Opinion
CV146044992S
07-25-2016
Beacon Insurance & Investment Group, LLC v. Annette M. Panzo et al
UNPUBLISHED OPINION
MEMORANDUM OF DECISION
Robin L. Wilson, J.
STATEMENT OF CASE AND PROCEDURAL HISTORY
This matter arises from the acts of two individuals allegedly taken in breach of non-competition agreements that they had entered into with their former employer. On February 12, 2014, the plaintiff, Beacon Insurance & Investment Group, LLC, commenced this action by service of process on the defendants, Annette M. Panzo and David Sagnella. In the second amended complaint, dated February 13, 2015, the plaintiff raises three claims against the defendants, sounding in breach of contract, tortious interference, and breach of the covenant of good faith and fair dealing.
The plaintiff suggested at trial that it would file an amended complaint with an additional claim of unjust enrichment. The court gave the plaintiff leave to do so immediately following the trial. No such amended complaint was filed. Thus, the court will not consider those arguments raised by the plaintiff concerning unjust enrichment.
A trial was held on February 23 and 24, 2016, during which the court heard testimony from the following witnesses: Frank Trentini, the owner of Beacon Insurance & Investment Group, LLC; Panzo; Sagnella; Joseph Votto; and Mike Azzaro, another former employee of the plaintiff. The parties submitted additional evidence that will be discussed below, as necessary. At the close of the plaintiff's case, Panzo and Sagnella each moved for a directed verdict. This court denied both motions. Following the trial, on April 25, 2016, per order of the court, the parties submitted proposed findings of fact and conclusions of law.
STANDARD OF REVIEW
" It is an abiding principle of our jurisprudence that [t]he sifting and weighing of evidence is peculiarly the function of the trier [of fact]. [N]othing in our law is more elementary than that the trier [of fact] is the final judge of the credibility of witnesses and of the weight to be accorded to their testimony . . . The trier has the witnesses before it and is in the position to analyze all the evidence. The trier is free to accept or reject, in whole or in part, the testimony offered by either party." (Citations omitted; internal quotation marks omitted.) Welsch v. Groat, 95 Conn.App. 658, 664, 897 A.2d 710 (2006).
BURDEN OF PROOF
The burden of proof is on the plaintiff to prove all of the essential allegations of its complaint. Lukas v. New Haven, 184 Conn. 205, 211, 439 A.2d 949 (1981). " While the plaintiff is entitled to every favorable inference that may be legitimately drawn from the evidence, and has the same right to submit a weak case as a strong one, the plaintiff must still sustain the burden of proof on the contested issues in the complaint and the defendant need not present any evidence to contradict it . . . The general burden of proof in civil actions is on the plaintiff, who must prove all the essential elements of [its] cause of action by a fair preponderance of the evidence." Gulycz v. Stop and Shop, 29 Conn.App. 519, 523, 615 A.2d 1087, cert. denied, 224 Conn. 923, 618 A.2d 529 (1992). Failure to do so results in judgment for the defendant. Id.
STANDARD OF PROOF
The ordinary civil standard of proof is the fair preponderance of the evidence standard. Freeman v. Alamo Management Co., 221 Conn. 674, 678, 607 A.2d 370 (1992). " The burden of persuasion in an ordinary civil action is sustained if evidence induces in the mind of the trier a reasonable belief that it is more probable than otherwise that the fact in issue is true." (Internal quotation marks omitted.) Lopinto v. Haines, 185 Conn. 527, 533, 441 A.2d 151 (1981). The standard of proof, a fair preponderance of the evidence, is " properly defined as the better evidence, the evidence having the greater weight, the more convincing force in your mind." (Internal quotation marks omitted.) Cross v. Huttenlocher, 185 Conn. 390, 394, 440 A.2d 952 (1981).
FINDINGS OF FACT
The court makes the following findings of fact based on a fair preponderance of the evidence. The plaintiff is an insurance company that sells property, casualty, life, accident, and health insurance products, as well as annuity products. Since February 12, 2000, the plaintiff has been located at numerous addresses within East Haven, Connecticut. The plaintiff advertises exclusively within New Haven County, and has had clients in every town and city within New Haven County. At least 85% of the plaintiff's customer base is located in New Haven County.
In October 2008, the plaintiff hired Panzo as an insurance agent responsible for the solicitation and sale of the plaintiff's products to new and existing clients. As an insurance agent, Panzo was paid a commission upon the sale or renewal of insurance products to the plaintiff's existing and new clients. From 2008 to 2010, Panzo was also paid an hourly compensation for training and customer service work. When Panzo was hired, she had no client base, or " book of business, " of her own. All of the clients for which Panzo was paid a commission by the plaintiff were acquired before or during her tenure at the company. Panzo's commissions were subject to a reduction or " charge back" in the event that Panzo had already been paid a full commission but as a result of a cancellation or reduction in the insurance policy premium, the plaintiff's commission was subsequently reduced.
On or about November 15, 2010, the plaintiff tendered to Panzo a non-competition agreement, which provided in part: " Employee agrees that for a period of two (2) years from the date of any termination of Employee's employment with the Company (the 'Restricted Period'), neither Employee nor any entity of which Employee is an owner, employee, partner, consultant, agent, representative, member or shareholder . . . shall, directly or indirectly, within [the State of Connecticut, its New Haven County] to this agreement: (a) Compete against the Company products or services by selling any similar type of products or services now offered by the Company or currently in research and development at the Company for a two (2) year period following any termination or separation of Employee; (b) Solicit current customers of the Company; (c) Will not solicit any person . . . located or having a location within New Haven County Connecticut to purchase insurance products or services; (d) Will not sell or broker any insurance products or services to any person . . . located or having a location within New Haven County Connecticut." Panzo was further obligated to refrain from recruiting or hiring the plaintiff's employees.
In exchange for Panzo's assent to the non-competition agreement, the plaintiff offered Panzo an increase in hourly compensation, from $10 to $13, along with an increase in the number of available work hours. After being afforded the opportunity to consult an attorney regarding the agreement, Panzo executed the agreement on November 15, 2010. Thereafter, beginning on January 2, 2011, Panzo received an increase in hourly compensation and a commensurate increase in the number of available work hours.
On January 28, 2013, the plaintiff hired Sagnella as an insurance agent. Sagnella's position was substantially similar in duties and compensation to Panzo's position. That same day, after having an opportunity to review it with an attorney, Sagnella signed a non-competition agreement that carried the same restrictions as were imposed on Panzo.
During the workday on December 10, 2013, Panzo quit employment with the plaintiff. Soon after, on December 23, 2013, Panzo formed an insurance agency, the A. Panzo Insurance Group, LLC (Panzo Group), located in Killingworth, Connecticut. Killingworth is in Middlesex County. Since its founding, Panzo Group has sold the same insurance products and has represented nearly the same group of insurance clients as the plaintiff. Panzo Group has advertised itself on Facebook, where it was available to be seen by the plaintiff's customers and other potential customers within New Haven County.
Beginning on January 12, 2014, Panzo solicited and sold competitive products to the plaintiff's existing clients, including those for whom she had received a commission while in the plaintiff's employ and others who had been clients of the plaintiff prior to Panzo's hiring in October 2008. From March 2014 to November 2014, Panzo also diverted the plaintiff's existing clients to the Jack Abbels Agency, a competitor of the plaintiff located in New Haven County. For doing so, Panzo received 75% of the commissions generated for two years.
On January 21, 2014, Sagnella quit employment with the plaintiff. Beginning on February 21, 2014, Panzo authorized Sagnella to work for Panzo Group as an insurance agent to solicit and sell competitive products to the plaintiff's existing customers. Indeed, Sagnella did conduct business with the plaintiff's existing clients, including those clients for whom Sagnella had received a commission while employed by the plaintiff and other clients who had been with the plaintiff prior to Sagnella's hiring in 2013. Likewise, in May and September 2014, Sagnella also diverted the plaintiff's existing clients to the Jack Abbels Agency, for which he received 75% of the commissions generated for two years. The court will set forth additional facts as necessary.
DISCUSSION
I
ENFORCEABILITY OF THE NON-COMPETITION AGREEMENT
A
Reasonableness of Restriction
The plaintiff's claims arise from the defendants' actions taken in breach of their employment contracts, in particular the non-competition agreement to which each defendant assented. The defendants argue that the non-competition agreement was overbroad and unreasonably restricted the defendants' ability to pursue their chosen livelihood.
