Ass'n Res. Inc. v. Wall.

• Citation: 2 A.3d 873,298 Conn. 145
• Decision Date: 31 August 2010
• Docket Number: No. 18316.,18316.
• Court: Supreme Court of Connecticut
• Parties: ASSOCIATION RESOURCES, INC. v. Joseph J. WALL.

298 Conn. 145

2 A.3d 873

ASSOCIATION RESOURCES, INC.

v.Joseph J. WALL.

No. 18316.

Supreme Court of Connecticut.

Argued May 27, 2010.

Decided Aug. 31, 2010.

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Edward T. Lynch, Jr., New Britain, for the appellant (plaintiff).

Paul H.D. Stoughton, with whom, on the brief, were Jennifer Katz and Joshua Chapps, West Hartford, for the appellee (defendant).

ROGERS, C.J., and NORCOTT, KATZ, PALMER, VERTEFEUILLE and McLACHLAN, Js. ^*

NORCOTT, J.

The principal issue in this appeal is whether a bonus payment, which is required to be paid under the express terms of an executive's employment contract and calculated in accordance with a formula set forth therein, is a “wage” as defined by General Statutes § 31-71a(3). ¹ The plaintiff and counterclaim defendant, Association Resources, Inc. (defendant), appeals ² from the judgment of the trial court awarding the defendant and counterclaim plaintiff, Joseph J. Wall (plaintiff), damages in the amount of $282,827 on his counterclaim alleging that the defendant's failure to pay the plaintiff certain bonuses constituted a breach of his employment contract and the Connecticut wage statutes (wage statutes), General Statutes § 31-71a et seq. ³ On appeal, the defendant claims that the trial court improperly: (1) concluded that the bonuses claimed by the plaintiff are subject to the wage statutes; (2) calculated the bonuses owed; (3) rejected its special defenses of accord and satisfaction and substitution of contract; and (4) denied its motion to dismiss the counterclaim for lack of standing and judicial estoppel on the basis of the plaintiff's failure to list the wage claims as assets in two bankruptcy petitions. We disagree and, accordingly, we affirm the judgment of the trial court.

The record reveals the following facts, which are either undisputed or were found by the trial court, and procedural history. The defendant is a Connecticut corporation that provides administrative, marketing and technical services to numerous nonprofit professional and trade associations. The defendant's president and founder is Peter Berry, whose wife, Suzanne Berry, serves as executive vice president. In August, 2002, the defendant hired the plaintiff as a consultant to upgrade its computer system. Due to the growth of the defendant, and the Berrys' desire to spend more of their working time on client development, the defendant hired the plaintiff shortly thereafter to serve as its chief operating officer, with the title of senior vice president. The plaintiff worked initially in accordance with a letter of intent. This was followed by an employment contract that was executed in July, 2003 (employment agreement), and was set to expire on August 6, 2005. Schedule 3.2 of the employment agreement, which set forth the plaintiff's responsibilities, intended the plaintiff to spend 70 percent of his working time overseeing the defendant's information technology, financial and human relations divisions, and specifically developing a Digital Group to provide enhanced Internet and mail services for its clients, with the remainder of his time devoted to other administrative and strategic responsibilities.

Under the employment agreement, the plaintiff's base salary was $86,000, with 5 percent annual increases to be given on August 7, 2003, and August 7, 2004. ⁴ Under § 2.4 of the employment agreement, the plaintiff also received a $100 monthly office allowance for items such as remote access and telephone charges. ⁵ Additional compensation for the plaintiff was furnished pursuant to § 2.2 of the employment agreement, which provides in relevant part: “[The plaintiff] shall be entitled to receive commissions and bonuses calculated as follows:

“(b) [The plaintiff] shall be paid bonuses on February 15, 2004; August 15, 2004; February 15, 2005 and; August 6, 2005 based upon the overall profitability of the Digital Group from July 1, 2003 through June 20, 2005. Said bonus amounts shall be calculated based upon the 2003-04 Digital Group budget as set forth in Schedule 2.2 and the 2004-05 budget which will be established in the [s]pring of 2004. [The plaintiff's] bonus shall be equal to the annual income received by the Digital Group less $75,000 for fiscal year 2003-2004 and $80,000 for fiscal year 2004-2005, and less the commissions paid pursuant to paragraph (a) above. [The plaintiff's] bonus will be determined after the Digital Group's expenses are paid for the preceding six month period and after [the defendant] receives its six months prorated income. [The plaintiff] shall then receive the remaining profit....” ⁶

