W. FREDERICK RAVETTO v. TRITON THALASSIC TECHNOLOGIES, INC., ET AL.; RAYMOND BARTKO v. TRITON THALASSIC TECHNOLOGIES, INC., ET AL.
SC 17792
Supreme Court of Connecticut
Argued February 7, 2007-officially released March 4, 2008
285 Conn. 716
Norcott, Katz, Palmer, Vertefeuille and Zarella, Js.
оfficial misinformed the plaintiff that she had to exhaust these remedies prior to filing a claim with the claims commissioner. Based on the foregoing, it is clear that S.A. 94-13 confers an exclusive public emolument on the plaintiff, and therefore violates article first, § 1, of the state constitution.
The judgment is affirmed.
In this opinion the other justices concurred.
W. FREDERICK RAVETTO v. TRITON THALASSIC TECHNOLOGIES, INC., ET AL.
RAYMOND BARTKO v. TRITON THALASSIC TECHNOLOGIES, INC., ET AL.
(SC 17792)
Norcott, Katz, Palmer, Vertefeuille and Zarella, Js.
that legislation seeking to remedy a procedural default for which the state is not responsible does not serve a public purpose and, accordingly, runs afoul of article first, § 1, of the state constitution. See, e.g., Merly v. State, supra, 211 Conn. 214; Vecchio v. Sewer Authority, supra, 176 Conn. 506-507; Hillier v. East Hartford, supra, 167 Conn. 108-109.
Argued February 7, 2007-officially released March 4, 2008
William G. Ballaine, pro hac vice, with whom was Christopher G. Fretel, pro hac vice, for the appellees-appellants (defendants).
Marc P. Mercier filed a brief for the Connecticut Employment Lawyers Association as amicus curiae.
Opinion
VERTEFEUILLE, J. This consolidated appeal1 arises out
sought to recover the unpaid wages, double damages, costs, interest and attorney‘s fees. Bartko also sought damages resulting from Triton‘s failure to repay in a timely manner a loan he made to the company from his retirement account. Ravetto‘s claim was tried to the court and the parties agreed to have Bartko‘s claim decided on the briefs. The plaintiffs now appeal and the defendants cross appeal from the judgment of the trial court, concluding that the plaintiffs were not entitled to double damages and attorney‘s fees under
In their appeal, the plaintiffs assert that the trial court improperly: (1) concluded that the plaintiffs were not entitled to double damages and attorney‘s fees under
to repay his loan in a timely manner. In their cross appeal, the defendants claim that the trial court improperly concluded that Ravetto was not obligated to repay advances that he had received against unearned commissions based on the absence of any language in the employment agreement expressly requiring that Ravetto make such repayment. We affirm the judgment of the trial court.
The trial court reasonably found the following facts. Triton was founded in August, 1994, by Ressler and others, to develop and market a technology that uses a monochromatic light source to treat and control bacteria and viruses in certain fluids. In June, 2000, Bartko entered into an employment agreement with Triton, in which the parties agreed that Bartko would be paid an annual salary of $90,000 for the position of engineering manager. Bartko began his employment with Triton on August 1, 2000.
In January, 2001, Ravetto entered into an employment agreement with Triton, in which the parties agreed that Ravetto would be employed in the position of vice president of sales, for which he would be paid an annual base salary of $110,000. In addition, he would be paid a commission on product sales to certain industries. The agreement further gave Ravetto the right to take a draw against his future commissions during each pay period. Ravetto began his employment with Triton on February 1, 2001.
On September 30, 2001, Ressler met with all employees of Triton and advised them that, due to financial difficulties, Triton could not meet its payroll. He further stated that he could not ask the employees to continue working for Triton because it could not pay them. Ressler gave all employees the opportunity to resign, and four employees did so. The remaining employees, including the plaintiffs, continued working with the
hope that the company would obtain the funds needed to pay them. Ressler referred to the employees who continued working without payment as employees who were working “on a deferred compensation basis.” Ressler had told the remaining employees that Triton would make every effort to obtain funding to pay them, but he did not guarantee the employees that they would be paid. The plaintiffs nevertheless voluntarily chose to remain at Triton and continue working.
On January 16, 2002, during another employees’ meeting, Ressler again reviewed Triton‘s poor financial position. He employed a power point presentation during which he informed employees that Triton could not ask them to work if it could not meet payroll obligations. The plaintiffs nevertheless continued working for Triton.
Thereafter, on March 11, 2002, Ressler convеned a final employees’ meeting. Triton issued a memorandum to all of its employees, informing them that: “Effective [immediately], all employees will be furloughed until further notice. On a person
Approximately one month later, Ravetto and Bartko filed separate claims with the state department of labor seeking unpaid wages in the amounts of $88,356 and $41,725.32, respectively. The plaintiffs thereafter withdrew their complaints with the department of labor and brought these actions in the Superior Court, seeking unpaid wages, attorney‘s fees, costs, prejudgment interest, and double damages. Bartko‘s complaint also sought damages for breach of contract for Triton‘s fail-
ure to repay the $50,000 loan that he had made to the company.
