Opinion
No. CV 03-0480442 S
May 28, 2004
MEMORANDUM OF DECISION ON MOTION TO STRIKE
The defendant has filed a motion to strike directed against several counts of the complaint — Count One (Promissory Estoppel/Severance), Count Four (Alleged Violation of the Connecticut Unfair Trade Practices Act (CUTPA), Count Five (Breach of Employment Contract), Count Six (Promissory Estoppel).
The standards to be applied in deciding a motion to strike are well recognized. A complaint that is subject to such a motion must be given every reasonable inference, Amodio v. Cunningham, 182 Conn. 80, 82 (1982), on the other hand a conclusory statement cannot be used to avoid a motion to strike, Bonamicio v. City of Middletown, 47 Conn. App. 758, 763-64 (1998).
I.
In count one the plaintiff makes a claim of promissory estoppel. He alleges that the plaintiff was hired by the defendant company in June 1991, he performed all his job functions satisfactorily but was fired "without warning or good cause" on January 3, 2003 (par 3-5). Paragraph 6 goes on to allege that Mr. Sauska, an authorized agent of the company, promised the plaintiff the defendant would pay him his normal salary as severance for six months from January 3, 2003 in addition to continuing his medical benefits and 401k benefits. It is then alleged that the plaintiff relied on these representations and that when Sauska made these just mentioned promises or representations, he did not state or imply that the plaintiff's severance payments would be discontinued if he accepted employment with a competitor of the defendant company "or that the promise was conditional on any act by Mr. Shine with respect to his future employment" (par 8). On January 25, 2003 the plaintiff accepted employment with Light Emissions Technologies to begin on February 17, 2003 (par 9). Paragraph 10 alleges that "(The plaintiff) reasonably relied on Mr. Sauska's oral promise in accepting employment with Light Transmissions Technologies after his termination from the defendant. (The defendant company's) promise of severance induced the plaintiff to leave the (defendant company), sign a release of claims, and accept a new position." Paragraph 11 then states the defendant breached its promise to pay severance benefits. Paragraph 12 then alleges that as a result of this breach of promise to pay "unconditional" severance benefits the plaintiff suffered both economic and noneconomic damages — the later including emotional distress, injury to reputation, anxiety and pain and suffering.
The court will set forth the defendant's position as to this count. It should first be noted in this regard that this count makes no explicit reference to the January 20, 2003 severance agreement signed by the plaintiff and alleged to be a binding contract between the parties.
The defendant first argues that the "required" elements of a promissory estoppel claim are not met. For one thing there is no claim that when Sauska failed to advise the plaintiff that his severance benefits would terminate if he got a new position with a competitor or an affiliate of a competitor that Sauska "intended to induce Shine to accept employment with (the new company)."
The severance agreement, which is alleged to be a binding contract between the parties, explicitly says that the plaintiff would lose his benefits if he took a new position with a competitor or affiliate of a competitor of the defendant. The second count is based on an alleged breach of this agreement.
In opposing the motion to strike directed against the first count, the plaintiff faults the defendant for "conflating" the first and second counts — "Count one, however, is not based on the severance agreement." But there the question becomes what is the purpose of at least the first portion of paragraph 8 of count one.
The defendant then states another necessary element of promissory estoppel has not been alleged — there is no allegation the plaintiff changed his position by relying on Sauska's alleged promise and thereby suffered injury.
In the court's opinion at least, the defendant takes a too narrow view of this tort. It is true that in Connecticut National Bank v. Voog, 233 Conn. 352, 366 (1995), the court said: "any claim of estoppel is predicated on proof of two essential elements.
the party against whom estoppel is claimed must do or say something calculated or intended to induce another party to believe that certain facts exist and to act on that belief and the other party must change its position in reliance on those facts, thereby incurring some injury."
(Emphasis by this court.)
But intentionality is not a prerequisite of this tort. Section 90 of Restatement (Second) Contracts defines what is, in effect, promissory estoppel in the following manner:
§ 90. Promise Reasonably Inducing Action or Forbearance
(1) A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is blinding if unjustly can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as, justice requires." (Emphasis by this court.)
