Schimenti Constr. Co. v. Schimenti, AC 44274

CourtAppellate Court of Connecticut
Writing for the CourtSEELEY, J.
Docket NumberAC 44274
Decision Date17 January 2023




No. AC 44274

Court of Appeals of Connecticut

January 17, 2023

Argued May 10, 2022

Procedural History

Action to recover damages for, inter alia, breach of contract, and for other relief, brought to the Superior


Court in the judicial district of Danbury and transferred to the judicial district of Hartford, Complex Litigation Docket, where the court, Moukawsher, J., granted the defendant's motion for summary judgment with respect to certain counts of the complaint; thereafter, the court, Moukawsher, J., denied the plaintiffs motion for a written determination in favor of an immediate appeal; subsequently, the plaintiff withdrew the remaining counts of the complaint; judgment for the defendant, from which the plaintiff appealed to this court. Reversed; further proceedings.

Robert M. Barrack, with whom, on the brief, was Peter E. Strniste, Jr., for the appellant (plaintiff).

Lori B. Alexander, with whom, on the brief, was Stephen P. Rosenberg, for the appellee (defendant).

Bright, C. J., and Cradle and Seeley, Js.




The plaintiff, Schimenti Construction Company, LLC, appeals from the summary judgment rendered by the trial court in favor of the defendant, Joseph Schimenti, on counts one and two of its complaint alleging breach of an employment contract and breach of the covenant of good faith and fair dealing. On appeal, the plaintiff claims that the court erred in determining that continued employment of an at-will employee[1] does not constitute consideration for a restrictive covenant.[2] We agree with plaintiffs claim and, therefore, reverse the summary judgment rendered in favor of the defendant and remand the case for further proceedings.

The following facts and procedural history, viewed in the light most favorable to the plaintiff, as the non-moving party, are relevant to our resolution of this appeal. See, e.g., DAB Three, LLC v. Fitzpatrick, 215 Conn.App. 835, 837, 283 A.3d 1048 (2022). The plaintiff, a construction management firm organized and existing under the laws of the state of New York, with its headquarters located in Ridgefield, Connecticut, employs more than 200 employees. The president and sole owner of the plaintiff is Matthew Schimenti (Matthew), the cousin of the defendant.[3] The plaintiff employed the defendant beginning in 1998. On various dates in 2013, the defendant informed Matthew that he "wanted more responsibility and to be involved in the strategic growth of [the plaintiff] and the overall management" and indicated that his ultimate goal included obtaining an ownership interest in the plaintiff. Matthew responded that he would consider creating a new position that included additional responsibilities and increased compensation for the defendant but noted that providing him with an ownership interest "was not possible at that time . . . ." At the beginning of 2014, the defendant held the title of project executive[4] and received a salary of $165,000 per year. At some point in January or February, 2014, the defendant was promoted to managing director.[5]

On February 25, 2014, Matthew presented the defendant with two documents, a promotion letter and a nondisclosure agreement.[6] The promotion letter, dated February 25, 2014, confirmed the defendant's promotion to managing director, effective February 1, 2014. This promotion letter described, inter alia, the responsibilities, compensation, and benefits of the new position. It stated that the defendant's initial base salary as managing director would start at $165,000 per year and that, effective August 1, 2014, it would increase to $185,000 per year, provided that he achieved performance objectives and was actively employed with the plaintiff. The promotion letter further stated that the defendant's salary was subject to an annual review, benchmarked on relevant industry data, and was subject to adjustment


based on an appraisal of the defendant's work performance and the finances of the plaintiff. It also detailed additional benefits that the defendant would be eligible for, including fringe benefit plans and an incentive program.