" Some jurisprudential background is in order. It is the general rule that competent persons shall have the utmost liberty of contracting and that their agreements, voluntarily and fairly made, shall be held valid and enforced in the courts. Collins v. Sears, Roebuck & Co., 164 Conn. 369, 377, 321 A.2d 444 (1973). However, it has long been the law that 'if the contract contemplates acts against public policy, or forbidden by statute, it is inoperative.' Smith v. Delaney, 64 Conn. 264, 276, 29 A. 496 (1894). In cases such as this the public policy exception to the liberty of contract is implicated because '[t]he public have an interest in every person's carrying on his trade freely; so has the individual. All interference with individual liberty of action in trading, and all restraints of trade of themselves, if there is nothing more, are contrary to public policy, and therefore void. That is the general rule. But there are exceptions: restraints of trade and interference with individual liberty of action may be justified by the special circumstances of a particular case. It is a sufficient justification, and, indeed, it is the only justification [in the absence of statute], if the restriction is reasonable-reasonable, that is, in reference to the interests of the parties concerned, and reasonable in reference to the interests of the public, so framed and so guarded as to afford adequate protection to the party in whose favor it is imposed, while at the same time it is in no way injurious to the public.' Samuel Stores, Inc. v. Abrams, 94 Conn. 248, 252, 108 A. 541 (1919).
" Therefore, a covenant that restricts the activities of an employee following the termination of his employment is valid and enforceable if the restraint is reasonable. Scott v. General Iron & Welding Co., 171 Conn. 132, 137, 368 A.2d 111 (1976); New Haven Tobacco Co. v. Perrelli, 18 Conn.App. 531, 533, 559 A.2d 715 (1989)." Daniel V. Keane Agency, Inc. v. Butterworth, Superior Court, judicial district of Fairfield, Docket No. 31 31 81, (February 22, 1995, Levin, J.).
Generally, a business is entitled to protect its customer list and other confidential information from competition with former employees for a reasonable period of time by the execution of a restrictive covenant not to compete. See Scott v. General Iron & Welding Co., supra, 171 Conn. 138. " By definition, covenants by employees not to compete with their employers after termination of their employment restrain trade in a free market . . . Consequently, these covenants may be against public policy, and, thus, are enforceable only if their imposed restraint is reasonable, an assessment that depends upon the competing needs of the parties as well as the needs of the public." (Citation omitted.) Deming v. Nationwide Mutual Ins. Co., 279 Conn. 745, 761, 905 A.2d 623 (2006). " 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." Hart, Nininger & Campbell Associates, Inc. v. Rogers, 16 Conn.App. 619, 636, 548 A.2d 758 (1988).
(i)
Time and Geography
Reasonableness is the standard by which courts evaluate whether the time restriction in a restrictive covenant is enforceable. Robert S. Weiss & Associates v. Wiederlight, supra, 208 Conn. 525, 530, 546 A.2d 216 (1988)." The general rule is that the application of a restrictive covenant will be confined to a geographical area which is reasonable in view of the particular situation . . . A restrictive covenant which protects the employer in areas in which he does not do business or is unlikely to do business is unreasonable with respect to area." (Citation omitted.) Scott v. General Iron & Welding Co., supra, 171 Conn. 138 (five-year restriction throughout Connecticut found reasonable). Additionally, the elements are intertwined, such that " [a] restriction covering a large area might be reasonable if in effect for a brief time, while a restriction covering a small area might be reasonable for a longer time." Van Dyck Printing Co. v. DiNicola, 43 Conn.Supp. 191, 197, 648 A.2d 898 (1993), aff'd, 231 Conn. 272, 648 A.2d 877 (1994) (twelve-month restriction throughout Connecticut found reasonable in light of subsequent conditions in the agreement).
In Robert S. Weiss & Associates, Inc. v. Wiederlight, supra, 208 Conn. 528, the Supreme Court was presented with the issue of whether a non-competition agreement between the defendant, an insurance broker, and the plaintiff, his former employer, was reasonable. The subject agreement barred the defendant, " for two years from the date the agreement terminated, from soliciting accounts held by the plaintiff at the time the employment agreement terminated, and from working within Stamford and within ten miles from the outer borders of Stamford." Id. The court held that the non-competition agreement was reasonable, noting that " the two year limitation fairly protected the plaintiff's interests in the commercial insurance business in the Stamford area while ensuring that [the defendant] could return to commercial insurance in that area within a definite period of time . . . In addition, the restricted geographical area was narrowly tailored to the plaintiff's business situation in the Stamford area. The provision . . . allowing [the defendant] to work in areas north of Stamford and in Long Island, New York, demonstrated the plaintiff's caution in avoiding an overly broad geographic restriction." Id., 531.
During the trial of the instant matter, Trentini, Panzo, and Sagnella offered substantial testimony regarding the scope and intended effect of the non-competition agreement. Beacon has always been located in and has advertised exclusively to New Haven County. Beacon has had customers from within every town and city in New Haven County. Additionally, approximately 85% of Beacon's customers, including those sold to by Panzo and Sagnella, are and have been located in New Haven County. It is evident, through their testimony, that the parties understood that the agreement was limited in effect to New Haven County. The defendants' business activities throughout the rest of the state, including Middlesex County, where the Panzo Group was located, were not subject to the non-competition agreement. The restriction on business within New Haven County was limited to a period of two years, after which Panzo and Sagnella would have been free to compete with the plaintiff in the sale of insurance products in New Haven County. The plaintiff has proven that the geographic limitation is narrowly drawn to areas where it does business and that the time period of two years is reasonable.
(ii)
Protection to the Employer
" In order to be valid and binding, a covenant which restricts the activities of an employee following the termination of his employment . . . should afford only a fair protection to the interest of the party in whose favor it is made." Scott v. General Iron & Welding Co., supra, 171 Conn. 137. " [W]hen the character of the business and the nature of employment are such that the employer requires protection for his established business against competitive activities by one who has become familiar with it through employment therein, restrictions are valid when they appear to be reasonably necessary for the fair protection of the employer's business or rights." Id.
As previously noted, Beacon has always been located in New Haven County and has exclusively advertised to New Haven County. Beacon has had customers from within every town and city in New Haven County and approximately 85% of its customers, including those sold to by Panzo and Sagnella, are and have been located in the New Haven County. This court finds that the restrictive covenant provides a fair degree of protection to the employer. The restrictive covenant pertains to the geographic area in which the plaintiff does business, for two years. Because the viability of Beacon Insurance depends on the relationship with its clients, it is important to protect that interest by enforcing the covenant not to compete.
(iii)
Interference With Employees' Employment
" The interests of the employee himself must also be protected, and a restrictive covenant is unenforceable if by its terms the employee is precluded from supporting himself and his family." Scott v. General Iron & Welding Co., supra, 171 Conn. 137. There was no credible evidence to demonstrate that the two-year restriction within New Haven County unreasonably precluded the defendants from pursuing a chosen occupation, within or outside of the insurance business, or prevented them from supporting themselves. The restrictive covenant interferes, albeit reasonably, with the defendants' employment. The restrictive covenant, however, does not force the defendants to sacrifice their livelihood. At any time, the defendants could work as insurance agents or insurance brokers throughout most of Connecticut and in any other state. Compare Russo Associates, Inc. v. Cachina, Superior Court, judicial district of Fairfield, No. 276910 (1995) (court found restrictive covenant not to compete unreasonable where plaintiff was restricted from practicing in his computer profession for two years in his home state (except for a relatively small rural area) because restriction would severely impact his employment in the computer field).
With respect to Sagnella, in particular, the record demonstrates that prior to signing the non-competition agreement, he had no experience in the insurance business. The evidence also demonstrates that he acquired his experience in the insurance business while employed for the plaintiff. There was no credible evidence to demonstrate that Sagnella was restricted from pursuing his occupation in the insurance business and supporting himself and his family in seven of the eight counties in Connecticut. Pursuant to the agreement, Sagnella was precluded from soliciting and selling insurance only with respect to the plaintiff's customer base in the geographic area of New Haven County. In addition to working for the Panzo Group, he also maintained numerous other part-time jobs.
(iv)
Public Interest
" In order for such interference [with the public interest] to be reasonable, it must be determined that the employer is seeking to protect a legally recognized interest, and then, that the means used to achieve this end do not unreasonably deprive the public of essential goods and services." New Haven Tobacco Co. v. Perrelli, supra, 18 Conn.App. 536.
" An employer can protect its business in the area where it does business." See Robert S. Weiss & Associates v. Wiederlight, supra, 208 Conn. 533; May v. Young, 125 Conn. 1, 7, 2 A.2d 385 (1938). The court finds that Beacon Insurance's interest in protecting itself from the competition of former employees, whom it has trained and who are familiar with its customer base, in the areas where it has accounts is legally protected. Hence, Beacon meets the first part of Perrelli's public interest test.
