Connecticut Educ. Ass'n v. Milliman Usa

• Decision Date: 29 January 2008
• Docket Number: No. 28123.,28123.
• Citation: Connecticut Educ. Ass'n v. Milliman Usa, 938 A.2d 1249, 105 Conn.App. 446 (Conn. App. 2008)
• Court: Connecticut Court of Appeals
• Parties: CONNECTICUT EDUCATION ASSOCIATION, INC. v. MILLIMAN USA, INC., et al.

938 A.2d 1249

105 Conn.App. 446

CONNECTICUT EDUCATION ASSOCIATION, INC. v.MILLIMAN USA, INC., et al.

No. 28123.

Appellate Court of Connecticut.

Argued October 9, 2007.

Decided January 29, 2008.

Martin A. Gould, with whom was Mark W. Baronas, Hartford, for the appellant(plaintiff).

Paul E. Pollock, Shelton, for the appellee(defendantSorokin, Gross & Hyde, P.C.).

GRUENDEL, LAVINE and PELLEGRINO, Js.

PELLEGRINO, J.

The plaintiff, the Connecticut Education Association, Inc., appeals from the judgment, rendered after a trial to the court, in favor of the defendantSorokin, Gross & Hyde, P.C., a Connecticut law firm.¹On appeal, the plaintiff claims that the trial court improperly (1) found that there was no contract between the parties as alleged in the complaint and (2) determined that part of the complaint sounded in tort rather than contract.We affirm the judgment of the trial court.²

The court made the following factual findings relevant to our discussion.The plaintiff is a union that represents public school teachers.The plaintiff's employees are unionized, and the benefits provided by the pension plan for these employees were subject to collective bargaining.The defendant advised the plaintiff with respect to its pension plan and related matters from 1989 until 1998.Milliman USA, Inc.(Milliman), provided the plaintiff with actuarial services during this time period.

In 1995, the plaintiff became concerned with the costs of funding its employees' pension plan.At this time, eligible retirees could choose to receive their pension either in a lump sum or in periodic payments.Both options included an annual cost of living adjustment (annual adjustment) of 2 percent.The plaintiff realized that an unexpected number of retirees were selecting the lump sum option, which caused a financial strain on the pension plan.

Two directors of the plaintiff, John Yrchik, the executive director, and Carol DeBarba, the director of administration and finance, sought ways to reduce this burden on the pension plan.Yrchik and DeBarba, acting on behalf of the plaintiff, requested assistance from both Milliman and the defendant.Specifically, DeBarba contacted Barrie Wetstone, the partner in the defendant law firm who handled the plaintiff's account, and requested a legal opinion as to whether certain proposed changes to the pension plan were permissible.One of the changes proposed by the plaintiff was whether the annual adjustment could be eliminated when a retiree chose the lump sum option.The plaintiff's request for a legal opinion was faxed to the defendant on November 2, 1995.

In a letter dated November 28, 1995, Sharon Kowal-Freilich, an associate in the defendant law firm, formally responded to the plaintiff's request.This letter opined that the annual adjustment could be eliminated when a retiree chose the lump sum option, as long as it is done only on a prospective basis.The plaintiff used this information in its negotiations with the Connecticut Education Association Professional Staff Organization, the union that represented the professionals employed by the plaintiff.The plaintiff and that union ultimately agreed to amend the pension plan.Specifically, the amendment provided that if a retiree elected the lump sum option, then the annual adjustment was eliminated.If, however, a retiree opted for periodic payments, then he or she was entitled to a 2.5 percent annual adjustment.The defendant drafted language to amend the pension plan in accordance with this agreement.

On or about the end of August, 1998, the plaintiff ended its professional relationship with the defendant.The plaintiff hired a law firm based in Washington, D.C., Bredhoff & Kaiser (Bredhoff), as counsel with respect to the pension plan.The plaintiff then reached an identical arrangement with the Associated Staff Organization of the Connecticut Education Association, the union representing the staff members of the plaintiff, with respect to the annual adjustments.Bredhoff incorporated these changes.Additionally, Bredhoff submitted the pension plan to the Internal Revenue Service for review, as a cautionary measure, and received an approval letter³ in March, 1999.