The promotion letter further provided in relevant part: "This letter will outline the terms and conditions of [the defendant's] employment with the [plaintiff]. It does not create an employment contract between the {plaintiff] and [the defendant]. [The defendant] shall at all times be an employee at will of the [plaintiff], and both [the defendant] and the [plaintiff] may terminate [the defendant's] employment at any time for any reason, with or without cause .... Nothing contained in this offer constitutes a promise of employment for any particular duration or [the defendant's] receipt of compensation or benefits of any level for any particular duration." (Emphasis added.) The promotion letter specifically stated: "As a condition of your continued employment by the [plaintiff], you must execute a Non-Disclosure, Assignment of Developments & Non-Solicitation Agreement ([nondisclosure agreement])," which the promotion letter indicated was attached to it. The nondisclosure agreement provided in relevant part: "In consideration and as a condition of my employment by [the plaintiff] . . . the [defendant] hereby agrees with the [plaintiff] as follows . . . ." Section one of the nondisclosure agreement was titled "Confidentiality of Information; Developments," section two was titled "Covenant Not to Compete/Solicit," and section three was titled "Miscellaneous." Section two prohibited the defendant from competing with the plaintiffs business for the duration of his employment and for two years after the termination of his employment.[7] In section three, the nondisclosure agreement provided in relevant part that "[t]he [defendant] acknowledges and agrees that [he] is an 'employee-at-will' and this [a]greement does not create any obligation on the [plaintiff] or any other person or entity to continue the [defendant's] employment or to exploit any [developments."

The promotion letter directed the defendant to sign and date both the promotion letter and the nondisclosure agreement. It also stated these two documents contained "the entire understanding" of the defendant's employment by the plaintiff. The defendant signed the nondisclosure agreement on February 28, 2014, and the promotion letter on March 17, 2014.

Approximately four years later, in March, 2018, the defendant resigned from his employment with the plaintiff and accepted a position at JRM Construction Management, a construction company in New York City. The plaintiff commenced this action on June 25, 2018, claiming that the defendant had breached the nondisclosure agreement. The plaintiff sought both monetary damages and injunctive relief. Thereafter, the plaintiff


filed an amended complaint (operative complaint) that contained seven counts.[8] Only counts one and two of the operative complaint, in which the plaintiff alleged claims of breach of contract and breach of the covenant of good faith and fair dealing, respectively, are relevant to this appeal. On March 12, 2019, the defendant filed a revised answer and special defenses, including that (1) the covenant not to compete in the nondisclosure agreement was unreasonable and, thus, unenforceable, (2) the covenant not to compete was unenforceable due to the lack of consideration, (3) the covenant not to compete was unenforceable due to the plaintiffs anticipatory breach, and (4) the plaintiff failed to mitigate its alleged damages and harm.

On September 20, 2019, the defendant filed a motion for summary judgment as to counts one and two of the plaintiffs operative complaint. The defendant claimed, inter alia, that the restrictive covenants set forth in the nondisclosure agreement were unenforceable because the nondisclosure agreement lacked consideration.[9]Specifically, he claimed that "the only item of value that [the defendant] arguably received for his [signing of the nondisclosure agreement] was his continued employment by [the plaintiff]" and that, "[b]ecause in this case there was no consideration for the [nondisclosure agreement] beyond [the defendant's] continued employment, the [nondisclosure agreement] is unenforceable as a matter of law."

On October 25, 2019, the plaintiff filed a memorandum of law in opposition to the defendant's motion for summary judgment. In addressing the defendant's claim of lack of consideration, the plaintiff argued that the promotion letter provided that the defendant's elevation to managing director became "effective February 1, 2014, that as part of that promotion he would be entitled to a raise to $185,000 per year (a $20,000 raise) effective August 1, 2014, and that as a condition of his continued employment in his new position he would sign the [nondisclosure agreement]." The plaintiff identified the promotion, additional employment responsibilities, and the promise of the $20,000 raise as consideration for the nondisclosure agreement. Finally, the plaintiff noted that Matthew" 'would have never promoted [the defendant] to managing director and provided him with increased compensation unless he signed [the nondisclosure agreement].'"

On December 11, 2019, the court issued its memorandum of decision granting the defendant's motion for summary judgment with respect to counts one and two of the operative complaint. At the outset, the court determined that both the promotion letter and the nondisclosure agreement were unenforceable due to a lack of consideration. It then stated that, pursuant to its interpretation of this court's decision in Thoma v. Oxford Performance Materials, Inc., 153 Conn.App. 50, 100 A.3d 917 (2014),


"a party giving nothing more than the status quo of continuing employment-neither offering a benefit nor accepting a harm-offers no consideration to exchange for his promise...

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