Opinion
No. CV-04-0490177 S
September 21, 2004
MEMORANDUM OF DECISION
The plaintiff has commenced this action seeking a permanent injunction. Plaintiff is also claiming compensatory and punitive damages as well as attorney fees and costs.
The plaintiff alleges that on March 26, 2003 an Employment Agreement was entered into by the defendant, and it contained a covenant not to compete for a period of twelve months after termination of defendant's employment with the plaintiff. It also alleges the defendant was prohibited from accepting employment during the twelve-month period with any competing entity during that period. The covenant also allegedly prohibits the defendant from soliciting business from any entity that had done business with the plaintiff during the three-year period prior to any termination of the defendant's employment. The complaint alleges defendant is subject to the above claims as a result of the breach of the Employment Agreement.
The defendant has denied the claims of the plaintiff and has alleged four special defenses as follows: (1) lack of consideration; (2) unreasonableness of the agreement as to geographic limitations and time constraints; (3) unclean hands; and (4) laches as to the signing of the agreement.
In 1999 Brian Goldwitz was the primary decision maker and principal of a group of related companies. The group consisted of at least four different companies, as well as a company located in China. The companies had different functions, but they were each related and controlled by Brian Goldwitz. One of the companies was Cover-It, Inc. which was in the business of direct consumer sales of car ports, garage frames and canopies. The materials to produce these products were obtained from the company located in China. Brian Goldwitz was an officer of the Cover-It corporate entity, which had its principal place of business in West Haven, Connecticut.
In February 1999 the defendant was a salesman at a trade show in Atlanta, Georgia which was attended by Brian Goldwitz. At that show defendant was offered the job of sales and marketing for a new company created to make sales to mass retail merchants. The products were to be for retail sales of shelters, canopies, instant garages and sporting goods. The new company was North American Outdoor Products, L.L.C. (hereinafter NAOP) and it had a different function than Cover-It, Inc. because it related to different customers and products than Cover-It, Inc. When defendant was hired for sales and marketing of NAOP the wife of Brian Goldwitz was named as the CEO of that entity. Her name is Tracy Forlini, and she had very little involvement because Brian Goldwitz ran the company and made all decisions relating to the operation of the business. Both Cover-It, Inc. and NAOP operated out of the same office building, but the employees of Cover-It were not employees of NAOP.
In 1999, Marie Hernandez was also hired by Brian Goldwitz as the graphic designer and advertising person for NAOP. Both she and the defendant Curtis Dawson were to be the key employees of NAOP.
After defendant and Marie Hernandez commenced their employment for NAOP this company began to grow and prosper. The defendant was instrumental in acquiring sales agreements with major national retailing companies. During defendant's employment he would receive paychecks of his salary from the different companies controlled by Brian Goldwitz, and any raises or salaries of both the defendant and Marie Hernandez were controlled by Brian Goldwitz.
In early 2001 defendant Dawson was given a raise of $20,000 by the acting general manager of NAOP, but Brian Goldwitz rescinded the raise. On June 19, 2001 defendant Dawson resigned in writing his position as National Sales Manager for North American Outdoor Products/Cover-It Instant Garages. Brian Goldwitz convinced defendant to stay with NAOP. Defendant then continued his employment in Connecticut until April 2002 when he and his family moved to Florida. This move occurred because of Goldwitz's criticism of defendant because of events at a Las Vegas trade show. Defendant in Florida continued to act as the marketing and sales representative of NAOP.
Brian Goldwitz wanted defendant to return to Connecticut, and the defendant informed him that he would only return if he was given an annual raise of $25,000, plus related moving expenses. At a dinner meeting in January 2003 defendant was verbally promised by Brian Goldwitz the raise of $25,000 plus his moving expenses and an apartment lease for six months in Middletown, Connecticut. The moving expenses were paid as well as the apartment rental which was approved by Brian Goldwitz. The weekly salary increase to reflect the raise did not commence until the week ending March 22, 2003, and defendant was paid in a check dated March 27, 2003.