D'Ulisse-Cupo v. Board of Directors, 202 Conn. 206, 213 (1987), refers to and adopts the language of the Restatement section.
Of course there is no allegation that the defendant intended to induce the plaintiff to accept employment with the new employer by making its allegedly unconditional promise to continue to pay benefits for a prescribed period of time. But the complaint does allege the plaintiff who is the supporter of his family relied on Sauska's promise in accepting the new employment in the sense that if he did he would not lose the promised benefits and still would be able to receive compensation from the new job. Giving the complaint every reasonable inference the promisor, Sauska, could be said to have reasonably expected the plaintiff would or even might seek new employment during the benefit period.
If this predicate is accepted, it would seem that the plaintiff changed his position by reliance on what the complaint says is an unconditional promise — he took the new job and thus lost benefits he claims that under the promise he was still entitled to receive given the nature of the Sauska promise. In Restatement terms the Sauska promise would be held to be binding since "injustice can be avoided only by enforcement of the promise" — in other words the claim is that he lost the promised benefits for reasons that cannot be deduced from the nature of the promise.
As noted, it is also argued that the "promissory estoppel is still deficient as, `judged, by an objective standard,' it would be unreasonable for (the plaintiff) to have relied on Sauska's alleged failure to inform him that the severance benefits would terminate upon his acceptance of employment with a competitor or an affiliate of a competitor." Sauska made the oral promise in January 3rd when the plaintiff was fired. But on January 20th he signed a severance agreement which explicitly stated benefits would be terminated by acceptance of employment with a competitor or an affiliate thereof. Shine was aware of this condition before he accepted the new employment on January 25th.
In other words the defendant relies on the language in D'Ulisse that for promissory estoppel to be viable the promisor can be held to his/her promise only if he/she could reasonably expect the promise would be relied upon and this means that . . ." a promisor is not liable to a promisee who has relied on a promise if judged by an objective standard, he (she) had no reason to expect any reliance at all." 202 Conn. at p. 213; cf. Restatement (Second) Contracts § 90, comment b, page 243.
An easy answer is to say that the plaintiff has a right to plead in the alternative and the first count does not like the second count, reference or rely on the written severance agreement but is based solely on Sauska's oral promise concerning benefits which was allegedly made over two weeks before the severance agreement was signed.
But there is another aspect to the argument made by the defendant as to the plaintiff's lack of reasonable reliance.
As noted, the Severance Agreement is no part of the allegations made in the first count as to promissory estoppel. But the alternative pleading right argument may have less persuasiveness when reference is made to the allegations of a separate count not to defeat the plaintiff's right to plead alternatively, but to test the viability of the theory of liability — here that of promissory estoppel or a least an element of it. After all would not the other counts of the complaint serve as admissions? And is it really a "speaking demurrer" tactic to allow the defendant to refer to the second count and the Severance Agreement? — after all to do so there is no need to go outside the pleadings; also see Bulkey v. Norwich, W Railway Co, 81 Conn. 284, 286 (1908), — how is another count outside the pleadings?
Fortunately the court does not feel compelled to decide this issue. This complaint could have used a request to revise. Apart from the elusive suggestion in paragraph 8 nowhere is it explicitly stated that in fact the new employer is a competitor or an affiliate of a competitor of the defendant.
Furthermore neither side has addressed the question of whether the Severance Agreement supercedes any consequences of the alleged oral promise made to the plaintiff by Sauska or what is in fact the interplay between these two events.
In any event the motion to strike the first count is denied.
2.
The defendant also argues that the Fourth Count alleging a violation of the Connecticut Unfair Trade Practices Act (§ 42-110a et seq.) must also be stricken. Quimby v. Kimberly Clark Corp., 28 Conn. App. 670 (1992), is cited for the proposition that the employment relationship does not fall within the ambit of trade or commerce, the necessary prerequisite for a CUTPA claim. A plaintiff must allege the defendant engaged in activities outside the employer-employee relationship as in Larsen Chelsey Realty Corp. v. Larsen, 230 Conn. 480, 492-94 (1995); if these allegations are met then the employer-employee relationship does not act as a complete bar to a CUTPA claim. Here, argues the defendant, the conduct supporting Shine's CUTPA claim arises solely out of his termination and alleged loss of severance benefits — thus, it is said, no activities are alleged outside the relationship.
