74 Conn. App. 710 | Conn. App. Ct. | 2003
Lead Opinion
Opinion
The plaintiff, William J. LaVelle, appeals from the trial court’s judgments in favor of the defendants, Ecoair Corporation (Ecoair) and its president, Peter S. Knudsen, Jr., in an action for breach of an employment contract. Additionally, the plaintiff appeals from the judgment in favor of Knudsen on Knudsen’s counterclaim for the repayment of a loan made to the plaintiff. On appeal, the plaintiff claims that the court improperly found that (1) the terms of a proposed employment agreement had neither been agreed to nor adopted by the parties, (2) the plaintiff was not entitled to severance pay under the terms of a letter agreement, (3) Ecoair was entitled to offset its obligation to the plaintiff for vacation pay by the amount of insurance benefits it paid on his behalf after his employment with Ecoair terminated, and (4) the plaintiffs debt to Knudsen was due and payable. We affirm the judgment of the trial court on the complaint and on the counterclaim.
Subsequently, the plaintiff and Ecoair formalized their arrangement by entering into a signed, written employment agreement dated December 13,1993 (1993 agreement), which provided, among other things, for the plaintiffs employment as Ecoair’s executive vice president and for his receipt of an annual salary of $132,500. The 1993 agreement contained a “termination for cause” provision and a provision permitting nonre-newal of the agreement by either party on an annual basis after proper notice (nonrenewal provision),
In 1993 and 1994, Ecoair’s board of directors consisted of Knudsen, Ecoair’s president; the plaintiff, its
In early 1995, Crane contacted an attorney for Ecoair, John Clark, to discuss the effects of the proposed resignations from the board. Attorney Clark prepared drafts of new employment agreements for Crane and the plaintiff, respectively (1995 agreements).
On February 17, 1995, Crane met with Knudsen and presented unexecuted copies of the 1995 agreements to him. Crane also submitted a conditional letter of resignation from the board and expressed concerns regarding his and the plaintiffs rights in the event that they were ever terminated without cause. Knudsen asked Crane to take back his conditional letter of resignation and to submit an unconditional resignation from the board. In turn, Knudsen furnished letters to Crane and to the plaintiff discussing, among other things, the availability of severance pay in the event of a termination without cause (letter agreement).*
The plaintiff told Knudsen that he and his family could not afford such a substantial reduction in salary. In response, Knudsen offered to loan the plaintiff $6500 per month from Knudsen’s personal funds, for a total of $78,000 over the course of the year in 1996. There is no written agreement as to the terms of repayment of the loan. The parties, however, agree that the loan was to be repaid to Knudsen free of interest when the plaintiff sold his Ecoair stock. The plaintiff accepted the total amount of $78,000 in loan funds. The plaintiff has not sold any of his stock since the loan was made and admits that he owes Knudsen $78,000.
The plaintiffs employment relationship with Ecoair continued until 2000. By a letter dated September 11, 2000, Ecoair gave the following notice to the plaintiff: “In accordance with paragraph [one] of the [e]mployment [agreement between you and Ecoair Corp. dated December 13,1993,
In 2001, the plaintiff commenced an action against Ecoair and Knudsen in the Superior Court alleging,
Our review of the plaintiffs appeal is governed by the well established principle that “an appellate court will overturn the factual findings of a trial court only if these findings are clearly erroneous. ... A finding is clearly erroneous when although there is evidence to support it, the reviewing court on the entire evidence
I
The plaintiffs first claim on appeal is that the court improperly found that the terms of the 1995 agreement had neither been agreed to nor adopted by the parties. Specifically, the plaintiff argues that the 1995 agreement modified and replaced the 1993 agreement, controlled his employment relationship with Ecoair since February, 1995, and, therefore, sets forth the terms for his recovery upon the termination of his employment. Furthermore, he contends that although no signed copy of the 1995 agreement ever was introduced into evidence at trial,
“For a valid modification to exist, there must be mutual assent to the meaning and conditions of the modification and the parties must assent to the same thing in the same sense. . . . Modification of a contract may be inferred from the attendant circumstances and conduct of the parties. . . .
