Tamborino v. Velocity Express, Inc.

Full title: FRANK TAMBORINO v. VELOCITY EXPRESS, INC

Court: Connecticut Superior Court Judicial District of Stamford-Norwalk at Stamford

Date published: Jun 6, 2008

2008 Ct. Sup. 9783 (Conn. Super. Ct. 2008)

Opinion

No. FST CV 05 05000234 S

June 6, 2008

MEMORANDUM OF DECISION

TIERNEY, J.

This case involves the plaintiff's employment claim for wages and other benefits from the defendant employer arising out of a February 2004 executed Employment Agreement and other employment rights. The original complaint was in six counts. During trial it became evident that there was some inconsistency within the signed Employment Agreement as to the corporate names of the employer and the issuer of stock. With the consent of this court, the plaintiff amended his complaint. The Second Amended Complaint dated September 11, 2007 (#135.00) realleged the first six counts citing both corporate names and added a count for reformation of the Employment Agreement. The matter was tried on this thirteen-count complaint.

The Seventh Count seeks reformation of the February 2004 Employment Agreement and alleged: "The first sentence in the Employment Agreement identifies the contracting party as Velocity Express, Inc., and thereafter defines it as `the Company' or `Velocity.' Yet the signature line for Velocity identifies the signing entity to be `Velocity Express Corporation.' Section 3.02 of the Employment Agreement provides a sign on bonus to Plaintiff in the form of `15,000 shares of the Company's Series I Preferred Stock, a warrant to purchase shares of the Company's common stock or another comparable security (initially equal to 150,000 shares of common stock).'" Plaintiff further alleges in the reformation count: "To the extent the term `Company's' as used in Section 3.02 is defined to mean Velocity Express, Inc., it is a scrivener's error and/or a mutual mistake by both parties to the Agreement. Plaintiff requests that Section 3.02 of Plaintiff's Employment Agreement be reformed to substitute the term `Velocity Express Corporation's' for the term `the Company's' in both places in Section 3.02." The uncontradicted evidence at trial disclosed that Velocity Express Inc., had no stock that could be awarded for employment renumeration and that the only corporation that had stock for employee issuance was Velocity Express Corporation.

The court makes the following finding of facts and legal conclusions:

The drafter and negotiator of the Employment Agreement on behalf of the defendant was Robert Lewis, its Chief Financial Officer. The plaintiff's Employment Agreement dated February 2004 closely paralleled the language of Mr. Lewis's employment agreement. There is no internal inconsistency concerning the identity of the corporation involved in Mr. Lewis' agreement as there was in the plaintiff's Employment Agreement.

The plaintiff's Employment Agreement was dated February 2004 but the signatures are dated March 4, 2004. The employer signed the Employment Agreement by Robert B. Lewis and the plaintiff signed it individually. The entire Employment Agreement including Exhibit A was marked at trial as Exhibit 3. The inconsistency in Exhibit 3 is that Velocity Express, Inc., is described in the introductory paragraph as "the Company" or "Velocity" whereas the signature line was signed on behalf of Velocity Express Corporation. Through the entire Exhibit 3, the employer is referred to as "Company" or "Company's" including the sign on bonus Article 3.02. During the trial the parties submitted a September 10, 2007 Stipulation marked as Exhibit 60, which stated: "Shares of Series I Preferred Stock referred to in paragraph 3.02 of the Employment Agreement was convertible into Velocity Express Corporation's common stock . . ." The parties therefore have stipulated there was a mutual mistake and/or scrivener's error in Exhibit 3. Lopinto v. Haines, 185 Conn. 527, 531-33 (1981); Wesley v. Schaller Subaru, Inc., 277 Conn. 526, 539 (2006).

The plaintiff has sued only Velocity Express, Inc., and continues and will continue to sue Velocity Express, Inc. as the only defendant. The plaintiff is requesting money damages in lieu of the issuance of stock in Velocity Express Corporation pursuant to Exhibit 3, Article 3.02. In order to accomplish that result, the Employment Agreement, Exhibit 3 must be reformed as requested by the plaintiff. The parties' Stipulation dated September 10, 2007 accomplishes that result.

The issues on the Seventh Count are found for the plaintiff and Exhibit 3, the Plaintiff's Employment Agreement dated February 2004 signed by the parties on March 4, 2004, is reformed as follows: "Section 3.02 of the plaintiff's Employment Agreement, Exhibit 3, is reformed to substitute the term `Velocity Express Corporation's' for the term `the Company's' in both places in Article 3.02."

PLEADINGS

Having reformed the contract and granting the relief requested by the plaintiff in the Seventh Count, the court finds that the First, Second, Third, Fourth, Fifth and Sixth Counts of the September 11, 2007 Second Amended Complaint are based upon the unreformed contract. Therefore the issues on the first six counts are found for the defendant since they relate to an unreformed contract. The identical issues raised in the first six counts have been restated by the plaintiff as Counts Eight though Thirteen of the Second Amended Complaint dated September 11, 2007 based on this court acting favorable on the Seventh Count sounding in reformation. All legal and factual issues raised by the parties in the first six counts will be dealt with by this court in the Eighth Count through the Thirteenth Count of the Second Amended Complaint.

The Eighth Count is for breach of contract, the contract being the Employment Agreement, Exhibit 3, for failure to pay the sign on bonus of 15,000 shares of Company's Series I Preferred Stock, the failure to pay the sign on bonus of a warrant to purchase 150,000 shares of the Company's common stock, the failure to pay a performance bonus of $40,000 under Article 3.03(d)d, failure to pay a performance bonus of $10,000 under Article 3.03(e), failure to pay the plaintiff's monthly medical insurance premium COBRA payments, and failure to pay accrued vacation under to Article 4.01. The plaintiff is not making any claims that any portion of his base annual salary of $150,000 later increased to $175,000 was not paid. The contract was for two years. The plaintiff's employment was terminated within those two years. The employer had the right to terminate the plaintiff within those two years subject to paying one year's salary as severance pay.

The plaintiff is not contesting his termination. The plaintiff acknowledges receiving the entire $175,000 severance pay, an original $25,000 cash signing bonus and a number of performance bonuses during his employment pursuant to Article 3.03 "Cash Bonus."

The Ninth Count sounds in an intentional breach of contract. The plaintiff alleges that the failures outlined in the Eighth Count "were committed intentionally, willfully and/or in reckless disregard for the rights of plaintiff under the Employment Agreement."

The Tenth Count sounds fraud in the inducement and claims as damages the same benefits as alleged in the Eighth Count. In the Tenth Count the plaintiff claims that such benefits were representations made to the plaintiff by the defendant and claims that those representations "were false when made and known to be false by the defendant. Plaintiff justifiable relied on the truth of the defendants representations all to his detriment."

The Eleventh Count alleges a violation of Gen. Stat. § 31-71c(b) as well as Gen. Stat. §§ 31-71a(3) and 31-71c. This count alleges that the failure to pay the payments set forth in the Eighth Count constitutes the failure to pay "wages" in violation of various sections of the Connecticut statutes. The plaintiff is seeking double the wages as well as attorneys fees pursuant to Gen. Stat. § 31-72 in the Eleventh Count.

The Twelfth Count alleges a violation of Gen. Stat. § 31-71e. The prior allegations of the Eighth Count have been restated and incorporated in the Twelfth Count. The plaintiff claims that the unauthorized withholding of monthly COBRA health insurance payments from the plaintiff's severance pay is a violation of Gen. Stat. § 31-71e and such a failure is a failure to pay wages. The plaintiff is seeking double damages and attorneys fees pursuant to Gen. Stat. § 31-72.

The Thirteenth Count alleges a violation of the Gen. Stat. § 31-76k. The prior allegations of the Eighth Count have been restated and incorporated in the Thirteenth Count. The plaintiff claims that the defendant is entitled to double damages and attorneys fees pursuant to Gen. Stat. § 31-72 for failure to pay accrued vacation time pursuant to Gen. Stat. § 31-76k.

The Plaintiff's Post-Trial Memorandum of Law dated January 7, 2008 outlined the total monetary damages being claimed by the plaintiff. He is claiming that the 15,000 shares of Series I Preferred Stock in Velocity Express Corporation as well as a warrant to purchase 150,000 shares of Velocity Express Corporation common stock and "another comparable security (initially equal to 150,000 shares of common stock)" are to be valued for the purpose of payment of this sign on bonus as of March 8, 2004, the plaintiff's first day of employment under the Employment Agreement. The plaintiff claims he is due $216,000 for the failure to pay these two Article 3.02 sign on bonuses. The plaintiff argues that he met the requirements of Article 3.03(d)d and is entitled to a $40,000 performance bonus. The plaintiff argues that he met the requirements of Article 3.03(e) and is entitled to a $10,000 performance bonus. The plaintiff's unpaid vacation claim under Article 4.01 is $16,826.90 (rounded off by the court to $16,827) and the refund of the COBRA premiums claim is $7,099. The total amount of these seven claims is $289,926. The plaintiff claims that each of the above six claims are "wages" under Gen. Stat. § 31-72. The plaintiff is seeking an award of double those damages or the sum of $579,852. Attorneys fees are claimed in the amount of $75,628 plus $9,341.75 (rounded off by the court to $9,342) in disbursements, expenses and expert and witness fees. The plaintiff's total claim of damages for the Eighth Count through the Thirteenth Count is $664,822. Exhibit 58 makes a claim for $714,051.32 but that includes disputed interest at the rate of 10% per annum.

To the plaintiff's thirteen-count complaint the defendant filed a September 21, 2007 Answer with a general denial (#131.10). On September 21, 2007 the defendant asserted a one count "Right of Set Off" seeking a return of accrued and unused vacation pay in the amount of $3,365.38 paid by the defendant to the plaintiff after his termination from employment but during the time he was receiving severance pay. The plaintiff is not seeking money damages in its Right of Set Off but is seeking to apply the $3,365.38 overpayment as a setoff to any monetary damages that the plaintiff would be awarded under the Eighth Count through the Thirteenth Count. The Right of Set Off sounds in unjust enrichment.

The plaintiff filed an Answer and Special Defenses to the Right of Set Off dated October 1, 2007 alleging latches, equitable estoppel, unclean hands and two other special defenses essentially alleging that the defendant's set off has failed to state a legal cause of action (#130.00). On October 15, 2007 the defendant denied each of the five special defenses (#132.00). The pleadings were closed after the conclusion of evidence but before a scheduled October 18, 2007 status conference designed to resolve any outstanding pleading or evidentiary issues.

DISCUSSION OF LAW

The central allegations of this lawsuit arises out of the employment relation between the plaintiff and the defendant including but not limited to a signed Employment Agreement. Exhibit 3. This Employment Agreement is a contract.

A contract must be construed to effectuate the intent of the parties, which is determined from the language used interpreted in light of the situation of the parties and the circumstances connected with the transaction . . . The intent of the parties is to be ascertained by a fair and reasonable construction of the written words and . . . the language used must be accorded as common, natural, and ordinary meaning and usage where it can be sensibly applied to the subject matter of the contract . . . Where the language of the contract is clear and unambiguous, the contract is to given effect according to its terms . . . Although ordinarily the question of contract interpretation, being a question of the parties' intent, is a question of fact . . . where the definitive contract language, the determination of what the parties intended by their contractual commitments is a question of law.

