue Flame with a 25% share
of the “profit, loss, and capital”. [Pl’s Ex. 37]. The 2009 tax
return states that Paula Balzer’s equity was reduced to 23% and
Robert Balzer was issued 8% equity by the end of 2009. [Pl’s Ex.
38]. The tax returns were prepared by Peter Olsen, who was
introduced to Treva Cooke and John Millard by the Balzers, yet
Mr. Olson continues as Blue Flame’s accountant despite the
falling out.3

Mr. Olsen, a disinterested witness, testified that

he discussed the 2008 tax return with all four partners.
Specifically, he testified that “percentages were discussed” and

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Q: You do personal work –As of today you’ve been engaged by
John and Treva and Blue Flame?
A (Olsen): As far as I know, I’m still getting calls from
Dylan [Treva’s son who works for Blue Flame]. (Tr. Feb. 18, 2011
at 107).
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that he explained that “partners who aren’t getting payroll will
have a draw and they have to pay their own estimated taxes.”
(Tr. Feb. 18, 2011 at 92).

Mr. Olson also prepared the 2009 tax

return which was discussed with all four partners on a scheduled
phone call. (Id. at 102).
Blue Flame, LLC issued equity to the Balzers in exchange for
their work and expertise in marketing and live event promotion
and accounting. The Court finds that, by agreement, the Balzers
were made partners of Blue Flame, LLC and treated as partners by
Treva Cooke and John Millward. [Pl’s Ex. 39 and 40].4 The first
element of the Balzers’ cause of action is satisfied.
2. Breach of Contract and Damages
The evidence establishes that defendants breached the
partnership agreement with plaintiffs, causing plaintiffs
monetary damages.

Martin v. Dupont Flooring Systems, Inc., No.

3:01CV2189 (SRU), 2004 WL 726903, at *3 (D. Conn. Mar. 31, 2004)
(Breach of contract is an "unjustified failure to perform all or
any part of what is promised in a contract.”). As partners,
plaintiffs were promised a net draw, which was not paid to the
Balzers as of October 15, 2010, despite the fact that plaintiffs
continued to work for and on behalf of Blue Flame. Failure to pay

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On October 22, 2010, Bob Balzer sent a letter to John
Millward in which he writes “I do not work for you – I am a
partner in this company”. Pl’s Ex. 1. This fact was not refuted
by John Millward in his response e-mail. [See Pl’s Ex. 20].
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plaintiffs their draw constitutes a breach. Further, Blue Flame
issued business credit cards to all partners for business
expenses with the understanding that they would be reimsbursed by
Blue Flame for these and any other out-of-pocket business-related
expenses. Failure to reimburse Paula Balzer for the business
expenses incurred from October 25, 2010 through November 11, 2010
for Blue Flame events constitutes a breach.5 The second and third
elements are satisfied.
Based on the evidence presented, the Court finds probable
cause to believe that a judgment in the amount of $26,073.16 will
be rendered in favor of plaintiff on Count II in a trial on the
merits.

Calfee v. Usman, 224 Conn. 29, 36-37 (1992); see Conn.

Gen. Stat. §52-278c(a)(2). At the second hearing, defendants, for
the first time, raised the issue that their counterclaims
provided them with an offset. However, no evidence was introduced
to support that claim.

IV. AMOUNT OF ATTACHMENT
The Court awards plaintiffs an attachment of $26,073.16 as
follows:
P. Balzer’s draw from Oct 15-Nov 12, 2010

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$ 15,000.00

This is especially true in light of the evidence that Blue
Flame was paid by Google and Duane Reed over $250,000 for the
events for which the expenses were incurred.
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Blue Flame, LLC American Express bill

$

5,832.686

Out of pocket expenses incurred for
Duane Reade event on behalf of Blue Flame, LLC

$

1,540.48

R. Balzer’s draw from Oct 15-Oct 31, 2010

$

3,700.00

TOTAL

$26,073.16

V. CONCLUSION
Based on the foregoing, plaintiff<s Application for a
Prejudgment Remedy [Doc. #21] is GRANTED in the amount of
$26,073.16.7 Defendants will comply with this ruling and order
within fourteen (14) days.
Entered at Bridgeport this 21st day of April 2011.

______/s/___________________
HOLLY B. FITZSIMMONS
UNITED STATES MAGISTRATE JUDGE

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Defendants argued that expenses for Debbie Toler, Ms.
Balzer’s assistant, on October 27, 2010 should be deducted
because defendants had asked Ms. Balzer to fire Ms. Toler. This
Court, having found probable cause that Ms. Balzer is a partner
of Blue Flame, rejects this argument.
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See Aetna Life Ins. Co. v. Toothsavers Dental Serv., No.
96 CV 570 (GLG), 1997 WL 102453 (D. Conn. Feb. 4, 1997) (finding
referral to Magistrate Judge "for the purpose of a hearing on
prejudgment remedy" was a request for a determination of the
prejudgment remedy pursuant to 28 U.S.C. §636(b)(1)(A) and was
not a recommended ruling effective only upon a District Court
Judge’s review and adoption, pursuant to 28 U.S.C.
§636(b)(1)(B)).
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