On March 31, 2004, while the actions were pending in the trial court, Triton made payments to Ravetto and Bartko. Triton paid Ravetto his unpaid wages plus interest, less $40,000 in advances that had been paid to Ravetto that exceeded his actual commissions earned. Triton paid Bartko all of his unpaid wages plus interest. On April 4, 2005, Triton repaid Bartko the principal and interest on the loan that he had made. Prior to trial, therefore, the plaintiffs had been paid their wages, and Bartko had been paid his loan.
After the trial court consolidated the two actions, Ravetto‘s claim was tried to the court, and the parties agreed that Bartko‘s claim could be decided by the court on the briefs. The trial court concluded that: (1) the plaintiffs were not entitled to double damages and attorney‘s fees pursuant to
I
The plaintiffs first claim that the trial court improperly concluded that they were not entitled to double damages and attorney‘s fees under
salary deferral plan7 was unreasonable as a matter of law. The plaintiffs also assert that the trial court‘s factual finding that the defendants did not induce the employees to remain at work without pay was clearly erroneous. We disagree with the plaintiffs.
Section 31-72 provides in relevant part that “[w]hen any employer fails to pay an employee wages in accordance with the provisions of sections 31-71a to 31-71i, inclusive, or fails to compensate an employee in accordance with section 31-76k . . . such employee . . . may recover, in a
269, 828 A.2d 64 (2003), quoting Sansone v. Clifford, 219 Conn. 217, 229, 592 A.2d 931 (1991).
A
The plaintiffs’ claim that they were entitled to double damages and attorney‘s fees because the defendants’ salary deferral was unreasonable as a matter of law presents a question of law. Our review of a question of law is plenary. A & M Towing & Recovery, Inc. v. Guay, 282 Conn. 434, 440, 923 A.2d 628 (2007).
The plaintiffs claim that, as a matter of law, it was unreasonable for the defendants to permit employees like the plaintiffs to continue working with the hope that they could be paid in the future if Triton obtained adequate funding. The plaintiffs assert that the defendants were obligated to terminate the employment of Triton‘s employees once Triton became unable to meet payroll because of financial difficulties.
We recognize that the wage statutes were designed to “[effectuate] the statutory policies of compensating employees and deterring employers from failing to pay wages.” Butler v. Hartford Technical Institute, Inc., 243 Conn. 454, 463, 704 A.2d 222 (1997). We cannot conclude as a matter of law, however, that an employer experiencing financial hardship that honestly informs employees that it cannot meet payroll and that does not promise them that future payment will be made is acting unreasonably when it allows employees to continue to work with the hope of future payment. This is particularly true where the employees are experienced business people and members of management who choose to continue working in the hope that their services to the employer will improve the financial status of the company. We can imagine circumstances in which such a choice by employees may inure to their benefits particularly when the financial hardship is short-lived and the financial status of the company ulti-
mately improves. In the present case, we recognize that Triton ultimately did pay the plaintiffs the wages that werе due them. Determinations of reasonableness are especially fact bound. See Williams Ford, Inc. v. Hartford Courant Co., 232 Conn. 559, 580, 657 A.2d 212 (1995) (citing cases from variety of contexts wherein “[w]e have consistently held that reasonableness is a question of fact for the trier to determine based on all the circumstances“). On the basis of the facts of the present case, we cannot conclude that the defendants’ salary deferral was unreasonable as a matter of law.
The plaintiffs rely on a series of out-of-state cases to support their claim that the
Unfair Trade Practices Act,
B
The plaintiffs also contend that the trial court‘s factual finding that the defendants did not induce the plaintiffs to continue working for Triton was clearly erroneous. The plaintiffs claim, more particularly, that it was “logically impossible” for them to have agreed to continue working voluntarily without having been induced to do so by the defendants. We disagree.
Whether the plaintiffs were induced to continue working is a question of fact. “Questions of fact are subject to the clearly erroneous standard of review. . . . A finding of fact is clearly erroneous when there is no evidence in the record to support it . . . or when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed. . . . Because it is the trial court‘s function to weigh the evidence . . . we give great deference to its findings.” (Internal quotation marks omitted.) Reiner, Reiner & Bendett, P.C. v. Cadle Co., 278 Conn. 92, 107, 897 A.2d 58 (2006); see Practice Book § 60-5.
In the present case, the trial court set forth its factual findings and conсlusions of law in a written memorandum of decision. The court noted that in several unpaid wage cases wherein double damages had been awarded, there had been evidence that employees were induced to continue working by false promises of payment. The trial court then continued, “[t]here is no such proof in
this case. The defendant corporation simply could not meet payroll and so advised its employees including the two plaintiffs on September 30, 2001. Some employees left immediately, but the plaintiffs voluntarily decided to remain at work under a ‘deferred salary plan.’ The defendants did not guarantee that the deferred salary would ever be paid, but only that Triton would make every effort to do so, which it did on
“It is well established that [i]t is within the province of the trial court, when sitting as the fact finder, to weigh the evidence presented and determine the credibility and effect to be given the evidence. . . . Credibility must be assessed . . . not by reading the cold printed record, but by observing firsthand the witness’ conduct, demeanor and attitude. . . . An appellate court must defer to the trier of fact‘s assessment of credibility because [i]t is the [fact finder] . . . [who has] an opportunity to observe the demeanor of the witnesses and the parties; thus [the fact finder] is best able to judge the credibility of the witnesses and to draw necessary inferences therefrom.” (Internal quotation marks omitted.) State v. Lawrence, 282 Conn. 141, 155, 920 A.2d 236 (2007).
