16 Conn. App. 619 | Conn. App. Ct. | 1988
The defendants appeal from the trial court’s award of monetary damages and injunctive relief arising from the defendants’ breach of contract. The defendants claim that the trial court erred (1) in concluding that the court had personal jurisdiction over each defendant, (2) in ruling that the defendant Timothy B. Leonard breached his individual agreement with the plaintiff, (3) in holding each defendant jointly and severally liable for the damages, (4) in both finding and assessing monetary damages and in imposing an injunction as relief for the same injury, (5) in finding monetary damages in the amount of $60,000, (6) in finding that the noncompetitive postemployment restrictive covenant set forth in the employment agreements was reasonable and enforceable, and (7) in rendering a default judgment against the defendant Stephen L. Rogers. We find no error.
The trial court found the following facts. Since 1967, the plaintiff, Hart, Nininger and Campbell Associates, Inc. (HNC), has been a manufacturer’s representative. HNC, a Connecticut corporation with its principal office in Woodbury, represented eleven “principals” including Quick Plastics (QP), Plainfield Tool and Engineer
The products sold through HNC’s efforts were specialized and were designed according to the unique needs of the particular customer. HNC was paid on a commission basis only when an actual shipment of products was made. A customer was at liberty to cancel any order prior to the actual shipment in which case the plaintiff received no commission for its efforts. There was often a substantial time lag between the initial placement of an order and the production and shipment of the resulting product.
HNC operated through a sales force which in July, 1985, consisted of four full-time sales representatives: HNC president, John Campbell, and the defendants Rogers, Leonard and Teresa Murray. The plaintiff had hired Rogers, then and now a resident of Maine, on August 31, 1981; Murray, presently a resident of New York and then a resident of New Jersey, on September 19, 1981; and Leonard, then and now a resident of New York, on September 7, 1982. None of the defendants has ever been a resident of Connecticut. Each of the defendants operated in different areas of the HNC territory. Each had been trained by Campbell and provided with HNC’s confidential information regarding the principals and lists of existing and poten
The confidential information disclosed to the defendants was regarded as such a valuable business asset that the plaintiff required some protection from postemployment competition by HNC sales representatives. Accordingly, as a condition of employment, each defendant entered into a written restrictive noncompetitive agreement with HNC protecting HNC from his or her postemployment competition.
During 1984 and 1985, HNC lost money. The court found that in July, 1985, Campbell tried to meet with the defendants to review HNC’s economic status and problems and to discuss possible solutions. The court also found that while Campbell was attempting to arrange a meeting of all the parties, the defendants were avoiding such a meeting because they were seeking their own representation of HNC’s clients. As evidence of these plans, the court found that certain taped telephone messages, taken from defendant Leonard’s answering machine, were most damning. These taped messages tracked the progress of the defendants’ efforts to solicit HNC clients and to form their own new business as manufacturers’ representatives.
Subsequent to an unproductive meeting with Campbell on July 31, 1985, the defendants terminated their employment with HNC. Immediately thereafter, three HNC principals, PMI, MAR and QP, terminated their business relationships with HNC as a result of the solicitation and inducement by the defendants. The defendants Murray and Rogers, pursuant to their plan, quickly formed Northeast Sales Associates, Inc. (Northeast), which then began to represent PMI, MAR and QP, all former HNC clients. The court also found that Murray, as a Northeast employee, continued to cover
The trial court found that the defendants breached their individual agreements with HNC and, more particularly, that “the defendants combined, cooperated and consulted with each other in their efforts to solicit and induce HNC’s clients to allow the defendants individually, instead of HNC, to be their sales representatives.” The court rendered judgment against each defendant “individually and jointly” for $60,000 for the loss of commissions caused by the defendants’ breach and also granted injunctive relief to protect HNC from the defendants’ violation of the restrictive postemployment noncompetitive agreements. From this judgment, the defendants now appeal.
I
The defendants, nonresidents of Connecticut, first claim that the trial court erred in finding in personam jurisdiction over them under General Statutes § 52-59b.