On April 19, 2001, an actuary employed by Milliman faxed DeBarba information regarding a recent federal District Court case, Laurenzano v. Blue Cross & Blue Shield of Massachusetts,134 F. Sup.2d 189 (D.Mass.2001).The actuary was concerned that the disparate treatment of the annual adjustments was not permissible.DeBarba eventually requested a legal opinion from Bredhoff.On October 19, 2001, Bredhoff "advised that the discrepancy in treatment was improper" and recommended reverting to the 2 percent annual adjustment for both lump sum and annuity pensions.The plaintiff unilaterally amended the pension plan to enact this recommendation, and, as a result, a complaint was filed with the National Labor Relations Board.During the pendency of this complaint, the plaintiff incorporated a 2.5 percent annual adjustment as to both options, which subsequently was negotiated down to 2 percent.

The plaintiff commenced the present action, and the operative complaint, dated March 21, 2005, alleged, inter alia, negligence and breach of contract on the part of Milliman, and breach of contract by the defendant.⁴The court rendered judgment in favor of Milliman and the defendant on September 22, 2006.With respect to the claim against the defendant, the court concluded that it was not "persuaded by a preponderance of the evidence that [the plaintiff] and [the defendant] entered into the agreement which has been alleged."This appeal followed.Additional facts will be set forth as necessary.

I

The plaintiff first claims that the court improperly found that there was no contract between the parties as alleged in the plaintiff's complaint.Specifically, it argues that there was no conflicting evidence regarding the critical terms of the contract.We are not persuaded.

The following additional facts are necessary for our resolution of this issue.In paragraph four of count three of the plaintiff's operative complaint, the following was alleged: "On or about 1999, the defendant . . . contracted with the [plaintiff] to provide the [plaintiff] with competent and professional legal services necessary and appropriate to maintain the [plaintiff's] Pension Plan . . . in good standing as a qualified defined benefit pension plan, under the Internal Revenue Code . . . and the Employment Retirement Income Security Act[of 1974(ERISA), 29 U.S.C. § 1101 et seq.] . . . and agreed, as part of said contract, to perform said services with due diligence and reasonable care."In its answer, the defendant denied this allegation.

DeBarba testified that she was employed by the plaintiff from 1993 until January, 2005.One of her responsibilities was to oversee the pension plan.DeBarba acknowledged that the defendant had advised the plaintiff regarding the plan beginning in the late 1980s, prior to her employment with the plaintiff.She testified that Wetstone and Kowal-Freilich drafted plan amendments and reviewed the plan to keep it in compliance with the law.She further explained that this arrangement had been established prior to her employment with the plaintiff.

Yrchik testified that he was the plaintiff's executive director starting in May, 1995.He admitted that, at the time this employment commenced, the defendant already had been in place as pension plan counsel.Specifically, Yrchik stated: "[The plaintiff] had an ongoing relationship with the [defendant].If we needed legal opinions, we asked the [defendant].If we needed plan amendments to be drafted, the [defendant] drafted them, and the [defendant] was responsible for ensuring that the plan was in compliance with the federal law."

Kowal-Freilich testified that she began working for the defendant in 1985 and remained in its employ until December, 2000.⁵She began practicing in the employment benefit department in late 1989 or early 1990.During cross-examination, the plaintiff's counsel questioned Kowal-Freilich as follows:

"Q.And your arrangement with the [plaintiff] was to help them with their pension plan and to keep it in compliance with the [Internal Revenue Service] code and ERISA, correct?

"A.Correct.

"Q.And so you answered any questions that they would pose to you regarding the pension plan?

"A.Correct. . . .

"A.We would tell them what they needed to do to address a particular issue to stay in compliance.Yeah.

"Q.Okay.If you became aware of a change in the law, whether through a new case or a new regulation or something that would put the compliance of their plan in jeopardy, would you—would it be part of your arrangement with them to let them know?

"A.Yes.

"Q.And that was the agreement that you had with them, that you would do that?

"A.Well, yeah, I guess."(Emphasis added.)

In its memorandum of decision, the court noted that the plaintiff had alleged a "rather precise contractual agreement. . . ."Furthermore, the court found that the plaintiff failed to prove, by a preponderance of the evidence, that the parties had entered into the contract alleged in the operative complaint.The court further found that the defendant did not promise the specific result of ensuring that the pension plan would remain compliant with the Internal Revenue Service code and ERISA standards.On appeal, the plaintiff maintains that the court's findings were improper because the "testimony presented by both parties was that [the defendant] was responsible for ensuring that the [plaintiff's] plan was in compliance with the [Internal Revenue Service] code and ERISA."

As a preliminary matter, we set forth certain legal principles germane to our discussion."It is well settled that the existence of a contract is a question of fact."(Internal quotation marks omitted.)Stevenson Lumber Co.-Suffield, Inc. v. Chase Associates,...