Opinion
NNHCV186079777S
08-07-2018
ATI Engineering Services, LLC v. Brian W. Millard
UNPUBLISHED OPINION
Judge (with first initial, no space for Sullivan, Dorsey, and Walsh): Pierson, W. Glen, J.
MEMORANDUM OF DECISION RE PPLICATION FOR TEMPORARY INJUNCTION (No. 100.36)
PIERSON, J.
STATEMENT OF THE CASE
This action was brought by the plaintiff, ATI Engineering Services, LLC, against a former executive, the defendant, Brian W. Millard. In its verified complaint, the plaintiff alleges claims in breach of contract; breach of the covenant of good faith and fair dealing; breach of fiduciary duty; tortious interference with business relations; violation of the Connecticut Unfair Trade Practices Act, General Statutes § 42-110a et seq. (CUTPA); and unjust enrichment.
According to the plaintiff, it is the successor entity to Avionics Technologies, Inc., a Connecticut corporation with a principal place of business located in Woodbridge, Connecticut. In approximately August 2007, Avionics Technologies, Inc. assigned its business and accompanying agreements to the plaintiff.
Given the related nature of these corporate entities, and the plaintiff’s status as successor to Avionics Technologies, Inc., the court will refer to these companies, interchangeably, as "the plaintiff."
The defendant resides in Portage, Pennsylvania. He is a Federal Aviation Administration (FAA) Designated Engineering Representative (DER) and, as such, is subject to regulatory guidelines promulgated by the FAA and the federal government.
The plaintiff claims that on May 31, 2007, the plaintiff and the defendant entered into an employment agreement whereby the defendant was engaged as its Vice President and Chief Operating Officer (COO). Pursuant to the agreement, the defendant was responsible for estimating project costs, preparing proposals, submitting bids, staffing projects, project management, cost reporting, and customer interface. In exchange for the performance of these professional services, the defendant received a base salary, together with medical and dental insurance benefits. The defendant also received a bonus based upon corporate performance and was paid profit sharing comprised of fifty percent of the plaintiff’s annual operating profits for each year. The plaintiff alleges that the defendant earned the following amounts, by year: approximately $505,000 in 2014; approximately $380,000 in 2015; approximately $248,000 in 2016; approximately $226,000 in 2017.
The plaintiff claims that in executing the employment agreement, the defendant acknowledged that the plaintiff’s confidential information is of incalculable value to the plaintiff. Further, the defendant agreed that he would not at any time during or after the termination of the agreement, either directly or indirectly, use the plaintiff’s confidential information except and to the extent required to carry out his employment duties. The plaintiff further claims that pursuant to the employment agreement, during the term of the agreement and for three years thereafter, the defendant would not directly or indirectly solicit, interfere with or endeavor to entice away any person who was a client of the plaintiff during the period of his employment, for the purpose of providing applied engineering services, sales representation, or any services of a similar kind or nature.
The plaintiff contends that under the employment agreement, a breach by the defendant of the covenants contained in the agreement, including those relating to confidentiality and competition, would cause irreparable harm to the plaintiff Accordingly, in the event of a breach or threatened breach by the defendant, the plaintiff would be entitled to obtain, without bond, a temporary or permanent injunction to be issued by any competent court of law or equity, enjoining and restraining the defendant from any breach or threatened breach of any covenant contained in the employment agreement.
The plaintiff alleges that the defendant was in a position of trust and was a fiduciary with respect to the plaintiff, both as a result of his position as an officer and his execution of the employment agreement. It further alleges that the defendant was highly compensated. The plaintiff claims that, despite the defendant’s position of trust, his fiduciary obligations, and his explicit agreement not to compete with the plaintiff, or divert business opportunities from the plaintiff, the defendant used the plaintiff’s time and resources to compete unlawfully with the plaintiff, to its detriment. More specifically, the plaintiff contends that on or around January 29, 2018, the plaintiff became aware of certain email communications that "unequivocally demonstrate[d]" that the defendant used company time and resources to perform personal work for the plaintiff’s customers, thereby diverting business opportunities from the plaintiff.
The plaintiff claims that it began investigating the defendant’s conduct to determine whether he was diverting its business opportunities for his own personal gain, which conduct might also violate the plaintiff’s "teaming agreements" with its customers and is prohibited by "industry ethical standards." It further claims that, upon information and belief, the defendant set up a "Dropbox" electronic storage unit, solely accessible to him, into which he moved company and customer files.