Under General Statutes § 52-59b, in personam jurisdiction over a defendant may be maintained as long as he “transacts any business” in this state. Although that section does not define the term “transacts any business,” our Supreme Court, in Zartolas v. Nisenfeld, supra, 474, construed the term “to embrace a single purposeful business transaction.” In Zartolas, the Supreme Court “eschewed ‘resort to a rigid formula’ in resolving the transaction of business in Connecticut but rather determine[s] it upon a balance of ‘consideration of public policy, common sense, and the chronology and geography of the relevant factors.’ Id., 477.” Rosenblit v. Danaher, 206 Conn. 125, 140, 537 A.2d 145 (1988).
Measured against these standards, we conclude that the trial court did not err in finding in personam juris
The next inquiry focuses on whether the exercise of personal jurisdiction violated principles of constitutional due process. The trial court concluded that “the maintenance of the suit does not offend traditional notions of fair play and substantial justice.” We take this to mean that the court found that the exercise of personal jurisdiction met with the constitutional requirements of due process. We again agree with the trial court.
“The twin touchstones of due process analysis under the minimal contacts doctrine are foreseeability and fairness. ‘[T]he foreseeability that is critical to due pro
From the facts of this case, it is not difficult to conclude that the defendants should have foreseen the potential of defending this case in the Connecticut courts. Even though the employment contracts were silent as to an agreed upon forum for litigation arising from the contracts, we cannot ignore the many business related contacts these parties had with this state. In this case, personal jurisdiction was not granted “in such a way as to make litigation ‘so gravely difficult and inconvenient’ that a party unfairly is at a ‘severe disadvantage’ in comparison to his opponent.” Burger King Corporations. Rudzewicz, 471 U.S. 462, 478, 105 S. Ct. 2174, 85 L. Ed. 2d 528 (1985).
We note that this case was tried to the court by able counsel and that all of the defendants’ claims at trial were fully litigated. In light of this entire record, the trial court did not err in concluding that fairness and due process were not violated by the exercise of personal jurisdiction over the defendants. Accordingly, the defendants’ first claim of error must fail.
II
The second claim of error is that there was insufficient evidence for the trial court to conclude that the defendant Leonard breached his individual agreement with the plaintiff. We find that this claim is without merit.
We begin by noting that we limit our review of this claim to determine whether the trial court’s legal and factual conclusions are supported by the facts stated
The essence of the trial court’s conclusion that the defendant Leonard breached his individual contract with the plaintiff involves the tape recorded messages of defendants Murray and Rogers that were left on Leonard’s telephone answering machine. Leonard’s voice could not be heard on the tapes, and it is clear from the record that Leonard never joined the other defendants in any other business activity after they left HNC. Also clear from the tapes, however, is the fact that Murray and Rogers implicated Leonard and chronicled his role in a scheme to leave HNC and solicit HNC principals away from that concern in violation of their employment agreements. Whether Leonard breached his individual agreement with HNC was a matter of circumstantial evidence at trial. Leonard did not testify. From the evidence before it, the trial court could reasonably have drawn the inference that Leonard was involved in a scheme that ultimately led to the breach of his contract with HNC. ‘ ‘Courts necessarily rely upon circumstantial evidence and are entitled to draw reasonable and logical inferences from all the facts.” Monroe v. Crandall, 3 Conn. App. 214, 220, 486 A.2d 657 (1985). This claim of error too must fail.
Ill
The defendants’ third claim of error is that the trial court erroneously held each defendant jointly and severally liable for the monetary damages of $60,000. We disagree.
We first note that the complaint was in four counts, alleging unlawful interference with contractual relations,
Notwithstanding the broad language of the court’s memorandum of decision, it is clear from the record that the trial court found that the plaintiff had prevailed on both the tortious interference and breach of contract claims.