" In determining whether a restrictive covenant unreasonably deprives the public of essential goods and services, the reasonableness of the scope and severity of the covenant's effect on the public and the probability of the restriction's creating a monopoly in the area of trade must be examined." New Haven Tobacco Co. v. Perrelli, supra, 18 Conn.App. 536. Here, the public interest will not suffer because the restrictive covenant is enforced. Beacon Insurance will not constitute a monopoly in the New Haven County area. With or without the defendants, enough businesses will compete for insurance sales so that the public will be adequately served. Indeed, Panzo had diverted the plaintiff's existing clients to the Jack Abbels Agency, a competitor of the plaintiff located in New Haven County.
Thus, as a preliminary matter, based on the evidence adduced at trial, the court finds that the non-competition agreements are reasonable as to both Panzo and Sagnella.
B
Consideration
Panzo argues, alternatively, that the non-competition agreement is unenforceable for lack of consideration because she had already been working for the plaintiff and receiving compensation when the agreement was made. " An 'agreement' is [t]he union of two or more minds in a thing done or to be done; a coming together of parties in opinion or determination . . . [T]he legal import of the word includes not only a promise, but also the consideration for which the promise was made." (Internal quotation marks omitted.) Viera v. Cohen, 283 Conn. 412, 429, 927 A.2d 843 (2007). " Generally, a promise to do something which the promisor is already legally obligated to do does not constitute consideration sufficient to support a valid contract." (Internal quotation marks omitted.) Jackson v. Water Pollution Control Authority, 278 Conn. 692, 707 n.13, 900 A.2d 498 (2006).
" Under the law of contract, a promise is generally not enforceable unless it is supported by consideration. E. Farnsworth, Contracts (1982) § 2.9, p. 89; A. Corbin, Contracts (1963) § 193, p. 188." D'Ulisse-Cupo v. Board of Directors of Notre Dame High School, 202 Conn. 206, 213, 520 A.2d 217 (1987). " It is an accepted principle of law in this state that when a party agrees to perform an obligation for another to whom that obligation is already owed, although for lesser remuneration, the second agreement does not constitute a valid, binding contract . . . Where, however, the subsequent agreement imposes upon the one seeking greater compensation an additional obligation or burden not previously assumed, the agreement, supported by consideration, is valid and binding upon the parties." (Citations omitted.) Brian Construction & Development Co. v. Brighenti, 176 Conn. 162, 166, 405 A.2d 72 (1978).
" In an employment contract, 'past consideration' does not make a promise enforceable. Dick v. Dick, 167 Conn. 210, 224, 355 A.2d 110 (1974). When the terms of employment change, new obligations and responsibilities will support a promise not to compete. Van Dyck Printing Co. v. DiNicola, 43 Conn.Supp. 191, 195-96, 648 A.2d 898 (1993), aff'd, 231 Conn. 272, 648 A.2d 877 (1994)." Daniel v. Keane Agency, Inc., Superior Court, supra, Docket No. No. 313181, .
The court finds that consideration supported Panzo's promise not to compete. The record demonstrates that in exchange for Panzo's assent to the non-competition agreement, Panzo was promised a raise of $3 per hour and an increase in the number of hours that she would be asked to work. Indeed, upon entering into the agreement, Panzo's salary was raised and her hours worked increased. The exchange of greater compensation and additional obligations is sufficient to constitute consideration in support of the non-competition agreement. Therefore, Panzo's argument to the contrary must fail.
II
BREACH OF THE NON-COMPETITION AGREEMENT
A
The court now turns to the defendants' liability under the contract, beginning with Panzo. " A contract is to be construed as a whole and all relevant provisions will be considered together. In giving meaning to the terms of a contract, we have said that a contract must be construed to effectuate the intent of the contracting parties. In ascertaining intent, we consider not only the language used in the contract but also the circumstances surrounding the making of the contract, the motives of the parties and the purposes which they sought to accomplish . . . The intention of the parties to a contract is to be determined from the language used interpreted in the light of the situation of the parties and the circumstances connected with the transaction. The question is not what intention existed in the minds of the parties but what intention is expressed in the language used." (Citations omitted; internal quotation marks omitted.) Barnard v. Barnard, 214 Conn. 99, 109-10, 570 A.2d 690 (1990).
In short, the non-competition agreement prohibited Panzo from selling competing insurance products and soliciting customers within New Haven County. " In interpreting contract items, we have repeatedly stated that the intent of the parties is to be ascertained by a fair and reasonable construction of the written words and that 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." Barnard v. Barnard, supra, 214 Conn. 110. Though the relevant terms are not explicitly defined in the contract, the " sale" and " solicitation" of insurance products are the subject of statutory regulation. A court may rely on a statutory definition to interpret a term when an alternative definition would be inconsistent with the legislative definition. See Piersa v. Phoenix Ins. Co., 273 Conn. 519, 532, 871 A.2d 992 (2005) (adopting statutory definition of undefined insurance term). Pursuant to General Statutes § 38a-702a, " (15) 'Sell' means to exchange a contract of insurance by any means, for money or its equivalent, on behalf of an insurance company. (16) 'Solicit' means attempting to sell insurance or asking or urging a person to apply for a particular kind of insurance from a particular company." Even if the court were to assume for the sake of argument, that the defendants were not actively seeking to take the plaintiff's existing customers when those customers approached the defendants about leaving the plaintiff, the defendant nevertheless engaged in the sale of insurance products when accepting that business and the resulting commissions.
Indeed, at trial, Panzo conceded that her actions taken after leaving her employment with the plaintiff constitute a breach of the non-competition agreement. This concession is supported by the evidence at trial, which demonstrates that immediately following termination, she solicited business from existing clients of the plaintiff, including Joseph Votto, a partner of one of the plaintiff's commercial customers. Within minutes of her departure, she contacted Votto, by text message, writing " [p]lease don't tell the office I contacted you, but call me on my cell phone . . ." After receiving the message, Votto called Panzo, who solicited him for her own business, an offer that Votto declined. Panzo also referred existing clients of the plaintiff to Jack Abbels Agency, a competitor located within New Haven County, and received a commission for those referrals.
Moreover, there is ample support in the record that she knowingly breached the provisions of the non-compete agreement. Having already worked for the plaintiff for years, Panzo entered into the non-competition agreement on November 15, 2010. She took actions in breach of the agreement almost immediately upon the termination of her employment by soliciting existing clients of the plaintiff or diverting them to a competitor within New Haven County. When she opened the Panzo Group at a location outside of New Haven County, Panzo's online advertisements and solicitous actions were nonetheless directed towards New Haven County, to plaintiff's existing customers and to potential new customers. Finally, although the plaintiff initiated this lawsuit on February 12, 2014, by which point Panzo was unquestionably made aware that she was acting in breach of the non-competition agreement, she has continued to violate the non-compete provisions of the agreement throughout the pendency of this litigation, up to and through the date of trial. Accordingly, the court finds in favor of the plaintiff on count one of the complaint against the defendant Panzo.
B
As discussed above, the non-competition agreement that Sagnella entered into with the plaintiff, which was the same in scope and effect as Panzo's agreement, was reasonable and enforceable. Unlike Panzo, Sagnella did not concede liability for breach of the non-competition agreement. Nevertheless, the record is replete with evidence supporting that very conclusion. On February 21, 2014, nine days after the instant action was commenced, Sagnella, working with Panzo, started to divert the plaintiff's existing clients to a competing agency in New Haven County, for which he received 75% of the commissions generated for two years. Moreover, on or about March 11, 2014, Sagnella began soliciting business from and selling insurance products to the plaintiff's existing clients, including those clients for whom Sagnella had received a commission while employed by the plaintiff and other clients who had been with the plaintiff prior to Sagnella's hiring. These actions by Sagnella led directly to the plaintiff's loss of existing accounts. Sagnella undertook this course of conduct with full knowledge of the terms of his non-competition agreement with the plaintiff, and despite the pendency of this lawsuit. Based on the foregoing, Sagnella stands in breach of his contract with the plaintiff. The court therefore finds in favor of the plaintiff on count one of the complaint against defendant Sagnella.
C
In Count Two of the second amended complaint, the plaintiff claims that the defendants interfered with its existing and prospective contractual and business relationships. " A claim for intentional interference with contractual relations requires the plaintiff to establish: (1) the existence of a contractual or beneficial relationship; (2) the defendant's knowledge of that relationship; (3) the defendant's intent to interfere with the relationship; (4) that the interference was tortious; and (5) a loss suffered by the plaintiff that was caused by the defendant's tortious conduct." Rioux v. Barry, 283 Conn. 338, 351, 927 A.2d 304 (2007). " This court has long recognized a cause of action for tortious interference with contract rights or other business relations . . . [We have held, however, that] not every act that disturbs a contract or business expectancy is actionable . . . [F]or a plaintiff successfully to prosecute such an action it must prove that the defendant's conduct was in fact tortious. This element may be satisfied by proof that the defendant was guilty of fraud, misrepresentation, intimidation or molestation . . . or that the defendant acted maliciously . . . [A]n action for intentional interference with business relations . . . requires the plaintiff to plead and prove at least some improper motive or improper means . . . The plaintiff in a tortious interference claim must demonstrate malice on the part of the defendant, not in the sense of ill will, but 'intentional interference without justification.' . . . In other words, the [plaintiff] bears the burden of alleging and proving 'lack of justification' on the part of the actor." (Citations omitted; internal quotation marks omitted.) Daley v. Aetna Life & Casualty Co., 249 Conn. 766, 805-06, 734 A.2d 112 (1999).