Issler v. Issler, 250 Conn. 226, 235 (1999); Levine v. Massey, 232 Conn. 272, 277 (1995). Recent cases have held in a number of different contexts that the contractual language at issue was so definitive as to make the interpretation of that language a question of law subject to the review by Supreme Court. Issler v. Issler, supra, 250 Conn. 236 (interpretation of written separation agreement); Levine v. Advest, Inc., 244 Conn. 732, 746 (1998) (arbitration agreement); Southeastern Connecticut Regional Resources Recovery Authority v. Department of Public Utility Control, 244 Conn. 280, 290 (1998) (electricity rate contract); Peter-Michael, Inc. v. Sea Shell Associates, 244 Conn. 269, 276 (1998) (lease agreement); Pesino v. Atlantic Bank of New York, 244 Conn. 85, 92 (1998) (settlement agreement); Levine v. Massey, supra, 232 Conn. 278 (warranty sharing agreement); Mulligan v. Rioux, 229 Conn. 716, 740 (1994) (Department of Public Works services contract); Bank of Boston Connecticut v. Schlesinger, 220 Conn. 152, 158 (1991) (indemnity agreement); Thompson Peck Inc. v. Harbor Marine Contracting Corp., 203 Conn. 123, 131 (1987) (loan agreement).

Where a commercial contract has been entered into by sophisticated commercial parties with relatively equally bargaining power the court will consider and interpret the contract as a matter of law.

Our case law, however does not set forth a test by which to determine whether contract language is sufficiently definite to warrant its review as a question of law rather than as a question of fact. It is noteworthy that, in the majority of the cases considering contract interpretation a matter of law, the disputed agreement was a commercial contract between sophisticated commercial parties with relatively equal bargaining power. We note the importance of that factor in Bank of Boston Connecticut, in which we stated that `the defendants are effectively requesting that we rewrite their commercially sophisticated guaranty and indemnity agreement to require the plaintiff to exhaust the collateral securing the notes before pursuing its available remedy under the agreement. The parties could have written such an agreement, but they did not do so . . . After reviewing the record, we conclude that the parties meant what they said and said what they meant, in language sufficiently definitive to obviate any need for deference to the trial court's factual findings as to the parties' intent.

Tallmadge Brothers v. Iroquois Gas Transmission System, 252 Conn. 479, 496-97 (2000).

"We accord the language employed in the contract a rational construction based on its common, natural and ordinary meaning and usage as applied to the subject matter of the contract . . . Where the language is unambiguous, we must give the contract effect according to its terms . . . where the language is ambiguous, however, we must construe those ambiguities against the drafter . . . This approach corresponds with the general rule that `any ambiguity in a declaration of condominium must be construed against the developer who authored the declaration." Cantonbury Heights Condominium Association, Inc. v. Local Land Development, LLC., 273 Conn. 724, 735 (2005). "The party who actually does the writing of an instrument will presumably be guided by his own interests and goals in the transaction. He may choose shadings of expression, words more specific or more imprecise, according to the dictates of these interests . . . A further, related rationale for the rule is that since one who speaks or writes, can by exactness of expression more easily prevent mistakes in meaning, than one with whom he is dealing, doubts arising ambiguity are resolved in favor of the latter." Connecticut Insurance Guaranty Association v. Fontaine, 278 Conn. 779, 789, fn.7 (2006). In an agreement made ambiguous by inconsistent provisions the courts follow this rule of contra proferentem. Montoya v. Montoya, 280 Conn. 605, 616 (2006).

Exhibit 3 was drafted almost entirely from the employment agreement for Robert B. Lewis, the defendant's chief financial officer. Exhibit 46, page 71. Mr. Lewis negotiated this contract with the plaintiff. The plaintiff made only one change increasing his annual salary from $140,000 to $150,000. All other terms and conditions of the Employment Agreement were dictated by the defendant. A review of the SEC exhibits indicate that a copy of Mr. Lewis' own employment agreement is attached. Exhibit 46, page 114. The court has read Mr. Lewis' employment agreement and finds that it is almost word for word the same as Exhibit 3. The court further finds that the plaintiff had never entered into or negotiated a stock option agreement. He was unfamiliar with the concept of stock options. The court finds that the drafter of Exhibit 3 was defendant. The court finds that the plaintiff is not a commercially sophisticated individual.

"The plaintiff need not prove damages with mathematical exactitude; rather, the plaintiff must provide sufficient evidence for the trier to make a fair and reasonable estimate" Embalmers' Supply Co. v. Giannitti, 103 Conn.App. 20, 54 (2007). "It is true that mathematical exactitude in the proof of damages is often impossible, and that `all that can be required is that the evidence, with such certainty as the nature of the particular case may permit, to lay a foundation which will enable the trier to make a fair and reasonable estimate . . . But he who seeks to recover damages . . . must establish a reasonable probability that the . . . injury to the property did bring about a loss . . . and must afford a basis for a reasonable estimate by the trier, court or jury, of the amount of that loss." Hedderman v. Robert Hall of Waterbury Inc., 145 Conn. 410, 414 (1958). "To authorize a recovery . . . facts must exist and be shown by the evidence which affords a reasonable basis for measuring the plaintiff's loss. The plaintiff has the burden of proving the nature and extent of the loss . . . Mathematical exactitude in the proof of damages is often impossible, but the plaintiff must nevertheless provide sufficient evidence for the trier to make a fair and reasonable estimate . . . Proof of damages should be established by reasonable certainty and not speculatively and problematically . . . Damages may not be calculated based upon a contingency or conjecture." Carrano v. Yale-New Haven Hospital, 279 Conn. 622, 650 (2006).

The plaintiff claims that he is entitled to his sign on bonus and the cash value of the two securities mentioned in Article 3.02 with the securities valued as of March 8, 2004. The defendant disputes this claim. It claims that Article 3.02 only refers to one sign on bonus and the defendant is not entitled to the issuance of two separate securities since Article 3.02 uses the word "or" not the word "and." The defendant states that Velocity does not dispute that the paper certificate evidencing his entitlement under Article 3.02 was accidentally not issued. The defendant concedes the plaintiff is entitled to be compensated for the underlying value of one security as a sign on bonus. However, the parties have not been able to agree on either the proper value of the security, number of securities to which the plaintiff was entitled or when he was entitled to the cash payment of the sign on bonus.

The defendant offers as a defense to the Article 3.02 claim that Velocity Express Corporation is a publicly traded corporation listed on the NASDAQ Stock Exchange. The defendant then claims that the sign on bonus issuance of securities pursuant to Article 3.02 involves the issuance of restricted securities or unregistered private sales. The defendant states that the terms and conditions of rules governing publicly traded corporations imposed by the Securities and Exchange Commission prevent the issuance of the securities in the manner claimed by the plaintiff. The language of the Employment Agreement is as follows: "3.02 Upon execution of this Agreement, Employee shall be entitled to receive a bonus to be paid in the form of 15,000 shares of the Company's Series I Preferred Stock, a warrant to purchase shares of the Company's common stock or another comparable security (initially equal to 150,000 shares of common stock)." The court notes that no sale of stock restriction is contained within Exhibit 3.

The defendant's claim is that the restrictions imposed by federal statutes and rules that govern the United States Securities and Exchange Commission prevent the issuance of the stock in the manner stated in Article 3.02. The defendant's expert testified this is the law pursuant to Rule 144 of the SEC. Rule 144 of the SEC is formally known as 17 Code of Federal Regulations Section 230.144. "Rule 144 is designed to implement the fundamental purposes of the Act, as expressed in its preamble, to provide full and fair disclosure of the character of the securities sold in interstate commerce and through the mails, and to prevent fraud in the sale thereof." 17 C.F.R. § 230.144. Both parties offered SEC experts who testified on the applicability of Rule 144 and the limitations and conditions set forth therein. Among these requirements is the holding period in Rule 144. The holding period portion of Rule 144 requires that "a minimum one year must elapse between the later of the date of the acquisition of the securities from the issuer or from an affiliate of the issuer, and any resale of such securities in reliance on this section for the account of either the acquirer or the subsequent holder of those securities." 17 C.F.R. § 230.1442. (d) The defendant claims that Rule 144 is applicable, and the plaintiff was not able to sell any of the stock or warrants granted to him under Article 3.02, Exhibit 3 until March 8, 2005, one year after he commenced his employment, the date of employment being the acquisition of the rights for the securities. The defendant claims that Rule 144 requires the court to value the stock price no earlier than March 8, 2005. The plaintiff claims that the value of the stock is as of March 8, 2004, his first date of employment. The plaintiff claims that Rule 144 is not applicable and Article 3.02 contains no restricted stock conditions. The court read the entirety of Exhibits 37 through 43 and Exhibit 46, the various filings the defendant made with the S.E.C. from 1996 to 2004.

Plaintiff is making a claim that the parties entered into Exhibit 3 and made a mutual mistake both in regards to Rule 144 and the first day the plaintiff would be able to sell the securities issued to him pursuant to Article 3.02. "The factual predicate necessary for a finding of mutual mistake is that both parties relied on the same mistaken information in entering into a contract." BRJM, LLC v. Output Systems, Inc., 100 Conn.App. 143, 150 (2007). "A mutual mistake requires a mutual misunderstanding between the parties as to a material fact." Harrington v. Dyer, 50 Conn.Supp. 460, 470 (2007); Dainty Rubish Service, Inc. v. Beacon Hill Association, Inc., 32 Conn.App. 530, 537 (1993). One of the remedies is available for a mutual mistake is a reformation of a contract. "Connecticut law has firmly established that reformation is appropriate in cases of mutual mistake — that is where, in reducing to writing an agreement made or transaction entered into as intended by the parties thereto, through mistake, common to both parties, the written instrument fails to express the real agreement or transaction . . . Reformation is also available in equity when the instrument does not express the true intent of the parties owing to the mistake of one party." Richards v. Richards, 78 Conn.App. 734, 746 fn.7 (2003). Neither party has claimed reformation of the Rule 144 effect of Article 3.02.

