Opinion
MMXCV146011126S
03-08-2016
P.K. Peter Lai, D.D.S. v. Community Health Center, Inc
UNPUBLISHED OPINION
MEMORANDUM OF DECISION
Julia L. Aurigemma, J.
The plaintiff, P.K. Peter Lai, DDS, has brought an action in four counts against the defendant, Community Health Center, Inc. (" CHC"). The first count of the first amended complaint (the " complaint") alleges breach of an express contract. The second and third counts allege unjust enrichment and quantum meruit, respectively, and the fourth count alleges a violation of Connecticut General Statutes § § 31-71a(3) and 31-72.
After trial, which occurred on December 16, 2015, the court finds the following facts. Beginning in 2004, Dr. Lai worked for CHC as a dentist. CHC is a community health care center which provides medical, dental and behavioral health treatment across the state of Connecticut. It operates 13 primary care centers and treats about 130, 000 patients, who are generally low income.
During the time he was employed as a dentist by CHC, Dr. Lai interpreted x-rays, performed dental exams, fillings, root canals and crowns. Dr. Lai and CHC entered into eight employment agreements starting in 2004 and continuing each year until 2011.
Dr. Lai's final employment agreement with CHC commenced on July 6, 2011 and continued through July 5, 2012 (the " Agreement"). It provided, in pertinent part:
Either party may terminate this Agreement without cause by giving the other party one hundred twenty (120) days prior written notice of the desire to terminate this agreement. No later than one hundred fifty (150) days prior to the expiration of the Initial Term, each party to this Agreement shall notify the other in writing of whether or not they desire to enter into a contract for a succeeding term of employment. If both parties so desire, they shall promptly enter into discussions concerning the terms of the succeeding contract period. In the event that both parties to this Agreement fail to give written notice as to whether or not they desire to enter into discussions concerning a succeeding term of employment within one hundred twenty (120) days of the end of the Initial Term, the Initial Term shall be automatically extended until one hundred twenty (120) days after the date that either party gives notice that they desire to terminate this Agreement.
Each of Dr. Lai's employment agreements provided that he would receive a certain amount of paid time off, or " PTO", in lieu of vacation or sick time. Under the Agreement, Dr. Lai received 26 days (208 hours) of PTO per 12 month period and eight hours of holiday pay for each of six designated holidays. Between 2008 and 2012, Dr. Lai used 556 hours of PTO.
CHC permitted Dr. Lai to accrue unused PTO from year to year. As of the end of his employment with CHC, Dr. Lai had accrued 361.51 hours of unused PTO valued at $22,743. Beginning with the agreement of 2006, Dr. Lai's employment agreements stated that he would forfeit any accrued PTO time upon the termination of his employment. The Agreement contained language nearly identical to that of the agreements of 2006-2010 and stated:
With one exception described in the following sentence, accrued PTO time not used as of last day of employment is forfeited . Accrued but unused PTO time will not be forfeited upon termination of employment if the employment relationship ends as a result of Dr. Lai giving timely notice [of] voluntary termination or non-renewal in accordance with the provisions of this Agreement.
Emphasis added.
The purpose of the foregoing provision was to create a strong disincentive to professionals to leave CHC's employment without giving the requisite 120 days notice. CHC needed to use the 120 day period to find a replacement for the professional who was leaving.
On January 13, 2012 Margaret Drozdowski Maule, D.M.D., Dr. Lai's supervisor, sent him a letter of reprimand regarding Dr. Lai's performance deficiencies. That letter referred to six complaints from patients about Dr. Lai's lack of professionalism. On March 28, 2012, Dr. Drozdowski Maule sent a letter to Dr. Lai, which stated, in full:
Your current contract with Community Health Center (" CHC") expires on July 31, 2012. As stipulated in the contract, " either party may terminate this Agreement without cause by giving the other party one hundred twenty (120) days prior written notice of the desire to terminate this agreement." Peter at this time, CHC wishes to discuss extending the current contract to December 28, 2012, instead of entering into a new contract . We seek to do this in order to allow you an opportunity to address and resolve identified performance issues which we have discussed.
Throughout this period, I will meet with you periodically to assess performance. If you are able to satisfactorily resolve concerns and remain interested in being employed as a dentist by CHC, Inc., I will remain open to entering into new contract discussions with a target of November 16th, 2012 for execution of such new contract. If we have not executed a new contract on or before that date, then your last date of employment will be December 31, 2012.
I appreciate the service you have provided to CHC, and would hope that you can resolve the identified performance issues. I will look forward to speaking with you about these issues and agreeing to a contract amendment extending the contract up to December 28, 2012.
Emphasis added.