In its memorandum of decision, the court sought to determine whether the 1995 agreement modified or replaced the 1993 agreement as the controlling employment contract between the parties. The court noted the following language contained in the modification provision of the 1993 agreement: “[n]o modification, amendment, extension or alleged waiver of this [agreement or any provision hereof shall be binding upon [Ecoair] or [the plaintiff] unless in writing and signed by both [Ecoair] and [the plaintiff].” Furthermore, the court noted that Knudsen denied ever signing any version of the 1995 agreement and, although the plaintiff testified that a signed version once existed, he failed to produce an executed copy and was unable to say which one of two versions ever had been signed.
The court determined that it was required to examine the surrounding circumstances for indications that the parties acted in accordance with the terms of the 1995 agreement or in other ways to suggest that they had adopted its terms. The court considered the testimony of the parties and witnesses at trial for evidence to support execution, adoption or ratification of the 1995 agreement. It found that the testimony of the witnesses at trial failed to support the plaintiffs assertion that the 1995 agreement had been executed. Moreover, it
The court also found an absence of evidence of actions taken or routines followed by the parties that adhered to the 1995 agreement, tending to support the plaintiffs allegation that the parties acted as though it were in effect. It considered the salary and vacation provisions of the drafts of the 1995 agreement, which provided for a salary of $165,625 per annum with annual increases and six weeks annual vacation time. The court found that the actual salary received by the plaintiff after 1995 demonstrated that the 1995 agreement’s salary provisions had not been implemented, and, furthermore, that the plaintiff never took the six weeks of vacation set forth in the drafts. The court concluded that no written or oral modification of the 1993 agreement was effected by the 1995 agreement.
Having reviewed the entire record, we conclude that there is ample evidence to support each of the factual findings made by the court. The court reasonably found that the evidence and the record, as a whole, failed to demonstrate the parties’ mutual assent to the meaning and conditions of the 1995 agreement. Consequently, we conclude that the court’s finding that the 1995 agreement had neither been agreed to nor adopted by the parties was not clearly erroneous. Accordingly, we reject the plaintiff’s first claim.
II
The plaintiffs second claim is that the court improperly found that he was not entitled to severance pay
In response, the defendants argue that the court reasonably found that the plaintiff was not entitled to severance pay under the terms of the 1993 agreement, as modified by the letter agreement from Knudsen. The defendants contend that the letter agreement’s provision for severance pay operates separately from the nonrenewal provision of the 1993 agreement and that it was not implicated because the plaintiffs employment was not terminated without cause but was simply not renewed. Alternatively, the defendants argue that even if the letter agreement’s provision for severance pay was implicated, the court properly found that Ecoair was not obligated to pay severance because Ecoair lacked an ongoing ability to pay. We agree with the defendants.
In its memorandum of decision, the court found that the sole modification to the 1993 agreement was con
Second, and critical to our resolution of the plaintiffs second claim, the court found that even if the letter agreement’s severance pay provisions were implicated by the manner in which the plaintiffs employment was
Even if we were to agree with the plaintiffs argument that the letter agreement’s severance pay provisions were implicated by virtue of the termination of his employment, we cannot ignore the court’s factual finding that Ecoair lacked an ongoing ability to pay. In his appellate brief, the plaintiff disputes that finding and advances various interpretations of Ecoair’s income statement, which he claims demonstrates Ecoair’s ongoing ability to pay. All that we have before us are repeated assertions in the plaintiffs brief that ask us to ignore the court’s finding and to adopt his interpretation of the evidence. In effect, the plaintiff would have us decide this case on facts directly opposite to those found by the court. “It is axiomatic that this court cannot find facts. This case must be reviewed on the facts found by the trial court.” Anquillare, Lipnicki, Ruocco & Co. v. VCR Realty Associates, 72 Conn. App. 821, 825, 808 A.2d 682 (2002).
In light of the evidence and pleadings of record, we do not find the court’s factual findings clearly erroneous. There is evidence to support the court’s findings and, after review, we are not left with the definite and firm conviction that a mistake has been made. Accordingly, we reject the plaintiffs second claim on the basis that the letter agreement for severance pay was contingent on Ecoair’s ongoing ability to pay.
Next, the plaintiff claims that the court improperly found that Ecoair was entitled to offset its obligation to pay him for unused vacation time by the amount of insurance benefits it paid on his behalf after his employment with Ecoair terminated.
In its memorandum of decision, the court found that although the plaintiff was due an amount of $3636.34 from Ecoair as payment for unused vacation days, that amount was to be offset by the amount of funds advanced by Ecoair toward the plaintiffs health insurance premiums.