The plaintiff is citing various statutes in seeking damages. He is requesting double damages and attorney fees pursuant to Gen. Stat. § 31-72 which states: "When any employer fails to pay an employee wages in accordance with provisions in sections 31-71 a to 31-71i, inclusive . . . such employee . . . may recover, in a civil action, twice the full amount of such wages, with costs and such reasonable attorneys fees as may be allowed by the court . . ." The plaintiff has alleged in three separate counts that the wages must be doubled and that he be awarded additional monetary damages of the costs of this action and attorneys fees under Gen. Stat. § 31-72i; The Eleventh, Twelfth and Thirteenth Counts. The plaintiff is claiming this relief by reason of the statutory wages definition under Gen. Stat. 31-71a(3): "Wages means compensation for labor or services rendered by an employee, whether the amount if determined on a time, task, piece, commission or other basis of calculation." The plaintiff is claiming relief under Gen. Stat. § 31-71c by reason of wage payments due upon termination of employment. The Eleventh Count alleges a violation of Gen. Stat. § 31-71c(b), which states: "Whenever an employer discharges an employee, the employer shall pay the employee's wages in fill not later than the business day next succeeding the date of such discharge." In the Eleventh Count the plaintiff reasserts his rights to the previously mentioned six monetary claims. In the Twelfth Count the plaintiff claims the defendant engaged in the unauthorized withholding of monthly COBRA health insurance benefits from the plaintiff's severance pay in violation of Gen. Stat. § 31-71e which states; "No employer may withhold or divert any portion of an employee's wages unless (1) the employer is required or empowered to do so by state or federal law, or (2) the employer has written authorization from the employee for deductions on a form approved by the commissioner, or (3) the deductions are authorized by the employee, in writing, for medical, surgical, or hospital care or service, without financial benefit to the employer and recorded in the employer's wage record book." In the Thirteenth Count the plaintiff is claiming that the defendant has failed and refused to pay the plaintiff for five of the six weeks vacation that he accrued prior to his termination in violation of Gen. Stat. § 31-76k, which states; "If an employer policy or collective bargaining agreement provides for the payment of accrued fringe benefits upon termination, including but not limited to paid vacations, holidays, sick days and earned leaves, and an employee is terminated without having received such accrued fringe benefits, such employee shall be compensated for such accrued fringe benefits exclusive of normal pension benefits in the form of wages in accordance with such agreement or policy but in no case less then the earned average rate for the accrual period pursuant to sections 31-71a to 31-71i, inclusive."

The common question to all the above statutory claims is what is the definition of "wages" under Gen. Stat. § 31-72? There are six monetary claims being made by the plaintiff for "wages"; (1) and (2), failure to pay three sign on bonuses in the form of securities; (3) and (4), failure to pay $40,000 and $10,000 performance bonuses during the period of employment; (5), failure to pay accrued vacation time after termination, and; (6), improper deduction of COBRA insurance health benefits from the plaintiff's severance pay.

"The appellate courts of this state have not yet considered whether the term `wages' in § 31-72 includes pension and medical benefits." Morales v. Pentec, Inc., 57 Conn.App. 419, 427 (2000). The definition of "wages" was discussed Harty v. Cantor Fitzgerald Co., 275 Conn. 72 (2005), an arbitration case. "The defendant cites several trial court cases stating that a bonus is considered a `wage' only if it compensates the employee for his or her personal efforts alone as evidence that the arbitrators manifestly disregarded the law." Id., 102. This is the only appellate case on the subject of whether bonuses are `wages" under Gen. Stat. § 31-72 and Harty does not answer the question. The defendant in Cantor Fitzgerald is correct that there are trial court decisions that hold that a bonus is a wage only when it has been earned.

Pereira v. DSL Net, Inc., Superior Court, Judicial District of New Haven at New Haven, docket number CV99-0428948 (July 28, 2000, Owens, J.) [ 27 Conn. L. Rptr. 643], reviewed the legislature history of Gen. Stat. § 31-72. The issue before the Pereira court was whether stock options that have not vested due to an alleged wrongful termination prior to the vesting date, constitute "wages" as defined in Gen. Stat. § 31-71a(3). "A review of the legislative history of General Statutes §§ 31-72 and 31-71a, and the relevant amendments thereto, demonstrates that the primary purpose in enacting the statutes was to provide redress for employees denied earned wages." Footnote 5 of Pereira states: "The payment of earned wages is a basic gut-level right that should be assured by clear, strong state statutes."

Morales v. Pentec, Inc., supra, 57 Conn.App. 429 ruled on the issue of pension and medical benefits for the first time. "Wages are payment for services on a weekly, daily or hourly basis or by the piece. The statutory definition of `wages' as used in § 31-72 is limited in its face and makes no mention of fringe benefits such as pension or medical benefits." Id., 429. "We hold that the plaintiff's pension and medical benefits do not qualify as `wages' pursuant to § 31-72 and, therefore, the court properly directed a verdict for the defendants on this claim." Id., 433.

Dice v. United Technologies Corporation, 247 Conn. 126, 133 (1998), construed Gen. Stat. § 31-310 of the Workers' Compensation Act discussing the term "average weekly wage." "We turn briefly to the plaintiff's assertion that vacation and sick pay also should be included in the calculation of an employee's average weekly wage. The plaintiff, in maintaining that all of his fringe benefits are included under § 31-310, has failed to explain why vacation and sick pay should be distinguished from other forms of renumeration, such as insurance and pension benefits, which we have determined do not constitute wages for purposes of § 31-310." Id. 141-42.

Fulco v. Norwich Roman Catholic Diocesan Corporation, 27 Conn.App. 800 (1992), held that an amendment to § 31-72 would not apply retrospectively to a plaintiff who was discharged prior to the effective date of the amendment. Specifically argued in Fulco was whether the term "wages" in § 31-72 was broad enough to include vacation pay. "Thus, the definition of wages is limited to renumeration for labor or services rendered, and does not include vacation pay . . ." Id., 804.

The plaintiff's Ninth Count sounds in intentional breach of contract by alleging "The defendant's breaches of the Agreement with the plaintiff set forth in paragraph 9 of this Ninth Count were committed intentionally, wilfully and/or in reckless disregard for the rights of the plaintiff under the Employment Agreement." The Ninth Count incorporated all the allegations of the Eighth Count, breach of contract.

A wilful and malicious injury is one inflicted intentionally without just cause or excuse. It does not necessarily involve the ill-will or malevolence shown in express malice. Nor is it sufficient to constitute such an injury that the act resulting in the injury was intentional in this sense that it was the voluntary action of the person involved. Not only the action producing the injury but the resulting injury must be intentional . . . A wilful or malicious injury is one caused by design. Wilfulness and malice alike import intent . . . Its characteristic element is the design to injure either actually entertained or to be implied from the conduct and circumstances . . . The intentional injury aspect may be satisfied if the resultant bodily harm was a direct and natural consequence of the intended act . . . Wanton misconduct is reckless misconduct . . . It is such conduct as indicates a reckless disregard of the just rights and safety of others or of the consequence of the action.

Markey v. Santangelo, 195 Conn. 76, 77, 78 (1985).

It appears that the allegations of intentional breach of contract in the Ninth Count and fraud in the inducement in the Tenth Count are attempting to engraft the theory of common law punitive damages as against the defendant so that attorneys fees can be recovered. "Punitive damages are not ordinarily recoverable for breach of contract . . . This is so because, as lucidly reasoned by Professor Corbin in the passage cited, punitive or exemplary damages are assessed by way of punishment, and the motivating basis does not usually arise as a result of the ordinary private contract relationship." L.F. Pace Sons, Inc. v. Travelers Indemnity Co., 9 Conn.App. 30, 47-48 (1986).

"For the breach of contract to be found intentional: Such tortuous conduct must be alleged in terms of wanton and malicious injury, evil motive and violence, for punitive damages may be awarded only for outrageous conduct, that is, for acts done with a bad motive or a reckless indifference to the interest of others . . . Thus, there must be an underlying tort or tortuous conduct alleged and proved to allow for punitive damages to be granted on a claim for breach of contract express or implied. Elements of tort such as wanton or malicious injury or reckless indifference to the interests of others giving a tortuous overtone to a breach of contract action justify an award of punitive or exemplary damages. In our jurisdiction such recovery is limited to an amount which will serve to compensate the plaintiff to the extent of his expenses of litigation less taxable cost." Triangle Sheet Metals Works Inc. v. Silver, 154 Conn. 116, 127-28 (1966); L.F. Pace and Sons, Inc. v. Travelers Indemnity Co., supra, 9 Conn.App. 48. The vast majority of Connecticut courts hold a simple breach of contract is not sufficient to establish a violation of CUTPA. Abatron, Inc. v. Reed Elsevier, Inc., Superior Court, Judicial District of Hartford at Hartford, docket number CV02-0191987 (January 24, 2003, Beach, J.).

The plaintiff has alleged fraud in the inducement in the Tenth Count by alleging: "In connection with the negotiations with plaintiff to become employed at defendant, defendant by and through its authorized representatives made the following misrepresentations of fact with the purpose or intent of inducing plaintiff to accept a position of employment." The remaining six subparagraphs allege in effect the six monetary damage claims: the nonpayment of the two sign on bonuses for shares of stock as per Article 3.02, the two performance bonuses for $40,000 and $10,000, accrued vacation pay and the payment of COBRA health insurance premiums. No other facts are alleged in this fraud in the inducement count. A cause of action for fraud in the inducement is the same as a common law claim to fraudulent misrepresentation. Dorsey v. Mancuso, 23 Conn.App. 629 (1990). "Fraud consists in deception practices in order to induce another to part with property or surrender some legal right, and which accomplishes the end designed . . ." Muller v. Muller, 43 Conn.App. 327, 337 (1996). The essential elements of a cause of action in fraudulent misrepresentation are: (1) a false representation was made as a statement of fact; (2) it was untrue and known to be untrue by the party making it; (3) it was made to induce the other party to act upon it; and (4) the other party did so act upon the false representation to his injury." Cadle v. Ginsberg, 70 Conn.App. 748, 769 (2002); Capp Industries Inc. v. Schoenberg, 104 Conn.App. 101, 116 (2007). "Additionally, the party asserting such a cause of action must prove the existence of the first three elements by a standard higher than the usual fair preponderance of the evidence, which . . . we have described as clear and satisfactory or clear precise and unequivocal." Capp Industries Inc. v. Shoenberg, supra, 104 Conn.App. 116. Fraud in the inducement is applicable to employment contracts. Ward v. Distinctive Directories, LLC, 104 Conn.App. 258, 262 (2007).

The plaintiff is claiming unpaid accrued vacation pay. The most recent case dealing with unused or stockpiled vacation time concerns state employees and Gen. Stat. § 5-252. "Because there is no logical reason why the legislature would embrace such a position, we will not lightly presume that it intended to do so." Longley v. Employees Retirement Commission, 284 Conn. 149, 173 (2007). Various statutes do permit the accrual of unused vacation time. Gen. Stat. § 5-252 (Any state employee leaving state service shall receive a lump sum payment for accrued vacation time as prescribed under rules and regulations to be promulgated by the Commissioner of Administrative Services, which rules and regulations shall be approved by the Secretary of the Office of Policy and Management): Gen. Stat. § 5-250(b) (State employees can accumulate up to 120 vacation days). Gen. Stat. § 5-253 (Permits state employees to receive a lump sum payment for unused vacation pay at death). Gen. Stat. § 5-154(h) (defines "salary" for state employees to include accrued vacation time). Gen. Stat. § 5-154(m)(6) (defines "state service" to include "a period equivalent to accrued vacation time.") Gen. Stat. § 10-156 (permitting governmental employees to accumulate sick leave.) In Gen. Stat. § 31-51pp(c)(1), the General Assembly amended the family and medical leave law effective October 1, 2003 to prohibit employers from denying an employee the right to use up to two weeks of "accumulated sick leave" for family medical leave purposes. Southern New England Telephone Co. v. Cashman, 283 Conn. 644, 647 (2007). There appears to be no statute that covers the situation of the parties in this case.

