Opinion
WWMCV156009733
07-28-2017
Classic Homemakers, LLC et al. v. Patricia Coolidge
UNPUBLISHED OPINION
MEMORANDUM OF DECISION
John D. Boland, Senior Judge.
This memorandum follows a trial in the case at which all parties appeared with counsel and were fully heard. Plaintiffs' objective in the action is an award of damages and attorney's fees against defendant for alleged violation of a covenant not to compete.
As in any action for breach of contract, the elements plaintiff must establish are: 1) the formation of an agreement; 2) performance by one party; 3) breach of the agreement by the other party; and 4) damages; Meyers v. Livingston, Adler, Pulda, Meiklejohn & Kelly, P.C., 311 Conn. 282, 291, 87 A.3d 534 (2014).
1. Did the Parties Enter into an Enforceable Agreement?
Briefly, the plaintiff company is in the business of providing personal care and housekeeping services to infirm individuals in the Plainfield area. Defendant had been one of its employees since 2004, working on an " at-will" basis. In 2013, the company offered her a document captioned " covenant not to compete, " reading as follows:
No reason was offered why Mary Congdon was made a plaintiff in the case. The evidence adduced is that the company employed defendant, and Ms. Congdon is an owner of the company. It is axiomatic that contracts with a limited liability company may be enforced by that entity, but not by individuals who are shareholders or similarly-situated persons in their individual capacity. See, for example, Maile v. Webster Bank, N.A., Docket No. CV 04-0527763, Superior Court, Judicial District of Hartford at New Britain (2005 Burke, J.); Zipp v. Florian, Docket No. CVN-03 1011980, Superior Court, Judicial District of Hartford at New Britain (2006 Bentivegna, J.); Elecor, LLC v. King, Docket No. CV06 5006235, Superior Court, Judicial District of New Haven (2007; Bellis, J); Stanziale v. Skiba, Docket No. CV 04 0412495, Superior Court, Judicial District of Fairfield at Bridgeport (2008; Arnold, J.); and Tabacco v. Vitrano, Preleski, and Wynne, LLC, Docket No. X04 CV 08 5026131, Superior Court, Judicial District of Hartford at Hartford (2011; Shapiro, J.).
The rendition of the covenant set out herein is a verbatim transcript of Exhibit A, except that I have inserted paragraph numbers for ease of reference.
This agreement made and concluded this 22nd day of July 2013, by and between Patricia Coolidge, of the town of Plainfield, County of Windham, and State of Connecticut, (herein after referred to as " Employee") and Mary Congdon of the town of Brooklyn, County of Windham and State of Connecticut, and Classic Homemakers, LLC a Connecticut limited liability Company having a place of business at 100A Broad St Danielson, Connecticut acting herein by Mary Congdon, its manager (herein after referred to as " Employer").
WITNESSETH
1) Whereas, as an employee of Classic Homemakers, LLC, I understand and acknowledge working in an administrative capacity, or setting up a home care agency, or accepting employment for clients assigned to me by Classic Homemakers, LLC, constitutes competition and a conflict of interest.
2) While employed at Classic Homemakers, LLC and for one year after separation from said employment, I agree not to participate in the administration of, or won or set up a home care business which will service the same or similar clients, serviced by Classic Homemakers, LLC.
3) As an employee of Classic Homemakers, LLC I agree not to accept employment from any client to whom I provided services while employed by Classic Homemakers, LLC either privately or through another agency, for a period of one year from termination of employment at Classic Homemakers, LLC.
4) Violation of this agreement will result in compensation due to Classic Homemakers, LLC in the amount of monies lost during the period of private employment, up to one year.
5) Employees further agree that in the event Classic Homemakers, LLC is required to take action to enforce this agreement and, in fact, receives a decree of the trial court, the trial court is authorized as part of costs to award Classic Homemakers, LLC its reasonable attorneys fees and other reasonable costs incurred enforcing this covenant.
6) Employees hereby acknowledge that the receipt of consideration for this covenant, to wit, is to be permitted to be employed by Classic Homemakers, LLC.
In witness hereof, the parties have hereunto set their hands and seals the day and year first above mentioned.
EMPLOYEE Patricia Coolidge
EMPLOYER Mary Congdon
As is clear from paragraph 6, the company offered no consideration for defendant's entering into that covenant beyond enabling her to continue her employment with it past July of 2013.
On or about July 1, 2015, plaintiff terminated defendant. She landed a new position within days with " Quality Homemakers, " another business alleged to be plaintiffs' competitor and apparently having the same mission. Upon the fact of that employment, which plaintiff did establish, it grounds its argument that defendant violated the covenant not to compete.