On or about April 3, 2018, the plaintiff claims that its president and chief executive officer, Jamie Lecker, confronted the defendant with his findings and sought an explanation for the diverted emails and customer contacts. According to the plaintiff, the defendant "initially denied his actions" but, after being informed that Lecker had evidence in the form of the defendant’s email activity, the defendant "admitted that he had been working with [the plaintiff’s] customers individually and for personal gain." The defendant allegedly offered as an excuse that Lecker had "orally authorized" the defendant to engage in such activity. The plaintiff denies that Lecker ever gave the defendant authorization to work with its customers individually, and for personal gain, contending that such authorization would have been unlawful, contravened the plaintiff’s business interests, and jeopardized the integrity of Lecker’s contacts with the plaintiff’s customers. The defendant’s employment was terminated.
The plaintiff alleges that on or about April 4, 2018, the defendant sent Lecker an email confirming that the defendant had been terminated by Lecker the day before. This email allegedly contained the following statement: "I’m cleaning some personal material off of my laptop this morning and copying my DER files that I have to maintain per FAA regulations." The plaintiff goes on to allege that the defendant deleted more than 3,600 emails "in an apparent effort to destroy evidence of his unlawful conduct," but that that many of the foregoing emails have been recovered and are important company files. The plaintiff claims that the recovered emails corroborate the defendant’s purported self-dealing and unlawful conduct. The plaintiff also claims, upon information and belief, that the defendant attempted to change his Dropbox account, thereby restricting access to and blocking the plaintiff from obtaining materials stored on that platform.
In Count One, the plaintiff claims a breach of contract, alleging that the defendant violated the employment agreement by using company time and resources to perform work for the plaintiff’s customers, on a personal basis, thereby diverting business opportunities from the plaintiff and causing it to suffer damages. In Count Two, the plaintiff alleges a breach of the covenant of good faith and fair dealing implicit in the employment agreement, by competing with the plaintiff, thereby diverting its business opportunities. In Count Three, the plaintiff alleges a breach of fiduciary duty, claiming the existence of a fiduciary relationship between the parties arising from the defendant’s position as a corporate officer; and based on a relationship characterized by a unique degree of trust and confidence, as well as on the defendant’s superior knowledge, skill or expertise, which the defendant had an obligation to use to represent the plaintiff’s interests. The plaintiff further alleges that the defendant’s actions, as described above, were in his own self-interest, and that he engaged in a pattern of self-dealing, diversion, misapplication and waste of corporate assets, all to the defendant’s detriment and harm to its business reputation. In Count Four, the defendant alleges a claim of tortious interference with business relations, claiming that the defendant interfered with the plaintiff’s contractual and/or business relationships by acting in his own self-interest, and engaging in a pattern of self-dealing, diversion, misapplication and waste of corporate assets. In Count Five, the plaintiff alleges that the defendant’s conduct violated CUTPA. In connection with this claim, the plaintiff contends that by unlawfully competing with the plaintiff and diverting its business opportunities, the defendant engaged in unfair methods of competition and/or deceptive acts or practices in the conduct of trade or commerce, and further, that the defendant’s conduct offended public policy, was immoral, oppressive, unethical and unscrupulous, and caused substantial injury to the plaintiff, including an ascertainable loss. Finally, in Count Six, the plaintiff asserts a claim in unjust enrichment, alleging that as a result of the actions complained of, the defendant has been or will be unjustly enriched, to the plaintiff’s detriment, by benefitting financially from the diversion, misapplication and waste of the plaintiff’s corporate assets.
In its verified complaint, the plaintiff seeks compensatory damages, common-law and statutory punitive damages pursuant to General Statutes § 42-110g(a), as well as temporary and permanent injunctive relief. More specifically, with respect to its claim for temporary injunctive relief, the plaintiff seeks the following: (1) that the defendant be enjoined and restrained from directly or indirectly using the plaintiff’s confidential information and from directly or indirectly soliciting or continuing to solicit, interfering or continuing to interfere with or endeavoring to entice away any person who was a client of the plaintiff during the period of his employment, for the purpose of providing applied engineering services, sales representation or any services of a similar kind or nature; (2) that the defendant be ordered to provide the plaintiff with access to all materials and communications with any client of the plaintiff from the inception of his employment until the present date, specifically but not limited to materials and communications from agreements and deals entered into by the defendant in a capacity outside of his association with the plaintiff; and (3) that the defendant be ordered to provide the plaintiff with access to his Dropbox account to permit an accounting of all materials unlawfully diverted.