The award of common law punitive damages is limited to attorneys fees. "Punitive damages, applying the rule of the state as to torts, are awarded when the evidence shows a reckless indifference to the rights of others or an intentional and wanton violation of those rights." Collens v. New Canaan Water Co., 155 Conn. 477, 489 (1967).

With respect to damages, our Supreme Court has clarified that lost profits are considered an element of compensatory damages . . . Our case law unequivocally supports awarding lost profits as an element of compensatory damages for general breach of contract claims. The general rule in breach of contract cases is that the award of damages is designed to place the injured party, so far as it can be done by money, in the same position as that which he would have been had had the contract been performed . . . The Restatement (Second) of Contracts divides a defendant's recovery into two components; (1) direct damages, composed of the loss in value to him of the other party's performance caused by his failure or deficiency . . . plus (2) any other loss, including incidental or consequential loss, caused by the breach . . . Traditionally, consequential damages include any loss that may fairly and reasonably be considered as arising naturally, i.e., according to the usual course of things, from the breach of contract itself . . . Although there is no unyielding formula of which damages are calculated, it is our rule that unless they are too speculative and remote prospective profits are allowable as an element of damages when their loss arises directly from and as a natural consequence of the breach . . . It is incumbent upon the party asserting either direct or consequential damages to provide sufficient evidence to prove such damages . . . Further, when damages are claimed they are an essential element of the plaintiff's proof and must be proved with reasonable certainty . . . Damages are recoverable only to the extent that the evidence affords a sufficient basis for estimating their amount in money with reasonable certainty . . .

Sullivan v. Thorndike, 104 Conn.App. 297, 303-04 (2007).

Connecticut limits the award of attorneys fees by the American Rule. There is no portion of the Exhibit 3 that provides for attorney fees. The plaintiff has cited two basis for attorneys fees; statutory and common-law punitive damages. Pursuant to Conn. Gen. Stat. § 31-72, if any of the six damage claims are determined to be "wages," the court can then in its discretion enter an award of attorneys fees. If there is a finding of intentional breach of contract as alleged in the Ninth Count or fraud in the inducement as alleged in the Tenth Count, attorneys fees can also be awarded as common-law punitive damages. "Generally, attorneys fees may not be recovered, either as costs or damages, absent contractual or statutory authorization. Attorneys fees may be awarded, however, as a component of punitive damages." Farrell v. Farrell, 36 Conn.App. 305, 311 (1994). "To furnish a basis for recovery of such damages, the pleadings must allege and the evidence must show wanton or wilful malicious conduct, and the language contained in the pleadings must be sufficiently explicit to inform the court and opposing counsel that such damages are being sought." Markey v. Santangelo, 195 Conn. 76, 77 (1985).

The plaintiff is claiming interest should be awarded pursuant to the costs section of Gen. Stat. § 31-72. Schoonmaker v. Brunoli, 265 Conn. 210, 260 (2003), discussed the award of interest on unpaid wages pursuant to Gen. Stat. § 37-3a. The issue was addressed but not decided. "We conclude that this issue is not preserved for appellate review because, by not filing the appropriate motion for an award of interest, the plaintiffs denied the trial court the opportunity to act and correct any potential error." Id. 264-65. The plaintiff failed to plead interest in his Claims for Relief even though interest is claimed in the body of each of the six counts. The plaintiff failed to brief the issue in his January 7, 2008 Post-Trial Memorandum of Law. The plaintiff did offer evidence at trial of an appropriate rule of interest. An award of interest must meet the requirements of Cecio Brothers v. Feldmann, 161 Conn. 265, 275 (1971); there must be wrongful withholding of the money, the specific date of the wrongful withholding must be shown, along with proof of the appropriate rate of interest.

The determination of attorneys fees under § 31-72 was discussed in Schoonmaker v. Brunoli, Supra, 265 Conn. 266-73. "In the present case, § 31-72 provides the statutory predicate for an award of `reasonable attorneys fees' to prevailing plaintiffs; it is well established, however, that it is appropriate for a plaintiff to recover attorneys fees, and double damages under the statute, only when the trial court has found that the defendant acted with `bad faith, arbitrariness or unreasonableness.'" Id. 269; Sansone v. Clifford, 219, Conn. 217, 229 (1991).

The defendant has filed a one count Right of Set Off for unjust enrichment seeking the return of $3,635.38 paid inadvertently to the plaintiff by the defendant for vacation pay after his April 15, 2005 termination. The $3,635.83 is rounded off by the court to $3,635. Exhibit 11 verifies that sum and further verifies that this payment was made on May 6, 2005 when the plaintiff was no longer employed by the defendant. The defendant is not seeking money damages as against the plaintiff but only a setoff of $3,635 against any monetary damages awarded to the plaintiff. OCI Mortgage Corp. v. Marchese, 255 Conn. 448, 463 (2001).

"In Connecticut, a setoff may be legal or equitable in nature . . . When the statutes governing legal setoff do not apply, a party may be entitled to equitable setoff nonetheless, only to enforce the simple but clear natural equity in a given case." Croall v. Kohler, 106 Conn.App. 788, 791 (2008).

Conn. Gen. Stat. § 52-139(a) set forth the statutory authority for a set off: "In any action brought for the recovery of a debt, if there are a mutual debts between the plaintiff or plaintiffs, or any of them, and the defendant or defendants, or any of them, one debt may be setoff against the other." "Legal setoff is governed by General Statutes § 52-139 et seq. and involves mutual debts between the parties in any action; (1) to recover a debt pursuant to § 52-139; (2) by an assignee of a nonnegotiable chose in action pursuant to General Statutes § 52-140; (3) for trespass to real or personal property or other tort committed without force pursuant to General Statutes § 52-141; or (4) involving joint debtors pursuant to General Statutes § 52-142 . . . When the statutes governing legal setoff do not apply, a party may be entitled to equitable setoff . . . The right to setoff, although it may arise out of a written instrument, is a common law equitable right that is not itself a written instrument." OCI Mortgage Corporation v. Marchese, supra, 255 Conn. 463-64. The defendant is claiming equitable setoff, not contractual or legal setoff. Croall v. Kohler, supra, 106 Conn.App. 791.

The defendant has filed five Special Defenses to the defendants set off claim: laches, unclean hands, equitable estoppel, no proof of debt due plaintiff and not an independent matter.

Latches consists of an inexcusable delay which prejudices the defendant . . . First there must have been a delay that was inexcusable, and second, that delay must have prejudiced the defendant . . . A conclusion by the trial court that a party has been guilty of latches is one of fact for the trier and not one that can be made by an appellate court, unless the subordinate facts found make such a conclusion inevitable as the matter of law . . . The burden of proof as to the existence of latches is on the party asserting it.

Lucido v. Zurich Insurance Company, Superior Court Judicial District of Hartford at Hartford, docket number CV03-008 1699S, (Beach, J., January 12, 2007); A. Sangiovanni Sons v. F.M. Floyag, 158 Conn. 467, 476 (1969).

The doctrine of unclean hands expresses the principle that where a plaintiff seeks equitable relief, he must show that his conduct has been fair, equitable, and honest as to the particular controversy in issue. Unless the plaintiff's conduct is of such a character as to be condemned and pronounced wrongful by honest and fair minded people, the doctrine of unclean hands does not apply.

Richfield v. Eppoliti Realty Co., 71 Conn.App. 321, 335 (2002); Thompson v. Orcutt, 257 Conn. 301, 312 (2001).

Where one, by his words or actions, intentionally causes another to believe in the existence of a certain state of things, and thereby induces him to act on that belief, so as injuriously to affect his previous position, he is concluded from averring a different state of things as existing at the time . . . Our Supreme Court . . . stated, in the context of an equitable estoppel claim, that there are two essential elements to an estoppel: the party must do or say something which is intended or calculated to induce another to believe in the existence of certain facts and to act upon that belief, and the other party, influenced thereby, must actually change his position or do something to his injury which he otherwise would not have done. Estoppel rests on the misleading conduct of one party to the prejudice of the other . . . Broadly speaking, the essential elements of equitable estoppel . . . as related to a party to be estopped, are (1) conduct which amounts to a false representation or concealment of material facts, or, at least, which is calculated to convey the impression that the facts are otherwise than, and inconsistent with, those which the party subsequently attempts to assert; (2) the intention, or at least the expectation, that such conduct shall be acted upon by, or influence, the other party or other persons; and (3) knowledge, actual or constructive, of the real facts.

Johnny Cake Mountain Associates v. Ochs, 104 Conn.App. 194, 208-09 (2007).

The defendant also claimed in two special defenses that the defendant has failed to state a cause of action: (1) "its claim for set off are one from a debt due by Plaintiff which is a condition precedent" and (2) "the claim arises out of the same transaction as the claims of the Plaintiff and are not independent matters." Both of these special defenses are the type that are addressed to a statutory set off. The plaintiff is claiming an equitable set off, not a statutory or legal set off. Thus these two special defenses leave no basis in fact in this case and are not proper legal special defenses to the defendant's Right of Set Off. Neither of these two special defenses are proper special defenses. Regardless of their content, those two special defenses are virtually seeking permission to file a late Motion to Strike. P.B. § 10-39 states that failure to state a cause of action is a proper reason for a motion to strike. In accordance with P.B. § 10-6 the filing of an Answer waives the right to file a Motion to Strike. The defendant has answered the Set Off. Thus the last two special defenses claiming the failure to state cause of action are not proper special defenses. The defendant has waived those special defenses by filing an answer. The issues on these last two special defenses are found for the plaintiff.

DISCUSSION OF PLAINTIFF'S CLAIMS

Of the plaintiff's September 11, 2007 thirteen-count complaint, this court has already granted the relief requested for reformation in the Seventh Count. Since the first six counts are based on the unreformed Employment Agreement those six counts are no longer before the court. The identical legal and factual claims alleged in those first six counts have here been repleaded in Counts Eight through Thirteen. The court will now deal with Counts Eight through Thirteen.

The Eighth Count will be discussed later in this Memorandum of Decision.

Ninth Count; intentional breach of contract. The allegations of the Ninth Count are identical to the allegations of the Eighth Count setting forth a breach of contract except for an additional allegation in paragraph 10: "The defendant's breaches of the Agreement with the plaintiff set forth in paragraph 9 of the Ninth Count were committed intentionally, wilfully and/or reckless disregard for the rights of the plaintiff under the Employment Agreement." No specific facts were alleged in the operative complaint to demonstrate "intentionally, wilfully or reckless disregard." The plaintiff is seeking attorney fees as common-law punitive damages under the Ninth Count. This court concludes that this entire lawsuit is a simple breach of contract claim. There are meaningful and significant good faith legal and factual disputes between the plaintiff and the defendant concerning the terms and conditions of the Employment Agreement and their employment relationship. There was no evidence that the acts of the defendant in not making the payments as requested by the plaintiff even approached "intentionally, wilful or reckless disregard." The plaintiff has not sustained his burden of proof. On the Ninth Count sounding in intentional breach of contract, the issues are found for the defendant.