The complaint contains a second count alleging violation of Connecticut's Unfair Trade Practices Act, or CUTPA. Plaintiff withdrew that count during the trial.
The chief response defendant makes to that premise is contained in a special defense asserting that the 2013 covenant is unenforceable due to lack of consideration. She cites Thoma v. Oxford Performance Materials, Inc., 153 Conn.App. 50, 100 A.3d 917 (2014), claiming the case holds that the continuance of one's at-will employment is insufficient consideration to undergird an employer's tender of a covenant not to compete to an employee. As the court there noted, " [t]he doctrine of consideration is fundamental in the law of contracts, the general rule being that in the absence of consideration an executory promise is unenforceable; " 153 Conn.App. 50, 56, 100 A.3d 917. That statement is dictum, however, because Thoma 's holding was to affirm a trial court decision declining to enforce a covenant not to compete due to ambiguities within the instruments creating it.
Connecticut law does not preclude continued employment standing alone from being deemed adequate consideration to sustain a covenant not to compete, at least when an affected employee leaves that employment voluntarily. In Roessler v. Burwell, 119 Conn. 289, 176 A. 126 (1934), the Court upheld the trial court's enforcement of a covenant not to compete against a salesman of delicatessen products who had signed such an agreement four years earlier, but then actively sought out the business of his former employer's customers after taking a new job. Adequate consideration, the court held, was to be found in the four-year duration of the employment relationship between the signing of the covenant and Burwell's new job. Modern decisions seem restless with the Roessler rule, with its overtones of absolute regard for freedom of contract in the spirit of Lochner v. New York, 198 U.S. 45, 53, 25 S.Ct. 539, 49 L.Ed. 937 (1906). RKR Dance Studios, Inc. v. Makowski, Superior Court, judicial district of Hartford, Docket No. CV-08 4035468 (September 12, 2008; Elgo, J.) [46 Conn.L.Rptr. 389, ], examined a host of superior court decisions issued between 1985 and 2008 going both ways on the continued vitality of Roessler 's holding. The case also involved a voluntary termination, in this instance of a dance instructor whose employer then sued her to enforce a covenant not to compete that she had signed only in consideration of continued employment. The RKR court concluded that the rule remains the law in this state, at least as applied to circumstances similar to those that case presented.
The termination of a sales agent's employment in Robert S. Weiss and Associates, Inc. v. Wiederlight, 208 Conn. 525, 546 A.2d 216 (1988), was involuntary, but the Court nonetheless upheld a covenant he had given not to compete with his former employer. In footnote 2, the decision cites Scott v. General Iron & Welding Co., 171 Conn. 132, 368 A.2d 111 (1976), which at page 137 lists five factors to be considered in evaluating the reasonableness of a restrictive covenant ancillary to an employment agreement: (1) the length of time the restriction operates; (2) the geographical area covered; (3) the fairness of the protection accorded to the employer; (4) the extent of the restraint on the employee's opportunity to pursue his occupation; and (5) the extent of interference with the public's interests.
In the present case, the covenant endures for a single year. The Weiss case and others have held that covenants of that length of time do not violate the first criterion. Paragraphs 2 and 3 of the covenant serve to limit the scope of the prohibition on defendant's post-termination activity so as to satisfy the concerns of the second, third, and fourth of the Scott criteria. There is no constraint of a geographical nature in the covenant, nor is defendant barred from working elsewhere in the industry; all that she may not do is work with plaintiff's clients in her new setting, for at least a year. " The fact that an employer seeks to protect his interest in potential new customers in a reasonably limited market area as well as his existing customers at the time the employee leaves does not render the covenant unreasonable; " 208 Conn. 525, 533, 546 A.2d 216. Plaintiff's covenant is reasonable in light of the first four of the enumerated criteria.
What is not self-evident is that the covenant serves a purpose consistent with public policy. Unlike a sales or even a teaching position, the consumer in a home health aide contract is often an infirm patient whose relationship with an aide is often intensely personal. A patient trusts a health care aide to provide some of humanity's most intimate services. It does not defy reason to maintain that a patient's loyalty may be more to the immediate provider than to whatever corporate entity issues her paycheck and dispatches her in the first instance to care for that individual, and that the law ought to value that patient's choice. In the present case, the parties' covenant makes it impossible for any patient to choose to continue with any given aide no matter what the circumstances may be under which that aide has left a particular employer.
