Chief Info. Officer v. Computers Plus Ctr., Inc.

• Decision Date: 03 September 2013
• Docket Number: Nos. 19029,19030,19031.,s. 19029
• Citation: 310 Conn. 60,74 A.3d 1242
• Parties: CHIEF INFORMATION OFFICER et al. v. COMPUTERS PLUS CENTER, INC., et al.
• Court: Connecticut Supreme Court

310 Conn. 60

74 A.3d 1242

CHIEF INFORMATION OFFICER et al.

v.COMPUTERS PLUS CENTER, INC., et al.

Nos. 19029, 19030, 19031.

Supreme Court of Connecticut.

Argued Jan. 3, 2013.

Decided Sept. 3, 2013.

Robert J. Deichert, assistant attorney general, with whom were Peter R. Huntsman, assistant attorney general, and, on the brief, George Jepsen, attorney general, and Gregory T. D'Auria, solicitor general, for the appellants-appellees (plaintiffs).

Brett J. Boskiewicz and James A. Wade, Hartford, for the appellees-appellants (defendants).

NORCOTT, PALMER, ZARELLA, EVELEIGH and ROBINSON, Js.

NORCOTT, J.

The principal issue in this appeal is whether, by bringing a cause of action against a private party, the state of Connecticut waives its sovereign immunity for all counterclaims against it, including those seeking monetary damages. The plaintiffs, the Department of Information Technology and its Chief Information Officer,¹appeal ² from the judgment of the trial court, rendered after a jury trial, awarding the named defendant, Computers Plus Center, Inc.,³ $18.3 million on a counterclaim alleging that the department had violated its right to procedural due process. On appeal, the department claims, inter alia, that the trial court: (1) should not have allowed the defendant to proceed with any counterclaim seeking monetary damages because sovereign immunity deprived the court of subject matter jurisdiction over such counterclaims; and (2) made several improper evidentiary rulings during the trial. The defendant cross appeals, claiming that the trial court improperly: (1) reduced the amount of the jury's verdict in its favor from $18.3 million to $1.83 million; and (2) determined that the doctrine of absolute immunity bars common-law defamation claims against government officials. We conclude that the trial court improperly determined that the department had waived the state's sovereign immunity regarding the defendant's counterclaims and, accordingly, reverse the judgment of the trial court in favor of the defendant on the procedural due process counterclaim. We further conclude that the trial court's evidentiary rulings were not improper and, therefore, affirm the judgment of the trial court in all other respects. Finally, because we conclude that the trial court lacked subject matter jurisdiction over the defendant's counterclaims, we dismiss the defendant's cross appeals as moot.

The record reveals the following facts, which the jury reasonably could have found, and relevant procedural history. The present case arises from disputes between the department and the defendant, a computer equipment supplier, in connection with two contracts under which the defendant had agreed to provide computer servers for the department and the Department of Transportation (server contracts), and a contract under which the defendant had agreed to provide personal computers to state agencies on an as needed basis (computer contract). After the memory in the servers that the defendant had supplied under the server contracts malfunctioned in the summer of 2002, the department began to suspect that the defendant deliberately supplied equipment that failed to comply with the relevant contract specifications, despite the defendant's prompt remediation of the memory malfunctions.

In August, 2002, the department determined that the defendant was not a “responsible” bidder as that term is defined in General Statutes § 4a–59 (a),⁴ rejected its pending invitation to the defendant seeking a bid on a contract to provide an additional computer server for the Department of Education, and requested that the defendant certify that all of the equipment supplied to the state by the defendant over the previous four years complied with the relevant contract specifications. Because the defendant was not able to complete its review of all of the contract awards and purchase orders from the requested time period in the time frame that the department had set forth, however, it simply replied that it believed that it “ ha[ d ] always ... adhered to all the terms and conditions of each contract award ” and requested the department, “[s]hould [it] find any other violations other than [the server memory violation],” to “bring them to [the defendant's] attention and [it would] take immediate action.” (Emphasis in original.)

