Opinion
No. CV-10-6011629S
March 15, 2011
MEMORANDUM OF DECISION
The Town of Stratford (Stratford or town) brought this action in three counts against a former employee, Eric Castater (Castater), seeking the return of $4,744.38 that it claimed had been improperly paid to Castater upon the termination of his employment. The case was tried before the court on January 6, 2011. After the plaintiff rested, the defendant orally moved for the court to enter judgment in his favor on all counts of the complaint. Construing that motion as one for dismissal for the failure to make out a prima facie case pursuant to Practice Book § 15-8, the court granted it as to the third count sounding in conversion only. No further evidence was presented and the parties agreed to submit post-trial memoranda pursuant to a briefing schedule.
A written "Motion for Judgment" was subsequently e-filed on the same date. See entry #120.
I.
The court finds the following facts based on the credible testimony, the exhibits and the parties' joint stipulation of facts dated January 6, 2011 (Stipulation): From March 9, 2009 through December 11, 2009, Castater was employed as the assistant to the mayor of Stratford, James Miron, who served as the town's mayor from December 11, 2005 through December 12, 2009. The responsibilities of the Assistant to the Mayor included working directly with him, handling constituent services, working on public events, media and community outreach programs, attending numerous meetings, managing the mayor's appointments, preparing materials for the mayor, researching and drafting legislative testimony, and managing the town's website. (Ex. 12.) According to Miron, Castater worked the same hours that he worked, which were often longer than the standard workweek.
The Stipulation of Facts dated January 6, 2011 was marked as "Plaintiff's/Defendant's Exhibit 1" and is a full exhibit in this case.
The parties have stipulated that "Castater was a salaried fulltime employee under a written `at-will' agreement and entitled to benefits pursuant to policies incorporated in his employment agreement." (Stipulation, ¶ 2.) The employment agreement provided that during the first six months of employment, Castater could be terminated without notice but after the completion of six months he could only be terminated either with 60 days advance notice or immediately without advance notice subject to the town paying "full salary and benefits for the sixty (60) day calendar period immediately following your date of termination." (Ex. 2, ¶¶ 4, 5.) The employment agreement incorporated by reference an appendix (the appendix), effective July 1, 2008, that listed the benefits package applicable to Castater's position as a non-union member of the mayor's professional staff. (Ex. 2, Appendix A.) The benefits included five personal days per calendar year, ten professional development days, ten vacation days and ten days of sick leave, all pro-rated in the first year of employment based on the starting month and then accruing as of January 1st after the initial year. (Ex. 2, Appendix A, §§ I, II, III, VI, XI.) The appendix specified that unused vacation and sick leave could be "cashed out" upon termination of employment. The appendix did not specify whether unused personal days and professional development days could or could not be cashed out in the same way upon termination. The appendix further provided that "[p]erfect attendance days are eliminated." (Ex. 2, Appendix A, § XXI.) Finally, the appendix provided that the "benefits description is for information only and may changed, altered or modified by the Town prospectively in the discretion of the Mayor. Except as otherwise provided in an employment letter, any such revisions shall not adversely affect leave balance accruals or payouts. Except for that limitation, any such revisions will supercede those provided in this package. Employees will be notified of such changes by communication from the Mayor, the CAO or the HR Director." (Ex. 2, Appendix A, § XXI.)
Mayor Miron lost his bid for re-election in November 2009. Following that loss, Miron decided to terminate five employees including Castater. A letter from Miron to Castater dated December 4, 2009 advised him that his employment was terminated effective December 11, 2009 and that the town would pay "full salary and benefits for the next sixty calendar (i.e., though the workweek ending Friday, February 12, 2010)." (Ex. 3.) A termination notice also dated December 4, 2009 specified the categories and accrued hours of benefits and salary that Castater was to receive as "cash-out" benefits. (Ex. 6.) The notice included payment for 150 hours of vacation, 22.50 hours of perfect attendance days, 137.50 hours of sick leave and 150 hours of professional development days. Miron personally approved the termination notice and these categories of payment. (Stipulation, ¶ 7.) Miron believed that he had broad authority under the town charter to modify the employment agreement to include termination benefits for such categories as professional development days and perfect attendance and he acted in accordance with that belief. He also believed that provision of the termination benefits to Castater and the other terminated employees was in the town's interest and could insulate it from any claims they might seek to make in the future.