The elements of tortious interference are the existence of a contractual or beneficial relationship, the defendants’ knowledge of that relationship, the intent to interfere "with it, and the consequent actual loss suffered by the plaintiff. Solomon v. Aberman, 196 Conn. 359, 383, 493 A.2d 193 (1985); Harry A. Finman & Son, Inc. v. Connecticut Truck & Trailer Service Co., 169 Conn. 407, 415, 363 A.2d 86 (1975). From our review, we find that each and every element of tortious interference was proven by the plaintiff and so found by the court. To conclude that the trial court simply found that the defendants breached their individual contracts with the plaintiff is to do injustice to the evidence and to the trial court’s articulate memorandum of decision. Concluding, as we do, that the court properly found for the plaintiff on the tortious interference count, we next examine whether the award of joint and several liability was erroneous.
“Connecticut follows the principle stated in § 876 (a) of the Restatement (Second) of Torts, on joint and several liability: ‘ “Where two or more persons unite in an act which constitutes a wrong to another, intending at the time to commit it, or in doing it under circumstances which fairly charge them with intending the consequences which follow, they incur a joint and several liability for the acts of each and all of the joint participants.” ’ Lamb v. Peck, 183 Conn. 470, 472, 441 A.2d 14 (1981), quoting Gutowski v. New Britain, 165 Conn. 50, 54, 327 A.2d 552 (1973); see Sparrow v. Bromage, 83 Conn. 27, 28, 74 A. 1070 (1910). If the
The trial court heard the evidence and found that the defendants acted in concert to bring about certain intended actions. The court held all of the defendants jointly and severally liable. We find that the court’s conclusions are clearly supported by the record. The evidence is unmistakably clear that the defendants jointly orchestrated the solicitation and inducement of the plaintiffs’ clients in violation of the noncompetitive covenants. It is also uncontroverted that defendants Rogers and Murray formed a new business, some of the operations of which clearly violated the same covenants. We conclude that the trial court’s findings, which underlie its holding of joint and several liability, are not clearly erroneous. See id., 609.
IV
The defendants’ next claim of error is that the trial court improperly awarded both monetary damages and injunctive relief against them as redress for the same injury.
In each of the defendants’ employment contracts with HNC, the defendants had agreed “that the breach by him of this Agreement cannot reasonably or adequately be compensated in damages in an action of law and that the Company shall be entitled to injunctive relief to enforce its terms. Nothing contained in this paragraph, however, shall prohibit the Company from pursuing other legal or equitable relief which may be available to it for a breach of any provision of this Agreement.” The rationale behind this provision was that HNC was engaged in a peculiarly specialized business which had been founded on years of the plaintiff’s goodwill and confidential trade information. HNC stood to suffer
The trial court found that, as a result of the breach, the plaintiff suffered, and would continue to suffer, irreparable harm for which there was no adequate remedy at law. Accordingly, the court ordered injunctive relief on behalf of the plaintiff. By virtue of the injunctive relief, each defendant was (1) enjoined from any competitive work activity previously prohibited under the employment agreements, (2) subjected to the injunction for a period of two years, (3) ordered to render an accounting of all monies received by them from the HNC principals listed in the injunction at the end of the second year of the injunction, and (4) ordered to pay a penalty of $1000 for each violation of the injunction.
The court also awarded the plaintiff monetary damages for the loss of commissions that the plaintiff would suffer in the future because of the breach of the contracts.
“The granting of injunctive relief is within the trial court’s discretion. In exercising this discretion, the court must balance the competing interests of the parties; Berin v. Olson, 183 Conn. 337, 343, 439 A.2d 357 (1981); and ‘[t]he relief granted must be compatible with the equities of the case.’ Dupuis v. Submarine Base Credit Union, Inc., 170 Conn. 344, 356, 365 A.2d 1093 (1976).” Dukes v. Durante, 192 Conn. 207, 225, 471 A.2d 1368 (1984). In the present case, the parties themselves recognized the need for injunctive relief in the event of the defendants’ breach and expressly provided for it. The trial court merely gave effect to the parties intentions to protect the plaintiff from the violative use of its confidential business information. Given the very specialized business involved, the money damages alone would not have protected the plaintiff from future wrongful conduct by the defendants. “A party seeking injunctive relief has the burden of alleging and proving irreparable harm and lack of an adequate remedy at law.” Hartford v. American Arbitration Assn., 174 Conn. 472, 476, 391 A.2d 137 (1978). We find that the trial court did not err in concluding that the plaintiff had met its burden of proof.
