Van Dyck Printing Co. v. DiNicola

• Court: Connecticut Superior Court
• Writing for the Court: HODGSON
• Citation: Van Dyck Printing Co. v. DiNicola, 648 A.2d 898, 43 Conn.Supp. 191 (Conn. Super. 1993)
• Decision Date: 11 August 1993
• Docket Number: No. CV87-262631,CV87-262631
• Parties: VAN DYCK PRINTING COMPANY v. Anthony F. DiNICOLA.

Page 898

648 A.2d 898

43 Conn.Supp. 191

VAN DYCK PRINTING COMPANY v. Anthony F. DiNICOLA.

No. CV87-262631.

Superior Court of Connecticut Judicial District of New Haven.

Aug. 11, 1993.

Jacobs, Grudberg, Belt & Dow, for plaintiff.

Gordon Alan Evans & Associates, for defendant.

HODGSON, Judge.

The plaintiff, Van Dyck Printing Company, brings the present action seeking money damages from the defendant, Anthony F. DiNicola, for breach of a covenant not to compete after the termination of his employment with the plaintiff. Because the plaintiff's claim concerning the covenant at issue applied to a two year period commencing in April, 1987, the plaintiff's request for injunctive relief has become moot.

The defendant denies breach of his employment agreement and raises as a special defense that the covenant not to compete was unenforceable because the plaintiff had breached the employment agreement over the years by unilaterally changing its terms to suit itself. The defendant has filed a counterclaim alleging that the employer has failed to pay commissions due the plaintiff from his employment under the terms of the employment agreement.

The court finds the facts to be as follows. On March 11, 1968, the defendant, who had been a pressman at Columbia Printing Company for thirteen years and at another printing company for several months, was hired by the plaintiff to work as a salesman. The defendant was acquainted with the plaintiff's president, Leonard Drabkin, who had been a salesman at Columbia Printing Company and who had left that company to purchase an interest in and to operate Van Dyck Printing Company. When the plaintiff agreed to hire the defendant to work as a printing salesman, a role the defendant had never before performed, the only settled features of the employment relationship were that there would eventually be a written contract, that the plaintiff would include in the contract some sort of protection in return for starting the defendant in the new career as a salesman, and that the compensation package would include a car allowance, a $150 per week draw against earned commissions, a commission schedule that would be no lower than 7 percent on the first $100,000 of sales and that would increase for sales in excess of $100,000 as an incentive to the defendant to sell more printing services to the plaintiff's customers, and some share in profits. When the defendant began work for the plaintiff, no agreement had been reached as to the precise amount of the commission rate for sales in excess of $100,000. The defendant had been earning a salary of $14,000 per year in his employment as a pressman at Columbia Printing Company.

Approximately four weeks after the defendant started work for the plaintiff, Drabkin presented him with an employment agreement, which the defendant inspected and signed. The contract provided for the expected $150 per week draw and the expected car allowance. As to commissions, it provided for a 7 percent commission on quarterly sales over $25,000, a 7.5 percent commission on sales over $37,000, an 8 percent commission on sales over $50,000, and an 8.5 percent commission on sales over $75,000. The agreement also provided for an annual profitability bonus of 12.5 percent of the difference between the total sales prices and total "production cost factor" of the printing jobs sold by the defendant.

The contract contained the following covenant not to compete: "14. For a period of twelve months after termination of ... this agreement, the Employee will not, within the State of Connecticut directly or indirectly, own, manage, operate, control, be employed by, participate in, or be connected in any manner with the ownership, management, operation, or control of any business, or the sales of goods or services in any way similar to the type of business conducted by the Employer at the time of the termination of this agreement. In this regard, it is recognized by both parties that the reasonable scope of Employer's present operations are at least throughout the State of Connecticut provided; however, that any activity described in this paragraph shall not be deemed a violation hereof so long as said business, similar in type to the business conducted by the Employer, does not handle, service or sell during said twelve month period, printing or related goods or services to any account or customer of the Employer, which account or customer was handled, serviced or sold by the Employer at any time during the effective life of this agreement; further provided, however, should Employee be employed, by a business similar to that conducted by Employer, as a pressman or in another inside capacity, and he does not deal with, service or otherwise contact any customer or account of Employer, it shall not be deemed a breach of this paragraph. In the event of a violation by Employee of the provision of this paragraph, the Employer shall be entitled to an injunction restraining Employee from continued participation in said similar type of business. Should Employee breach any of the provisions [of] this paragraph, said twelve month period shall be lengthened to a twenty-four month period and shall be enforceable for such a twenty-four month period by an injunction. Nothing herein shall be construed as prohibiting the Employer from pursuing any other remedies available to Employer for said violation, including the recovery of damages from Employee." The agreement provided, in paragraph 13, for termination by either party on one month's written notice.