Based on the conduct of Panzo and Sagnella, as described above, there is sufficient evidence to support the conclusion that they tortiously interfered with the plaintiff's business interests. Both Panzo and Sagnella were aware of the plaintiff's existing business relationships with its customers. Their interference with the plaintiff's existing business relationships was malicious because, despite knowing that their conduct was prohibited by the non-competition agreements, they acted intentionally and without justification in undermining the plaintiff's business. Finally, their tortious conduct caused the plaintiff to suffer a loss in having to forfeit commissions and pay a charge back on the cancelled policies. The court therefore finds in favor of the plaintiff on count two of the complaint against the defendants, Panzo and Sagnella.
D
In Count Three, the plaintiff claims a breach of the covenant of good faith and fair dealing. " [I]t is axiomatic that the . . . duty of good faith and fair dealing is a covenant implied into a contract or a contractual relationship . . . In other words, every contract carries an implied duty requiring that neither party do anything that will injure the right of the other to receive the benefits of the agreement . . . The covenant of good faith and fair dealing presupposes that the terms and purpose of the contract are agreed upon by the parties and that what is in dispute is a party's discretionary application or interpretation of a contract term . . .
" To constitute a breach of [the implied covenant of good faith and fair dealing], the acts by which a defendant allegedly impedes the plaintiff's right to receive benefits that he or she reasonably expected to receive under the contract must have been taken in bad faith . . . Bad faith in general implies both actual or constructive fraud, or a design to mislead or deceive another, or a neglect or refusal to fulfill some duty or some contractual obligation, not prompted by an honest mistake as to one's rights or duties, but by some interested or sinister motive . . . Bad faith means more than mere negligence; it involves a dishonest purpose . . .
" Accordingly, because the covenant of good faith and fair dealing only requir[es] that neither party [to a contract] do anything that will injure the right of the other to receive the benefits of the agreement, it is not implicated by conduct that does not impair contractual rights." (Citation omitted; internal quotation marks omitted.) Capstone Building Corp. v. American Motorists Ins. Co., 308 Conn. 760, 794-95, 67 A.3d 961 (2013).
Again, as discussed above, the defendants refused to fulfill their duties under the agreement. The defendants' conduct deprived the plaintiff of the benefits of the non-competition agreement, which reasonably sought to restrict the defendants from soliciting business or competing with the plaintiff within New Haven County for two years. They did so in knowing breach of their contractual obligations, and for the purpose of enriching themselves at the expense of the plaintiff by building a competing insurance business with accounts taken from the plaintiff's book of business. Thus, the defendants have breached the duty of good faith and fair dealing and the court therefore finds in favor of the plaintiff on count three against the defendants.
III
DAMAGES
Having found the defendants liable for breach of the non-competition agreement, the court must next determine the plaintiff's damages. The plaintiff seeks monetary damages for breach of contract and punitive damages for the defendants' tortious interference and breach of the duty of good faith and fair dealing, as well as attorneys fees and expenses.
A
Compensatory Damages
" The general rule in breach of contract cases is that the award of damages is designed to place the injured party, so far as can be done by money, in the same position as that which he would have been in had the contract been performed . . . It has traditionally been held that a party may recover general contract damages for any loss that may fairly and reasonably be considered [as] arising naturally, i.e., according to the usual course of things, from such breach of contract itself." (Internal quotation marks omitted.) Torosyan v. Boehringer Ingelheim Pharmaceuticals, Inc., 234 Conn. 1, 32, 662 A.2d 89 (1995).
The plaintiff has divided its compensatory damages into multiple categories: (1) the charge backs that the plaintiff was forced to pay because of the cancelled policies; (2) the damages caused by the defendants' solicitation and acceptance of business from the plaintiff's existing customers; (3) the damages caused by the diversion of existing customers to a competitor within New Haven County; and (4) the damages caused by the defendants' sales of competing products to new customers located in New Haven County. Additionally, pursuant to the terms of the non-competition agreements, the plaintiff seeks attorneys fees and expenses related to the prosecution of the instant action. The plaintiff also seeks common law punitive damages based upon its claim against the defendants for intentional interference with contractors and business relationships.
" The proper measure of damages for breach of a covenant not to compete is the nonbreaching party's losses rather than the breaching party's gains . . . The plaintiff seeks to establish its lost profits by reference to the undisputed fact that [the defendant] sold commercial insurance to customers in the restricted area during the covenant's operation. To permit the plaintiff to recover damages merely by proving that the defendant breached the covenant, however, would ignore the well established rule that damages are essential to the plaintiff's proof and must be shown with reasonable clarity." (Citations omitted.) Robert S. Weiss & Associates, Inc. v. Wiederlight, supra, 208 Conn. 542-43. " Although we recognize that damages for lost profits may be difficult to prove with exactitude . . . such damages are recoverable only to the extent that the evidence affords a sufficient basis for estimating their amount with reasonable certainty . . . Consequently, we have permitted lost profits to be calculated by extrapolating from past profits. See, e.g., Westport Taxi Service, Inc. v. Westport Transit District, [235 Conn. 1, 32-33, 664 A.2d 719 (1995)] (proper to base lost profits award on profits from preceding year); Humphrys v. Beach, [149 Conn. 14, 21, 175 A.2d 363 (1961)] ('[i]n the absence of evidence to the contrary, the court was entitled to draw the inference that the plaintiff's business would continue to be as profitable as it had been in the year and a half before the fire'). We have stated, however, that the plaintiff cannot recover for 'the mere possibility' of making a profit. See Goldman v. Feinberg, 130 Conn. 671, 674-75, 37 A.2d 355 (1944) (in context of tortious interference claim, plaintiff must show more than that he was 'about to' enter into contract and must, instead, show that he 'would have' done so). A damage theory may be based on assumptions so long as the assumptions are reasonable in light of the record evidence . . . In order to recover lost profits, therefore, the plaintiff must present sufficiently accurate and complete evidence for the trier of fact to be able to estimate those profits with reasonable certainty." (Citations omitted; emphasis omitted; internal quotation marks omitted.) Beverly Hills Concepts, Inc. v. Schatz & Schatz, Ribicoff & Kotkin, 247 Conn. 48, 69-70, 717 A.2d 724 (1998).
" It is incumbent on the party asserting either direct or consequential damages to provide sufficient evidence to prove such damages . . . Generally, [p]roof of damages should be established with reasonable certainty and not speculatively and problematically . . . At the same time, the quantum of proof required is relaxed in instances involving the wrongful breach of a contract by the defendant." (Citations omitted; emphasis omitted; internal quotation marks omitted.) Meadowbrook Center, Inc. v. Buchman, 149 Conn.App. 177, 189, 90 A.3d 219 (2014). " For that reason, the Restatement (Second) of Contracts provides that a court may consider the willfulness of a party's breach in assessing damages: 'Doubts are generally resolved against the party in breach. A party who has, by his breach, forced the injured party to seek compensation in damages should not be allowed to profit from his breach where it is established that a significant loss has occurred. A court may take into account all the circumstances of the breach, including willfulness, in deciding whether to require a lesser degree of certainty, giving greater discretion to the trier of the facts.' 3 ]Restatement (Second), [Contracts § 352, comment (a) [1981]." Meadowbrook Center, Inc. v. Buchman, supra, 149 Conn.App. 190-91.
The plaintiff's claims resemble those before the Supreme Court in Robert S. Weiss & Associates, Inc. v. Wiederlight, supra, 208 Conn. 526-27, a case in which a former employee breached a restrictive covenant by soliciting the plaintiff's accounts and soliciting new accounts within a restricted area. " The trial court concluded that the plaintiff had sustained the burden of proof of damages for net profits lost in 1983 and 1984 through [the defendant's] sales to the plaintiff's accounts in breach of the restrictive covenant. In assessing damages, the court used certain tables, supplied by the plaintiff, that provided data on the accounts. The information included the account's name, the year the plaintiff obtained the account, and the claimed actual and projected losses for the years 1983 through 1991. To arrive at the damage figure, the trial court reduced the total amount of losses for the years 1983 and 1984 by 44 percent. The reduction included 27 percent for [the defendant's] salary compensation, 11 percent for the plaintiff's average annual loss of customers, and a 6 percent overhead factor. The court, however, found that there was no credible evidence that the plaintiff's customers would have renewed their accounts after 1984, and denied damages for the period following 1984." (Footnote omitted.) Id., 540. The court also refused to award damages for the defendant's breach of the contract by soliciting new accounts within the restricted area, finding that " there was no evidence that the plaintiff would have written any of the accounts in the restricted area had [the defendant] not breached the covenant" and thus rendering those damages speculative. Id., 542.
