Label Systems Corporation v. Aghamohammadi

Citation852 A.2d 703,270 Conn. 291
Decision Date27 July 2004
Docket Number(SC 17125).
CourtSupreme Court of Connecticut

Sullivan, C. J., and Norcott, Palmer, Vertefeuille and Zarella, Js.

Alexander J. Trembicki, with whom was Thomas B. Lynch, for the appellants-appellees (plaintiff and third party defendant Kenneth P. Felis).

Stephen E. Pliakas, with whom was Jeffrey J. Tinley, for the appellees-appellants (defendants).



This appeal arises out of the internecine dispute between two former employees, the defendants, Samad Aghamohammadi and Pamela Markham, and their former employer, the plaintiff, Label Systems Corporation (Label Systems), as well as its president, Kenneth P. Felis. Label Systems commenced this action against the defendants,1 who counterclaimed against Label Systems and filed a third party complaint against Felis.2 A jury found the defendants liable for conversion, and awarded Label Systems compensatory and punitive damages. In addition, the jury found Label Systems and Felis3 liable for vexatious litigation in relation to a prior action, and awarded the defendants compensatory damages. The trial court rendered judgment in accordance with the jury's verdict. The plaintiffs appealed, and the defendants cross appealed to the Appellate Court, and we transferred both appeals to this court pursuant to General Statutes § 51-199 (c) and Practice Book § 65-1.

On appeal, the plaintiffs claim that the trial court improperly failed to set aside the jury's finding on the vexatious litigation claim because: (1) there was, as a matter of law, probable cause for the plaintiffs to engage in litigation; and (2) it was inconsistent with the jury's other findings. In addition, the plaintiffs claim that the trial court improperly: (1) denied their motion in limine regarding the admissibility of Felis' prior criminal convictions, and failed to grant a mistrial after the defendants violated the court's order in connection with the same; (2) failed to set aside or reduce the compensatory damages awarded to the defendants; and (3) limited Label Systems' award of punitive damages to $19,303.13 in attorney's fees.4 In their cross appeal, the defendants claim that: (1) the trial court improperly denied their motion for a directed verdict and motion for judgment notwithstanding the verdict on Label Systems' conversion claim; (2) the trial court abused its discretion by awarding excessive attorney's fees as punitive damages; and (3) the amount of punitive damages awarded violated the due process clause of the fourteenth amendment of the United States constitution. We reject each claim raised on appeal and on the cross appeal, and, accordingly, we affirm the judgment of the trial court.

The jury reasonably could have found the following facts. Label Systems, a corporation located in Bridgeport, is in the business of manufacturing and producing, among other things, labels, stickers and holograms. The defendants are a married couple, both of whom were employed by Label Systems. Aghamohammadi, an immigrant from Iran, began his employment with Label Systems in 1985, and advanced during his tenure to the position of head of the finishing department. In that capacity, Aghamohammadi was responsible for the examination and inspection of finished products for defects, packaging finished products for shipment and shipping products to customers. Markham began her employment at Label Systems in 1982, and served as the office manager and bookkeeper, where she was primarily responsible for paying Label Systems' bills, managing its finances, and overseeing its medical plan. Both defendants were regarded as valuable and trusted employees by Felis. During their employment, the defendants were provided with a company car, which they used for their commute from Waterbury to Bridgeport. In November, 1992, while driving the company car, their sole means of transportation, the defendants were rear-ended by another car. Subsequently, the defendants received a check in the amount of $1095.01 from the tortfeasor's insurance company. Because Markham was nearing the end of a difficult pregnancy, her first, the defendants did not want to be without the car, and they chose to delay having it repaired until after her delivery. Accordingly, the defendants cashed the insurance check and deposited the proceeds into their personal checking account. In early 1993, Felis equipped the defendants' house with computer equipment so that Markham could work from home after the baby was born, and he built and furnished a nursery in the office for Markham to use after she returned to work.