Miron testified about his opinion. His belief is also set forth in an affidavit dated October 18, 2010 that was introduced into evidence as exhibit 1.
On December 11, 2009, the date of his termination, the town issued payment, by way of direct deposit, for the hours set forth in the categories specified in the termination notice to Castater (ex. C) based on his nominal hourly rate of $25.6411, which was based on an annual salary of $50,000.00 and a 37.5-hour work-week for the town's full-time employees. (Stipulation ¶¶ 3, 6.) Castater received a W-2 form from the town in January 2010 which included the "cash out" benefits as income for social security purposes and itemized deductions accordingly. (Stipulation ¶ 10.)
The policy eliminating perfect attendance days set forth in § XXI of the appendix was formally rescinded retroactively by Mayor Miron on December 4, 2009 (ex. 4) for "the following employee classifications: executive management class; uniformed professional class; professional class; Mayor's staff; and associated administrative staff of same" covering the period from July 1, 2008 through December 31, 2009. According to Miron, the original purpose of eliminating perfect attendance for the town's non-union employees was to influence negotiations with the unions regarding elimination of perfect attendance days and when that effort failed the policy was rescinded, months before the December memorandum, but the rescission had not been memorialized in writing.
A new town administration took office on December 14, 2009. Some time in late January or early February 2010, the town notified Castater that it was contesting some of the benefits he had received as part of the termination package. On April 6, 2010, Castater received notice from the Department of Labor, Unemployment Compensation Department, that he was ineligible for unemployment benefits through March 13, 2010 based on the payment of wages in lieu of benefits and vacation pay from his former employer. (Ex. 8.) Castater has never made any claims against the town based on the termination of his employment.
CT Page 7074
II.
In the first count of its complaint, the town alleged a cause of action for "Money Had and Received" specifically that it had overpaid Castater "monies in excess" of what he was entitled to under the terms of his employment agreement in the amount of $4,744.37. (Count One, ¶¶ 7, 8.) It further alleged that it had no "moral or legal obligation to make the Overpayment," that Castater "in equity and good conscience had no right to retain" it and that the town "in equity and good conscience" was entitled to it. (Count One, ¶¶ 9-10.) Castater denied all these allegations.A common-law cause of action for money had and received, or indebitatus assumpsit, has been long recognized in Connecticut. Originally requiring the existence of a contractual debt, the cause of action "was extended to contracts `implied in law' (now referred to as quasi contracts) . . . Courts frequently upheld actions in general assumpsit when the defendant would otherwise be unjustly enriched . . . Thus, in Northrop v. Graves, 19 Conn. 548, [1849] this court held that when money is paid by one on the basis of a mistake as to his rights and duties and the recipient has no right in good conscience to retain the money, an action of indebitatus assumpsit may be maintained to recover the money, regardless of whether the mistake was one of fact or of law." Westport v. Bossert Corp., 165 Conn. 410, 413-14, 335 A.2d 297 (1973). However, in Northrop v. Graves, 19 Conn. 548, 554, 558 (1849), the court also made clear that if the money was not mistakenly paid or was paid for the purpose of potentially compromising a claim or was paid gratuitously, then a plaintiff cannot recover. Moreover, even if a plaintiff mistakenly made the payment, if the trial court concludes that the defendant had a right "in good conscience" to retain the money, id. 556, then the balance of the equities favors the defendant and the plaintiff cannot recover.
"The action for money had and received is an equitable action to recover back money paid by mistake, where the payor is free from any moral or legal obligation to make the payment and the payee in good conscience has no right to retain it . . . The real ground of recovery is the equitable right of the plaintiff to the money." Bridgeport Hydraulic Co. v. Bridgeport, 103 Conn. 249, 261-62, 130 A. 164 (1925). Simply put, the cause of action only allows a plaintiff to collect for a debt of "quasi contractual and equitable nature," Westport v. Bossert Corp., supra, 165 Conn. 415, to which it has a right superior to the defendant upon the balancing of all the equities. See 42 C.J.S. Implied Contracts § 12.