A substantial portion of the testimony at trial was directed towards the proper measure of damages. In support of its damages, the plaintiff presented the testimony from Trentini, Panzo, and Sagnella. Trentini testified that when an employee left the plaintiff, that employee's book of business was retained by the plaintiff, becoming " house accounts" for which the plaintiff would collect the full commission while the plaintiff retained the customer account. The plaintiff also submitted numerous exhibits, including a binder with the breakdown of totals for each category of damages claimed, the individual customer accounts, and the termination records for each of those accounts (Plaintiff's Exhibit 10). As in Wiederlight, the plaintiff has provided tables of the existing customer accounts that were taken or diverted by the defendants. The tables included the following: the account's name; the policies held under each account; the policy effective date; the policy cancellation or broker of record (BOR) date; the charge back, if any; and the projected commission losses for year one and year two while the defendants' noncompetition agreements were in effect. The plaintiff listed damages based on the new customers acquired by the defendants in New Haven County. (Pl's Ex. 11.)
Based on those tables, the plaintiff's claimed damages as to Panzo are: $2, 454.94 in charge backs, $68, 002.06 in lost commissions from the plaintiff's customers (representing $34, 001.03 in year one of the non-competition agreement and $34, 001.03 in year two), $4, 883.07 in commissions diverted to Jack Abbels Agency ($2, 441.85 for each year of the agreement), and $20, 977.48 for sales to new customers.
As to Sagnella, the plaintiff's claimed damages are: $1, 332.41 in charge backs, $16, 175.58 in lost commissions from the plaintiff's customers (representing $8, 087.79 in year one of the non-competition agreement and $8, 087.79 in year two), $1, 011.30 in commissions diverted to Jack Abbels Agency ($505.65 for each year of the agreement), and $2, 013.12 for sales to new customers.
As a preliminary matter, the defendants argue that the damages sought for new customers within New Haven County are speculative. As previously noted, " [t]he proper measure of damages for breach of a covenant not to compete is the nonbreaching party's losses rather than the breaching party's gains." Robert S. Weiss & Associates, Inc. v. Wiederlight, supra, 208 Conn. 542. Similarly, with respect to measuring damages in a tortious interference claim, " [i]t is an essential element of the tort of unlawful interference with business relations that the plaintiff suffered actual loss . . . Thus, it must appear that, except for the tortious interference of the defendant, there was a reasonable probability that the plaintiff would have entered into a contract or made a profit . . . Such a determination is a question for the trier of fact, as is the question of whether the plaintiff has suffered an 'actual loss.'" (Citations omitted; internal quotation marks omitted.) American Diamond Exchange, Inc. v. Alpert, 101 Conn.App. 83, 97, 920 A.2d 357, cert. denied, 284 Conn. 901, 931 A.2d 261 (2007). Indeed, while the defendants' breach and resultant gains are plain, the plaintiff has not provided any evidence demonstrating that, but for the defendants' breach, the new customers acquired by Panzo and Sagnella and commissions derived therefrom would have instead inured to the plaintiff. Therefore, this court concludes that the plaintiff's damages in this category are speculative, and therefore the plaintiff cannot recover damages based on the defendants' sales to new customers.
With respect to its existing customers, however, the plaintiff has provided thorough documentation of its damages. Based on the testimony at trial and the plaintiff's records, the court finds that the plaintiff has proven that it is entitled to the charge back fees incurred as a result of the customer accounts that were cancelled mid-term. The plaintiff's remaining damages rely on profit forecasting, and so the circumstances surrounding those damages merit a close examination. The defendants argue that the plaintiff's claims are speculative with respect to many of the existing customers who left the plaintiff to open insurance policies through the defendants. For instance, the existing customer list provided by the plaintiff includes policies issued to Panzo and Sagnella, as customers, and counts the lost commissions for those policies among the damages. Moreover, many of the plaintiff's existing customers were friends and family of the defendants. The testimony of Sagnella, in particular, indicated that upon his departure, many of his family members were intent on cancelling their policies with the plaintiff, regardless of whether Sagnella solicited them or began working with a competitor. Finally, there was testimony that Trentini put minimal effort towards retaining those customers who left out of loyalty to the defendants.
While the plaintiff, for a variety of reasons, may not have kept many of the accounts that left, particularly those of friends and family, the willfulness of the defendants' breach permits the court to require a lesser degree of certainty in calculating the plaintiff's damages. See Meadowbrook Center, Inc. v. Buchman, supra, 149 Conn.App. 189. As discussed above, the defendants' breach of the noncompetition agreement was egregious. The defendants were aware of their duties under the agreement, yet, with the exception of locating the actual office outside of New Haven County, they acted in flagrant dereliction of those duties. For the purposes of calculating the plaintiff's losses, the defendants have offered no legal authority that would justify treating friends and family differently from strangers.
The plaintiff has proven its damages as to the majority of the accounts. The defendants have submitted rebuttal evidence, however, indicating that some specific accounts should still be subtracted from the damages total. As conceded by the plaintiff's counsel, a handful of the accounts for which the plaintiff seeks to recover damages would have inevitably left based solely on the circumstances surrounding the defendants' termination, not because of any act of sale or solicitation by the defendants. Those accounts belong to Sagnella, himself, and the accounts of Sagnella's immediate family: David and Joan Sagnella, his parents, and Rose Sagnella, his grandmother. Likewise, while her policies were not specifically identified in the course of testimony, the personal policies of Panzo may also be subtracted from the damages total because the plaintiff likewise cannot prove that it would have retained her policies. Thus, from the list of damages attributed to Panzo, $2, 038.96 should be removed for her personal policies, as well as $1, 045.38 for the policies of David and Joan Sagnella. From those damages attributed to Sagnella, $393.60 should be removed for his personal policies, as well as $350 for the policy of Rose Sagnella.
With those accounts subtracted, the plaintiff's damages for existing accounts taken by the defendants are $64, 917.02 as to Panzo and $15, 431.98 as to Sagnella. The plaintiff also seeks to recover for the accounts diverted to Jack Abbels Agency--another $4, 883.07 for Panzo and $1, 011.30 for Sagnella. Those combined totals must be further reduced to reflect the plaintiff's annual overhead costs and standard attrition rate. See Robert S. Weiss & Associates, Inc. v. Wiederlight, supra, 208 Conn. 540.
The plaintiff submitted evidence indicating that its annual rate of overhead is between 8 and 16 percent, and that the rate of customer attrition is between 8 and 10 percent. In its post-trial brief, the plaintiff suggested, based upon the evidence submitted, that it would be appropriate for the court to apply reductions of 12 percent for an annual rate of overhead reduction and 9 percent for an annual rate of customer attrition, for a 21 percent total reduction to the plaintiff's compensatory damages. Based upon the testimony of the plaintiff regarding the nature of the business, the percentage of the plaintiff's client base that is located in New Haven, and how the business was doing, the court finds that the rate of customer attrition and annual overhead rate as suggested by the plaintiff is appropriate. Thus, the court will apply a reduction rate of 12% for the cost of overhead, and an annual rate of 9% for customer attrition, for a total of 21% reduction to the plaintiff's compensatory damages. Applying this rate, the damages for lost commissions are $55, 142.07 from Panzo and $12, 990.19 from Sagnella. Finally, for the charge backs, the plaintiff has proven damages of $2, 454.94 as to Panzo and $1, 332.41 as to Sagnella.
Based on the foregoing, the plaintiff's compensatory damages, reflecting the total for lost commissions and charge backs and not including the sales to new customers within New Haven County, is $57, 597.01 from Panzo and $14, 322.60 from Sagnella.
B
Attorneys Fees
Pursuant to the terms of the non-competition agreements, which provide for attorneys fees and expenses in the event of a breach, the plaintiff seeks reasonable attorneys fees in the amount of $48, 790.50 and $1, 938.51 in expenses.
With respect to Panzo, section 3.2 of the non-compete agreement provides in relevant part that, " nothing in this section shall preclude the Company from seeking taxation of costs and/or reasonable attorneys fees as permitted by law should a court of competent jurisdiction deem the employees' breach of this agreement willful."