In March 2003 the Cover-It entity was in the process of dissolution and some employees of that company were either terminated or transferred their employee relationship to NAOP. Both the defendant and Mariel Hernandez as the key employees of NAOP were never considered as employees of Cover-It at that time, and they did not receive pink slips or termination notices from Cover-It, Inc. in March 2003. The defendant however in that month was requested to sign an Employee Agreement which contained provisions relating to an agreement regarding the termination of his employment from North American Outdoor Products, LLC and its affiliates, and subsidiaries, successors and assigns. This document was signed by the defendant and dated March 26, 2003. In February 2004 defendant obtained a copy of this document (defendant's Exhibit B) and found it had not been signed by any authorized representative of NAOP. However after defendant in March 2004 advised NAOP of his intent to leave NAOP, and then filing his resignation on April 2, 2004 he learned on commencement of this injunction action that NAOP had allegedly signed the document dated March 20, 2004 (plaintiff's Ex. 3).
The complaint filed by the plaintiff alleges that on or about March 26, 2003 NAOP entered into an Employment Agreement with the defendant. To create a contract there must be a bargain in which there is manifestation of mutual assent, and a definite agreement upon which there was a meeting of the minds. In the absence of a meeting of the minds the court cannot make a contract for the parties. Hoffman v. Fidelity Casualty Co., 125 Conn. 440, 443 (1939). The burden is on the plaintiff to prove a meeting of the minds in order to prove its version of the claimed contract. If the plaintiff has failed to prove a mutual assent then the plaintiff can not prevail on its express contract claim. Ubysz v. DiPietro, 185 Conn. 47, 51 (1981). It is only when both parties intend to be bound that a contract can arise. What the parties intended is determined from the languages used, the circumstances, the motives of the parties and the purposes they sought to accomplish, Klein v. Chatfield, 166 Conn. 76, 80 (1974).
The agreement involved was only signed and executed by the defendant on March 26, 2003, and not signed by the plaintiff (defendant's Exhibit B). The document was bilateral, and it contained a signature line to be signed both by the plaintiff and the defendant. The defendant was the only party that signed the agreement. In the case of Farfaxx Corp. v. Nichelson, 28 Conn. L. Rptr. 162 (Gormely, J.) (September 14, 2000) it was held that both signatures may not be essential to enforce a bilateral contract, but if the agreement makes the signatures of both parties essential then the absence of the employer's signature would make the agreement unenforceable.
In the case of Connecticut Prop. Tri-Town Plaza, L.L.C. v. Seymour Cinema, Inc., 84 Conn.App. 569, 577 the court stated:
Connecticut law requires an issue of contract interpretation to be resolved by reading the contract in its entirety," with each provision read in light of the other provisions . . . and every provision [to] be given effect if it is possible to do so." (Citation omitted.) United Illuminating Co. v. Wisvest-Connecticut, LLC, 259 Conn. 665, 671, 791 A.2d 546 (2002). "Where the language of the contract is clear and unambiguous, the contract is to be given effect according to its terms. A court will not torture words to import ambiguity where the ordinary meaning leaves no room for ambiguity . . . Similarly, any ambiguity in a contract must emanate from the language used in the contract rather than from one party's subjective perception of the terms." (Internal quotation marks omitted.) Niehaus v. Cowles Business Media, Inc., 263 Conn. 178, 188-89, 819 A.2d 765 (2003).
The agreement relied upon by the plaintiff does not state the date when the contract was to take effect. The first paragraph refers to the agreement date of March 26, but it fails to state the year in which the contract was to take effect. The Agreement states: ". . . this Agreement as of the date set forth above." The only date stated above does not state the date when the contract was to take effect. Furthermore although the Agreement states Employee and NAOP acknowledge, represent and agree to the terms the plaintiff never signed the agreement until March 20, 2004 after it learned the plaintiff intended to terminate his employment.
The agreement also fails to clearly identify the parties to the contract. The reference to North American Outdoor Products, L.L.C. and its affiliates, and subsidiaries, successors and assigns does not identify who is making the agreement with the defendant. Although NAOP is named the ambiguity as to the other entities referred to fails to clearly identify the parties to the agreement.