To establish that Castater is indebted to it, the town argues that some of the "cash-out" benefits he received were unauthorized. Castater denies this proposition and also maintains that the town received consideration from him for the payment both in the value of his work beyond the standard 37.5-hour work week and in his forbearance from making any claims against the town due to his termination.
As a result, the town's reliance on New Haven Securities, Inc. v. Drazen, 38 Conn.Sup. 578, 455 A.2d 351 (App.Sess. 1982), is misplaced because in that case the defendant conceded he had received unauthorized payments. Id., 579.
The town relies on provisions of its charter that it introduced into evidence (ex. 5) to argue that Miron did not have the sole authority either to modify Castater's employment agreement or determine the categories and hours of his "cash out" benefits, specifically pointing to § 2.2.1(e) which gives the town council "the power to make, alter and repeal resolutions and ordinances . . . relative to the appropriation of Town funds," and to § 2.2.5 which provides that the "Council shall fix the salaries . . . of all . . . Mayoral appointees [and] shall further have the power to approve or disapprove wage and salary schedules recommended by the Mayor for administrative department employees." These provisions not only fail to cover the issue of termination of employment, but also do not address the extent of the mayor's authority regarding personnel decisions.
Other provisions of the charter give the town's mayor broad authority generally to administer and supervise "all departments, agencies and offices of the Town," § 1.2, ¶ 1, and specifically to "act as . . . personnel director for the Town, with the exception of the Board of Education . . ." § 1.2, ¶ 12. The charter provides that the mayor has the duty to "act as the bargaining agent . . . in all labor and employment matters . . ." Id. Other mayoral duties with respect to labor and employment include the authority to select, appoint and hire department heads, § 1.2, ¶ 13, and the duty to adopt and update "written policy for . . . hiring all Town employees for positions in accordance with approved job descriptions." § 1.2, ¶ 14. The charter further provides that: "The power to appoint persons to employment, granted to the Mayor by this Charter, shall be exercised solely and exclusively by him or her." § 2.2.14. These provisions suggest a broad grant of authority to the town's mayor, by virtue of the town charter, regarding personnel decision. The appendix to the employment agreement (ex. 2) reinforces that conclusion in the provision which specifies that the mayor can modify, change or alter the benefit descriptions "in his discretion."
Accordingly, the court concludes that Miron had broad authority, as long as he was the mayor, to both modify the terms of Castater's employment agreement and to determine the categories and hours to be used to calculate Castater's "cash out" benefits upon termination. See White Co. v. Citizens Bank Trust Co., 110 Conn. 635, 638-39 149 A. 133 (1930) (When the facts established that plaintiff's agent was specifically authorized to indorse checks for deposit and use the proceeds, on behalf of the plaintiff, within his discretion for the plaintiff's benefit, plaintiff was equitable estopped from claiming a lack of authority). Authorized payments are not subject to recovery under the theory of money had and received as they have not been mistakenly paid. Northrop v. Graves, supra, 19 Conn. 554.
Even if Miron were mistaken as to the extent of his authority or if factual mistakes were made in calculating the benefits, there is no evidence that Castater knew of those mistakes, id. 555, or demanded or induced the payment. Thus, the court concludes Castater acted in good faith and justifiably accepted the "cash out" benefits paid to him upon his termination. Furthermore, Castater not only paid taxes on the "cash out" benefits but their receipt delayed his eligibility date to collect unemployment benefits. In balancing the equities, as the court is required to do for this cause of action, the court concludes that Castater has a right "in good conscience" to retain the "cash out" benefits that he received from the town.
At pages 11-13 of its memorandum dated January 21, 2011, the plaintiff recited a number of factual mistakes that it claims were made in calculating the benefits including improperly failing to pro-rate Castater's time.