In the present case, the trial court credited Ressler‘s testimony, as it was entitled to do. Ressler testified that he had met with all of the employees, including the plaintiffs, on more than one occasion and had informed them that Triton would not be able to make payroll. Ressler further testified that he had explained to all of the employees, including the plaintiffs, that Triton could not ask them to stay if it could not pay them, and that he had given every employee, including the plaintiffs, the opportunity to resign. Ressler also testified that the
defendants never guaranteed that the employees who remained working for Triton would be paid, only that Triton would try to pay them if it received adequate funding to do so. Additional evidence before the trial court demonstrated that Ravetto and Bartko were both experienced businessmen, who, as vice president of sales and engineering manager, respectively, sufficiently were aware of Triton‘s financial status to understand that they were not guaranteed payment for their continued services after September 30, 2001. We must defer to the trial court‘s assessments concerning credibility; see id.; and, therefore, we conclude that the evidence amply supported the trial court‘s finding that the defendants did not induce the plaintiffs to remain employed. Accordingly, we conclude that the trial court‘s factual finding was not clearly errоneous.
II
The plaintiffs’ second claim on appeal is that the trial court improperly failed to award the plaintiffs 12 percent prejudgment interest on their unpaid wages pursuant to
In their complaints in the present cases, the plaintiffs included a general claim for prejudgment interest in their demand for relief. The plaintiffs did not cite any statute or other authority for their request of prejudgment interest, nor did they indicate the specific interest rate that they were seeking. The record and the transcript of the proceedings demonstrate that the plaintiffs never raised the issue of prejudgment interest at trial,
in their briefs, or by motion. In its memorandum of decision, the trial court awarded Ravetto $40,650 in damages, representing the commission advances paid to him and subsequently subtracted
“Practice Book § 60-5 provides in relevant part that [t]he court shall not be bound to consider a claim unless it was distinctly raised at the trial or arose subsequent to the trial. The court may in the interests of justice notice plain error not brought to the attention of the trial court. . . . Indeed, it is the appellant‘s responsibility to present such a claim clearly to the trial court so that the trial court may consider it and, if it is meritorious, take appropriate action. That is the basis for the requirement that ordinarily [the appellant] must raise in the trial court the issues that he intends to raise on appeal. . . . For us [t]o review [a] claim, which has been articulated for the first time on appeal and not before the trial court, would result in a trial by ambuscade of the trial judge. . . . We have repeatedly indicated our disfavor with the failure, whether because of a mistake of law, inattention or design, to object to errors occurring in the course of a trial until it is too late for them to be corrected, and thereafter, if the outcome of the trial proves unsatisfactory, with the assignment of such errors as grounds of appeal.” (Citation omitted; internal quotation marks omitted.) Schoonmaker v. Lawrence Brunoli, Inc., supra, 265 Conn. 265. Accordingly, we conclude that the plaintiffs failed properly to preserve this issue for appellate review.
III
The final claim in the appeal is Bartko‘s assertion that the trial court improperly failed to award him consequential damages resulting from Triton‘s failure to repay timely the loan that he had made to the company. Specifically, Bartko asserts that, because the loan he made to Triton had come from his 401k account, Triton‘s failure to repay the loan in sixty days as agreed forced Bartko to report the withdrawal from his 401k account as personal income and pay early withdrawal penalties on the money. We conclude that the record is inadequate to decide this issue, which was not addressed by the trial court.
The record reflects the following additional facts. In 2001, after learning of Triton‘s bleak financial situation, Bartko offered to loan $50,000 to Triton. On November 1, 2001, Triton executed a $50,000 promissory note, which was due and payable on December 31, 2001, with interest at a rate of 5.5 percent per year. Triton did not repay the loan by December 31, 2001. On April 4, 2005, Triton paid Bartko $60,035, representing the entire principal balance plus 5.5 percent annual interest to March 31, 2005.
Bartko‘s complaint in this matter included a breach of contract claim against the defendants for their default on the promissory note and claimed both harm and detriment resulting from the nonpayment. He briefed this claim for damages related to the tax penalty in his posttrial brief. In its memorandum of decision, however, the trial court stated that “the only issue in the Bartko case is whether he is entitled to double damages pursuant to . . .
“This court recently has reiterated the fundamental point that [i]t is incumbent upon the [appellant] to take the necessary steps to sustain [his] burden of providing
an adequate record for appellate review. . . . Our role is not to guess at
In the present case, it is unclear from the trial court‘s memorandum of decision why it did not award Bartko consequential damages for Triton‘s failure to repay the loan on time. In other words, the trial court could have failed to award such damages for any number of reasons, such as factual insufficiency or a legal conclusion that such damages were not recoverable under the terms of the promissory note. Alternatively, the trial court simply may have forgotten to address Bartko‘s claim for such damages. See Stone-Krete Construction, Inc. v. Eder, 280 Conn. 672, 685, 911 A.2d 300 (2006).