" Wilful misconduct has been defined as intentional conduct designed to injure for which there is no just cause or excuse . . . '[Its] characteristic element is the design to injure either actually entertained or to be implied from the conduct and circumstances.' . . . Not only the action producing the injury but the resulting injury also must be intentional . . ." Dubay v. Irish, 207 Conn. 518, 533, 542 A.2d 711 (1988).
As previously noted, at trial, Panzo conceded that her actions after leaving her employment with the plaintiff violated the non-compete agreement. Further, immediately following Panzo's termination, she solicited business from existing clients, diverted clients to a known competitor, and when she opened the Panzo Group, her online advertisements and solicitous actions were directed towards New Haven County to plaintiff's existing customers, and to new customers. Beginning in January 2014, Panzo solicited and accepted the business of the plaintiff's clients despite admitting that she knew that such conduct was prohibited. Panzo also engaged Sagnella by employing him in her business clearly in violation of 1.1(g) which prohibited her from " recruit[ing] or [hiring] or attempt[ing] to recruit or hire any of Company employees, agents or representatives for any purpose within a two (2) year period following any termination or separation." Pl. Ex. 6. Much of Panzo's conduct in violation of the non-compete agreement took place after she was put on notice that the plaintiff intended to enforce its rights under the non-compete agreement. As of the date of trial, Panzo was still in violation of the non-compete agreement since she continued to sell competing insurance products and solicit customers within New Haven County. Thus, even after Panzo was put on notice of the present lawsuit, she continued to violate the terms of the non-compete agreement up to and including the date of trial. Such misconduct is willful and therefore an award of attorneys fees and costs is warranted.
As to Sagnella, section 3.2 of his non-compete agreement provides in relevant part that " the Employee agrees to pay costs and reasonable attorneys fees to the Company in any action by the Company to enforce this Agreement." Pl. Ex. 15. Although the court found Sagnella's breach was willful, his agreement does not require a finding of willful conduct for an award of attorneys fees. Thus, Beacon is entitled to an award of attorneys fees pursuant to Sagnella's agreement as well.
The court must now determine whether the plaintiff's claim for attorneys fees in the amount of $48, 790 and $1, 938.51 in expenses are reasonable. In support of its claim for attorneys fees, the plaintiff submitted into evidence the affidavits of attorneys Marc P. Mercier, Alexa J.P. Lindauer and Joshua C. Shulman all from the law firm of Beck and Eldergill, P.C. Attached to the affidavits are the invoices and billing records. A review of the billing records show that attorney Mercier, who is a partner in the firm, conducted the majority of the work on the case. In addition, attorney Mercier tried the case before the court. The billing records date back to April 2014, when the firm entered its appearance on behalf of the plaintiff, and the majority of the billing records show entries for attorney Mercier which include various entries for emails, telephone conferences, in-person conferences, filing of pleadings, review of documents, preparation for depositions, drafting of pretrial memos, trial management reports, legal research, attendance at trial management conference, preparation of subpoenas, and trial preparation. The entries for attorney Lindauer show review of documents, preparing subpoenas, drafting pleadings, legal research of issues relating to the case, research and drafting of legal memorandum and research for pretrial memos, investigative research relating to the claims in the case and reviewing claims of law memorandum. The entries for attorney Shulman show legal research, review of amended complaint, drafting of legal memoranda and a conference with attorney Mercier relating to the case.
The defendants did not submit any evidence challenging the actual amounts charged for the services rendered or challenging the reasonableness of the hourly rates of the attorneys. They have not argued, or produced evidence to show, that the total number of hours spent was unreasonable. Instead, the defendants argue that the plaintiff is not entitled to attorneys fees because the plaintiff has failed to meet its burden in proving its claims, including damages. Panzo claims that the plaintiff has failed to prove that the breach was willful, which is required under her contract for an award of attorneys fees; the plaintiff has failed to prove damages as a result of the breach; the plaintiff did not attempt to meet its burden; and attorneys fees are not reasonable in light of any damages the court might find.
Sagnella likewise argues that an award of attorneys fees is not appropriate because the plaintiff failed to establish that clients that left Beacon did so as a result of Sagnella's breach of the agreement; that the plaintiff failed to establish that the new business written by Sagnella in New Haven was a client or a prospective client of Beacon that Beacon had been in contact with; and that any award of attorneys fees far outweighs the amount of any damages the court may find and therefore are not reasonable.
This case is a contract case and the court is guided by the following public policy principles: " There is a strong public policy in Connecticut favoring freedom of contract: It is established well beyond the need for citation that parties are free to contract for whatever terms on which they may agree . This freedom includes the right to contract for the assumption of known or unknown hazards and risks that may arise as a consequence of the execution of the contract. Accordingly, in private disputes, a court must enforce the contract as drafted by the parties and may not relieve a contracting party from anticipated or actual difficulties undertaken pursuant to the contract, unless the contract is voidable on grounds such as mistake, fraud or unconscionability." (Citations omitted; emphasis in original; internal quotation marks omitted.) Schwartz v. Family Dental Group, P.C., 106 Conn.App. 765, 772-73, 943 A.2d 1122 (2008).
Lastly, " courts do not unmake bargains unwisely made. Absent other infirmities, bargains moved on calculated considerations, and whether provident or improvident, are entitled nevertheless to sanctions of the law . . . Although parties might prefer to have the court decide the plain effect of their contract contrary to the agreement, it is not within its power to make a new and different agreement; contracts voluntarily and fairly made should be held valid and enforced in the courts ." (Citations omitted; emphasis in original; internal quotation marks omitted.) Id., 773.
Thus, given these strong public policy considerations, this court will not " unmake" the bargain regarding the attorneys fees provision set forth in the contractual agreements between the plaintiff and the defendants. Both Panzo and Sagnella signed the agreement acknowledging that they " read the agreement, understand it and agree to be bound by its terms. [They further acknowledged] that [they] . . . consulted with legal counsel and/or have been afforded the opportunity to consult with legal counsel concerning the contents of [the] [a]greement and sign[ed] the [a]greement freely without . . . coercion on the part of the Company." Exs. 6 and 15. As the court has found that Panzo breached the non-compete agreement and said breach was willful, the plaintiff is entitled to an award of attorneys fees. Since Sagnella's contract only requires that there be a breach, and the court has found that he breached the non-compete agreement, an award of attorneys fees pursuant to his agreement is also appropriate.
" No one can state the reasonable value of legal services as a fact. He can only express his opinion. The value is based on many considerations . . . A court has few duties of a more delicate nature than that of fixing counsel fees. The degree of delicacy increases when the matter becomes one of review on appeal. The principle of law, which is easy to state but difficult at times to apply, is that only in a case of clear abuse of discretion by the trier may we interfere . . . The trier is always in a more advantageous position to evaluate the services of counsel than are we." (Citation omitted; internal quotation marks omitted.) Murtha v. Hartford, 303 Conn. 1, 14, 35 A.3d 177 (2011).
" The amount of attorneys fees to be awarded rests in the sound discretion of the trial court and will not be disturbed on appeal unless the trial court has abused its discretion. Sound discretion, by definition, means a discretion that is not exercised arbitrarily or wilfully, but with regard to what is right and equitable under the circumstances and the law. Judicial discretion is always a legal discretion, exercised according to the recognized principles of equity. The trial court's discretion imports something more than leeway in decision making and should be exercised in conformity with the spirit of the law and should not impede or defeat the ends of substantial justice . . ." Rodriguez v. Ancona, 88 Conn.App. 193, 201-02, 868 A.2d 807 (2005).
" Even when a party is entitled to [attorneys'] fees by contract or under statute, . . . the party seeking the award of fees must first satisfy a threshold evidentiary showing . . . As we have explained previously, courts have a general knowledge of what would be reasonable compensation for services which are fairly stated and described . . . and . . . may rely on their general knowledge of what has occurred at the proceedings before them to supply evidence in support of an award of attorneys fees . . . Even though a court may employ its own general knowledge in assessing the reasonableness of a claim for attorneys fees, we also have emphasized that no award for an attorneys fee may be made when the evidence is insufficient. (Citations omitted; internal quotation marks omitted.) Smith v. Snyder, supra, at 471-72, 839 A.2d 589; see also Storm Associates, Inc. v. Baumgold, 186 Conn. 237, 246, 440 A.2d 306 (1982)." Total Recycling Services of Ct., Inc. v. Connecticut Oil Recycling Services, LLC, supra, 308 Conn. 312, 328, 63 A.3d 896.