The agreement states "In consideration of at will employment, Employee and NAOP acknowledge, represent and agree to the terms and conditions set forth in this Agreement." It also alleges in paragraph (7) "This agreement is not intended . . . as a contract of employment for a definite period of time or to limit or restrain NAOP or the Employee's right to terminate . . ." To be valid and enforceable, the employment contract with a covenant not to compete must be given in exchange for something, either some benefit to the promissor or some detriment to the promisee. Employment may not be sufficient to support these covenants not to compete if the employee can be terminated at will. There is no consideration to support a covenant signed after the employment relationship has begun because past consideration cannot support the imposition of a new obligation. Timenterial, Inc. v. Dagata, 29 Conn.Sup. 180, 185-86, 277 A.2d 512 (1971). The agreement in this matter was not a consideration contemplated by the parties when the defendant commenced his employment in 1999, nor can this court find any implied promise of continued employment as consideration.
It is well settled law in Connecticut that continued employment is not consideration for a covenant not to compete entered into after the beginning of the employment. The case cited by the defendant, Van Dyck Printing Co. v. DiNicola, 43 Conn.Sup. 191 (1993), is not applicable to the case at bar. In Van Dyck the parties had not concluded the terms of the employment contract. However, wording in Van Dyck is instructive in that it says: "This case does not resemble the situation presented in National Safe Northeast, Inc. v. Smith, Superior Court, Superior Court Judicial District of Hartford-New Britain at Hartford, Docket No. 304189 (December 31, 1985), in which an employee who had been working for one year was asked to sign a covenant not to compete as a condition of continued employment, a circumstance found to entail no new consideration for the new obligation." Also see Dick v. Dick, 167 Conn. 210 (1974), which held that continued employment is not additional consideration and that past consideration cannot support the imposition of a new obligation. Also see Kristin Norton v. Commercial Credit Corporation, CV 98-0578441, Superior Court Judicial District of Hartford at Hartford October 6, 1998 (Rittenband, J.) ( 23 Conn. L. Rptr. 102) citing Thermoglaze, Inc. v. Morning Side Gardens Co., 23 Conn.App. 741, 745, 583 A.2d 1331 (1991), and Torosyan v. Boehringer Ingelheim Pharmaceuticals, Inc., 234 Conn. 1, 18, 662 A.2d 89 (1995). Artman v. Output Technologies Sol. E.R., No. CV 00-0595362 S (Jun. 28, 2000) 2000 Ct.Sup. 8003, 373.
The evidence has demonstrated the raise granted to the defendant based upon the agreement in January 2003 of Brian Goldwitz, was not the consideration for this Employee Agreement. The raise of $25,000 was related to the inducement by Mr. Goldwitz to have the defendant return to Connecticut from Florida. That raise was also given to the defendant by the plaintiff in addition to payment of his moving expenses, as well as payment of the rent of an apartment for six months to relocate to Connecticut. The weekly increase to defendant's salary as a result of that raise commenced prior to March 26, 2003 the date defendant signed the agreement. The raise was included in the check for the week ending March 22, 2003.
The consideration stated in the document related to at-will employment, and it did not refer to the $25,000 raise as the consideration for the agreement.
The Employment Agreement relied upon by the plaintiff did not constitute an enforceable agreement between the parties because of the ambiguity as to the date and the execution of the agreement, as well as the lack of consideration for the covenant not to compete. In reaching this conclusion this court does not address the other claims of the plaintiff relating to the reasonableness of the provisions. However, the geographical area referred to in the agreement as well as the reference in the testimony of the additional states of Oregon, Minnesota, Nebraska, Kentucky and Washington would also make this agreement unenforceable because the evidence has established the geographical limitations are found to be unreasonable.
Based upon the above findings and conclusions the plaintiff's claims for the relief claimed is denied, and the agreement and restrictive covenants are unenforceable. Therefore, judgment shall enter for the defendant.
Howard Zoarski
Judge Trial Referee