“Under these circumstances, the plaintiff should have filed a motion for articulation to preserve an adequate record for review. See Practice Book §§ 61-108 and 66-5.9
It is well established that [a]n articulation is appropriate where the trial court‘s decision contains some ambiguity or deficiency reasonably susceptible of clarification. . . . [P]roper utilization of the motion for articulation serves to dispel any . . . ambiguity by clarifying the factual and legal basis upon which the trial court rendered its decision, thereby sharpening the issues on appeal. . . . In the absence of an articulation, we are unable to determine the basis for the court‘s decision, and we therefore decline to review this claim.” (Citation omitted; internal quotation marks omitted.) Stone-Krete Construction, Inc. v. Eder, supra, 280 Conn. 685-86.
Because Bartko failed to seek an articulation from the trial court, we are unable to determine the basis for the court‘s failure to address his claim. Accordingly, we decline to review it.
IV
In their cross appeal, the defendants claim that the trial court improperly concluded that Ravetto was entitled to retain the advances paid to him against commissions that ultimately were not earned. The defendants contend that the trial court‘s conclusion was based on an incorrect construction of Connecticut law. Ravetto asserts in response that the trial court properly concluded that he could retain
The following additional facts reasonably found by the trial court are relevant to the resolution of the cross appeal. Ravetto‘s employment agreement with Triton included a provision for the payment of commissions on sales of Triton products to certain industries. The
presentation of the issues raised or for the proper presentation of questions reserved. The trial judge shall file the decision on the motion with the appellate clerk. . . .”
agreement permitted Ravetto to take a draw every pay period against these future commissions. Once Ravetto began working for Triton in February, 2001, he began receiving approximately $2700 per pay period as an advance on commissions to be earned in the future. When Ravetto ended his employment with Triton, the advances that he had taken exceeded the commissions that he had earned by approximately $40,000. When Triton paid Ravetto for his unpaid wages in March, 2004, the company deducted approximately $40,000 from the wages that it had calculated that he was owed.
At trial, Ravetto claimed that the defendants improperly had deducted these advances from the back wages that it owed him. The defendants asserted that Ravetto was obligated to repay the excess advances under the terms of the agreement. More specifically, the defendants claimed that the use of the term “advance” in the agreement established that Ravetto was required to repay the excess unearned commissions. The defendants further claimed that because the terms of the employment agreement were clear and unambiguous, any evidence beyond the four corners of the agreement was irrelevant to determining whether Ravetto was obligated to repay the excess advances.
The trial court concluded that an employee is not required to repay excess advances unless the parties expressly or impliedly agree that he or she would do so. The trial court cited Sutton v. Avery, 132 Conn. 397, 399, 44 A.2d 701 (1945), in support of its conclusion that an employer is not entitled to reimbursement of excess advances in the absence of an express or implied agreement by the employee to reimburse the employer. The trial court found that “[t]he written employment agreement in this case is silent as to whether an employee is required to pay back excess advances. It does not contain any express language on reimbursement of unearned commissions. Ravetto never agreed
to repay advances in excess of earned commissions. Accordingly, Ravetto is entitled to retain excess advances and Triton owes him the $40,650 that it improperly subtracted from the wages paid him . . . .”
We first set forth the appropriate standard of review. “[T]he scope of our appellate review depends [on] the proper characterization of the rulings made by the trial court. To the extent that the trial court has made findings of fact, our review is limited to deciding whether such findings were clearly erroneous. When, however, the trial court draws conclusions of law, our review is plenary and we must decide whether its conclusions are legally and logically correct and find support in the facts that appeаr in the record.” (Internal quotation marks omitted.) Kelly v. Stop & Shop, Inc., 281 Conn. 768, 776, 918 A.2d 249 (2007). Because the defendants’ sole claim on appeal is that the trial court incorrectly construed and applied Connecticut law, our review is plenary. See id.
On appeal, the defendants claim that the trial court improperly relied on Sutton v. Avery, supra, 132 Conn. 399, in support of its conclusion that an employee is not required to repay excess advances unless the parties expressly or
loans that had to be repaid. This court concluded that the defendant was not liable to repay these amounts because the agreement between the parties “amounted to a contract by the plaintiff to guarantee a weekly return to the defendant of an amount equal to the latter‘s minimum requirements for living and travеling expenses.” Id. This court later went on to state, in dicta, that, “[e]ven if the advances were to be regarded as sums to be deducted from future commissions, the weight of authority is against recovery.” Id., 399. We agree with the defendants in the present case that, because this court did not construe the agreement between the parties in Sutton as providing for advances to be offset against future commissions, but, rather, to provide a weekly guaranteed return to the defendant therein, this court did not decide the issue of whether excess advances against commissions must be repaid in the absence of a contractual obligation to do so.