" In determining the amount of an award or reasonable attorneys fees, the recent case of Electrical Wholesalers v. V.P. Electric, 132 Conn.App. 843, 33 A.3d 828, cert. denied, 303 Conn. 939, 37 A.3d 155 (2012) is instructive. After a six-day trial, the court awarded damages to the plaintiff in the amount of $51, 284.75. The agreement between the parties allowed for the recovery of the plaintiff's attorneys fees. After a review of the billing and time records submitted by the plaintiff's attorney, the court awarded the plaintiff $43, 640 in attorneys fees. On appeal, the defendant argued that the trial court abused its discretion by not utilizing the Johnson test for attorneys fees. See Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974), abrogated on other grounds, Blanchard v. Bergeron, 489 U.S. 87, 92-93, 109 S.Ct. 939, 103 L.Ed.2d 67 (1989). The court disagreed stating: 'In Connecticut, the Johnson test has been applied exclusively in awarding attorneys fees for individuals filing actions under the Connecticut Unfair Trade Practices Act.' Electrical Wholesalers v. V.P. Electric, supra, at 849. The court then observed: 'The present case involves a contract dispute between two similarly situated businesses, not an action brought pursuant to a statute specifically enacted to assist private litigants who might otherwise be unable to enforce their rights. We fail to see how this is an appropriate case in which to apply the Johnson guidelines as envisioned by the United States Court of Appeals for the Fifth Circuit or by Connecticut courts. Therefore, we conclude that the court did not abuse its discretion.' (Emphasis added.) Id., at 849-50." Total Recycling Services of Ct., Inc. v. Connecticut Oil Recycling Services, LLC, Superior Court, judicial district of Middlesex, Docket No. CV065000447S, (Nov. 27, 2013, Domnarski, J.).
Like Electrical Wholesalers, the parties in the present case entered into a contract. Although employees of the plaintiff at the time they entered into their respective non-compete agreements, both Panzo and Sagnella, like the plaintiff are familiar with the insurance business, and both were provided an opportunity to review the contract before signing it. Moreover, both acknowledged that they read the agreement, understood it and agreed to be bound by its terms. They further acknowledged that they consulted with legal counsel and/or had been afforded the opportunity to consult with legal counsel concerning the contents of the agreement and that they signed the agreement freely without coercion on the part of the Company.
Courts have found that " a contract clause providing for reimbursement of incurred fees permit[s] recovery upon the presentation of an attorney's bill, so long as that bill is not unreasonable upon its face and has not been shown to be unreasonable by countervailing evidence or by the exercise of the trier's own expert judgment." (Internal quotation marks omitted.) N.E. Leasing, LLC v. Paoletta, 89 Conn.App. 766, 778, 877 A.2d 840 (2005).
The plaintiff here has provided detailed billing records regarding services rendered by its attorneys. The court has carefully reviewed these records. The firm of Beck and Eldergill charged $350 per hour for work performed by attorney Marc Mercier, who did most of the work on the case according to the invoices, and who tried the case. Attorney Mercier specializes in employment law with a focus on litigation. He submitted an affidavit and averred that based upon his knowledge of rates charged by other law firms who practice in the area of employment law, such firms charge at least $350-$450 per hour. The court finds that attorney Mercier's hourly rate of $350 is a reasonable rate considering his experience, education, number of years in practice, skill as a trial lawyer and the rates charged by other law firms in the area of employment law.
Attorney Alexa J.P. Lindauer and attorney Joshua C. Shulman also worked on the file and are associates with Beck and Eldergill. Their hourly rates are $225 and $175 respectively. The court finds that these hourly rates are reasonable considering the experience, education, number of years in practice and skill as associates. Both submitted affidavits and averred that their respective hourly rates are rates charged by other law firms for attorneys with their skill, education and experience. According to the invoices submitted, fees and expenses charged from April 1, 2014, when the firm entered an appearance on behalf of the plaintiff, through February 22, 2016 are $50, 728.51. Considering the work performed, and the time expended, the court finds that $50, 728.51 is a reasonable fee for the services performed by Beck and Eldergill. As this court previously noted, " [j]udicial discretion is always a legal discretion, exercised according to the recognized principles of equity. The trial court's discretion imports something more than leeway in decision making and should be exercised in conformity with the spirit of the law and should not impede or defeat the ends of substantial justice . . ." Rodriguez v. Ancona, supra, 88 Conn.App. 201-02. Thus, the court in its exercise of discretion, and recognizing principles of equity, and in conformity with the spirit of the law, further finds that the total fees and expenses should be apportioned in accordance with the proportionate share of damages attributable to each defendant. Accordingly, the court hereby orders that Panzo pay 75% of the total fees and expenses or $38, 046.38 and Sagnella pay 25% of the total fees or $12, 682.12.
C
Punitive Damages
In addition to its claim for attorneys fees and expenses the plaintiff also seeks an award of common-law punitive damages based on the defendants' intentional interference with its contractual and business relationships. See DiNapoli v. Cooke, 43 Conn.App. 419, 428, 682 A.2d 603, cert. denied, 239 Conn. 951, 686 A.2d 124 (1996) (punitive damages may be awarded in tortious interference claim).
As this court has found that the defendants intentionally interfered with the contractual and business relations of the plaintiff, the court finds that an award of punitive damages is appropriate. The evidence is overwhelming that both Panzo and Sagnella knew and understood the terms of the non-compete agreement, yet notwithstanding this knowledge they both willfully violated the terms. As previously discussed, much of Panzo's conduct in violation of the non-compete agreement took place after she was put on notice that the plaintiff intended to enforce its rights under the non-compete agreement. As of the date of trial, Panzo was still in violation of the non-compete agreement since she continued to sell competing insurance products and solicit customers within New Haven County. Even after Panzo was put on notice of this lawsuit, she continued to violate the terms of the non-compete agreement up to and including the date of trial. Like Panzo, Sagnella wilfully violated the terms of the non-compete agreement. Again as previously discussed, Sagnella solicited business from and sold insurance products to the plaintiff's existing clients, including those clients for whom Sagnella had received a commission while employed by the plaintiff and other clients who had been with the plaintiff prior to Sagnella's hiring. These actions by Sagnella led directly to the plaintiff's loss of existing accounts. Sagnella undertook this course of conduct with full knowledge of the terms of his non-competition agreement with the plaintiff, and despite the pendency of this lawsuit.
Although an award of punitive damages is appropriate in the present case, this court's award of punitive damages is limited to litigation expenses and nontaxable costs. " Punitive damages in Connecticut are not designed 'to punish the defendant for his offense but rather to compensate the plaintiff for his injuries.' Miller v. Drouin, 183 Conn. 189, 190, 438 A.2d 863 (1981) . . ." (Citations omitted.) Lord v. Mansfield, 50 Conn.App. 21, 27, 717 A.2d 267 (1998). In Berry v. Loiseau, 223 Conn. 786, 826-27, 614 A.2d 414 (1992), the Supreme Court upheld the long-standing rule in Connecticut limiting common-law punitive damages to litigation expenses less taxable costs, which was first expressed in Hanna v. Sweeney, 78 Conn. 492, 62 A. 785 (1906).
" The Supreme Court stated [in Berry]: 'In Hanna, this court characterized the common law doctrine of punitive damages as a 'hybrid' that contained elements of a criminal fine. More recently, we reiterated our concern that the determination of punitive damages under the common law rule allowing broad jury discretion is at odds with the generally accepted rule of compensation in civil cases . . .'In Waterbury Petroleum Products, Inc. v. Canaan Oil & Fuel Co., supra, we . . . affirmed the continuing viability of a long line of cases holding that common law punitive damages serve primarily to compensate the plaintiff for his injuries and, thus, are properly limited to the plaintiff's litigation expenses less taxable costs . . . We recognized, moreover, that our rule, when viewed in the light of the increasing costs of litigation, also serves to punish and deter wrongful conduct.'" (Citations omitted.) Berry v. Loiseau, supra, 223 Conn. 826, 827.
" While an award of punitive damages is primarily designed and awarded for compensatory purposes in Connecticut, an award of attorneys fees is often regarded as, and equated with, an award of punitive damages. See Hartford v. International Assn. of Firefighters, Local 760, 49 Conn.App. 805, 815-18, 717 A.2d 258 (1998) (the arbitrator's use of the words 'attorneys fees' construed to be an award of punitive damages); Lord v. Mansfield, supra, 50 Conn.App. 24 (recovery by defendants of litigation expenses taken to be a request for punitive damages). 'In Connecticut, an award of attorneys fees is an element of punitive damages.' Hartford v. International Assn. of Firefighters, Local 760, supra, 49 Conn.App. 816-17." Trimachi v. Connecticut Workers' Compensation Committee, Superior Court, No. CV 97 0403037 S (Jun. 14, 2000, Devlin, J.) [27 Conn.L.Rptr. 469, ].
Accordingly, the court will not issue an award of punitive damages in addition to its award of attorneys fees and expenses pursuant to the non-compete agreement, since the plaintiff's claim is for common-law punitive damages which is limited to litigation costs and non-taxable expenses.