Although the payment was not made in response to a demand, see Monroe National Bank v. Catlin, 82 Conn. 227, 230, 73 A.3 (1909), the evidence further supports the conclusion that, in making the "cash out" benefits determination for Castater and the other terminated employees, Miron sought to protect the town from the potential of future litigation as he believed that it served the purpose of potentially compromising a claim where there may have been some uncertainty as to the rights of the terminated employees.
Based on the court's conclusions that the payments made to Castater were authorized and, to the extent he was overpaid because Miron exceeded his authority or due to factual mistakes, that the town does not have a superior right in equity to any overpayment, judgment shall enter for the defendant on the first count of the complaint.
III.
In the second count of its complaint, the town alleged unjust enrichment. Although related to the first cause of action because it is similarly "broad and flexible" and, like it, "is based on the principle that it is contrary to equity and good conscience for a defendant to retain a benefit at the expense of the plaintiff," Gagne v. Vaccarro, 255 Conn. 390, 409, 766 A.2d 416 (2001), on appeal after remand, 80 Conn.App. 436, 835 A.2d 491 (2003), cert. denied, 268 Conn. 920, 846 A.2d 881 (2004), a claim of unjust enrichment has different requirements. The "three basic requirements [of the doctrine of unjust enrichment] are that (1) the defendant was benefitted, (2) the defendant unjustly failed to pay the plaintiff for the benefits, and (3) the failure of payment was to the plaintiff's detriment . . . All of the facts . . . must be examined to determine whether the circumstances render it just or unjust, equitable or inequitable, conscionable or unconscionable, to apply the doctrine." Id.
"[A] contractual relationship is not a prerequisite to recovery based on unjust enrichment." Schirmer v. Souza, 126 Conn.App. 759, 767 (2011). Even when there is an express contract between the parties, if it does not specifically address the subject at issue a claim for unjust enrichment is not precluded as long as the relief requested is not inconsistent with the terms of the contract. New Hartford v. Connecticut Resources Recovery Authority, 291 Conn. 433, 454-56, 970 A.2d 592 (2009). In this case, the employment contract between Castater and the town did not address the town's right to recover for an improper overpayment of "cash out" benefits upon termination.
However, because the cause of action is "based upon the principle that one should not be permitted unjustly to enrich himself at the expense of another but should be required to make restitution of . . . property received [or] retained . . . The question is: Did [the defendant], to the detriment of someone else, obtain something of value to which [the defendant] was not entitled?" Franks v. Lockwood, 146 Conn. 273, 278, 150 A.2d 515 (1959). The town has failed to prove that Castater was not entitled to the "cash out" benefits he received, see part II., supra, or that the alleged overpayment was detrimental to it. Moreover, under the circumstances of this case, in which Castater paid taxes on the "cash out" benefits and his receipt of unemployment benefits was delayed based on the town's payment of "cash out" benefits, the court concludes that it would be inequitable to apply the doctrine of unjust enrichment against him to order restitution in the town's favor.
IV.
At the close of the plaintiff's case, the court dismissed the third count of the complaint which alleged conversion. "To establish a prima facie case of conversion, the plaintiff had to demonstrate that (1) the material at issue belonged to the plaintiff, (2) that [the defendant] deprived the plaintiff of that material for an indefinite period of time, (3) that [the defendant's] conduct was unauthorized and (4) that [the defendant's] conduct harmed the plaintiff." News America Marketing In-Store, Inc. v. Marquis, 86 Conn.App. 527, 545, 862 A.2d 837, aff'd, 276 Conn. 310, 885 A.2d 758 (2005). The court determined that the plaintiff failed to offer any evidence to establish the third and fourth elements of the tort of conversion.
Even if the determination that the plaintiff failed to establish a prima facie case was incorrect, the court's conclusion above that the payments made to Castaster were authorized, see part II., supra, would require judgment to enter in Castater's favor on the third count because there is no basis to conclude that he did not rightfully possess the funds paid to him. A conclusion that the use of property is authorized is "fatal" to a cause of action for conversion. Hi-Ho Tower, Inc. v. Com-Tronics, Inc., 255 Conn. 20, 47, 761 A.2d 1268 (2000).
V.
Based on the foregoing, judgment shall enter for the defendant and against the plaintiff on all counts of the complaint.