Both parties and the trial court also cite to Valoco Building Products, Inc. v. Chafee, 4 Conn. Cir. Ct. 322, 231 A.2d 101 (1966). In that case, the Connecticut Circuit Court held that an employer could not recover excess advances against unearned commissions when there had been no express or implied agreement requiring the employee to repay such excess advances. Id., 326. In support of its conclusion, the court cited Sutton when stating that, “Connecticut has adopted the majority rule that, where advances made to a salesman are charged against commissions earned, he is not required to pay excess of advances over commissions unless it has been expressly or impliedly agreed that he do so.” Id., 323. As set forth previously herein, we disagree with the court‘s characterization of Sutton in Valoco Building Products, Inc., as adopting a general rule addressing whether an employee is obligated to reimburse an employer for advances against unearned commissions when the contraсt between the parties is silent concerning reimbursement.
The issue, however, is presented to us squarely by the cross appeal in the present case. As we consider it, we are mindful that this issue “is a matter of policy for the court to determine based upon competing concerns in society.” (Internal quotation marks omitted.) Cweklinsky v. Mobil Chemical Co., 267 Conn. 210, 216, 837 A.2d 759 (2004).
A number of courts in other states have examined whether an employee is obligated to repay advances that exceed earned commissions. These courts recognize that whether an employer is entitled to recover advances in excess of earned commissions generally is a question of contract interpretation. See, e.g., Shaler Umbrella Co. v. Blow, 199 Wis. 489, 492, 227 N.W. 1 (1929) (“the purpose [in construing a contract] is to discover the intent of the parties“). “Whether or not money given by a principal is given as an advance
In construing these contracts to effectuate the intent of the parties regarding excess advances, the majority of the jurisdictions applies the general rule that if no express or implied contract for repayment is established, the employee is not liable to the employer for repayment of advances that exceed earned commissions. See, e.g., Kennesaw Life & Accident Ins. Co. v. Hendricks, 108 Ga. App. 148, 151, 132 S.E.2d 152 (1963) (“[a] prerequisite to the right of the principal to recover the excesses of advances over earned commissions, under the authorities cited, is the existence of an ‘express or implied agreement, or promise to repay’ such excesses“); Perma-Home Corp. v. Nigro, 346 Mass. 349, 353, 191 N.E.2d 745 (1963) (“we adopt the rule which appears to prevail elsewhere, that in the absence of an express or implied agreement to repay any excess of advances over the commissions earned, the employer may not recover from the employee the amount of the excess“); annot., 32 A.L.R.3d 802, 806 (1970) (“the overwhelming preponderance of case law is to the effect that while the parties may provide in the agreement for personal liability, in the absence of language, or at least some evidence, indicative of such an intention, it will generally be presumed that no liability was intended, and that the prinсipal‘s sole source of reimbursement was intended to be the fund contemplated, that is, the anticipated commissions, bonus, or profits“).
In applying this general rule, the majority of these courts has concluded that the use of terms such as “advance” or “draw,” standing alone, is not sufficiently indicative of the parties’ intent to obligate the employee to repay the advances.10 “It
liability on the part of the [employee] does not necessarily arise from the agreement on the part of the employer to make certain advancements. To advance does not necessarily mean to loan.” Shaler Umbrella Co. v. Blow, supra, 199 Wis. 491. “To advance is to bring forward. Standing by itself it means nothing more than that the company will ‘forward’ to [the employee] this money; they will take it from their treasury and put it in his hands.” North-western Mutual Life Ins. Co. v. Mooney, 108 N.Y. 118, 124, 15 N.E. 303 (1888); see also Richmond Dry Goods Co. v. Wilson, 105 W. Va. 221, 225, 141 S.E. 876 (1928) (“without a promise to repay, express, or fairly to be implied from the agreement under which the advances were made, a promise to advance money for a particular purpose—as here, the furtherance of the defendants’ business—does not import an expectation of its return personally by the person to whom the money was advanced” [internal quotation marks omitted]). We agree with the majority of courts that the mere use of the terms “draw” or “advance” in an employment agreement is not sufficient to establish the parties’ intent that the employee is obligated to repay the excess advances.
In arriving at the general rule that an emplоyer may not recover excess advances unless an express or implied agreement to repay is established, many courts have reasoned that because the employer usually drafts the employment agreement, it easily may include language in the agreement obligating the employee to repay any advances that exceed commissions. See, e.g., Shaler Umbrella Co. v. Blow, supra, 199 Wis. 492 (“[w]here it is the intent of both parties that the [employee] shall repay the excess of advancements it is a simple matter to expressly so provide“). “[I]n an agreement so fully and minutely defining the duties and contract obligations of the agent, and the contract rights of the company . . . [i]t would have been much more natural to insert words signifying [the transaction between the employer and employee to be a loan], if it was so intended, than omit them, and much easier to say directly that [the employee] assumed a personal liability, if that were the fact, than to use words which require an extended argument on the part of counsel to satisfy a referee or court that such liability, although not expressed, may be inferred.” North-western Mutual Life Ins. Co. v. Mooney, supra, 108 N.Y. 123-24. We find such reasoning persuasive.