The defendants’ next contention, that the two forms of relief granted in this case were unfairly duplicative, is also untenable. “The fact that the court awarded damages does not preclude the plaintiff from recovering injunctive relief.” Berin v. Olson, supra, 342; see also Taylor v. Conti, 149 Conn. 174, 180-81, 177 A.2d 670 (1962). Here, the trial court awarded the plaintiff money damages and injunctive relief to cover two very
V
The defendants’ next claim is that the trial court’s award of $60,000 in monetary damages was speculative and unsupported by the evidence. This claim is also without merit.
The trial court’s memorandum of decision was very specific as to money damages. The court found that, because of the defendants’ breach, the plaintiff would suffer the loss of commissions yet to be realized. The court calculated the value of the prospective lost commissions on the basis of past profits and commissions earned by HNC. These calculations were based on (1) the actual amount of commission dollars paid to the plaintiff by each former principal during the two years prior to the breach, (2) the principals’ statements regarding the value of expected profits and commissions for the coming years, (3) the statements made to HNC by purchasers of the principals’ products with respect to purchasing levels for the coming years, (4) the monthly and quarterly sales projections of the defendants themselves, and (5) the estimates of Campbell, HNC’s president, who had many years of experience in his field of business. The court’s calculations were complex but well documented. “That damages may be difficult to assess is, in itself, insufficient reason for refusing them once the right to damages has been established. See Ball v. T. J. Pardy Construction Co., 108 Conn. 549, 551, 143 A. 855 (1928).” Griffin
On the basis of the evidence before it, the trial court calculated the loss of the plaintiff’s future commissions to be $60,000 from July 31, 1985, until August 1, 1987. “Prospective damages are recoverable if they are reasonably certain to occur”; Neiditz v. Morton S. Fine & Associates, Inc., 2 Conn. App. 322, 328, 479 A.2d 249 (1984), rev’d in part, 199 Conn. 683, 508 A.2d 438 (1986); and “ ‘whenever their loss relates directly from and as a natural consequence of the breach.’ ” West Haven Sound Development Corporation v. West Haven, 201 Conn. 305, 320, 514 A.2d 734 (1986). The trial court here had more than sufficient evidence upon which to conclude that the damages were likely to occur and that they stemmed directly from the defendants’ breach. The calculation of the award was neither speculative nor subjective, and it allowed for an objective ascertainment of the amount ordered. See Bronson & Townsend Co. v. Battistoni, 167 Conn. 321, 326-27, 355 A.2d 299 (1974).
The defendants’ next argument with respect to this claim of error is that the court erred by not deducting the defendants’ expenses and salaries from the $60,000 money damages award. This argument requires little discussion.
To accept the defendants’ argument would be to ignore the method of realizing commissions which was peculiar to HNC’s business. HNC paid its sales representatives at the front end of its operational scheme for work they did in matching HNC’s principals with purchasers. The court’s projection of lost commissions necessarily disregarded the expenses and salaries already paid to the defendants. To deduct these items would be tantamout to a reward to the defendants for their breach. This the trial court properly refused to
VI
The defendants’ sixth claim of error is that the trial court erred in finding that the postemployment noncompetitive restrictive covenants were reasonable and enforceable. We disagree.
The facts relevant to this claim are undisputed. The employment agreement of each defendant included a restrictive noncompetitive covenant that was expressly intended to protect the “confidential trade and business practices and information” and “trade secrets” of the plaintiff.