The Tenth Count; fraud in the inducement. The allegations in paragraph 7 are: "In connection with the negotiations with plaintiff to become employed at defendant, defendant by or through its authorized representatives made the following representations of fact with the purpose or intent of inducing plaintiff to accept a position of employment." Paragraph 7 then continues by outlining his two-year employment and the six monetary claims made in the Eighth Count. The Tenth Count fails to allege any specific representations. No acts of fraud were delineated in the pleadings. There was no proof at trial that any of the above stated representations were untrue when they were made. The essential allegations of the Tenth Count are the breach of contract claims restated as fraud in the inducement. The plaintiff has failed to prove any of the four elements of fraud by clear and convincing evidence as to any of the six monetary damage claims. The plaintiff's two-year employment contract was terminated only for reasons found in the terms of the contract. The plaintiff has not contested his termination or the reasons therefore. The plaintiff's annual salary was increased from $150,000 to $175,000 during these two years. He was paid the $25,000 cash sign on bonus. The defendant has admitted the stock sign on bonus is due. He was paid a number of performance bonuses prior to his termination. Both parties in good faith attempted to abide by the terms of the Employment Agreement. The evidence has established that this entire lawsuit is a simple breach of contract claim. On the Tenth Count sounding in fraud in the inducement, the issues are found for the defendant.

The Eleventh Count; violation of Gen. Stat. § 31-71c(b) by failure to pay wages as defined in Gen. Stat. §§ 31-71a(3) and 31-71c. The Eleventh Count alleges that each of the six aforementioned claims of damages are "wages" and were not paid to the plaintiff on April 15, 2005, the date his employment ended. The failure to pay wages "not later than the business day next succeeding the date of such discharge" is a violation of Gen. Stat. § 31.71c(b). The court finds that the two sign on bonuses under Article 3.02 were not based upon services that were rendered by the plaintiff. The plaintiff performed no act in order to "earn" those claimed Article 3.02 sign on bonuses. At the time of signing Exhibit 3, the plaintiff was not employed by the defendant. The two claimed the sign on bonuses under Article 3.02 are not wages under Gen. Stat § 31-72. Wuerth v. Schott Electronics, Inc., Superior Court, judicial district of Ansonia-Milford at Milford, Docket Number CV-91-036406S (March 13, 1992, Flynn, J.) [ 6 Conn. L. Rptr. 167]; Mislow v. Continuing Care of South Windsor, Inc., Superior Court, judicial district of New Haven at New Haven, Docket Number CV00-0443654S (April 2, 2001, Jones, J.); Miller v. O.S. Shipping Trading Corp., Superior Court, judicial district of Waterbury, Complex Litigation Docket, Docket Number X06-CV01-0166810S (November 7, 2001, McKelvey, J.); Mangiofico v. McKelvey, Superior Court, judicial district of New Britain of New Britain, Docket Number CV04-4000609S (April 18, 2005, Burke, J.). The two performance bonuses of $10,000 and $40,000 were claimed to be earned during the plaintiff's employment. Those performance bonuses, to the extent that they have been shown to be due, are wages subjecting the defendant to the doubling of those wages as well as an award of attorneys fees, if the requirements of Gen. Stat. § 31-72 have been met. The determination as to whether one or both of the $10,000 and $40,000 performance bonuses is due will be discussed under the Eighth Count sounding in breach of contract. The previous case law is clear that nonpayment of fringe benefits including vacation pay and medical insurance are not wages. On the Eleventh Count sounding in violation of Gen. Stat. § 31-71c(b), the issues are found for the defendant. The determination of whether or not the performance bonuses of $10,000 and $40,000 were due will be discussed later in this Memorandum of Decision.

The Twelfth Count; violation of § 31-71e by unauthorized withholding of COBRA insurance benefits. The plaintiff is claiming under the Twelfth Count a separate claim that "The Defendant's unauthorized withholding of monthly Cobra health insurance payments from the plaintiff Frank Tamborino's severance pay is a violation of C.G.S. Section § 31-71e." Gen. Stat. § 31-71e states: "No employer may withhold or divert any portion of an employee's wages unless (1) the employer is required or empowered to do so by state or federal law, or (2) the employer has written authorization from the employee for deductions on a form approved by the commissioner, or (3) the deductions are authorized by the employee, in writing, for medical, surgical or hospital care or service, without financial benefit to the employer and recorded in the employer's wage record book." The plaintiff claims that the defendant violated Gen. Stat. 31-71e by withholding the COBRA insurance premiums from the plaintiff's severance pay that was paid to him by the defendant for one year after his April 15, 2005 termination. The plaintiff's claim is that $7,099 was improperly withheld from his severance pay for COBRA and it was the defendant's responsibility to make those COBRA premium payments using the defendant's own funds.

The plaintiff's health insurance premiums were paid through the COBRA program after his discharge. Normally the health insurance premiums are the employee's obligation unless there is a contractual obligation for those premiums to be paid by the employer. The only contractual terms are Articles 5.05 and 5.06, Exhibit 3.

5.05 During the two (2) year period of this Agreement, if the Company terminates Employee's employment for any reason other than those listed in Sections 5.02, 5.03 or 5.04 above, the Company, its successors or assigns, shall:

(a) pay Employee as severance pay each month for twelve (12) consecutive months following his termination his monthly base salary in effect at the time of separation, less customary withholdings, in addition to his ordinary benefits, beginning one (1) month after termination;

(b) if Employee timely elects to continue his group health and dental insurance coverage pursuant to applicable COBRA/continuation law and the terms of the respective benefit plans, pay on Employee's behalf the premiums for such coverage for the lesser of (i) twelve (12) months, (ii) such time as Employee's COBRA/continuation rights expire, and (iii) the date on which Employee becomes eligible to participate in any other health and welfare benefit program with comparable benefits.

5.06 At the termination of this Agreement, the Company may, in its sole discretion, extend, renew or renegotiate the Agreement. Any such renewal or extension must be in writing. In the event that the Company elects to not renew or extend this Agreement, the Company will offer to Employee severance for a period of up to twelve (12) month (the "Severance Option") in exchange for Employee executing a restrictive covenant as set forth in Exhibit A, hereto. If the Company offers, and Employee accepts the Severance Option, the Company will pay each month for twelve (12) consecutive months following Employees termination his monthly base salary in effect at the time of separation, less customary withholdings, beginning one (1) month after termination.

The COBRA payments of $7,099 are health premiums insurance for the plaintiff and his dependants. The COBRA payments are a form of medical benefits. "We hold that the plaintiff's pension and medical benefits do not qualify as `wages' pursuant to § 31-72 . . ." Morales v. Pentec, Inc., supra, 52 Conn.App. 429. The court finds that the COBRA payments are not wages. Therefore any award of money for the improper withholding of COBRA premiums are not "wages" under Gen. Stat. § 31-72. In addition they are not wages under Gen. Stat. § 31-76k, since they were not based upon "an employer policy or collective bargaining agreement provides for the payment of accrued fringe benefits upon termination." In addition, they are not "wages" under Gen. Stat. § 32-26k, since they were due only after termination and did not accrue before April 15, 2005, the date of termination. The COBRA payments were not withheld until after April 15, 2005.

Exhibits 10 and 12 demonstrate that $7,099 was deducted by the defendant from the plaintiff's severance paychecks as health insurance premiums. The plaintiff made his post-termination COBRA election in Exhibit 16. Prior to the plaintiff's termination the health insurance premiums were paid by the plaintiff from the plaintiff's own funds and the defendant withheld those sums from his paycheck each pay period. The plaintiff did not object to the health insurance premiums being deducted from his salary prior to his April 15, 2005 termination. He did object to the COBRA withholding from his severance pay. Despite that objection the defendant continued to withhold the COBRA premiums. A total of $7,099 COBRA premiums were withheld. Exhibit 12.

The plaintiff claims that Exhibit 3 Article 5.05 supports his claim: ". . . if the Company terminates Employee's employment for any reason other than those listed in Sections 5.02, 5.03 or 5.04 above." Plaintiff was not terminated for any of the reasons listed in Articles 5.02, 5.03 and 5.04. Article 5.05 the requires the Employer to pay the Employee's severance pay; one year's salary "less customary withholdings, in addition to his ordinary benefits, beginning are one (1) month after termination." The plaintiff claims "customary withholdings" was social security, FICA and state and federal income taxes, and not health insurance premiums. The defendant claims that all of the above plus health insurance premiums are "customary withholdings" and those sums have always been taken from the plaintiff's pay during his employment.

Article 5.05 (b) requires the Employee's election in regards to COBRA. The plaintiff did so elect. Thus the parties are bound by Article 5.05(b): "pay on Employee's behalf the premiums for such coverage." The plaintiff claims that this is an outright obligation and that the defendant must pay all COBRA premiums out of its own funds, not from the plaintiff's funds. The defendant argues that "pay on Employee's behalf" means that the actual COBRA premiums will be paid directly by defendant but using the plaintiff's severance pay to fund those payments. The defendant argues that this reading is consistent with the entirety of Article 5.05.

This conflict is resolved by the last sentence of Article 5.06: "If the Company offers, and Employee accepts the Severance Option, the Company will pay each month for twelve (12) consecutive months following Employees' termination his monthly base salary in effect at the time of separation, less customary withholdings, beginning one (1) month after termination." Under the plaintiff's interpretation of the COBRA process, the plaintiff will continue to pay his health insurance including COBRA premiums from his funds but if the plaintiff so elects unilaterally, the defendant must pay those COBRA premiums from the defendant's own funds.

The court finds that Exhibit 3 required the plaintiff to pay all health insurance premiums. During his employment they were customarily withheld from his pay. Exhibit 10. The plaintiff during his employment used his own funds to pay the premiums. He acknowledged the COBRA conditions. Exhibit 48. After his termination the plaintiff would still be obligated to pay his health premiums under the COBRA provisions. He could either pay them directly or, if he so elected, have those COBRA premiums withheld from his severance pay and then the defendant would pay the COBRA premiums using the plaintiffs already withheld funds. This is the more reasonable and consistent reading of Exhibit 3 taken into consideration the withholding of the plaintiff's health insurance premiums before his termination. The plaintiff is not entitled to the refund of $7,099. On the Twelfth Count sounding in violation of Gen. Stat. § 31-71c(b) as to COBRA premiums, the issues are found for the defendant. On the plaintiff's claims for wages by reason of the COBRA payments as alleged in the Eighth and the Eleventh Count, the issues are found for the defendant.