At trial, Wisot testified that insurance premiums were paid at the beginning of each month and that Ecoair could cancel insurance coverage only at the end of the month for the following month. He testified that Ecoair already had paid the plaintiffs health insurance premiums for December, 2000, because the plaintiffs employment with Ecoair continued until mid-December. Moreover, he testified that in December, 2000, shortly after the plaintiffs employment with Ecoair ended, Ecoair sent a notice to the plaintiff, explaining that he was required to notify the company if he wanted to discontinue his insurance benefits. Furthermore, Wisot testified that if the plaintiff had notified Ecoair that he wanted to terminate his coverage, Ecoair would not have been obligated to continue paying the premiums. Finally, Wisot testified that prior to February, 2001, he had not been instructed to cancel the plaintiffs insurance.
On appeal, the plaintiff does not assert that Ecoair failed to notify him regarding the continuation or termination of his health insurance premiums. In his brief, the plaintiff admits that he paid Ecoair for his health insurance coverage for the month of March, 2001, and that he thereafter notified Ecoair that he no longer would be purchasing insurance through the company.
After reviewing the entire record, we are not left with the definite and firm conviction that a mistake has been
IV
The plaintiffs final claim challenges the court’s finding in favor of Knudsen on Knudsen’s counterclaim. The plaintiff claims that the court improperly found that his promise to repay Knudsen was illusory and made in bad faith, and that his $78,000 debt to Knudsen was due and payable. As previously set forth, the repayment terms of the loan were that the $78,000 was due and payable without interest upon the sale of the plaintiffs Ecoair stock. The plaintiff argues that he has not sold any of his Ecoair stock since the time of the loan and, therefore, under the clear and undisputed repayment terms agreed upon by the parties, his repayment obligation has not yet been triggered.
In response, Knudsen does not contend that the plaintiff sold any shares of his Ecoair stock.
In its memorandum of decision, the court concluded that the plaintiffs debt to Knudsen was due and payable on two grounds. First, it determined that the plaintiffs promise to repay Knudsen upon the sale of his stock was illusory.
“When the terms of a contract’s time of performance are indefinite . . . [t]he result generally reached is that
The present case is materially indistinguishable from DeCarlo & Doll, Inc. v. Dilozir, supra, 45 Conn. App. 633. In DeCarlo & Doll, Inc., we held that when the terms of a contract’s time for performance axe indefinite, the promised performance must be rendered within a reasonable time. Id., 643. The plaintiff in DeCarlo & Doll, Inc., sought to recover payment from the defendant under a contract pursuant to which the plaintiff performed engineering and technical services for development of the defendant’s self storage facility. Id., 635-37. The defendant argued that his payment obligations under the contract were conditioned on his obtaining financing, which was an event that never occurred. Id., 637-38. The defendant maintained that the contract clause “[s]ubject to payment ... at time of financing” excused his performance. Id. We explained that “the clause ‘subject to payment ... at time of financing’ was not a condition on which payment was contingent.” Id., 641. Rather, “[t]his clause set forth the time, which was in the sole control of the defendant, when payment was to be made by the defendant.” Id. We determined that “this obligation was in the control of the defendant, and, therefore, he [would] not be excused by his nonperformance.” Id., 642. Moreover, we concluded that “[b]ecause financing was never obtained by the defendant, the time of payment should have been within a reasonable time.” Id., 643.
As to the concerns expressed by the dissent, we respectfully note that we do not consider our application of DeCarlo & Doll, Inc., in the present case to be an extension of that decision to individual employment contract situations. In the present case, there is no employment contract between Knudsen and the plaintiff; Knudsen both loaned the funds and brought the counterclaim in his personal, individual capacity. In addition, we respectfully disagree with other distinctions drawn by the dissent between DeCarlo & Doll, Inc., and the present case. In the present case, as in DeCarlo & Doll, Inc., it is uncertain whether the time for payment ever would arrive; in the present case, it is uncertain whether the plaintiff himself ever would decide to sell his stock, and in DeCarlo & Doll, Inc., it was uncertain whether the defendant ever would receive financing. The dissent maintains that in the present case, the plaintiffs payment obligation must even
The judgment is affirmed.
In this opinion DUPONT, J., concurred.