Unsatisfied with the defendant's response, the department performed a physical audit of all of the computers that the defendant had supplied under the computer contract. In conducting this audit, the department discovered that many of those computers contained only an integrated network interface card while, in the department's view, the contract specifications required both an integrated and a stand alone network interface card. On the basis of its findings during its audit, in December, 2002, the department notified the auditor of public accounts and the state comptroller of “apparently pervasive contract irregularities” with the defendant, and also requested that the Commissioner of Public Safety “conduct a more thorough review” of the defendant's activities in relation to the computer contract.

Shortly thereafter, the department terminated the computer contract with the defendant, citing, as reasons for the contract termination, that it was a financial burden to the state and that the purchasing process had not achieved the expected cost savings.⁵ Over the following several months, the department began refusing to award contracts to the defendant, even when it was the lowest bidder and, in some cases, refused even to acknowledge the defendant's bids. When the defendant asked the department to clarify its status as a bidder during this time period, the department indicated that the defendant was “not prohibited from responding” to invitations to bid, but emphasized that the standard bid terms and conditions indicated that “[a]ward [s] will be made to the lowest responsible qualified bidder.” In addition, in March, 2003, the department issued a notice to “[a]ll [u]sing [s]tate [a]gencies” indicating that it had discovered “certain performance failures” because the defendant had deviated from certain contract specifications, “charged the [s]tate for parts ordered but not delivered ... and failed to properly credit the [s]tate for substitute parts.” The department further stated, in that notice, that the “substitution of generic parts ... also occurred on a prior contract involving servers,” and the state, therefore, “recommend[ed] that [the agencies] exercise appropriate caution if [they] contemplate[d] purchasing from [the defendant] under [their] direct purchasing authority.”

Around the same time, state police officers obtained and executed search warrants at the defendant's office and the personal residence of Gina Kolb, the defendant's president.⁶ On the basis of evidence obtained during those searches, and the department's internal audit and investigations, in April, 2004, the department decided to bring the present litigation against the defendant. The department held a press conference with the attorney general and the chief state's attorney announcingthe commencement of this civil action against the defendant and issued a press release to similar effect. This announcement received significant media attention, and the defendant's other customers thereafter began cancelling their contracts with the defendant. Given that the department also declined to award the defendant bids on new contracts during this time period, the defendant was unable to continue operating its business, and ultimately ceased operations in 2005.

On April 8, 2004, the department filed this action against the defendant,⁷ alleging breach of contract and fraud claims premised on allegations that the defendant intentionally provided computers that did not comply with the specifications set forth in the computer contract. The department also asserted claims for breach of contract and fraud premised on allegations that the defendant provided the state with computer servers that contained generic, after market memory when the server contracts required factory-installed memory.⁸

The defendant filed an amended counterclaim in response, wherein it alleged that the department: (1) took the defendant's property, namely its business expectancyin the computer contract, without just compensation in violation of article first, § 11, of the Connecticut constitution (takings counterclaim); (2) deprived the defendant of its liberty interest to pursue its business without due process of law in violation of article first, § 10, of the Connecticut constitution (procedural due process counterclaim); and (3) defamed the defendant by publicly suggesting that it had engaged in improper conduct in its dealings with the department (defamation counterclaim), and sought, inter alia,⁹ monetary damages and a jury trial. The department then moved to dismiss the defendant's takings and procedural due process counterclaims on the basis of the state's sovereign immunity, and the defamation counterclaim on the basis of absolute immunity.

On November 27, 2007, the trial court, Shortall, J., denied the department's motion to dismiss both the takings and the procedural due process counterclaims, concluding that, by asserting claims against the defendant, the department had waived the state's sovereign immunity for any related counterclaims. Judge Shortall cited State v. Kilburn, 81 Conn. 9, 12, 69 A. 1028 (1908), and noted that, “[f]or almost 100 years, it has been the law that, when the state sues a party, it ‘open[s] the door to any defense or cross complaint germane to the matter in controversy.’ ” Judge Shortall further stated that, “[t]his rule was announced in Kilburn, an equitable action, but no reason appears why it should be limited to suits in equity and not actions at law, and other courts have not so limited it.” ¹⁰ Because Judge Shortall determined that the defendant's...