Opinion
No. FBT-CV-03-0404575-S
December 23, 2005
MEMORANDUM OF DECISION
The plaintiff, Leo's Partners, LLC, is a limited liability company organized under the laws of the State of Connecticut. (Ex. 1.) On July 17, 2001, the plaintiff purchased a restaurant, then known as Leo's, from the defendant, Emmar, Inc. (Emmar). The restaurant was located at 271 South Main Street, Newtown, Connecticut. (Ex. 2.) As part of the transaction and in consideration of $150,000.00, the plaintiff and the defendants, Emmar, Inc. and Martin Ferrari (Ferrari), the president of Emmar, entered into a non-competition agreement (agreement). (Ex. 3.) Pursuant to the agreement, Ferrari was prohibited from engaging in the restaurant business within a radius of twenty miles of 271 South Main Street, Newtown, Connecticut for a period of ten years. The parties stipulated, at the commencement of trial, that Ferrari opened a restaurant in competition with the plaintiff within the time period set forth in the agreement. They further stipulated that this restaurant was within a twenty-mile radius of 271 South Main Street, Newtown, Connecticut. Finally, the parties stipulated that the plaintiff would not present evidence of actual damages occasioned by the alleged breach of the agreement by Ferrari.
The testimony presented during the course of the trial established that the restaurant was family-style with a good reputation. The clientele was primarily local, but there were some customers who would travel a considerable distance to partake in the fare. Approximately eighteen months after the closing, Ferrari engaged in the restaurant business several miles away in Fairfield, within the twenty-mile limitation. This new restaurant was known as Rooster's. Advance promotion of Rooster's indicated that a similar menu format to Leo's would be followed in this restaurant for breakfast and lunch. (Ex. 5.) Rooster's restaurant opened briefly in the winter of 2002-2003. Rooster's then reopened from June 25, 2003 until July 5, 2003, when it was closed for seven weeks as result of a fire. Ferrari then operated Rooster's from late August 2003 until June 2004. In June 2004, Ferrari was "bought out" of Rooster's. Ferrari now operates a restaurant in Guilford, which is not within the twenty-mile limitation.
The plaintiff claims that, despite a showing of actual damages, it should be awarded $150,000.00 in damages. The plaintiff claims that the violation of the agreement by Ferrari caused the plaintiff not to receive the benefit of the bargain and that the consideration paid should be awarded as damages. The defendants, while acknowledging the violation of the agreement, claim that the agreement is unenforceable as an unreasonable restraint on trade and against public policy by virtue of its breadth and scope and, further, that the plaintiff failed to mitigate its damages.
The contract between the parties is a contract in restraint of trade. The factors to be considered in evaluating the reasonableness of a restrictive covenant ancillary to the sale of a business are that "the restraint must be limited in its operation with regard to time and place and afford no more than a fair and just protection to the interests of the party in whose favor it is to operate, without unduly interfering with the public interest." Mattis v. Lally, 138 Conn. 51, 54 (1951). This court cannot, under the facts presented, find that the contract is unreasonable. Mr. Ferrari is currently conducting a restaurant in Guilford. There was no evidence that the defendant's inability to operate such a business within twenty miles of the plaintiff's business for ten years interferes with the public interest. In fact, the defendant's admitted disregard of the agreement demonstrated the need to protect the plaintiff for an extended period of time.
The next issue is what damages should be assessed against the defendant for the breach of the agreement. The court does not agree with the plaintiff that the agreement provides for liquidated damages. "The proper measure of damages for a breach of a covenant not to compete is the nonbreaching party's losses . . ." Robert S. Weiss Associates, Inc. v. Wiederlight et al., 208 Conn. 525, 542 (1988). In this case, the plaintiff has sustained no loss. At trial, the plaintiff had an opportunity to establish that it had sustained actual damages as a result of the violation of the agreement. The plaintiff acknowledges that there were no damages. When a claim for compensatory damages is not supported, a judgment for nominal damages only can be supported. Sylvia Fleming et al. v. City of Bridgeport et al., 92 Conn.App. 400 (2005). Since the plaintiff has sustained no damages, the recovery of attorney fees should be limited. In reviewing this matter, the court believes that an award of $750.00 in attorney fees would be fair.
Accordingly, judgment shall enter on behalf of the plaintiff in the amount of one dollar in damages and $750.00 in attorney fees.