Paragraph one of the 1993 agreement (nonrenewal provision) provides: “1. Employment. [Ecoair] hereby employs [the plaintiff] and [the plaintiff] hereby accepts employment with [Ecoair] upon the terms and conditions herein set forth. Such employment is for successive terms of one (1) year, unless sooner terminated as provided in this [agreement. Each one-year term shall be automatically renewed unless one party gives notice to the other party of his or its intention not to renew this agreement not less than ninety (90) days before the expiration of the then current one (1) year term.”
Paragraph fifteen of the 1993 agreement (modification provision) provides: “15. Modification: Entire Agreement. No modification, amendment, extension or alleged waiver of this [a]greement or any provision hereof shall be binding upon [Ecoair] or [the plaintiff] unless in writing and signed by both [Ecoair] and [the plaintiff]. This [agreement constitutes the entire agreement and understanding between [Ecoair] and [the plaintiff] relating to the latter’s employment, and supersedes and replaces all prior agreements and understandings, written or oral, relative to such employment.”
Knudsen’s letter to the plaintiff dated February 17, 1995, was signed by Knudsen and states in relevant part: “In accordance with our discussions regarding your employment agreement with Ecoair, the Company has agreed to modify the termination provisions of your agreement, so that in the event of termination without cause you will have the right to . . . severance at full pay subject to Ecoair’s ongoing ability to pay will be thirty-six months if terminated in 1995, twenty-four months if terminated in 1996, and twelve months thereafter.”
At trial, the plaintiff testified about his belief that a version of the 1995 agreement had been executed and that it thereafter governed the terms of his employment relationship with Ecoair. Crane testified that he did not recall ever signing any draft of the 1995 agreement. The plaintiff and Crane
The plaintiff testified that from 1996 through 2000, his annual salary remained at $100,000.
See footnote 1.
Specifically, the plaintiff alleged the following four counts in his amended complaint, the first two of which are involved in this appeal: Count one alleged that Ecoair wrongfully terminated the 1995 agreement; count two alleged that Ecoair breached employment terms and conditions that had been agreed on by the parties both verbally and in writing; count three alleged that Knudsen acted in bad faith, and interfered with the employment relationship between the plaintiff and Ecoair; and count four alleged that Knudsen breached fiduciary duties. The plaintiffs fourth count was dismissed, and neither his third nor fourth counts are at issue in this appeal.
In its memorandum of decision, the court stated: “If the 1993 [agreement] is found to be the controlling document, then [the] letter dated September 11, 2000 ... to the plaintiff would be effective as a nonrenewal of that contract, effectively limiting any recovery by the plaintiff to the terms of the 1993 [agreement].” The court determined, among other things, that: (1) no written or oral modification of the 1993 agreement was effected by the 1995 agreement; (2) the sole modification to the 1993 agreement was contained in the letter agreement from Knudsen to the plaintiff dated February 17, 1995, although that letter agreement did not create a severance pay requirement under the circumstances of the case; (3) pursuant to the 1993 agreement, the plaintiff was entitled to an amount of $3636.34 from Ecoair as payment for unused vacation days; however, that amount was to be offset by the amount of funds advanced by Ecoair toward the plaintiffs health insurance premiums subsequent to the termination of his employment and, therefore, the plaintiff was entitled to the balance of $151.63; and (4) the plaintiffs debt to Knudsen on the 1996 loan in the amount of $78,000 as alleged in Knudsen’s counterclaim was due and payable.
See footnote 4.
See footnote 3.
We need not address the issue of whether the letter agreement effectively modified the 1993 agreement because the parties have not addressed that issue. We note that the plaintiffs second claim and the parties’ arguments with respect to that claim assume that the letter agreement effectively modified the 1993 agreement.
Rather, the court found that the letter agreement created a mechanism for Ecoair to terminate the plaintiffs employment at any time without cause, but that if Ecoair exercised that right, it would be obligated to comply with the terms providing for severance pay specified in the letter agreement. In contrast, the court found that the 1993 agreement provided a mechanism for nonrenewal of the parties’ employment relationship that was available to either party, but that if either party sought to invoke that mechanism, they would be required to notify the other party at least ninety days prior to the expiration of the then current one year term of employment.
The portion of the court’s memorandum on that issue states: “There remains in dispute the question of whether the amount advanced by Ecoair to pay the plaintiffs health insurance premiums should offset the amount due the plaintiff for nine vacation days, $3636.34. That figure is not disputed.