Similarly, many of these courts have reasoned that, because the employer generally enjoys superior bargaining power in the employment relationship, it is incumbent upon the employer to make any obligation for reimbursement explicit in the employment agreement. “The majority rule is further predicated upon the obvious reality that the superior bargaining power of the employer in contracting with an agent or employee requires the imposition upon the employer of the duty of making explicit his rights under the contract agreement, particularly in situations where he demands the return of previously transferred funds.” Agnew v. Cameron, 247 Cal. App. 2d 619, 624, 55 Cal. Rptr. 733 (1967), citing Shaler Umbrella Co. v. Blow, supra, 199 Wis. 489; Joseph Toker, Inc. v. Cohen, 67 N.J. Super. 68, 74-75, 169 A.2d 838 (1961). This court recently has acknowledged the superior bargaining power of an employer that enters into an employment contract with an employee. “[A]n employer . . . possesses
The majority rule is further based on the rationale that, when an employee works for an employer on a commission basis, the employee and employer are engaged in a joint venture. See, e.g., Agnew v. Cameron, supra, 247 Cal. App. 2d 624; Perma-Home Corp. v. Nigro, supra, 346 Mass. 353; Richmond Dry Goods Co. v. Wilson, supra, 105 W. Va. 224; Shaler Umbrella Co. v. Blow, supra, 199 Wis. 491; annot., 32 A.L.R.3d 802, 806 (1970). If an employee were to be required to repay all excess advances when the business did not produce sufficient commissions to cover the advances, the entire risk of the joint undertaking would be placed unfairly on the employee, and such an outcome would be contrary to the nature of the relationship as a joint venture. Indeed, “the employee‘s undertaking is in the nature of a joint enterprise with the employer, the main object of which is the furtherance of the employer‘s business, and it is not to be assumed that the employee, in furnishing his time and ability, likewise assumes all the risk.” Agnew v. Cameron, supra, 624.
We therefore agree with the majority of jurisdictions that “absent a contractual provision expressly holding [an employee] personally liable for advances, [an employer] must show that [the employee], by his [or her] conduct, exhibited an intent to be held personally liable for the repayment of the advances.” SDJ Ins. Agency, LLC v. American National Ins. Co., 292 F.3d 689, 694 (10th Cir. 2002). This rule is consistent with the “well settled judicial reluctance to cause a forfeiture of money already received unless it convincingly appears that such a result was intended by the parties . . . .” Agnew v. Cameron, supra, 247 Cal. App. 2d 624. The trial court properly concluded that an employer that seeks reimbursement from an employee of advances that exceeded earned commissions has the burden of proving that the employee explicitly or impliedly agreed to repay any such excess advances.
In the present case, the defendants claimed in the trial court that the employment agreement was clear and unambiguous in establishing Ravetto‘s obligation to repay the excess advances, and relied on the use of the term “advance” to establish the repayment obligation. We agree with the trial court and the majority of other jurisdictions that the mere use of the term “advance” is not sufficient to establish an express repayment obligation.
On appeal in this court, the defendants now claim that the trial court improperly failed tо determine whether there was an implied agreement between the parties that required Ravetto to repay the excess advances.11
As we previously
The judgment is affirmed.
In this opinion NORCOTT, KATZ and PALMER, Js., concurred.
ZARELLA, J., concurring in part and dissenting in part. I agree with the majority that the trial court properly determined that the plaintiffs, W. Frederick Ravetto and Raymond Bartko, were not entitled to double damages and attorney‘s fees and that Bartko was not entitled to damages for the failure of the named defendant, Triton Thalassic Technologies, Inc. (Triton),1 to repay his loan to the company in a timely manner. I also agree with the majority that the plaintiffs did not preserve their claim that the trial court improperly had failed to award them prejudgment interest for unpaid wages. I disagree, however, with the majority‘s conclusion in part IV of its opinion that the trial court properly determined, without considering evidence of the parties’ negotiations, that Triton was not entitled to recover advances to Ravetto in excess of earned commissions. Accordingly, I respectfully dissent in part.
The following additional undisputed facts are necessary to a full discussion of this issue. In the latter part of the year 2000, an executive recruiter informed Ravetto that Triton was searching for a vice president of sales and arranged an interview with the company. At that time, Ravetto was working for Nash Engineering Company (Nash) and was earning an annual salary of $160,000, plus a bonus. Ravetto was interested in exploring the position at Triton because Nash was losing money, and his bonus had declined over the previous five years.
During his interview at Triton in early December, 2000, Ravetto met with several individuals, including Triton‘s chief executive officer, Barry Ressler, to discuss the sales executive position. Thereafter, Ravetto wrote a letter to Ressler in which he summarized his approach to the job. Ravetto acknowledged that the company was “[a] startup effort to introduce a new technology to mature industrial markets” and would require “an aggressive sales program . . . .” He also recognized that “[t]he sales ramp up can be ‘lumpy’ when a base business flow has not yet been established,” that “[t]he major obstacle to overcome is the slowness of mature markets, such as those targeted [by Triton], to adapt to change” and that potential customers would “need to be dislodged from the risk averse patterns of the past.” (Emphasis in original.) According to Ravetto, this would require an “aggressive and targeted” sales approach. Nevertheless, Ravetto declared that, despite these challenges, he was “keenly interested in pursuing the career opportunity at Triton.”