The plaintiff argues that indeed the defendant's actions occurred outside the employment relationship. He was fired January 3, 2003 and on January 16 he was summoned in to sign a severance agreement; "the defendant engaged in unfair and deceptive acts in the conduct of its business by enticing Mr. Shine to give up his legal rights (he had to sign a General Release under the terms of the Severance Agreement) in exchange for severance payments and to thereafter stop the payments in an attempt to prevent him from working for a company that it apparently viewed as a competitor." The problem with the plaintiff's position is that in the Fourth Count which alleges a CUTPA violation only paragraph 1 though 11 of the First Count are realleged; the severance agreement as such is not even mentioned. More to the point, from what allegation can the court deduce that the defendant stopped the severance payments "to prevent (the plaintiff) from working for a company that it apparently viewed as a competitor." It is nowhere explicitly alleged that the new employer was a competitor.
As the pleadings stand now nothing more is alleged than that the defendant cut off the plaintiff's benefits in a deceptive and unfair way. Not every alleged bad or unfair act engaged in by a business subjects that business to regulatory statutes like CUTPA. Our act is based on the federal Clayton Act and the so-called 1938 Wheeler Amendment to that act. Referring to the Federal Trade Commission which was set up to enforce the Clayton Act the court in FTC v. Colgate Palmolive Co., 380 U.S. 374, 384-85 (1964), said: "When the commission was created by Congress in 1914, it was directed by § 5 to prevent `unfair methods, of competition or commence." Congress amended the act in 1938 to extend the commission's jurisdiction to include `unfair or deceptive acts or practices in commence — a significant amendment showing Congress's concern for consumers as well as for competitors." That concern is reflected in our act and in effect defines the ambit of "trade or commerce." The wrongful acts must affect the putative CUTPA claimant as a "consumer" or must have a deleterious effect on competition between entities or individuals competing against each other in business. As plead the plaintiff certainly cannot be defined as an injured consumer and as the court has indicated there are no allegations indicating there might be a deleterious effect on competition.
The Fourth Count is stricken.
3.
The motion to strike is also directed against the Fifth Count which alleges the breach of an oral contract of employment. The defendant argues that Shine was an employee at will and to prevail on a claim of breach of an employment contract as a result of termination the plaintiff must allege that the employer agreed "either by words or actions or conduct, to undertake some form of actual contract commitment to him under which he could not be terminated without just cause," Torosyan v. Boehringer Ingelheim Pharmaceuticals, 234 Conn. 1, 14-15 (1995). But facts must be alleged to indicate that the employer meant to enter into a contractual commitment by way of implied contract to alter the rights the employer would otherwise have under an at-will relationship. Torosyan, 2354 Conn. at p. 15. In other words a complaint cannot avoid a motion to strike by making conclusory allegations or stating "conclusions of law absent sufficient alleged facts to support them," Cavallo v. Derby Savings Bank, 188 Conn. 281, 285 (1982). Are there sufficient factual allegations?
Here in paragraph 5 of Count Five (Breach of Employment Contract) it is alleged that:
5. On several occasions, the president of Light Sources, acting as Light Sources authorized agent, told Mr. Shine that he would have a job with Light Sources as long as he wanted it and made other statements and took other actions that indicated Mr. Shine's employment would not be terminated in the absence of good course.
We are a fact pleading state so the last phrase is conclusory — what other statements or actions? The viability of Count Five depends then on the claim that the plaintiff was told he would have a job with the defendant company as long as he wanted; it is also said this statement was made several times. The plaintiff said in exchange for the statements he turned down other opportunities and worked diligently. Was an oral contract of employment created by these statements which could be breached for a termination without good cause?
In other words the court cannot ascertain whether Shine deduced that he could not be fired without cause by his own interpretation of what was told him; is he making a legal conclusion from what he was told or was he explicitly told that he would not be fired without just case for a good reason or similar words to that effect? C.f. statements in Gaudio v. Griffin Hospital, 249 Conn. 523, 528 (1999), and Torosyan v. Behringer, 234 Conn. 1, 14-15 (1995), infra.