Dr. Lai argues in his Post-Trial Memorandum that Dr. Drozdowski Maule's letter " informed Dr. Lai that [CHC] was not going to enter into a succeeding term of employment, " and that the letter stated that CHC " was not going to renew Lai's contract, " and that the letter " effectively terminat[ed] the agreement" without providing Dr. Lai 120 days notice. It is clear from the full text of the letter set forth above that the plaintiff has badly mischaracterized the terms of the letter. CHC did not terminate his employment. It offered to extend it. At trial Dr. Lai admitted that the letter " offered a six-month renewal with CHC" and that the letter did not terminate his employment.
The plaintiff also argues that Dr. Drozdowski Maule's letter of March 28, 2012 violated the Agreement's requirement of 120 days notice of termination. Since the letter did not terminate the Agreement, it did not violate the 120 day notice provision. Moreover, at trial Dr. Lai admitted that if December 31, 2012 wound up being the end of his employment at CHC, the March 28, 2012 letter would have given him a lot more than 120 days notice.
Dr. Lai never accepted Dr. Drozdowski Maule's invitation to discuss extending his contract. His only written response to the March 28, 2012 letter was his resignation, which Dr. Lai tendered via e-mail to " Dr. Drozdowski, Mr. Masselli and Ms. Flinter" on May 22, 2012. The e-mail stated in pertinent part:
It is with deep regret that I must tender my resignation from CHC effective Friday June 22, 2012.
I have only recently been offered a position as an Orthodontic Fellow at the University of Nevada, Las Vegas. It has been my career dream to become an orthodontist.
I apologize for the latest of this notification. Unfortunately, I cannot control when this offer was made .
Emphasis added.
Two days after Dr. Lai left CHC, on June 24, 2012, he sent an e-mail to Margaret Flinter, CHC's vice president, which stated, " Once again sorry to leave on such short notice." Dr. Lai again blamed the short notice on the short notice given to him by the University of Nevada at Las Vegas orthodontics fellowship program. On February 12, 2013, after Dr. Lai moved to Las Vegas for his fellowship, he wrote to CHC's CEO, Mark Masselli, and requested payment for his accrued PTO time. The letter asked Mr. Masselli to " [p]lease accept my apologies for not providing the 120 days notice to resign. My actions were not malicious. However, I hope, you will be able to appreciate my situation and affect a solution satisfactory to all parties."
Dr. Lai's resignation e-mail provided only 31 days prior written notice of termination. At trial Dr. Lai testified that he understood that his notification was late and in breach of his contractual obligation under the Agreement. He also admitted that CHC did not prevent him from giving the 120 day notice. Based on the foregoing the court cannot agree with the plaintiff's arguments that somehow CHC made it impossible for Dr. Lai to give the requisite 120 day notice.
The purpose of the PTO forfeiture provision in the Agreement and in CHC's agreements with its other dentists was to ensure that dentists gave CHC sufficient time to hire and train replacements. The Agreement clearly provided that Dr. Lai would not receive his accrued PTO when he left CHC's employ. The only circumstance which would result in Dr. Lai's receipt of the accrued PTO would arise if, and only if, he gave the requisite 120 days notice before he left his employment with CHC.
It took CHC approximately 110 days to hire a replacement for Dr. Lai and get her to the point where she was able to see patients. During the time between Dr. Lai's departure on June 21, 2012 and the last week of September when the replacement became fully functional, CHC had less capacity to treat patients. There was a net reduction of about 15 patients per day, and new patients were scheduled for appointments further into the future. CHC lost revenue while it continued to pay the fixed expenses of the support personnel who did not have a dentist to support for 110 days.
In the first count of the complaint the plaintiff alleges that CHC breached the Agreement by failing to compensate him for accrued but unused PTO time. Contrary to the plaintiff's arguments, CHC did nothing which made it impossible for Dr. Lai to give 120 days notice before his departure. Further, CHC did not itself breach the Agreement by terminating Dr. Lai's contract or by failing to give Dr. Lai 120 day notice of its desire not to renew his contract. As stated above, CHC offered to discuss extending Dr. Lai's existing Agreement in March 2012. Dr. Lai did not respond to his supervisor's letter concerning that extension.
The plaintiff's argument that Dr. Drozdowski Maule's March 2012 letter was an " anticipatory" breach of the Agreement is invalid. As Dr. Lai admitted at trial, CHC gave him an opportunity to improve his performance, offered to extend the Agreement and remained open to entering into yet another agreement with Dr. Lai after that. Nothing in the March 2012 letter constituted a breach of the Agreement by CHC.
Finally, the plaintiff argues that his notice of termination extended the Agreement to November 2, 2012 and, therefore, was timely. This argument is virtually unfathomable. Under the terms of the Agreement, any notice of termination would extend the existing Agreement 120 days from the date of notice--meaning that Dr. Lai would have to work an additional 120 days after the date of the notice in order to qualify to receive his PTO amounts. Dr. Lai gave his notice on May 22, 2012 and worked 31 days thereafter until June 22, 2012. The May 22nd notice would have been timely only if Dr. Lai worked an additional 120 days--to September 19, 2012. He did not.