The Thirteenth Count; violation of Gen. Stat. § 31-76k for failure to pay the accrued fringe benefits upon termination, to wit: five of the six weeks vacation time. The plaintiff is claiming that he is entitled to $16,826.90 (rounded off by the court to $16,827) for vacation time for the five weeks of vacation allotted to him that he had not yet taken by the April 15, 2005 termination. Article 4 of Exhibit 3 entitled, "Vacation and Leave" states in its entirety: "4.01 Employee is entitled to three weeks of paid vacation per year consistent with the Company's policy, in addition to the Company's normal holidays. Vacation time will be scheduled taking into account the Employee's duties and obligations at the Company. Sick leave, holiday pay and all other leave of absences will be in accordance with the Company's stated personnel policies." The plaintiff took only one week vacation in his first year of employment and no vacation time in his second year. The plaintiff is claiming the monetary equivalent for accrued vacation time for the remaining two weeks of his first year of employment, which ended March 7, 2005 and the three weeks allotted to him by the Employment Agreement for the second year, which commenced March 8, 2005 and ended on April 15, 2005. Exhibit 3 was a two-year contract. The defendant had the right to terminate the plaintiff on April 15, 2005 and the plaintiff has not claimed otherwise. The plaintiff's annual base salary was $150,000 and was increased prior to April 15, 2005 to $175,000. The plaintiff is claiming $16,827 is due. This calculation appears to be based on one week of the $150,000 yearly salary and four weeks of the $175,000 yearly salary. The defendant does not dispute this calculation but does dispute the plaintiff's entire vacation claim.

The "Company's stated personnel policies" were inconsistent with Article 4.01. The court finds that the Employment Agreement provisions binds the parties. The plaintiff is therefore entitled to three weeks vacation. There was no evidence of the amount of vacation time the plaintiff would have been entitled to using the rather sophisticated formula under the "Company's stated personnel policies." The plaintiff has testified that he only received Exhibit 2, a seven-page benefit statement entitled "Velocity Benefits Overview — Sales, General, Administrative Employees." Included in Exhibit 2 is a small quarter page summary entitled "Velocity Express Paid Time Off (PTO) Leave Program." Under the PTO hours are earned per month with maximum hours earned per calendar year. The full-time employees can than use these PTO hours for any type of work absences, whether for vacation, personal, family illness or to attend to personal business. Under Exhibit 2 a full-time employee with seniority with the defendant of seven months through one-year earns 6.67 hours PTO per month up to a maximum of 40 hours per year. A full-time employee with seniority with the defendant of one-year through five years earns 8.0 hours per month up to a maximum of 96 hours per year. According to Exhibit 10, the plaintiff's pay stub, the plaintiff is paid biweekly for 80 hours. Thus the plaintiff is a 40-hour per week full-time employee. The three weeks vacation granted to him by Exhibit 3 is the equivalent of 120 hours a year. This exceeds his PTO rights. Neither party claimed at trial that the plaintiff's vacation time was anything less than the three weeks set forth in Article 4.01 Exhibit 3.

The Employment Agreement, Exhibit 3, does not give the plaintiff the right to be paid for unused vacation time at any time including upon his termination from employment. Exhibit 2, the PTO Program does not give the plaintiff the right to be paid for unused vacation time at any time including upon his termination from employment. The court finds that the plaintiff was provided Exhibit 5, the "Velocity Express Employee Time Off Policy" for the period January 1, 2004 trough December 31, 2004. He signed for it on March 8, 2004. Exhibit 49. On page 2 of Exhibit 5 is the following: "Unused paid time off hours may not be carried over into the next calendar year." The words "may not" are printed, underlined and in bold for emphasis in Exhibit 5. On page 3 of Exhibit 5 is the following "Unused paid time off" will not be paid out upon separation from employment except as required by law." No documents were offered to demonstrate that this language changed in any later version of the Velocity Express Employee Time Off Policy. As a high ranking officer the plaintiff was expected to be knowledgeable about all company policies. Even if the plaintiff was not provided with a copy of the PTO policy, he was a high ranking officer and he had access to a copy of the policy. The plaintiff offered no evidence to dispute that Exhibits 2 and 5 were the PTO policies that covered the plaintiff's vacation claim.

The court finds that Exhibit 2 and Exhibit 5 are the "Company's stated personnel policies" in regards to vacation. Exhibit 3 contains no contractual right to accrued vacation time. Exhibit 5 specifically states that no such carry-over rights exist. There is no statutory obligation the defendant has to pay to the plaintiff any of the five weeks of vacation time claimed. There is no accrued vacation time "required by law" that the defendant owes the plaintiff. Gen. Stat. § 31-76k does not grant the right to accrued vacation time unless such a right was already in existence. There was no proof that any right to accrued vacation time ever existed. On the Thirteenth Count sounding in violation of Gen. Stat. § 31-76k for failure to pay accrued fringe benefits upon termination the issues are found for the defendant. On the plaintiff's claim for wages by reason of the accrued vacation time as alleged in the Eighth Count and the Eleventh Count, the issues are found for the defendant.

The court will now discuss the remaining three special defenses to the Right to Set Off claim of $3,635. The plaintiff is making a claim of equitable set off. The court finds that $3,635.38 was inadvertently paid by the defendant to the plaintiff on May 6, 2005 for vacation time after his termination when he was not entitled to receive it. Exhibit 11. The court finds that the plaintiff has been unjustly enriched. The plaintiff was not induced to act on any belief by reason of his receiving the $3,635.38 vacation pay during the period he was receiving his severance pay. There is no evidence that the defendant was making a statement that the plaintiff had a right to receive five weeks of vacation pay when the one week payment of $3,635.38 was mistakenly made on May 6, 2005. There was no proof that any officer of the defendant had any role in making that payment. It was an administrative clerical error. The plaintiff has not been prejudiced by any aspect of this Set Off claim. The statute of limitations has not run on the defendant's Set Off claim. There was no delay in the defendant making this set off claim. The mistaken payment of $3,635 in vacation time to the plaintiff after his employment is different then advances made by an employer as against commissions to be earned. Ravetto v. Triton Thalassic Technologies, Inc., 285 Conn. 716, CT Page 9810 741-42 (2008). The mistaken payment to the plaintiff was brought to the attention of the plaintiff and the court as soon as this administrative mistake was discovered. The remaining three special defenses of laches, equitable estoppel and unclean hands find no support in the evidence. The plaintiff was not entitled to the $3,635.38 paid to him by either his Employment Agreement or the defendant's personnel policies. In the event that the plaintiff recovers from the defendant on the Eighth and/or Eleventh Count, the defendant is entitled to a $3,635 set off. The issues on the one count Right of Set Off sounding in unjust enrichment are found for the defendant.

The Eighth Count; breach of contract. The plaintiff claims that under Article 3.02 Exhibit 3 he is entitled to two forms of sign on bonuses: "15,000 shares of the Company's Series I Preferred Stock" and "a warrant to purchase shares of the Company's common stock or another comparable security. (Initially equal to 150,000 shares of common stock.)" The defendant claims that only one of those two forms of security are to be paid as a sign on bonus: (1) 15,000 shares of the Company's Series I Preferred Stock or (2) a warrant to purchase shares of the Company's common stock or another comparable security (initially equal to 150,000 shares of common stock.)

The plaintiff's claim for two securities as a sign on bonus fails for four reasons.

The First Reason: The phrase in Article 3.02 does not contain the word "and" between what the plaintiff claims is the description of the two separate forms of security. "The use of the conjunctive `and' indicates that both conditions must be fulfilled . . ." Penn v. Irizarry, 220 Conn. 682, 687 (1991). "We find significance in the use of the word `and' between the two stated conditions." Nicotra Wieler Investment Management, Inc. v. Grower, 207 Conn. 441, 455 (1988). "In examining the text of the statute, we note at the outset that, by its use of the conjunctive `and,' the statute appears to impose two preconditions for an enhanced sentence to be imposed in lieu of the lesser sentence prescribed for the offense for which the defendant stands convicted . . ." State v. Bell, 283 Conn. 748, 796 (2007). "The use of the disjunctive `or' clearly indicates that compensation in accordance with § 31-76k is distinct from wages." Morales v. Pentec, Inc., supra, 57 Conn. 427-28.

The Second Reason: The two securities claimed by the plaintiff are worth the same amount of money. The parties stipulated that "Company's common Stock was in Velocity Express Corporation. The Stipulation dated September 10, 2007 signed by parties indicates that as of March 4, 2004 the fair market value of 15,000 shares of the Company's Series I Preferred Stock is identical to the `warrant to purchase shares of the Company's common stock initially equal to 150,000 shares of common stock.'" The Stipulation stated: "Shares of Series I Preferred Stock referred to in paragraph 3.02 of the Employment Agreement was convertible into Velocity Express Corporation's Common Stock at a 1-10 ratio (one share of preferred stock equivalent to 10 shares of common stock) before the February 5, 2005 reverse stock split." The evidence further demonstrated that the plaintiff's 15,000 shares of the Company's Series I Preferred Stock and 150,000 shares of common stock were identical in value both before and after the February 2005 stock split. There was no evidence of "another comparable security." If there was "another comparable security," it would have to be the same value as the other two securities.

The Third Reason: The plaintiff admitted that he was entitled to only one security. On July 30, 2004 the plaintiff made an inquiry regarding the Article 3.02 security before he was given third party assistance. He apparently asked for one security; "Warrant for Frank Tamborino." Ex. 15. To this e-mail Robert Lewis responded: "To date Frank has no received the documented warrant." The plaintiff was copied with this response. The plaintiff did not correct the statement in this Exhibit 15 e-mail dated July 30, 2004 that he was entitled to a single security, "a documented warrant." No one representing the defendant told plaintiff at anytime that he was entitled to more than one security as a sign on bonus. His formal demand for more than one security was prepared with the assistance of Samuel Schuster. Exhibit 16. His counsel of record prepared the prelawsuit demands for more than one security. The court concludes that the plaintiff's understanding of Article 3.02 was that he was entitled to only a single security. The plaintiff did not contact Robert Lewis or any other officer of the defendant demanding payment of his sign on bonus until he was terminated on April 15, 2005.

The Fourth Reason: The use of a comma separating only two subjects is not proper under the rules of punctuation and grammar for the purpose of including both as separate subjects. The use of the word "and" is the correct method. A comma that separates three subjects is called a serial comma. The comma in Article 3.02 is a serial comma. The thought ends with the word "or" indicating three alternatives. Elements of Style, Struck and White, 4th Edition, 1999 (In a series of three or more items with a single conjunctive, use a comma after each item except the last). Mallozzi v. Nationwide Mutual Insurance Company, 72 Conn.App. 620, 629, fn.6 (2002).

The common stock of Velocity Express Corporation was available for issuance to the plaintiff. The plain language of Article 3.02 states that upon the acceptance of his employment, the plaintiff was to receive this bonus, a one-time sign on bonus. There were no conditions or restrictions on sale set forth in Article 3.02. The court finds Article 3.02 unambiguous. The CEO of the defendant testified that the plaintiff was entitled to receive that sign on bonus. The court finds that the plaintiff had the right to the issuance of his sign on bonus of the following or its equivalent; 150,000 shares of common stock in Velocity Express Corporation on March 8, 2004. Poole v. Waterbury, 266 Conn. 68, 98-99 (2003). Based on the February 2005 reverse split those 150,000 shares of common stock are now 3,000 shares of common stock in Velocity Express Corporation. The court finds that the plaintiff is entitled to one sign on bonus pursuant to Article 3.02; 3,000 shares of common stock in Velocity Express Corporation.