This is a difficult question in light of the pleadings. In Gaudio v. Griffin Health Servs. Corp, 249 Conn. 523, 528 (1999), the court found an implied contract of employment from the existence of certain language in the employment manual but then said "In addition, the jury could have reasonably credited the plaintiff's testimony that `I was promised that as long as I was doing my job and . . . continued to do a good job, I would be there as long as I wished.'" In Toroysan the court noted, in finding an implied contract not to terminate without cause, that the employee was told that "if the plaintiff did a good job, the defendant (company) would take care of him"; but this statement was made to him "in the context of an employment interview in direct response to (the plaintiff's) inquiries about job security." 234 Conn. At page 16. Also in that case there was an employment manual that "explicitly qualified the defendant's right to discharge with the words `for cause.'" Id. 17. As to the oral representations of the employer to the worker, in both cases there is an implication that there would be no termination unless the employer was dissatisfied with job performance — to get the benefits of the promise the employee had to have good work performance.
The problem with the factual allegation here is that it reads as if it was merely an offer of permanent employment — he would have a job as long as he wanted. In that regard in 27 Am.Jur.2d, "Employment Relationship," § 34 at pp. 581-82 it says the following:
Although susceptible of various interpretations, `permanent' or `lifetime' employment is generally treated as indefinite in duration and terminable at the will of either party, in the absence of an express or implied agreement that refers to employment pending the occurrence of some event, such as the employer's dissatisfaction with the employee's services or some cause for termination.
Connecticut seems to follow this view. In Carter v. Bartek, 142 Conn. 448 (1955), the court says: "If the agreement between the parties provided for the permanent employment of the plaintiff, the defendant might have been legally justified in discharging the plaintiff, as he did, on August 21, 1953. In the absence of a consideration in addition to the rendition of services incident to the employment, an agreement for permanent employment is no more than an indefinite general hiring, terminable at the will of either party without liability to the other." Id. 450. The fact that the plaintiff might have turned down job opportunities at some time subsequent to the alleged promise of permanent employment does not qualify as bargained for consideration under a strict breach of contract theory which is what is being advanced here. Citing Allegheny College v. National Chautauqua County Bank of Jamestown, 159 N.E. 173 (NY, 1927), Calamari and Perillo, Contracts 3d at § 4-2, pp. 187-88, sets forth the three elements that must concur before a promise can be said to be supported by consideration:
(a) The promisee must suffer legal detriment; that is, do or promise to do what he is not legally obligated to do; or refrain from doing or promise to refrain from doing what he is legally privileged to do.
(b) The detriment must induce the promise. In other words the promisor must have made the promise because he wishes to exchange it at least in part for the detriment to be suffered by the promisee.
(c) The promise must induce the detriment. This means in effect, as we have already seen, that the promisee must know of the offer and intend to accept.
The promise of permanent employment offers nothing since it does not change the at-will relationship and there is nothing to indicate that the detriment — not to accept other employment — served as a motive to make the promise.
The court will strike Count Five.
4.
Count Six is also subject to the motion. It like Count One is based on promissory estoppel but it is not duplicative of the earlier count insofar as it makes a claim in paragraph 7 that the plaintiff was promised he would not be terminated except for cause. At least a portion of the claim goes beyond the claim in count one — there is a demand for lost pay resulting from the termination not just severance as in count one. If the other elements of promissory estoppel are established this would certainly constitute a "change of position."
The difficulty the court has, however, lies with the fact that the count fails to set forth how it could be said the alleged promise described in paragraph 7 induced action or forbearance to act on the part of the promisee, Mr. Shine. Is the claim made Shine would not have taken the job with the defendant but for the promise? That he would not have continued with the job beyond a certain point? What is the "reasonable reliance" beyond a mere statement to that effect? Why is there any reference in the count to the severance agreement if the promissory estoppel claim in this count is focused on the termination of the employment relationship and makes a lost pay claim?
Count Six is stricken.
Corradino, J.