At trial the court questioned whether the failure to pay accrued PTO would constitute an unenforceable penalty. It appears that it would not. Many employers refuse to pay any compensation for unused vacation time and courts have enforced their position. See Fulco v. Norwich Roman Catholic Diocesan Corp., 27 Conn.App. 800, 807, 609 A.2d 1034 (1992) (dismissing former employee's claim for compensation for unused vacation days); see also Sexton v. Oak Ridge Treatment Ctr. Acquisition Corp., 1 167 Ohio App.3d 593, 2006 Ohio 3852, 856 N.E.2d 280, 282 (Ohio Ct. App, 2006) (" because Oak Ridge's policy clearly precludes its employees from collection any payment for PTO upon discharge from employment, the trial court erred in failing to enforce it. Accordingly we reverse the trial court's judgment").
In Sweet v. Stormont Vail Regional Medical Ctr., 231 Kan. 604, 647 P.2d 1274, 1280 (Kan. 1982), the court enforced an employer's right to condition compensation for accrued fringe benefits upon an employee's giving a specified amount of advance notice of termination. The court in Sweet concluded, " Since the notice requirement here is consistent with the hospital's need to be adequately staffed for the health and safety of its patients, the requirement of notice of intent to terminate is reasonable." Id.
Under Connecticut law, employers are not required to compensate employees for accrued fringe benefits, such as PTO time, upon termination of employment unless " an employer policy or collective bargaining agreement provides" for such payment. Connecticut General Statutes § 31-76k.
Dr. Lai did not give CHC 120 days prior written notice of his intention to terminate the Agreement. Therefore, he forfeited any accrued PTO time under the terms of the Agreement. CHC did not breach the Agreement by failing to compensate Dr. Lai for such time.
Counts two and three of the complaint allege unjust enrichment and quantum meruit, respectively. An employee cannot recover in unjust enrichment against his employer for its failure to pay him compensation when an express, enforceable employment agreement set the terms of the employee's compensation but did not provide for the compensation sought, and the employee does not claim he performed services not contemplated by the agreement. Meaney v. Connecticut Hospital Association, Inc., 250 Conn. 500, 517, 735 A.2d 813 (1999). The existence of a contract enforceable at law precludes recovery under a theory of restitution or unjust enrichment. Feng v. Dart Hill Realty, Inc., 26 Conn.App. 380, 385-86, 601 A.2d 547 (1992). Dr. Lai was not entitled to compensation for PTO under the terms of the Agreement. He also admitted that he did not perform any services for CHC that were not contemplated by the Agreement. Therefore, the plaintiff cannot prevail on count two of the complaint.
" Quantum meruit is a theory of recovery permitting restitution in the context of an otherwise unenforceable contract." Walpole Woodworkers, Inc. v. Manning, 307 Conn. 582, 587, 57 A.3d 730 (2012). As set forth at length above, the Agreement is enforceable and, therefore, precludes Dr. Lai's quantum meruit claim.
In count four of the complaint the plaintiff alleges that CHC's failure to compensate him for accrued PTO time amount to a failure to pay wages in violation of Connecticut General Statutes § § 31-71a(3) and 31-72. " General Statutes § 31-71a(3) defines 'wages' for the purposes of § 31-72 as 'compensation for labor or services rendered by an employee . . .' Thus, the definition of wages is limited to remuneration for labor or services rendered, and does not include vacation pay, which is compensation for loss of wages." Fulco v. Norwich Roman Catholic Diocesan Corp, 27 Conn.App. 800, 807, 609 A.2d 1034 (1992). In Morales v. Pentec, Inc., 57 Conn.App. 419, 428, 749 A.2d 47 (2000) the Appellate Court stated " we accept Fulco's reasoning that the legislature intended that § 31-76k and the statutory definition of wages in § 31-71a(3) concern different types of remuneration."
Under § 31-76k, an employee may recover compensation for accrued fringe benefits such as PTO time upon termination of employment only " [i]f an employer policy or collective bargaining agreement provides for payment of accrued fringe benefits upon termination" and only " in accordance with such agreement or policy." At trial Dr. Lai admitted that CHC has no such policy or collective bargaining agreement and that he was unaware of CHC's compensating any clinician for accrued PTO time upon termination of their employment when they did not give the required notice.
PTO time is not wages within the meaning of § 31-72 and CHC has no policy or collective bargaining agreement which provides for the payment of accrued PTO time upon termination of employment unless the clinician provides 120 days notice. Dr. Lai provided only 31 days notice. Therefore, he cannot prevail on count four of the complaint.
Based on the foregoing, judgment enters in favor of the defendant, CHC, on all counts of the complaint.