The court now turns to the issue of the evaluation of those 3,000 shares of common stock in Velocity Express Corporation. The plaintiff had the right to sell those shares at anytime from and after March 8, 2004 and he had the right to hold those shares of stock, even to this very day. The plaintiff knew he had a security backed signed on bonus when he signed Exhibit 3 on March 4, 2004. There is no evidence of any demand that the plaintiff made to the defendant to sell the stock prior to his termination. Some inquires were made by the plaintiff as to the status of the issuance of shares of stock during his employment. He made a formal demand on April 15, 2005 for the first time indicating that he wanted the money. In the interim period of time from March 8, 2004 to April 15, 2005 the stock substantially decreased in value. Exhibit 47. The plaintiff did look up the value of the stock during March 2004.

The plaintiff has the obligation to prove by fair preponderance of the evidence that he intended to sell the stock at a particular point in time. The plaintiff has failed to do so. There is no evidence whatsoever that he had any intention of selling any of the stock from March 8, 2004 until April 15, 2005. The evidence being silent in that regard, a fair inference can be made that the defendant intended to keep the stock for investment purposes even though the stock was declining in value.

The plaintiff claims he was entitled to the issuance of the stock on March 8, 2004, his first day of employment. He claims he was entitled to an immediate issuance and payment of the sign on bonus of the 150,000 warranty for common stock as well as the 15,000 shares of Series I Preferred Stock in Velocity Express Corporation as stated in Article 3.02. Both components are claimed by the plaintiff. The other dates that have been furnished for the purpose of evaluating the stock are: (1) July 14, 2004, when plaintiff made an inquiry to the defendant about "a warrant"; (2) February 15, 2005, the date of the Amendment of the Certificate of Incorporation; (3) April 15, 2005, the date of termination of plaintiff from employment and the sending by the plaintiff of an e-mail, Exhibit 16; (4) May 14, 2005, Exhibit 21 when e-mails where sent by the plaintiff making an inquiry as to when the stock was going to be issued; (5) May 20, 2005, Exhibit 22 e-mail about the stock; and (6) June 15, 2005, when the plaintiff made a demand on the defendant for his stock. The court has to determine the proper date of the value of the 3,000 shares of common stock of Velocity Express Corporation.

The court finds that only one formal demand was made in which the plaintiff chose to elect his payment of the stock. That date is April 15, 2005. The court finds that April 15, 2005 is the election date. The breach of the sign on bonus occurred on April 15, 2005. Harrington v. Dyer, 50 Conn.Sup. supra, 475. Prior to April 15, 2005 the sign on bonus was the plaintiff's property. He and he alone could choose to sell it. As with any personal investment asset the plaintiff could choose to add to the investment or to sell all or any part of the investment. That choice was his. He had that choice to make from March 8, 2004. He chose to hold his stock investment in Velocity Express Corporation. He chose not to sell the stock or convert into cash until April 15, 2005. The risk of the stock market going up or down in value falls on the plaintiff's shoulders, not on the defendant's shoulders. "Contract damages are ordinarily based upon the injured party's expectation interest and are intended to give him the benefit of the bargain by awarding his sum of money that will, to the extent possible, put him in as good position as he would have been had the contract been performed . . . Such damages, moreover, are to be determined as of the time of the occurrence of the breach." Colby v. Burnham, 31 Conn.App. 707, 721 (1993).

The court finds that the specific date and time that is fair and reasonable for the plaintiff to be entitled to the cash proceeds of the stock is the date of the demand, April 15, 2005. "For your convenience I have outlined the compensation that is owed to me per the agreement . . . Stocks Stock Options — 15,000 shares of the Company's Series I Preferred Stock, due me with the execution of the employment agreement and 150,000 warrants to purchase shares of common stock (@.01 per share.)" Ex. 16.

A variety of values have been argued by the parties for the market value of the common stock of Velocity Express Corporation based on the NASDAQ public trade prices for that day. The September 10, 2007 Stipulation states: "The value of the Series I Preferred Stock is to be determined by converting the particular number of shares of Series I Preferred Stock into the number of shares of common stock as indicated in paragraph one above and then multiply the number of shares of common stock by the daily prices as reflected on the Yahoo Finance website under the symbol `VEXP.'" It is noted that since March of 2004 the fair market value stock of Velocity Express Corporation has deteriorated substantially to approximately one-tenth the value that it was at its height. The SEC filings reflected that fact. The Velocity Express 10-K filed with the SEC on June 28, 2003 stated at pages 12 and 19: "that the warrant is highly speculative and that the Holder is able to bear the economic risk associated with this warrant." Selecting the date for the value of the stock is the most significant decision this court has to make.

On February 15, 2005 Velocity Express Corporation filed an amended Certificate of Incorporation and other documents that effectuated an 50-1 reverse stock split. "The reverse stock split in February 2005 made 50 shares of Velocity Express Corporation's common stock the equivalent of one share of common stock. Therefore, after the February 2005 stock split, 5 shares of said Series I Preferred Stock was equivalent to one share of Velocity Express Corporation's common stock." September 10, 2007 Stipulation. Exhibit 60. 150,000 shares of common stock referred to in Exhibit 3 Article 3.02 became 3,000 shares of common stock on and after February 15, 2005 and 15,000 shares of Series I preferred Stock would thus be converted to 3,000 shares of common stock. Exhibit 47 was agreed upon by the parties in the September 10, 2007 Stipulation as containing the per share price of common stock of Velocity Express Corporation at various dates. The opening price of the common stock on April 15, 2005 was $7.08 per share and the closing price was $6.03 per share. The highest price on April 15, 2005 was $7.21 and the lowest price was $6.03. The average of the opening and closing price on April 15, 2005 was $6.56 per share. (The court rounded off $6.5555 . . . to $6.56.) The 3,000 shares of Velocity Express Corporation common stock multiplied by $6.56 per share is $19,680, multiplied by $7.08 is $21,240 and multiplied by $6.03 is $18,090. Had the plaintiff made a demand for the stock on April 6, 2005, the range of values would be $11.43 to $13.05 per share, an average price per share of $12.24 and his sign on bonus claim would then be worth $36,720.

Neither party furnished the court with legal authority for the selection of a dollar and cents value of the shares of common stock of Velocity Express Corporation. It appears from Exhibit 47 that the shares fluctuated each day with an opening price and a closing price different on each day. This court's selection of either the closing or opening price results in a difference of $3,150 ($21,240 less $18,090 equals $3,150). This court has not been able to find legal authority from a Connecticut court requiring the selection of a particular formula for determining publicly traded stock that fluctuates in value on a specific date.

The court is familiar with valuation rules approved by the Internal Revenue Service in stock evaluation for the purpose of exercising and evaluation stock options for capital gains purposes or stock value calculations for Estate Tax purposes.

Proposed internal Revenue Service regulations take a flexible approach to determining the fair market value of options . . . The IRS would allow use of the closing stock price on the day of or before the grant; the price of last sale before the grant, or the first sale after it, or any other "reasonable" method that relies on actual market prices and is applied consistently.

BNET Business Network, a division of CNET Network.

In addition the General Motors corporate web site, www.gm.com, in an article devoted to advising holders of GM and Delphia common stock in a merger situation discusses three alternative evaluation methods acceptable by the IRS. The first stated method is the average of the high and low trading prices of the stock on May 28, the specific date in question.

Federal tax law does not specifically identify how you should determine the fair market value of your GM $1-2/3 common stock and the Delphi common stock that you received. There are arguably three alternative methods for determining the fair market value: (i) the average of the high and low trading prices of such stocks on May 28 (the day on which the Delphi Spin-Off occurred); (ii) the stocks' opening trading price on May 28; and (iii) the stocks' closing trading price on May 28. In certain IRS private rulings, the IRS has recognized the use of the average of the high and low trading prices as an acceptable measure of fair market value.

Due to the lack of legal authority on which price to use and the failure of the parties to brief that issue, the court finds that the average price of the opening and closing price of $6.56 is the proper price to use. The court finds that the 3,000 shares of Velocity Express Corporation stock had a fair market value of $19,680 on April 15, 2005.

Plaintiff claims a performance bonus of $40,000 due under Article 3.03(d). This is an annual bonus for the reduction of the company's accounts receivable. The plaintiff would be entitled to a $40,000 bonus for a 50% reduction. The defendant hired the plaintiff as Vice President of Treasury Services. The plaintiff has been in the credit business for over thirty years. In his employment at Moore Corporation, the plaintiff was in charge of collecting cash for accounts receivable. The plaintiff worked with Robert Lewis at Moore Corporation. Robert Lewis was the defendant's hiring officer as the defendant's Chief Financial Officer and solicited the plaintiff to join the defendant while the plaintiff was working for Moore Corporation. The plaintiff's current employment in 2007 involves the collection of cash for accounts receivable. Robert Lewis hired the plaintiff on behalf of the defendant to collect cash for the accounts receivable and to monitor the change in the defendant's computer accounting system.

The court finds that the defendant's accounts receivables were reduced only due to a write-off of over $4,300,000 accounts receivable, a majority related to one account, Staples. This write-off was not a positive cash benefit to the defendant. The $40,000 annual bonus was designed so that the defendant would benefit by a positive infusion of cash by collecting accounts receivable that would otherwise be uncollectable. Under Article 3.03(d) the bonus is due where there is "reduction in the Companies accounts receivable that are ineligible as collateral under the Companies Credit Facility with Fleet Capital Corporation and Merrill Lynch Capital." The write-off and forgiveness of an account receivable does not meet those requirements. Exhibit 27.

The defendant is in business of short term critical delivery of commercial customer's packages. It has a large amount of accounts receivable and uses these accounts receivable as collateral for short term borrowing in order to manage cash flow. As of March 2004 the defendant had arrangements with two entities that lent funds using the accounts receivable as collateral; Merrill Lynch Capital and Fleet Capital Corporation. Most of the borrowing was with Fleet Capital Corporation later known as Bank of America. The basic loan agreement that the defendant and Fleet entered into was called a Credit Facility Agreement, which was an asset backed lending agreement that used the accounts receivable of the defendant as collateral. Certain of the accounts receivable could not be used for collateral. They were called "an ineligible." Examples of an "ineligible" were those accounts receivable that were uncollectible or beyond a certain age. The defendant had no ability to use these "ineligibles" as collateral for borrowing against even though they were accounts receivable held by the defendant as a corporate asset.

A computer software system was used to track the age of each account receivable, the billing records, the payments, and the allocation of each payment to a specific invoice. The defendant was in the process of shifting to a new computer software system in order to create consistency. Prior to March 2004 it was difficult to track which outstanding invoice had been paid; the oldest or the most recent.