The defendant worked as a salesman for the plaintiff from 1968 to 1987. In approximately February, 1987, the defendant and another employee, Sam C. Lindberg, approached Drabkin with an idea of starting a business that would act as a buying service for consumers of printing services. Lindberg had no written employment contract with the plaintiff. Drabkin said he was not interested in participating either as an owner of the proposed new venture or as a supplier of printing services to its customers. Under the impression that the defendant was leaning toward leaving with Lindberg to start the new venture described to him, Drabkin, as president of the plaintiff, sent the defendant a letter giving him one month's written notice of termination and reminding him of the covenant not to compete. In the letter, Drabkin invited the defendant to reconsider any plan to leave.

The defendant left the plaintiff at the end of April, 1987, and within one week was selling to the plaintiff's customers the services of Image Development, Inc. (Image), a company in which he was an equal shareholder with Lindberg. Image's business was soliciting from users of printing services information concerning their needs for printed products, securing bids from various printers, placing and supervising production of the projects, and billing the products to the customers, with a mark-up for their efforts. Image also supplied consulting services to customers as to technical features of printing jobs.

In the course of his employment at Image, the defendant had as customers four businesses that had been his own sales accounts when he was employed by the plaintiff: Hubbard/Brassil Advertising, Echlin, Inc., Insight, Inc., and McLaughlin, DelVecchio & Casey. The defendant ceased his employment with and sold his equity interest in Image in 1989, leaving Lindberg as sole owner.

The first issue for the court is the enforceability of the written employment agreement relied on by the plaintiff. That issue has several parts: whether the agreement was ever valid, having been signed after employment began; whether it is too broad in its scope to be enforceable; and whether, if initially valid, the contract became unenforceable because of a prior breach or abandonment of its terms by the plaintiff.

The defendant argues that an employee who has already commenced employment and receives no additional consideration for signing a covenant not to compete is not subject to enforcement of the covenant, because past consideration cannot support the imposition of a new obligation. Dick v. Dick, 167 Conn. 210, 355 A.2d 110 (1974). This general proposition is not, however, applicable to the situation presented. At the time the defendant began work, he and the plaintiff had not concluded an agreement concerning the terms of his employment. They had, rather, agreed on some items and left open some others--notably, the precise commission rate and the nature of the "protection" to be obtained for the plaintiff for entrusting a sales role to the defendant. When the plaintiff presented the defendant with the proposed written contract, no completed contract was already in place. Because the defendant was expected simply to take a $150 weekly draw while the actual commission schedule was being worked out, and because, as a new and untrained salesman, he was not expected to start generating commissions immediately, the fact of his presence at work does not signify, as in other cases, the completion of an agreement. The defendant himself testified that he had begun work without all features of his employment having been clearly formulated. This case does not resemble the situation presented in National Safe Northeast, Inc. v. Smith, Superior Court, judicial district of Hartford-New Britain at Hartford, Docket No. 304189 (December 31, 1985), in which an employee who had been working for one year was asked to sign a covenant not to compete as a condition of continued employment, a circumstance found to entail no new consideration for the new obligation.

Even if the parties were construed to have reached a complete agreement before the defendant started work, however, the enhanced commission rate, described above, would constitute new consideration for the covenant not to compete.

The defendant further claims that the covenant not to compete is unenforceable because it is overbroad in scope. By its...