In late December, 2000, Triton offered Ravetto the position of vice president of sales with an annual salary of $100,000, plus commissions. In an e-mail dated December 29, 2000, Ravetto rejected the offer, explaining that, although he felt that the “fit with Triton was excellent in terms
Ressler responded by e-mail on December 31, 2000, conceding that Triton was “a developing, emerging company” with “[l]imited resources and a lot of groundbreaking challenges . . . .” With respect to Ravetto‘s compensation, he stated: “[Y]our overall reasoning makes sense and there is no way that we can guarantee the outcome.” (Emphasis added.) Although Ressler disagreed with Ravetto‘s projected sales numbers, he acknowledged that the product involved “new territory and it will require a significant effort on the part of the sales manager candidate and I repeat, no guarantees.” (Emphasis added.)
The parties reached an agreement that was formalized in a written offer from Ressler to Ravetto dated January 10, 2001. The offer provided that Ravetto would be paid an annual salary “of $110,000 in semi-monthly installments,” plus a commission on sales to the automobile, paper and food industries. In an addendum to the agreement, the commission was calculated at 0.5 percent on the first $5 million of sales, 0.75 percent on the next $5 million of sales and 1 percent on sales between $10 million and $20 million for the first eighteen months of employment, starting February 1, 2001. The addendum also set forth (1) three levels of sales and the percentage commission that Ravetto would earn at each level, (2) the actual commission he would earn if sales reached the maximum within each level, (3) a hypothetical commission to be paid as an advance or as a commission earned based on sales, and (4) how much the projected advances would exceed earned commissions in the various hypothetical scenarios. The agreement further provided that Ravetto could choose to “take a ‘draw‘” on his sales commissions of “up to $2710 per pay period, up to a maximum advance of $65,000.” This “bonus plan” would “remain in effect until sales force growth require[d] a reorganization.” Changes to his compensation or the calculation thereof would be by mutual agreement. The offer also included a “10,000 share stock option” and a standard benefits package. Ravetto subsequently signed the offer, thereby accepting its terms and conditions.
On January 18, 2001, Ravetto signed a personnel form acknowledging receipt of Triton‘s personnel policies and procedures manual. In signing the form, Ravetto also acknowledged: “No promises regarding employment or inducements to take employment have been made or offered to me other than in Triton‘s offer letter of employment and I understand and agree that no promises are binding upon Triton unless made in writing by [Ressler] . . . .” On January 23, 2001, Ravetto signed another personnel form entitled “personal employee profile,” which described his position as “[s]alaried,” with semi-monthly payments of $4583.33. After joining Triton, Ravetto elected to take the maximum advance on commissions permitted under the agreement.
Thereafter, the trial court declared in its November 4, 2005 memorandum of decision that “Connecticut has adopted the majority rule that, where advances made to a salesman are charged against commissions earned, he is not required to pay any excess of advances over commissions unless it is expressly or impliedly agreed that he do so.” (Internal quotation marks omitted.) The court then determined, without considering any other contract provisions regarding the compensation package, or any other evidence of the parties’ intent, including their negotiations, that, because the agreement contained no “express language on reimbursement of unearned commissions, Ravetto never agreed to repay advances in excess of earned commissions.” Consequently, he was entitled to retain such advances when he ceased working for the company.
As the majority has observed, Connecticut law provides that “[a] contract must be construed to effectuate the intent of the parties, which is determined from the language used interpreted in the light of the situation of the parties and the circumstances connected with the transaction. . . . [T]he intent of the parties is to be ascertained by a fair and reasonable construction of the written words and . . . the language used must be accorded its common, natural, and ordinary meaning and usage where it can be sensibly applied to the subject matter of the contract.” (Emphasis added; internal quotation marks omitted.) Alstom Power, Inc. v. Balcke-Durr, Inc., supra, 269 Conn. 610.2
The majority appears to agree with these principles when it notes that, among those jurisdictions that have considered the question, the greater number have concluded that, “if no express or implied contract for repay-
ment is established, the employee is not liable to the employer for repayment of advances that exceed earned commissions.” (Emphasis added.) Part IV of the majority opinion, citing Kennesaw Life & Accident Ins. Co. v. Hendricks, supra, 108 Ga. App. 148, 150, 132 S.E.2d 152 (1963) (employer may not recover advances that exceed commissions earned “in the absence of an express or implied agreement, or promise to repay
The agreement specifically provided: “You may take a ‘draw’ on your sales commission of up to $2710 per pay period, up to a maximum advance of $65,000. This bonus plan . . . will remain in effect until sales force growth require[d] a reorganization. Changes to your compensation or the calculation thereof will be by mutual agreement.” To ascertain the commonly approved usage of a term, we look to its definition in the dictionary. E.g., Hummel v. Marten Transportation, Ltd., 282 Conn. 477, 498, 923 A.2d 657 (2007). According to Webster‘s Third New International Dictionary, the common and ordinary meaning of the term “draw” is “to gain as a recompense оr one‘s due . . . as for services,” or “to pay out money held to the credit of the drawer . . . .” The ordinary meaning of the term “advance” is “to supply (as money or other value) beforehand in expectation of repayment or other future adjustment . . . .” Webster‘s Third New International Dictionary. These definitions indicate that when the term “advance” is used in a contract, it implies a future accounting to reconcile money paid in expectation of work to be performed with money owed if expectations are not fulfilled. That Ravetto might not earn the sales commissions necessary to justify the advances he drew was reflected in column four of the addendum to the employment agreement, captioned “[e]xcess of earnings,” which provided examples of situations in which advances might exceed earned commissions and thus require repayment.