The total accounts receivable less the ineligibles was the basis for borrowing and this was called the "collateralized base." Weekly or bi-weekly reports were submitted to Fleet using a form prepared by Fleet that outlined the accounts receivable, their ages and the amount of eligible accounts receivable that could be used to borrow against. Exhibits 59 and 66. Five different dating periods were listed: 1-30 days, 31-60 days, 61-90 days, 91-120 days and over 120 days. This was called an "aging summary." Exhibit 25. Those accounts receivable over 90 days, in the last two categories, were "ineligibles." For example, on March 27, 2004 the total accounts receivable (eligible and ineligible) were $38,316,418 and of those $6,635,517.65 were ineligible. On April 2, 2005 the total accounts receivable (eligible and ineligible) were $31,678,040 and of those $2,591,667.52 were ineligible. This reduction in the "ineligibles" reflected the write-off of the $4,300,000 accounts receivable in December 2004 previously mentioned. Exhibit 26.

The "borrowing base" was the total accounts reversible less the ineligibles. Thus on March 27, 2004 the borrowing basis was $31,680,900 ($38,316,418 — $6,635,518) and on April 2, 2005 the borrowing base was $27,086,372 ($31,678,040 — $2,591,668). The goal was for the plaintiff to collect the "ineligibles" thus increasing the "borrowing base." This would benefit the defendant in two ways: cash payments from the collection of ineligible accounts receivable and increasing the ability to borrow more money from Fleet due to a higher "borrowing base."

This borrowing base would also be increased due to the process of cross-aging. Cross-aging was part of the Credit Facilities Agreement. These accounts receivable that are less than 90 days old are "eligible" for being included in the borrowing base but some of those otherwise eligibles can be declared ineligible due to other accounts receivable for that same customer that were over 90 days old. There is a formula for this cross-aging calculation. Cross-aging is the process of recovering some of the three above stated "eligible" aging categories by reducing a specific customer's oldest accounts receivables, those over 90 days old. Exhibit 25 contains a line for the crossed aged balance. Under this system of cross-aging it is possible that more of the existing accounts receivable for that one specific customer would became eligible to be included in the borrowing base. The plaintiff claims he is entitled to the $40,000 performance bonus for two reasons: The $4,300,000 December 2004 write-off did reduce the accounts receivable in the manner set forth in Article 3.03(d) and the reduction in all of the accounts receivable including the $4,300,000 write-off increased the borrowing base due to cross-aging and thus was a "reduction in the companies accounts receivable that are ineligible as collateral under the Company's Credit Facility with Fleet Capital Corporation" under Article 3.03(d). The plaintiff testified that he does not know what "qualified collateral" means. He admitted that he did not read the entire Credit Facilities Agreement. He doesn't recall ever seeing any Fleet borrowing certificate. Exhibit 59. The court concludes that the plaintiff does not have an understanding of the terms of the Credit Facilities Agreement.

The defendant offered the testimony of Stacey Walker, a CPA and the employee placed in charge of the software accounts receivable reconciliation project immediately after the plaintiff's termination. She analyzed each account in detail and after 18 months was able to balance the accounts receivable records. She was able to collect $1,000,000 from the $4,300,000 Staples December 2004 write-off. She testified that the borrowing base actually decreased in January 2005 after the $4,300,000 write-off. She testified that the cross-aging process did not increase the borrowing base. Vincent Wasik, the Chairman and the Chief Operating Officer of the defendant, testified that the $4,300,000 write-off did not increase the borrowing base and the cross-aging portion of the write-off was small. Michael Trafecante, the defendant's Comptroller, has never seen a write-off accounts receivable become an eligible and became part of the borrowing base. The court finds the testimony of these three witnesses credible.

The plaintiff failed to prove his compliance with the conditions of Article 3.03(d) and is not entitled to the $40,000 performance bonus. The issues for the payment of the $40,000 performance bonus are found for the defendant as to the Eighth Count and the Eleventh Count.

The plaintiff is claiming that he is entitled to a $10,000 performance bonus since he met the terms of Article 3.03(e) of the Employment Agreement, Exhibit 3, which states: "An annual bonus of $10,000 for achieving a 5 day reduction in the companies DSO." The defendant objects claiming that the taking of the over $4,300,000 of accounts receivable written off in December 2004 was the source of the "reduction in the companies DSO" and further objects for the reasons that the plaintiff is not entitled to the $40,000 performance bonus under Article 3.03(d), he is not entitled to the $10,000 performance bonus under Article 3.03(e).

DSO means "Days Sales Outstanding." This is a form of measuring on how fast receivables are being collected. Exhibit 30 outlines the monthly DSO records from January 31, 2004 through April 2, 2005, which covers the entirety of plaintiff's first year of employment ending on March 7, 2005. On March 27, 2004 the DSO was 54.0 and on April 2, 2005 the DSO was 43.9. An examination of Exhibit 30 demonstrates a reduction of the DSO on a steady basis except October 30, 2004. Exhibit 30 is a DSO spreadsheet prepared by the defendant. The plaintiff has proven that he achieved "a 5 day reduction in the companies DSO." The defendant has failed to prove otherwise. The defendant has also failed to prove that the $4,300,000 write-off in December 2004 affected the 5-day reduction in the companies DSO. The bonus is paid on an annual basis. The plaintiff is entitled to receive the $10,000 performance bonus under Article 3.03(e) "for achieving a 5 day reduction in the companies DSO." Since this is an annual bonus, the plaintiff was entitled to that $10,000 on March 8, 2005. The issues on the Eighth Count and the Eleventh Count as to the $10,000 performance bonus under Article 3.03(e) are found for the plaintiff. As previously found, this $10,000 performance bonus are "wages" under Gen. Stat. § 31-72.

The court is authorized to double the wages and/or award attorneys fees if the court finds that the withholding by the defendant of the $10,000 performance bonus met the requirements of "bad faith or arbitrariness or unreasonable." Sansone v. Clifford, supra, 219 Conn. 229. No such evidence was provided. The plaintiff has failed to sustain his burden of proof. There was a substantial and legitimate factual and legal dispute by the defendant in good faith as to this $10,000 performance bonus. The plaintiff was paid all his salary up to the date of termination, as well as his one year severance pay. His annual salary was $150,000 and his one year severance pay was $175,000. Despite the terms of his two-year contract, the plaintiff's pay was increased to $175,000. He was paid the $25,000 cash sign on bonus in March 2004 and a $20,000 performance bonus in the next year under Article 3.03(f), the maximum bonus permitted under that section. He was also paid another $27,000 in other bonuses during his employment. The defendant has in good faith factually and legally disputed the plaintiff's claims, which at trial were over $600,000. The plaintiff has failed to prove the bad faith element of Gen. Stat. § 31-72. Therefore the court will exercise its discretion and not double the wages and not award attorneys fees in accordance with Gen. Stat. § 31-72. The issues are found for the plaintiff in the amount of $10,000 as wages in the Eighth Count and Eleventh Count with no award of attorney fees or doubling of the $10,000. Ravetto v. Triton Thalassic Technologies, Inc., supra, 285 Conn. 723-26.

The court will now discuss the plaintiff's claim of interest. The court finds that the plaintiff's proof of wrongful withholding falls short of the legal requirements for an award of interest. The plaintiff did offer evidence of the rates of interest at trial. Exhibit 64. In addition the plaintiff asked this court to take judicial notice of the appropriate rate of interest to be used. Utilizing Exhibit 64 the court found at trial in open court that the average rate of interest charged by banks on short term loans to businesses was 5.98% as of May 2005. Thus the court disclosed to the party's its taking of judicial notice of a 6.0% rate of interest. The parties were offered the opportunity to comment and/or offer evidence as to the 6.0% interest rate. Both parties waived the right to a hearing on the rate of interest.

The Defendant's Post-Trial Brief dated January 7, 2008 (#139.10) contains the following first sentence: "The evidence in this case supports an award to plaintiff Frank Tamborino of no more than $22,620 inclusive of 6% interest from April 15, 2005." This Brief contains the following last sentence: "With 6% prejudgment interest, he is entitled to $22,620." Thus the defendant has judicially admitted that the monetary awards to the plaintiff are subject to an additional award of interest. Wesson v. F.M. Heritage Company, 174 Conn. 236, 243 (1978).

The court therefore must determine the date of the commencement of interest. As to the sign on bonus under Article 3.02, the Court has already found that April 15, 2005 is the date the plaintiff first requested issuance of the stock. April 15, 2005 was established by this court as the date of valuation of the 3,000 shares of common stock in Velocity Express Corporation. The date of wrongful withholding is found to be April 15, 2005. Interest at the rate of 6.0% shall run from April 15, 2005 on the $19,680 due. The interest on $19,680 from April 15, 2005 to June 5, 2008 is $3,714 with per diem interest after June 5, 2008 at $3.28.

As to the $10,000 performance bonus under Article 3.03(e), the Employment Agreement states: "An annual bonus of $10,000 for achieving a 5 day reduction in the companies DSO." Since the plaintiff commenced employment on March 8, 2004, the end of his first year of employment was March 7, 2005. His "annual bonus of $10,000" was due on March 8, 2005 and the plaintiff is entitled to 6.0% interest from March 8, 2005 on the $10,000. The interest on $10,000 from March 8, 2005 to June 5, 2008 is $1,950 with per diem interest after June 5, 2008 at $1.67.

In addition, the court has found that the defendant is entitled to a set off of $3,365. The defendant has made no claim of interest on the Right of Set Off complaint. The plaintiff in good faith contested the set off. The parties had a substantial and good faith legal and factual dispute on the $3,365 set off. The court cannot make a finding of wrongful withholding as to the Set Off. The defendant is not entitled to an award of interest on the $3,365 Right of Set Off.

After the above calculation of interest on the two damage claims, the plaintiff has prevailed on the calculation of interest on his claim of $19,680 and $10,000 as well as defeating any claim of interest on the defendant's $3,635 Right of Set Off.

The damage claim under the Eighth Count and the Eleventh Count are identical. Therefore only one award of damages will be made. Judgment will enter for the plaintiff, Frank Tamborino, against the defendant, Velocity Express, Inc., in the amount of $10,000 plus $1,950 interest and $19,680 plus $3,714 interest for a total of $35,344 less the $3,635 set off for a total judgment of $31,709. This includes interest through June 5, 2008.

The court has examined the file and can find the only one Offer of Judgment filed by the plaintiff. It is dated November 28, 2006 (#107.00). The plaintiff offered to take judgment of the defendant, Velocity Express, Inc., in the amount of $149,000. The court finds that the judgment just entered by this court does not exceed the plaintiff's November 28, 2006 Offer of Judgment.

The Defendant's Offer of Judgment dated September 4, 2007 (#123.00) was filed pursuant to Gen. Stat. § 52-192b since the return date of the lawsuit was prior to October 1, 2005. "The defendant offers $75,000 in full and final settlement of the plaintiff's claims." The court finds that the plaintiff failed to recover $75,000. The court finds that this September 4, 2007 Defendant's Offer of Judgment was filed the day before trial commenced on September 5, 2007. Gen. Stat. § 52-193; P.A. 01-71. The court finds that the Defendant's Offer of Judgment was not timely filed and no relief can be obtained therefrom by the defendant.