Noncompetitive or restrictive covenants between an employer and employee usually occur when an employer is trying to protect his trade secrets, customer lists or territory. “ ‘Under the common law, the well-settled rule is that an anticompetitive covenant ancillary to a lawful contract is enforceable if the
Other jurisdictions have enforced noncompetitive agreements only when necessary to prevent the disclosure of confidential information or when the employee’s services are unique or extraordinary. See Rigging International Maintenance Co. v. Gwin, 128 Cal. App. 3d 594, 180 Cal. Rptr. 451 (1982); Scott Paper Co. v. Finnegan, 101 App. Div. 2d 787, 789, 476 N.Y.S.2d 316 (1984). Our Supreme Court has set out a five-part test for determining the reasonability of a restrictive covenant: (1) the length of time the restriction is to be in effect; (2) the geographical area covered by the restriction; (3) the degree of protection afforded to the interest of the party in whose favor the covenant is made; (4) the restrictions imposed on the employee’s ability to pursue his occupation; and (5) the potential for undue interference with the interests of the public. Scott v. General Iron & Welding Co., 171 Conn. 132, 137, 368 A.2d 111 (1976).
In this case, the trial court concluded that the noncompetitive agreement was “reasonable and reasonably necessary . . . to protect the interest of HNC.” The court found that there was a reasonable relationship between the type of business interests to be protected and the scope of the geographical restrictions.
We find that the court correctly applied the relevant law to the evidence and did not err in concluding that the restrictive covenant was reasonable and enforceable.
VII
The final claim of error relates to the defendant Rogers. The claim is that the trial court erred in rendering a default judgment against Rogers for failing to appear in the absence of a military affidavit.
On April 3, 1986, two months following the service of process on him, pursuant to General Statutes § 52-87,
The evidentiary hearing of the present case commenced on February 4, 1986. During that hearing, the defendant Murray testified that Rogers was then currently employed as a manufacturer’s representative for one of the plaintiff’s former clients, the Plainfield Com
The defendant Rogers claims as error that the court failed to find that he was not in military service as required by Practice Book § 353. This claim is first raised here on appeal since Rogers neither appeared at trial nor moved to open the default judgment. We will consider Rogers’ claim only for the limited purpose of determining whether the claim raises a jurisdictional question that we must address.
Practice Book § 353 implements the Soldiers’ and Sailors’ Civil Relief Act of 1940, 54 Stat. 1178, as amended, 50 U.S.C. § 520 (1) and (3). “The purpose of that statute is to protect those in the military service against default judgments. A default judgment rendered without a military affidavit is not void but voidable at the instance of a serviceman on a proper showing of prejudice and injury. ... A default judg
This result is clearly applicable to the present case where the plaintiff clearly and successfully bore the burden of showing at the hearing that the defendant Rogers was not in the military. Rogers’ assignment of error here is without merit.
There is no error.
In this opinion Stoughton, J., concurred.
General Statutes § 52-59b provides in pertinent part: “jurisdiction OF COURTS OVER NONRESIDENTS AND FOREIGN PARTNERSHIPS. SERVICE of process, (a) As to a cause of action arising from any of the acts enumerated in this section, a court may exercise personal jurisdiction over any nonresident individual, or foreign partnership, or his or its executor or administrator, who in person or through an agent: (1) Transacts any business within the state; or (2) commits a tortious act within the state, except as to a cause of action for defamation of character arising from the act; or (3) commits a tortious act outside the state causing injury to person or property within the state, except as to a cause of action for defamation of character arising from the act, if he (A) regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the state, or (B) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce; or (4) owns, uses or possesses any real property situated within the state.”
We take the allegation In this count to be synonymous with a claim of tortious interference with a contractual relationship.
The court’s memorandum of decision provides, in pertinent part, as follows: “Thus, I find that as a result of HNC’s loss of commissions caused by the defendants' breach of the restrictive postemployment noncompetitive provisions of their contract with HNC, that HNC has suffered damages in the amount of $60,000. Judgment may enter against each defendant individually and jointly for sixty thousand ($60,000) dollars.”