D
Extension of Restriction
The plaintiff also requests, pursuant to the terms of each defendants' non-competition agreement, that the prohibitions contained in the agreement should be extended automatically by the number of days that the court determines each defendant to have been in violation of the agreement. Section 1.9 of both Panzo's and Sagnella's non-compete agreements state that, " [i]f a court of competent jurisdiction finds that Employee has violated any of the restrictions or covenants contained in this Section 1, then the parties agree that the period of all restrictions and covenants set forth in Section 1 automatically shall be extended by the number of days that the court determines Employee to have been in violation of such restriction or covenant." By enforcing this provision of the non-compete agreements, the plaintiff is asking the court to extend a prohibition of competition beyond the original two-year prohibition which could and did expire during the litigation. Thus, the court must determine whether the extension is reasonable.
Although he did not specifically address the extension period contained in section 1.9 of the agreement, Sagnella did contend that the restriction was unreasonable, specifically focusing on the original two-year restriction contained in section 1 of the agreement, arguing that it placed an unreasonable restraint on his ability to pursue his occupation. Neither of the defendants however, adequately addressed the extension provision contained in section 1.9 except that, both defendants claim that the plaintiff is not entitled to any damages because of lack of proof of a breach and causation.
As this court previously discussed, our Connecticut Supreme Court in Scott v. General Iron & Welding Co., 171 Conn. 132, 137, 368 A.2d 111 (1976), set forth the standard for assessing the enforceability of a covenant not to compete: " In order to be valid and binding, a covenant which restricts the activities of an employee following the termination of his [or her] employment must be partial and restricted in its operation 'in respect either to time or place . . . and must be reasonable-that is, should afford only fair protection to the interest of the party in whose favor it is made and must not be so large in its operation as to interfere with the interests of the public. Cook v. Johnson, 47 Conn. 175, 176 [1879]; May v. Young, 125 Conn. 1, 5, 2 A.2d 385 [1938]; Samuel Stores, Inc. v. Abrams, 94 Conn. 248, 253, 108 A. 541, 9 A.L.R. 1450 [1919].' Torrington Creamery, Inc. v. Davenport, 126 Conn. 515, 519-20, 12 A.2d 780 [1940]; see Oregon Steam Navigation Co. v. Winsor, 87 U.S. (20 Wall) 64, 66-67 [1874]."
In Robert S. Weiss & Associates, Inc. v. Wiederlight, supra, 208 Conn. 525, the Supreme Court indicated that time and geographical restrictions are to be reviewed as intertwined considerations when a determination is made on the reasonableness of the limitations of an employee's post-termination activities. A restriction covering a large area might be reasonable if in effect for a brief time, while a restriction covering a small area might be reasonable for a longer time. Here, as in New Haven Tobacco Co. v. Perrelli, 18 Conn.App. 531, 536-37, 559 A.2d 715, cert. denied, 212 Conn. 809, 564 A.2d 1071 (1989), the area consisting of the plaintiff's actual customers is not overbroad. With respect to the original two-year restriction, the plaintiff had the legitimate goal of allowing a period during which he could restaff his sales force to serve the customers formerly serviced by the defendants without losing the accounts to the appropriation by the defendants of the accumulated goodwill and familiarity built up by the plaintiff as their employer. As Panzo was clearly the plaintiff's top client getter, the original two-year restriction to ensure that Beacon could protect its client base in the New Haven County area was not unreasonable. Similarly, although not at the top, Sagnella was clearly on the rise within the plaintiff's company. Neither Panzo nor Sagnella complied with the original two-year restriction. Notwithstanding the clear and unambiguous terms of the non-compete agreement, both Panzo and Sagnella admittedly never complied with the original two-year restriction, and remained in violation up to and including the date of the trial. Thus, the goal and purpose of the non-compete provision was undermined by the defendants' failure to comply with the non-compete agreement.
The court must be mindful, however, of the public policy as it pertains to non-compete agreements and their effect on the public. " By definition, covenants by employees not to compete with their employers after termination of their employment restrain trade in a free market . . . Consequently, these covenants may be against public policy, and, thus, are enforceable only if their imposed restraint is reasonable, an assessment that depends upon the competing needs of the parties as well as the needs of the public." (Citation omitted.) Deming v. Nationwide Mutual Ins. Co., 279 Conn. 745, 761, 905 A.2d 623 (2006). As previously noted, " 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." Hart, Nininger & Campbell Associates, Inc. v. Rogers, 16 Conn.App. 619, 636, 548 A.2d 758 (1988).
The court has already determined that the two-year restriction not to compete was reasonable. However, Panzo has never complied with the restriction, and Sagnella was only in compliance for one month. Moreover, both Panzo and Sagnella, after having received notice that the plaintiff intended to exercise its rights to enforce the non-compete restriction still remained in non-compliance up to and including the date of trial. The defendants' continued non-compliance therefore clearly undermined the purpose of Beacon requiring the restriction in the first instance.
Accordingly, in applying the five factors to determine reasonableness, the court concludes that the extension provision of the agreement is reasonable and therefore the court will extend the two-year restriction by the number of days that it determines Panzo and Sagnella to have been in violation of such restriction or covenant.
According to the terms of their non-competition agreements, the restrictions placed on the defendants were scheduled to expire two years after each defendant's termination of employment. For Panzo, the expiration date would have been December 12, 2015. For Sagnella, it would have been January 21, 2016. The plaintiff seeks to extend the effect of the non-competition agreement by the period during which the defendants were in breach. Panzo has not at any point since her termination been in compliance with the terms of the agreement. Thus, her agreement would be extended by a full two years from the date of judgment. Sagnella has been in breach since he commenced employment with the Panzo Group on February 21, 2014. Because he was in compliance for one month following his termination, the effect of the agreement would be extended by 23 months from the date of judgment.
E
Injunction
The plaintiff also requests the court to issue an order preliminarily and permanently enjoining the defendants from engaging in the restrictions as set forth in the non-compete agreement, for a period of two years from the defendants' date of termination, plus an extension for the number of days the defendants have been in violation of the agreements.
The standard for a temporary and permanent injunction requires that the moving party must establish: " (1) the plaintiff ha[s] no adequate legal remedy; (2) the plaintiff would suffer irreparable injury absent [the injunction]; (3) the plaintiff [is] likely to prevail . . . and (4) the balance of the equities favor[s] [issuing the injunction.]" Waterbury Teachers Ass'n. v. Freedom of Information Commission, 230 Conn. 441, 446, 645 A.2d 978 (1994). In ordering a permanent injunction, " the relief granted must be compatible with the equities of the case." (Internal quotation marks omitted.) Castonguay v. Plourde, 46 Conn.App. 251, 267, 699 A.2d 226, cert. denied, 243 Conn. 931, 701 A.2d 660 (1997). " The request for injunctive relief is addressed to the sound discretion of the trial court . . . In exercising its discretion, the court, in a proper case, may consider and balance the injury complained of with that which will result from interference by injunction . . . The issuance of an injunction and the scope and quantum of injunctive relief rests in the sound discretion of the trier." (Citations omitted; internal quotation marks omitted.) Tomasso Bros., Inc. v. October Twenty-Four, Inc., 230 Conn. 641, 648, 646 A.2d 133 (1994).
Here, the injunctive relief requested by the plaintiff is moot, since the time requested by the plaintiff to enjoin the defendants has passed. Moreover, the court has enforced the penalty provision contained in the non-compete agreements which extends the period of the restrictive covenant for the number of days the defendants were in violation of the agreement. Additionally, the plaintiff has pursued successfully an adequate remedy at law as it has claimed money damages and the court has awarded same. Accordingly, for the foregoing reasons, the plaintiff's claim for injunctive relief is denied.
CONCLUSION
The court finds in favor of the plaintiff on all counts. The court awards compensatory damages in the amount of $57, 597.01 as to Panzo and $14, 322.60 as to Sagnella for a total award of compensatory damages of $71, 919.61. The court awards reasonable attorneys fees in the amount of $48, 790.00 and expenses in the amount of $1938.51 for atotal award of $50, 728.51. As previously discussed, supra, the award of attorneys fees and expenses shall be apportioned as follows, Panzo shall pay 75% of the total fees or $38, 046.38 and Sagnella shall pay 25% of the total fees or $12, 682.12. Since the award of punitive damages is limited to attorneys fees and nontaxable costs, the court does not award punitive damages as the court has, pursuant to the agreement, awarded reasonable attorneys fees and expenses. Finally, with respect to the requested extension of the restriction pursuant to section 1.9 of the agreement, the court hereby extends the restriction for a period of two years as to Panzo and twenty-three months as to Sagnella to commence from the date of judgment. The plaintiff's claim for injunctive relief is denied. Judgment shall enter in accordance with the above. It is so ordered.