Thoma v. Oxford Performance Materials, Inc.

• Decision Date: 23 September 2014
• Docket Number: No. 35313.,35313.
• Citation: 100 A.3d 917,153 Conn.App. 50
• Court: Connecticut Court of Appeals
• Parties: Lynne A. THOMA, v. OXFORD PERFORMANCE MATERIALS, INC.

153 Conn.App. 50

100 A.3d 917

Lynne A. THOMA

v.OXFORD PERFORMANCE MATERIALS, INC.

No. 35313.

Appellate Court of Connecticut.

Argued May 28, 2014.

Decided Sept. 23, 2014.

David R. Makarewicz, Hartford, with whom, on the brief, was Christopher L. Brigham, New Haven, for the appellant (defendant).

Edward G. McAnaney, Suffield, with whom, on the brief, were Proloy K. Das and Erin E. Canalia, Hartford, for the appellee (plaintiff).

ALVORD, MULLINS and LAVERY, Js.

Opinion

MULLINS, J.

The defendant, Oxford Performance Materials, Inc., appeals from the judgment of the trial court rendered in favor of the plaintiff, Lynne A. Thoma. On appeal, the defendant claims that the trial court erred in declining to enforce a subsequent employment agreement between the parties. We conclude that the court correctly held that the subsequent agreement the defendant sought to enforce was not supported by consideration, and, consequently, we affirm the judgment of the trial court.

The court found the following relevant facts in its memorandum of decision. The defendant is a corporation that manufactures high performance polymers. The plaintiff was employed by the defendant beginning in February, 2003. In May or June, 2006, the defendant pursued new financing to advance its business. DSM Venturing (DSM), a prospective investor, advised the defendant that it wanted certain employees to enter into employment contracts to ensure continuity within the defendant's company. On the basis of this advice, the plaintiff and the defendant entered into an “Executive Employment Agreement” (first agreement) on June 12, 2006.¹

The first agreement included the following relevant provisions. The plaintiff was entitled to a $78,000² annual base salary and various benefits. The plaintiff's initial employment period was twenty-four months and was automatically renewed for twelve month terms. The court found: “The defendant had the right to terminate the [plaintiff's employment] without cause with sixty days written notice. If terminated without cause, the contract provided that the defendant ‘shall pay to the [plaintiff] all compensation accrued and unpaid up to the effective date of termination plus the base salary of the [plaintiff] that would be payable to the [plaintiff] for the remainder of the then-current initial or renewal term and six (6) months thereafter....’ ” (Emphasis in original.) Additionally, the plaintiff agreed not to pursue employment with the defendant's competitors during her employment and for six months after her employment had ended.

After the first agreement was executed, Richard Steele, a managing member of another investor, Longmeadow Capital (Longmeadow), informed Scott DeFelice, the defendant's chief executive officer, that he considered an employment agreement with a monetary component to be “too strong” and that there was no need for it. Following this discussion, the defendant's board of directors decided to draft another agreement that would protect the defendant's intellectual property and include a noncompete clause.

Then, on an unspecified date between June 12 and June 20, 2006, the defendant presented a “Non-competition, Proprietary Information and Inventions Agreement” (second agreement) to the plaintiff. Section 1.1 of the second agreement provided in relevant part: “Executive³ accordingly agrees that in the event that the Executive's employment relationship with the [c]ompany terminates for any reason, whether voluntary or involuntary ... Executive shall continue to comply with the provisions of [s ]ection 1.2 of this [a]greement.” (Emphasis added; footnote added.) Section 1.2 provided: “Executive agrees that [she] shall not, during the period of [her ] employment with the [c]ompany, directly or indirectly seek, solicit, enter into or engage in any employment, business, enterprise, agreement or consulting arrangement with any other person or entity, that is at that time engaged in, or that has clear plans for future engagement in competition with the [b]usiness of the [c]ompany....” (Emphasis added.)

The second agreement additionally provided that the defendant could “terminate the [plaintiff's] employment ... at any time with or without cause and with or without notice,” thus making her an at-will employee. The second agreement included no mention of salary or provision for termination compensation. Lastly, the second agreement stated: “This agreement, together with any attachments, contains the entire agreement of the parties, and supersedes any prior or contemporaneous statements or understanding by or between the parties.”

The second agreement was executed on June 20, 2006. Pursuant to the first agreement's terms, the plaintiff's salary was increased from $65,000 to $78,000 on or about July 1, 2006.

