209 Conn.App. 395
Conn. App. Ct.2021Background
- Hospital Media Network (HMN) employed James Henderson as chief revenue officer from Jan. 1, 2013 until his termination on Sept. 5, 2013; he had been a consultant to HMN before 2013.
- While employed, Henderson worked with Generation Partners on acquiring Captivate (a competitor); after his termination the acquisition closed on Sept. 26, 2013, and Henderson received a $150,000 finder’s fee, a three‑year $50,000/yr consulting contract, and an offer of restricted stock.
- Henderson was defaulted for discovery noncompliance; liability was therefore treated as admitted and the trial court held hearings to determine equitable monetary relief for breach of fiduciary duty (duty of loyalty).
- In the first damages decision the trial court awarded about $454,580 (salary/bonus forfeiture, full disgorgement of third‑party payments and stock). This court (Conn. App.) reversed only the damages portion and remanded for a new damages hearing, directing a more measured, equity‑based inquiry under Wall Systems v. Pompa.
- On remand the trial court awarded $323,545.84 (forfeiture of 2013 salary and some consulting fees; disgorgement of the $150,000 finder’s fee and $50,000 — one year — of the consulting fees). Henderson appealed.
- The appellate court affirmed the remand court’s factfinding and most of the equitable award but reversed insofar as the court ordered disgorgement of $50,000 of the $150,000 consulting fees (vacating that portion) because the plaintiff failed to show that portion was earned for work during employment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Scope of remand: may the trial court reweigh facts on a new damages hearing? | HMN allowed the trial court to hold a new damages hearing and consider the whole record and any additional evidence. | The court on remand was bound by the factual findings in the 2017 decision and could not reopen or revise them. | Trial court acted within scope: remand for a new damages hearing permits independent factfinding based on the full record. |
| Whether Henderson earned the $150,000 finder’s fee for pre‑employment work | HMN (plaintiff) argued the finder’s fee was earned for work performed mainly in 2013 while employed, not for earlier efforts. | Henderson argued he performed substantial pre‑2013 work (as a consultant) that justified the fee. | The trial court’s finding that substantial compensable work was not performed pre‑2013 was supported by the record and not clearly erroneous. |
| Trial court’s finding that Henderson offered many exhibits that plaintiff had not seen and related inference about concealment | Plaintiff stressed discovery noncompliance and some concealed evidence; the court could consider that in weighing equities. | Henderson argued the court’s finding that he offered numerous unseen exhibits was unsupported by the record. | That specific finding was unsupported but harmless; the court reasonably relied on discovery default and nonproduction as a basis to scrutinize Henderson’s credibility and to weigh equities. |
| Disgorgement of $50,000 of the $150,000 consulting fees; overall equity of award | Plaintiff argued a nexus existed between Henderson’s 2013 conduct and the consulting agreement, justifying forfeiture/disgorgement of at least one year of fees. | Henderson argued HMN barred disgorgement of compensation earned outside employment and plaintiff failed to prove the $50,000 was earned for work during employment. | Court erred in ordering disgorgement of $50,000: plaintiff failed to meet burden to show that portion was earned for in‑employment work; otherwise the remand damages award was within the trial court’s equitable discretion and is affirmed. |
Key Cases Cited
- Wall Systems, Inc. v. Pompa, 324 Conn. 718 (2017) (describes equitable remedies—forfeiture and disgorgement—for employee breach of loyalty and lists factors courts should weigh)
- Hospital Media Network, LLC v. Henderson, 187 Conn. App. 40 (2019) (prior appellate decision reversing the original damages award and remanding for a new, equity‑based damages hearing)
- Hurley v. Heart Physicians, P.C., 298 Conn. 371 (2010) (principles governing the scope of an appellate mandate and limits on remand)