In a different context, our law deems such a barrier when viewed from the vantage point of the consumer to be a violation of public policy; see, Schoonmaker v. Cummings and Lockwood of Connecticut, P.C., 252 Conn. 416, 747 A.2d 1017, (2000) (" An agreement restricting the right of partners or associates to practice after leaving a firm not only limits their professional autonomy but also limits the freedom of clients to choose a lawyer"; at 439).
In Fairfield County Bariatrics and Surgical Associates, P.C. v. Timothy B. Ehrlich, M.D. et al., Superior Court, judicial district of Fairfield, Docket No. FBT CV10 50291046, (March 8, 2010; Levin, J.), the court examined a number of other trial level decisions and concluded that the party challenging the enforceability of a covenant not to compete has the burden of proving that the covenant is not enforceable. While defendant here did challenge enforceability, it did not do so on any basis implicating public policy. Thus whether or not a covenant not to compete in the home-health aide arena is reasonable is a question which must be left for another day.
I find the covenant presented in this case to be enforceable.
2. Did Plaintiff Perform its Part of the Bargain?
Between the execution of the agreement on an uncertain date in July of 2013, and the cessation of defendant's employment on July 1, 2015, both parties performed their end of the bargain. Defendant at one point counterclaimed for unpaid wages, but she withdrew that claim on the record in the course of the trial.
3. Did Defendant Breach the Covenant?
In paragraph 11 of the complaint, plaintiff alleges that at or around the time of her termination, the defendant solicited and encouraged various clients of the plaintiffs to change their in-home assistance care provider from Classic to Quality. It further alleges that these solicitations were made knowingly and maliciously. Notably, defendant's employment by Quality, standing alone, would not violate the covenant; only treating a former client of Classic while in the employ of Quality would do that.
Defendant denies these allegations. As is usual in cases involving breach of contract, the plaintiff bears the burden of proof on this as well as upon the other elements of its cause, and the standard is a preponderance of the evidence.
Plaintiff called two witnesses: Mary Congdon and Sheila Burelle. Ms. Burelle went first and testified for most of an hour. She identified herself as an administrative assistant employed by plaintiff having personal knowledge of the circumstances of defendant's employment. The entirety of the evidence she offered concerned events preceding defendant's termination from employment. She did not so much as mention the covenant, nor any behavior on defendant's part that would violate the covenant.
Ms. Congdon's testimony took about a half-hour. On direct, she too spent a good deal of time explaining pre-termination details. The critical testimony on the question of what defendant did that violated the covenant came in her response to a series of questions on cross examination at pages 66 and 67 of the transcript.
On March 24, the first day of trial. Due to some post-trial issues, I allowed plaintiff to recall this witness on April 28, when she testified for approximately ten minutes further on the issue of damages.
Q): " . . . You claim that Pat Coolidge moved 'A' to Quality? Is that correct? Don't you claim that?"
A): " No."
Q): " You don't claim that. Okay. Do you have proof that Pat Coolidge moved 'A' to Quality?"
A): " Do I have proof? No. I have what I heard --"
Q): " Okay"
A):--" from Pat Coolidge ."
Q): " All right. But we're in court of--now's your--now's your chance to tell the whole world about your proof. Do you have any proof that Pat --"
A): " Just what she told me ."
Q): " Well, my question is do you have any--do you have any--do you have any documents?"
A): " No. No; I don't."
Q): " All right. You said that she did it maliciously. Do you have any proof she did it maliciously?"
A): " I didn't say that."
Q): " Well, doesn't your lawsuit say that? Let me read you in the complaint, 'that the defendant solicited--under paragraph 11, count 2--I'm sorry-count 1--solicited and encouraged knowingly and maliciously--that Pat Coolidge knowingly and maliciously moved 'A'--'A' over to Quality.' Do you have any proof of that?"
A): " Do I have proof? No." (Emphasis added).
The cross examination concluded after a few more questions on miscellaneous aspects of the case relating to other details. Plaintiff's counsel declined the opportunity to redirect this witness, and thereupon rested. This inquiry comprises the totality of plaintiff's testimonial evidence of breach.
Some additional evidence is in the record. Defendant's exhibit D is a copy of her discovery request to plaintiff and was admitted as a full exhibit. Interrogatory 5 therein reads as follows:
The parties provided the court with post-trial briefs. In that process, plaintiff took another crack at supplying evidence of breach. It appended as exhibits a total of six pages from defendant's pretrial deposition purportedly confessing that she took " A" with her to Quality as a client. Plaintiff describes this material as " reasonable" and " trustworthy" under Evidence Rule 8-9 which embodies the residual rule for the admission of hearsay not admissible under any other route.