On November 20, 2007, the defendant terminated the plaintiff from her employment. The plaintiff filed an amended complaint alleging breach of contract and fraud on March 23, 2009.⁴ The plaintiff alleged that the defendant breached the first agreement's terms by terminating her employment without notice, cause, or termination pay. The defendant argued at trial that it did not breach the terms of the first agreement because the second agreement had superseded it.

After a trial to the court, the court issued its decision on August 15, 2012. The court held that the first agreement was supported by consideration and was valid. The court additionally held that the second agreement was not valid because it was not supported by consideration.⁵ Consequently, the court concluded that the second agreement did not supersede the first agreement and that the plaintiff was entitled to termination compensation in accordance with the first agreement's terms. This appeal followed. Additional facts will be set forth as necessary.

On appeal, the defendant argues that the court erred by concluding that the first agreement, rather than the second agreement, controlled.⁶ According to the defendant's argument, the second agreement was the only enforceable agreement between the parties, as dictated by the complete integration clause stating that the agreement superseded any prior writings. The defendant thus claims that the court erred in concluding that there was no valid consideration to support the second agreement. The defendant argues that (1) the second agreement was supported by consideration because it eliminated the plaintiff's six month noncompete clause that was contained in the first agreement, (2) the plaintiff's increased chance for continued employment was consideration, and (3) the second agreement listed a recital of consideration, which the plaintiff failed to dispute effectively. We will consider each of these arguments in turn.

We begin our analysis by setting forth the relevant legal standards. “Whether an agreement is supported by consideration is a factual inquiry reserved for the trier of fact and subject to review under the clearly erroneous standard.” (Internal quotation marks omitted.) Viera v. Cohen,

283 Conn. 412, 442, 927 A.2d 843 (2007). “The conclusion drawn from the facts so found, i.e., whether a particular set of facts constitutes consideration in the particular circumstances, is a question of law ... and, accordingly, is subject to plenary review.” (Citation omitted.) Willamette Management Associates, Inc. v. Palczynski, 134 Conn.App. 58, 71, 38 A.3d 1212 (2012).

“The doctrine of consideration is fundamental in the law of contracts, the general rule being that in the absence of consideration an executory promise is unenforceable.” (Internal quotation marks omitted.) Connecticut National Bank v. Voog, 233 Conn. 352, 366, 659 A.2d 172 (1995). “Put another way, [u]nder the law of contract, a promise is generally not enforceable unless it is supported by consideration.” (Internal quotation marks omitted.) NSS Restaurant Services, Inc. v. West Main Pizza of Plainville, LLC, 132 Conn.App. 736, 740–41, 35 A.3d 289 (2011). “A modification of an agreement must be supported by valid consideration and requires a party to do, or promise to do, something further than, or different from, that which he is already bound to do.” (Internal quotation marks omitted.) TD Bank, N.A. v. M.J. Holdings, LLC, 143 Conn.App. 322, 332, 71 A.3d 541 (2013).

“[C]onsideration is [t]hat which is bargained-for by the promisor and given in exchange for the promise by the promisee.... We also note that [t]he doctrine of consideration does not require or imply an equal exchange between the contracting parties.... Consideration consists of a benefit to the party promising, or a loss or detriment to the party to whom the promise is made.” (Internal quotation marks omitted.) Martin Printing, Inc. v. Sone, 89 Conn.App. 336, 345, 873 A.2d 232 (2005).

I

The defendant first argues that the second agreement was supported by consideration because it eliminated the six month post-employment prohibition on competition imposed under the first agreement and limited the period of noncompetition to include only the time that the plaintiff was employed by the defendant. We disagree.

“Section 71 of the Restatement (Second) of Contracts relates the familiar legal sense of the term ‘consideration’: ‘(1) To constitute consideration, a performance or a return promise must be bargained for. (2) A performance or return promise is bargained for if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise.’ ” Mandell v. Gavin, 262 Conn. 659, 668, 816 A.2d 619 (2003). Consideration, therefore, requires intent by the parties to incur benefits or detriments at the time an agreement is entered into. See Willamette Management Associates, Inc. v. Palczynski, supra, 134 Conn.App. at 70, 73, 38 A.3d 1212 (determining whether contract was supported by consideration “at the time that the parties entered into the ... agreement”).

In addressing the second agreement's noncompetition restriction, the court held that “[t]he language is...