On February 15, 1993, upon their arrival at work, the defendants were met outside by Felis and other members of his staff. Felis gave the defendants letters of termination that accused them of wilful and felonious misconduct in the course of their employment,5 terminated their employment, and refused to allow them to enter the facility to collect their personal belongings. The defendants surrendered the company car to Felis, and departed in an awaiting limousine, which had been arranged for by Felis. Later that evening, Aghamohammadi was arrested based upon Felis' claim that Aghamohammadi had threatened him when receiving his letter of termination. Label Systems immediately stopped paying a salary to both defendants, and terminated their health insurance.

On February 23, 1993, Markham gave birth to the defendants' first child. On March 10, 1993, Label Systems filed a three count complaint against the defendants, alleging conversion, breach of duties of loyalty and appropriation of trade secrets. The defendants had requested unemployment benefits immediately following their termination, and on April 7, 1993, over the objection of Label Systems, separate awards of unemployment benefits were made to both defendants. The defendants were unable to extend their health insurance at their own expense, however, because of the alleged wilful and felonious misconduct underlying the termination of their employment. On April 22, 1993, Felis, on behalf of Label Systems, appealed from the decisions awarding unemployment benefits to the defendants, claiming that the defendants were terminated for wilful and felonious misconduct, and, therefore, that they were precluded from receiving such benefits. Over the course of the next four months, three separate hearings were held in which the plaintiffs offered testimony and evidence in support of their claim of wilful and felonious misconduct by the defendants. On August 18, 1993, after the third hearing, both appeals were unilaterally withdrawn by the plaintiffs.

In April, 1994, in response to the withdrawal of the appeals, the defendants counterclaimed against Label Systems, and filed a third party complaint against Felis, both of which alleged vexatious litigation, abuse of process, intentional infliction of emotional distress, negligent infliction of emotional distress, slander per se, slander, interference with contractual relations, wrongful discharge and intentional interference with prospective contractual relations. In July, 2001, the actions proceeded to trial, where the jury found the defendants liable for conversion, rejected all of Label Systems' remaining claims, and awarded Label Systems $50 in compensatory damages. In addition, the jury found that the defendants had converted Label Systems' property under circumstances warranting punitive damages, in an amount to be set by the trial court according to the prior agreement of the parties. In regard to the counterclaims and third party complaint, the jury found the plaintiffs liable for vexatious litigation, rejected all of the remaining claims, and awarded Markham $160,000 and Aghamohammadi $60,000 in compensatory damages. These awards were doubled automatically pursuant to General Statutes § 52-568 (1),6 which provides for the doubling of damages for groundless or vexatious actions. The trial court denied several post-trial motions filed by both parties, awarded Label Systems $19,460.17 in punitive damages, and rendered judgment in accordance with the jury's verdict. This appeal followed.


As noted previously, the jury found that the plaintiffs had engaged in vexatious litigation7 when they pursued an administrative appeal from the awards of unemployment benefits made to the defendants based upon an allegation of wilful and felonious misconduct.8 On appeal, the plaintiffs claim that the trial court improperly denied their motion for a directed verdict on the vexatious litigation claim. Specifically, the plaintiffs claim that they had probable cause as a matter of law to appeal from the unemployment awards based upon a claim of wilful and felonious misconduct by the defendants.9 The defendants contend that the trial court properly denied the motion for a directed verdict. We agree with the defendants.

It is well established that "[o]ur review of a trial court's refusal to direct a verdict or to render judgment notwithstanding the verdict takes place within carefully defined parameters. We must consider the evidence, including reasonable inferences which may be drawn therefrom, in the light most favorable to the parties who were successful at trial . . . [and] giving particular weight to the concurrence of the judgments of the judge and the jury, who saw the witnesses and heard the testimony . . . . The verdict will be set aside and judgment directed only if we find that the jury could not reasonably and legally have reached their conclusion." (Citation omitted; internal quotation marks omitted.) Cohen v. Yale-New Haven Hospital, 260 Conn. 747, 761, 800 A.2d 499 (2002).

In regard to the appeal from Markham's award, the plaintiffs advanced two reasons supporting their belief, prior to the time of termination, that Markham had engaged in wilful and felonious misconduct. First was Felis' belief...

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