Following some initial disagreement concerning the bonus amount owed under the employment agreement, namely, the percentage of the Digital Group's net profit to which the plaintiff was entitled, on February 15, 2004, the defendant ultimately acceded to the plaintiff's request for a first bonus in the amount of $28,883. ⁷ The parties' relationship then grew increasingly strained and, by the spring of 2004, the Berrys had expressed concerns with the plaintiff's performance as an administrator, informed him that the bonus provisions in the employment agreement were “not working for them,” and sought to change the focus of his employment to more technical work, with a fixed salary of $90,000 plus discretionary bonuses. To that end, in July, 2004, the defendant proposed to amend the employment agreement by deleting the bonus provisions of § 2.2 in their entirety. The plaintiff refused, however, to sign that proposal.

The defendant subsequently did not pay the plaintiff his second bonus payment, for the second half of the 2003-2004 fiscal year, which was due on August 15, 2004 (second bonus). The parties did not discuss the bonus issue again until November 15, 2004, when the defendant proposed to pay the plaintiff a second bonus in the amount of $8727, despite the plaintiff's claim that he was owed $58,329. Peter Berry then told the plaintiff that he no longer was willing to discuss the issue and, the following morning, he presented the plaintiff with a letter on behalf of the defendant signed by himself and Suzanne Berry. In the letter, the defendant presented the plaintiff with two options: “(1) Sign the requested contract amendment; accept [its] offer of an [$8000] bonus; and leave open the possibility of extending your contract that expires in August, 2005; or (2) [r]equire [it] to pay you the bonus that you are seeking thereby acknowledging that your contract will not be renewed next year.” The plaintiff declined to accept either option, but directed the payroll office to pay him $8000 toward the amount that he believed that he was owed. ⁸ The plaintiff testified that he took the $8000 because he had been experiencing personal financial difficulties, of which the Berrys were aware.

Subsequently, on December 13, 2004, the defendant exercised its termination option under § 4.1 of the employment agreement, ⁹ gave the plaintiff the required sixty days notice and renewed its offer of a different position at a salary of $90,000, excluding bonuses. The plaintiff accepted that offer and signed a new employment contract on January 3, 2005 (2005 contract), reasoning that he needed a job, but nevertheless claimed entitlement to the bonus, on the basis of the Digital Group's performance for the first half of the 2004-2005 fiscal year, that would be due on February 15, 2005, under the terms of the original employment agreement third bonus), prior to the 2005 contract taking effect. See also part IV B of this opinion. Through the remainder of 2005, the plaintiff's role with the defendant was reduced to the management of the Digital Group.

In June, 2005, the plaintiff filed a claim with the wage and workplace standards division of the department of labor (department), seeking to collect the unpaid second and third bonuses. The parties' relationship deteriorated even further over the summer and, by August, 2005, while the plaintiff was away on vacation, he learned that the defendant had locked him out of remote access to its computer servers. The plaintiff then sent a letter to Peter Berry indicating that he took the lockout as a sign he was no longer employed by the defendant, and he did not subsequently return to his job.

In August, 2005, the defendant initiated this action seeking damages and injunctive relief against the plaintiff, claiming, inter alia, that he had breached both non-compete provisions of the employment agreement and his fiduciary duty by: (1) not returning to work after his vacation; and (2) promoting his former business and seeking a new job. The plaintiff then filed an answer generally denying the claims in the complaint and raising numerous special defenses, along with the counterclaim at issue in the present appeal seeking money damages, twice the full amount of the unpaid wages, attorney's fees and costs, and a prejudgment remedy on the ground that the defendant's failure to pay the plaintiff his bonuses and the $100 monthly office allowance violated the employment agreement and the wage statutes, specifically General Statutes §§ 31-71b, ¹⁰ 31-71c, ¹¹ 155 31-71e ¹² and 31-73. ¹³

Thereafter, the defendant withdrew the original complaint after the parties were able to resolve the issues raised therein, leaving only the counterclaim pending. See also footnote 3 of this opinion.

Subsequently, the proceedings were stayed pursuant to 11 U.S.C. § 362 and Practice Book § 14-1 because of the plaintiff's filing of an application for relief in the United States Bankruptcy Court for the District of Connecticut (Bankruptcy Court) under chapter 13 of the United States Bankruptcy Code. The stay was terminated after the Bankruptcy Court dismissed the plaintiff's petition for relief.

After the plaintiff filed a revised counterclaim that named Peter Berry personally as a defendant...