Saunders v. Firtel
| Decision Date | 22 September 2009 |
| Docket Number | No. 18309.,18309. |
| Citation | 978 A.2d 487,293 Conn. 515 |
| Parties | Barry SAUNDERS et al. v. Burton FIRTEL et al. Barry Saunders v. Burton Firtel et al. Barbur Associates, LLC v. Adco Medical Supplies, Inc. |
| Court | Connecticut Supreme Court |
Arnold M. Potash, Seymour, for the appellants (defendant Burton Firtel et al.).
Jonathan S. Bowman, with whom was Rachel A. Pencu, Bridgeport, for the appellees (plaintiff Barry Saunders et al.).
ROGERS, C.J., and NORCOTT, VERTEFEUILLE, ZARELLA and McLACHLAN, Js.
This appeal1 arises out of three separate actions2 initiated by the plaintiff, Barry Saunders,3 against the defendants, Burton Firtel, Adco Medical Supplies, Inc. (Adco), and Barbur Associates, LLC (Barbur),4 in which the plaintiff, a former employee of Adco and a member and 50 percent interest holder in Barbur, sought to recover unpaid wages and double damages from Adco under General Statutes §§ 31-71c5 and 31-72,6 and a judicial dissolution and winding up of Barbur pursuant to General Statutes §§ 34-2077 and 34-208.8 The trial court found in favor of the plaintiff on his unpaid wages claim, awarded the plaintiff double damages pursuant to § 31-72 and ordered a dissolution and winding up of Barbur pursuant to §§ 34-207 and 34-208. On appeal, the defendants claim that the trial court improperly (1) invoked § 31-72 in awarding wages to the plaintiff because the plaintiff was not an "employee" of Adco within the meaning of § 31-72, (2) calculated the amount of wages awarded to the plaintiff for 2004 by failing to prorate the plaintiff's salary on the basis of the number of months that he had worked in that year, (3) awarded double damages to the plaintiff pursuant to § 31-72, and (4) ordered the dissolution of Barbur. The plaintiff responds that the trial court properly (1) found that the plaintiff was an employee of Adco and that the defendants' argument to the contrary stems from their misinterpretation of § 31-72, (2) calculated the wages awarded to the plaintiff on the basis of the evidence adduced at trial, (3) awarded double damages on the basis of its findings of fact, and (4) ordered the dissolution of Barbur because it was not reasonably practicable for the parties to carry on the business together. We affirm the judgment of the trial court.
The trial court's memorandum of decision and the record reveal the following relevant facts and procedural history. The plaintiff and Firtel began a profitable business relationship and a strong personal friendship in the mid-1980s. Prior to Firtel's involvement with the plaintiff, Firtel had formed Adco, a pharmaceutical sales company, as a Connecticut corporation in or about 1970. Firtel was the sole owner of Adco. Prior to the plaintiff's involvement with Firtel, the plaintiff had been employed as a sales representative for a medical supply company known as General Medical Corporation, where he had obtained extensive training and sales experience.
In 1986, following a successful initial joint venture, the plaintiff and Firtel sought to formalize their business relationship. The plaintiff joined Adco and obtained a 49 percent shareholder interest in the company, and Firtel retained a controlling 51 percent interest. In September, 1986, the plaintiff and Firtel executed a document entitled "Operational Agreement Regarding Adco Corporation," which was signed by Firtel as president of Adco and by Firtel and the plaintiff, individually. The agreement provided that the plaintiff "desire[d]" to become a stockholder of Adco, "and to be employed by [Adco]. . . ."
Paragraph eight of the agreement set forth the respective duties of the parties and the compensation that they would receive. That paragraph provides in relevant part:
The agreement also assigned control of the board of directors to Firtel, through an appointment process, which provided:
Following the execution of the agreement, Firtel continued to hold the position of president of Adco, and the plaintiff was appointed vice president and secretary.9 From 1986 through July, 2004, the plaintiff was "in charge of virtually all of Adco's day-to-day operations." During each of the years between 1986 and 2003, Adco paid expenses incurred by both Firtel and the plaintiff, in addition to their salaries.10 These expenses included medical and health expenses, automobile expenses, professional services and other related expenses.