The trial court also found that individual specific damages of $266.89, $156.31 and $1357.60 were due the plaintiff from the defendants Rogers, Murray and Leonard respectively. These damages covered items such as an unreturned telephone answering machine, unreturned balances of expense advances, charges for personal items billed to HNC, and the balance on a promissory note executed by Leonard. The defendants do not challenge these awards of additional damages, and, accordingly, they are not the subject of this appeal.
The noncompetitive covenant provided: “Employee further agrees that during his employment with the Company and for a period of two years after the termination thereof, he will not directly or indirectly for his own account or as an employee, stockholder, director, officer or consultant of another anywhere engage in any enterprise or business in the Company’s Territory competitive with any business now or hereafter carried on by the Company during the term of his employment and that he will not solicit or attempt to represent or do business with any of the principals represented by the Company or customers to whom the Company sells with respect to competing or complementary product lines.”
The defendants do not challenge either the time restriction or the “public interest” interference concern as set forth in Scott v. General Iron & Welding Co., 171 Conn. 132, 137, 368 A.2d 111 (1976). We will discuss only those matters challenged by the defendants on appeal.
Further evidence in the record of the reasonableness of the restrictive noncompetitive covenant is found in the fact that Northeast was successful in attracting its own client, American Optical Company, which was not affected by the covenant, since it was neither a principal of HNC, nor a competitor of its principals.
We note that the defendant Murray also argues that the restrictive covenant should not be enforceable as against her because she was forced to sign the employment agreement without the benefit of legal counsel. This argument is wholly without merit or support in the record and requires no further discussion.
General Statutes § 52-87 provides: “continuance on account of absent or nonresident defendant, (a) Every civil action in which the defendant is an inhabitant of this state but is absent from the state at the commencement of the action and continues to be absent until after the return day, without having entered any appearance therein, shall be continued
“(b) If the defendant is not an inhabitant or a resident of this state at the commencement of the action and does not appear therein, the court shall continue or postpone it for three months and may, if it deems further notice advisable, direct such further notice of the pendency of the action to be given to the defendant by publication in some newspaper, or otherwise, as it deems expedient, or may authorize any person empowered to serve process by the laws of the foreign jurisdiction in which the defendant resides to serve upon the defendant a copy of the summons and complaint and of the order of notice. Any such person serving process in a foreign jurisdiction shall make affidavit of his actions concerning the process on the original order of notice. If, upon the expiration of such three months, the defendant does not then appear and no special reason is shown for further delay, judgment may be rendered against the defendant by default. Upon the expiration of the three-month continuance, it shall be presumed prima facie that no special reason for further delay exists. In actions of foreclosure, including prayers for relief incident thereto and part thereof, judgment may then be rendered upon the plaintiff’s motion for judgment of foreclosure.
“(c) The provisions of this section shall not apply in the case of any civil action brought under and pursuant to section 47-33 or 52-69, and no continuance or postponement of any such action or additional notice of the pendency thereof may be required unless the court so orders.
“(d) A continuance or postponement under this section-shall not be granted or, if granted, shall terminate if actual notice is shown in accordance with section 52-88.”
Practice Book § 353 provides: “defaults under soldiers’ and sailors’ relief act
“An affidavit must be filed in every case in which there is a nonappearing defendant, either (1) stating that such defendant is in the military or
“If it appears that the defendant is in such service the court shall, and if it is undetermined whether the defendant is in such service or not the court may, appoint an attorney to represent such defendant before judgment is rendered. No such attorney shall have the power to waive any right of the person for whom he is appointed or to bind him by his acts.
“Unless it appears that the defendant is not in such service, the court may require as a condition before judgment is rendered that the plaintiff file a bond approved by the court conditioned to indemnify the defendant, if in military service, against any loss or damage that he may suffer by reason of any judgment should the judgment be thereafter set aside in whole or in part.
“The findings made under the three preceding paragraphs shall be recited in the judgment.”
The Ruggiero case also makes it clear that the failure of the court to make in the judgment a recital of the finding of military status does not render the judgment void. See Ruggiero v. Ruggiero, 35 Conn. Sup. 581, 399 A.2d 187 (1978).'