“Relying on the testimony of [Richard] Wisot, the court concludes that it should. The plaintiff did not give Ecoair notice to end his coverage and Ecoair made the payments which created a benefit available to the plaintiff, though he may not have enjoyed the actual use of it.
“The court concludes the plaintiff is entitled to the balance of $151.63 offered by the defendant.”
At trial, the parties agreed that if the 1993 agreement was found to be the operative employment contract, then under that agreement, at the time that the plaintiffs employment ended, the plaintiff was entitled to $3636.34 representing nine days of pay for unused vacation time. Prior to trial, Ecoair tendered payment of $1354.71 for vacation pay owed to the plaintiff. Ecoair
At oral argument on the appeal, Knudsen’s counsel argued that the plaintiffs daughters’ sale of stock triggered the plaintiffs repayment obligation because the plaintiff transferred the stock to his daughters after he received a substantial portion of the $78,000 loan, and his daughter’s sale of those shares benefited the plaintiff. Subsequently, this court has determined that the argument advanced by Knudsen’s counsel was not premised on a proper recitation of the facts. Following oral argument, Khudsen’s counsel submitted a letter to this court dated September 17,2002, conceding that the plaintiff did not transfer stock to his daughters after receiving any portion of the loan.
The court explained that an illusory promise exists when a condition of the contract is completely within the control ol' the promisor. The court determined that the condition in the parties’ loan agreement — repayment upon the sale of stock — was wholly within the control of the plaintiff, the promisor. The court recognized that an implied obligation to use good faith is enough to avoid the finding of an illusory promise, citing Sicaras v. Hartford, 44 Conn. App. 771, 781, 692 A.2d 1290, cert. denied, 241 Conn. 916, 696 A.2d 340 (1997). The court stated, however, that it could not find that the plaintiff acted in good faith “in entering into the loan agreement which permitted him to unreasonably delay or totally avoid payment,” and that “[i]t could not have been the intention of the parties when the loan was made to produce an inequitable result which shocks the conscience . . .
Dissenting Opinion
dissenting in part. I concur with the affirmance of the judgment on the complaint. I respectfully dissent from the majority holding on the counterclaim found in part IV of the majority opinion. I would reverse the trial court’s determination that the plaintiffs debt to the defendant Peter S. Knudsen, Jr., was due and payable.
I begin by expressing my opinion that permitting the counterclaiming Knudsen to demand payment of his note prior to the plaintiffs sale of his stock interest in his employer’s corporation, which was the agreed on triggering event requiring payment, is unfair to the plaintiff. The plaintiff was induced to remain in employment at a salary reduced by $65,000 annually from what had been agreed between him and his employer, and did so until discharged. He should not be deprived of the loan terms for which he bargained which were the return consideration for that performance.
Second, I do not think DeCarlo & Doll, Inc. v. Dilozir, 45 Conn. App. 633, 698 A.2d 318 (1997), should be extended and applied to individual employment contract situations where money is lent to the employee and partial consideration in the form of accepting or, as in this case, continuing in employment has been received by the noteholder at the time of the loan. The plaintiffs agreement to remain in employment, and at
Third, I disagree with the trial court’s holding that the promise to repay was illusory and find no justification for the court’s imposing a “reasonable time” for payment to which the parties had not agreed. Maturity of the loan and the plaintiffs obligation to pay it in full, unlike the defendant’s mortgage financing in DeCarlo & Doll, Inc., is an event certain to happen even though the time of its triggering is not certain. This is so if for no other reason than that upon the death of the plaintiff borrower there would be a sale or some other passing of title to the stock equivalent to a sale which would trigger the obligation to repay principal.
In order to keep the plaintiff employed by the defendant corporation as a key executive officer in his company after reducing his annual pay by $65,000 per year, the defendant Khudsen, a majority stockholder, agreed to lend the plaintiff $6500 per month without interest, which was not to be paid until the plaintiff sold his stock. The plaintiff has never sold the stock. The defendant Knudsen got what he bargained for in that the plaintiff continued in employment at much less pay until his discharge and remained obligated to repay the note. There was nothing illusory about the plaintiffs performance. Unfortunately, if the judgment for the defendant on his counterclaim stands, there is something illusory in what the defendant promised. Instead of the debt maturing, as the parties agreed, only when the plaintiff sold his stock in the corporation which employed him, it is deemed due under the judgment in five years from the note date. This to me seems an