Sometime after 2000, the plaintiff became disenchanted with the business arrangement. In March, 2003 the plaintiff sought a change in the operational agreement stemming from his perception that he was performing most of the work necessary to guarantee a profit for Adco but was dividing compensation and fringe benefits equally with Firtel. The plaintiff submitted a proposal, suggesting that he be paid 50 percent of the income for running the business and that the next 50 percent be equally divided between the shareholders. Firtel did not engage in any meaningful discussions concerning this suggested change because, apparently, he was satisfied with the status quo.
On May 19, 2004, the plaintiff, through his attorney, formally advised Firtel that operating Adco in accordance with the 1986 agreement no longer was acceptable. The plaintiff offered to submit the dispute to arbitration and indicated an intention to file an action seeking to terminate the business relationship if an agreement could not be reached. Two months later, Firtel, acting in his capacity as president and majority stockholder of Adco, responded by terminating the plaintiff's employment via a July 23, 2004 memorandum. The plaintiff did not perform any work for Adco after July, 2004. He received no salary from Adco in 2004, and since the July 23, 2004 memorandum, the plaintiff has not been compensated by Adco either in the form of salary or most fringe benefits.
Meanwhile, in July, 1999, during what the trial court referred to as their "era of good feeling," the plaintiff and Firtel had formed Barbur, a limited liability company in which each owns a 50 percent interest. Barbur owns certain real estate located in Hamden, where Adco conducts its business. Barbur leases its property to Adco pursuant to an oral month-to-month lease. Prior to 2004, Adco paid Barbur an annual rent of $18,000. The lease obligated Adco to pay taxes, insurance and maintenance on the property.
After July, 2004, when Firtel terminated the plaintiff's employment with Adco, Firtel reduced the rental payments without consulting the plaintiff. In addition, Firtel unilaterally authorized the repair of the floor of the premises at a cost of $8480 and arranged for a $5000 loan from Barbur to Adco. Firtel continues to manage Barbur and to maintain Barbur's finances. In the aftermath of the May 19, 2004 and July 23, 2004 exchanges between the parties, any business or personal relationship that formerly had existed between them ended.
Following the plaintiff's termination from Adco, he initiated the three actions that later were consolidated for trial. The first action included, inter alia, his statutory claim for unpaid wages.11 The second action sought the judicial dissolution of Barbur12 and the third action, which is not at issue in this appeal, consisted of a summary process action commenced by the plaintiff on behalf of Barbur against Adco. The trial court found in favor of the plaintiff on his unpaid wages claim, awarded him double damages pursuant to § 31-72 and ordered a dissolution and winding up of Barbur pursuant to §§ 34-207 and 34-208. This appeal followed. See footnote 1 of this opinion. Additional facts will be set forth as necessary.
The defendants first claim that the trial court improperly awarded wages to the plaintiff pursuant to § 31-72. The defendants make three arguments with respect to this claim. First, the defendants argue that the trial court improperly invoked § 31-72 in awarding wages to the plaintiff because the plaintiff was not an "employee" of Adco within the meaning of § 31-72. Second, the defendants contend that the trial court improperly calculated the base amount of wages awarded to the plaintiff for 2004 by failing to prorate the plaintiff's award on the basis of the number of months that he had worked in that year. Finally, the defendants assert that the trial court's award of double damages to the plaintiff pursuant to § 31-72 was improper because that court did not make a specific finding of bad faith on the part of Adco.13 We disagree with the defendants' first two arguments and decline to reach the third argument because the record is inadequate for our review.
The defendants first claim that General Statutes § 31-58(f)14 provides the applicable definition of the term "employee" as that term is used in § 31-72, and that the plaintiff does not come within that definition. Specifically, the defendants contend that, because the plaintiff was an officer of Adco and was "running the company," the plaintiff was "an individual employed in a bona fide executive, administrative or professional capacity," and,...
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