Furthermore, the language of the employment agreement was permissive in nature, specifically providing that “[y]ou may take a ‘draw’ on your sales commission,” and placed a cap of $65,000 on advances that Ravetto could obtain during his initial eighteen months with the company. These provisions indicate that the advances were not regarded by the parties as guaranteed income. Indeed, common sense dictates that giving Ravetto the option of drawing advances against unearned commissions meant that they were not intended as guaranteed income and would require repаyment should Ravetto fail to produce the necessary sales.
Correspondence during the negotiations confirmed that the parties did not view the advances as guaranteed income. Ravetto admitted that, because the company was “[a] startup effort to introduce a new technology to mature industrial markets” with no established “business flow,” and because there might be substantial resistance to change among the targeted customers, his ability to generate sales during his first two years with the company would be limited. In explaining to Triton his decision to decline its initial offer, he estimated that he would earn only $10,000 in sales commissions during his first year of employment
The majority concludes that the trial court‘s determination that “Ravetto never agreed to repay advances in excess of earned commissions” suggests that the court considered the negotiations when rejecting Triton‘s claim. I disagree. The trial court‘s conclusion that Ravetto never agreed to repay the advances directly followed its observation that the agreement was silent on the issue of repayment. The majority‘s inference that the trial court considered evidence outside the four corners is, therefore, entirely unsupported.
Moreover, Triton‘s failure to seek an articulation from the trial court as to whether it considered such evidence is not fatal, as the majority insists. “[A]n articulation is appropriate [when] the trial court‘s decision contains some ambiguity or deficiency reasonably susceptible of clarification. . . . [P]roper utilization of the motion for articulation serves to dispel any . . . ambiguity by clarifying the factual and legal basis [on] which the trial court rendered its decision, thereby sharpening the issues on appeal.” (Internal quotation marks omitted.) Orcutt v. Commissioner of Correction, 284 Conn. 724, 738, 937 A.2d 656 (2007). In the present case, the triаl court did not fail to address the issue of whether the parties agreed that Ravetto would be required to repay excess advances. The court expressly found that “[t]he written employment agreement in this case is silent as to whether an employee is required to pay back excess advances. It does not contain any express language on reimbursement of unearned commissions.” Accordingly, the factual and legal basis for the trial court‘s decision is clear. To the extent that the court‘s decision may be considered incomplete because it did not make findings concerning all of the evidence presented, “[i]t was the province of the court, as the finder of fact, to assess the evidence and to determine which factual grounds supported its decision.” State v. Bennett, 101 Conn. App. 76, 82, 920 A.2d 312 (2007). These grounds were stated in its ruling. Consequently, there is no ambiguity in the trial court‘s decision, and Triton had no responsibility to seek an articulation in appealing from that court‘s judgment.
Additionally, I disagree with the majority‘s decision to promulgate a rule that, in the absence of an explicit provision in the employment agreement holding an employee personally liable for advances, an employer must show by the employee‘s conduct that he or she intended to be held personally liable for the repayment of advances that exceeded earned commissions.
Finally, I do not agree with some of the theoretical justifications on which the majority relies in adopting such a rule. For example, a potential employer does not always possess superior bargaining power in an employment relationship. When Ravetto interviewed with Triton, he was employed by Nash and was earning annual compensation of approximately $170,000. Triton, on the other hand, was a start-up company with limited resources and repeatedly told Ravetto that it could not guarantee the company‘s future success. It is therefore clear that Ravetto, rather than Triton, had superior bargaining power in discussing the terms of his potential employment with the company.
With respect to the majority‘s theory that when an employee works for an employer on a commission basis, the employee and employer are engaged in a joint venture in which they share the risk, the majority fails to acknowledge that, in the present case, the analogy does not apply because Ravetto was not compensated solely on a commission basis; rather, he received a substantial salary of $110,000 before commissions. Thus, even if Ravetto earned no commissions, it would be disingenuous to suggest that a salary of this magnitude placed Ravetto in the precarious position of assuming a major share of the risk associated with Triton‘s business.
For all of the foregoing reasons, I respectfully dissent in part.
ELAINE J. GIBBONS v. HISTORIC DISTRICT COMMISSION OF THE TOWN OF FAIRFIELD (SC 17846)
Rogers, C. J., and Norcott, Palmer, Vertefeuille and Zarella, Js.