Please describe in detail the basis of the Plaintiff's claim that the " defendant solicited and encouraged various clients of the Plaintiffs to change their in-home assistance care provided from Plaintiff to . . . Quality Homemakers" by stating exactly what the Defendant did, when the Defendant did so and which clients the Plaintiff is referring to.
ANSWER:
When Defendant was assigned to " A, " Defendant objected to calling and verifying her hours with the Plaintiffs. Then she was unable to fit all hours in. The client did not want any other PCA, then suddenly the Defendant quit the job and the client cancelled Plaintiff's services on the same day. His new company, Quality Homemakers, LLC, employed Defendant Patricia Coolidge to provide his services. She admitted to both Marybeth and Sheila that she told the conservator of " A" to go to Quality (and switch Mr. " A" to that company ). (Emphasis added).
Thus on the required element that defendant breached the covenant, the evidence reduces to these few propositions: 1) on whether defendant moved " 'A' to Quality" --" I have what I heard from Pat Coolidge, " 2) on whether there was " any proof that Pat . . . [predicate unknown]" --" Just what she told me"; and 3) [Defendant] admitted . . . that she had told the conservator . . . to switch " A" to defendant's new employer.
What a party opponent says to another is generally deemed to be admissible hearsay. However, given that such statements are hearsay, some minimal clarity is required as to what that speaker actually said. In simplest terms, a factfinder is entitled to know what a speaker said before determining what the speaker meant. Only the third of the three references to defendant's statements approaches a quotation of her actual words, and the first two references are incomplete, ambiguous and fragmentary allusions to some unspecified communication. But all three bits were elicited by defendant, who for her own part did not testify and did not present any exculpatory evidence. Together the three fragments may amount to barely the weight of a feather, but a feather weighs greater than zero and thus I find that plaintiff has met its burden of proving breach by a preponderance of the evidence before me.
4. Has Plaintiff Proven Its Damages?
To recover damages, the plaintiff must offer evidence sufficient to prove the claimed loss. " It is axiomatic that the burden of proving damages is on the party claiming them . . . When damages are claimed they are an essential element of the plaintiff's proof and must be proved with reasonable certainty . . . Damages are recoverable only to the extent that the evidence affords a sufficient basis for estimating their amount in money with reasonable certainty . . . Mathematical exactitude in the proof of damages is often impossible, but the plaintiff must nevertheless provide sufficient evidence for the trier to make a fair and reasonable estimate." (Citations omitted; internal quotation marks omitted.) Ulbrich v. Groth, 310 Conn. 375, 441, 78 A.3d 76 (2013).
At the conclusion of the March 24 hearing, the sum of plaintiff's evidence on damages was that it billed the state $18.88 for each hour an employee worked with a client, and paid the employee $11.00 for that hour. Thus, it contended, its lost profits equaled $7.88 per hour; it offered no evidence as to how many hours of such profits were lost. First of all, the estimate of hourly loss is insufficient as it fails to account for employer costs that are a function of wages paid, such as its social security and medicare contributions and unemployment and workers' compensation assessments, or for any other variables associated with the actual work performed by an employee.
The more fundamental omission from its measure of damages is any proof of the actual hours defendant might have spent with " A" in the year beginning July 2, 2015. Plaintiff argued that 1560 should be used as the multiplier, as that is the product of 52 (weeks) multiplied by 30 (hours per week). There was no evidence whether he was in the care of defendant for one day, one month, or one year, or even that he was still alive on July 3. Plaintiff's numbers are cognizable only if there is evidence that defendant served as " A" s caretaker for the full year following termination, and did so for thirty hours each week. While an award of damages may be predicated upon reasonable inferences and estimates, no such reasonable inferences and estimates can be deduced from the facts which were proven at trial. Ms. Congdon's continued testimony on April 28 added no further detail on this crucial point.
Conclusion
For the foregoing reasons, judgment enters for the defendant.
At the trial's conclusion, I directed plaintiff's counsel to indicate in his post-trial brief why Ms. Congdon had been named as a party. Plaintiff's brief is silent on that score. In light of the authorities cited and the failure to respond to the directive that Ms. Congdon's role as a party be explained, her claim against defendant is dismissed.
Defendant objects to the tender of this evidence after the conclusion of the trial. The deposition in question had been marked as plaintiff's exhibit 2 for identification prior to trial, but plaintiff did not seek to have it admitted as a full exhibit. Plaintiff made no further reference to this item throughout the trial, nor until its resurrection weeks after the conclusion of its evidentiary phase. Defendant's challenge to this attempt is sound. I will not consider the post-trial material as a basis for any finding as to whether there was a breach of the covenant not to compete.