On April 16, 2018, when the verified complaint was filed, the plaintiff also submitted to the court an ex parte application for temporary injunction (No. 100.36), which application is at issue here. On June 6, 2018, the defendant filed a pre-hearing legal memorandum in connection with the application (No. 109). On June 25, 2018, the plaintiff filed a memorandum of law in support of its application for temporary injunction (No. 112). A hearing was held on the plaintiff’s application on June 6, June 25, and July 2, 2018, during which testimony was heard and documents were submitted into evidence. Thereafter, on July 2, 2018, the defendant filed a post-hearing legal memorandum (No. 114) and the matter was submitted to the court for adjudication.
As a hearing was held on the application at which the defendant and his attorney appeared, and the defendant’s counsel argued, and further, as the defendant submitted briefs in opposition to the application, the application is no longer ex parte.
FINDINGS OF FACT
Jonathan "Jamie" Lecker is the founder and president of the plaintiff. The plaintiff is a small company of eight employees engaged in the aircraft business. More specifically, the plaintiff (1) modifies civilian aircraft for military and government clients; (2) conducts aircraft lighting modifications; and (3) provides engineering consulting services. The plaintiff’s modest size is illustrated by the fact that it generates $5-$6 million annually in the context of the trillion-dollar aerospace industry.
The plaintiff began as a startup company which, at its inception in 2007, had no revenues. The defendant was hired by the plaintiff in 2007 to serve as its chief engineer and chief operating officer. The defendant holds a bachelor of science degree in electrical engineering technology from the University of Pittsburgh at Johnstown and a master of science in systems engineering from the Massachusetts Institute of Technology. He is certified by the FAA as a DER, New England Region. Prior to joining the plaintiff, the defendant worked as a manager, consultant and engineer at a variety of aerospace businesses, including United Technologies Sikorsky Aircraft and Concurrent Technologies Corporation. During his testimony, Lecker described the defendant as a "brilliant engineer," who is intelligent, articulate and pragmatic.
Although Lecker was residing in Connecticut at the time of the plaintiff’s inception, the plaintiff established its operations in Johnstown, Pennsylvania, where the defendant was living at the time. If the plaintiff had not agreed to be headquartered in Johnstown, Pennsylvania, the defendant probably would not have agreed to work for the plaintiff.
Lecker provided a letter to the defendant dated May 29, 2007 (the Agreement), setting forth "the understanding between Avionics Technologies, Inc. (’ATI’) and you concerning your employment." The defendant signed the Agreement, the terms of which he acknowledged and agreed to as of May 31, 2007.
Section 1 of the Agreement, entitled, "Engagement ," provides in part that "ATI hereby offers you a position as Vice President and COO of ATI Engineering Services Division (the ‘Division’), for a minimum term of two years commencing June 1, 2007. You will report to me, as President of ATI. You will devote best efforts to performance of the services. It is understood and agreed that your employment is an employment at will."
Section 2 of the Agreement, entitled, "Job Description ," states that the defendant "will be a Vice President and COO of the Division. The Division will be providing design and consulting services to existing or prospective ATI clients. You will be responsible for estimating project costs, preparing proposals, submitting bids, staffing projects with an appropriate number of qualified contractors, project management, cost reporting and customer interface, provided that no bids may be submitted or contractors retained without my written consent. You will provide me with monthly (or more often if necessary or appropriate) reports on the status of bids or ongoing projects. You will at all times use diligent efforts and skills to promote the business of ATI and will follow prudent and ethical design and consulting practices. You will devote a minimum of 40 hours per week to the Division’s business."
Section 3 of the Agreement, entitled, "Fee for Services ," provides in part that the defendant "will be paid a guaranteed minimum base salary of $120,000 per annum for the first two years. In addition you will be eligible for bonuses based upon corporate performance and paid profit sharing during the period you are employed hereunder ..."
Section 6 of the Agreement, entitled, "Confidentiality ," provides: "You acknowledge that as a result of your employment with ATI, you will receive, generate and become acquainted with confidential information relating to clients of ATI, and the trade secrets, techniques, list of clients and client contacts, market data, processes, methods of operation, project information or project requests, company records, computer programs, databases, software codes, systems and models, marketing, sales and promotional programs and financial information concerning the business of ATI and the requirements of its clients, which information is not readily available to the public and provides ATI an opportunity to gain an advantage over competitors who do not know or use this information in the same manner as ATI, and which ATI regards as confidential, proprietary and in the nature of trade secrets (collectively, ‘Confidential Information’). Confidential Information does not include (i) information known in general to your profession, or which becomes known thereafter, other than by an unauthorized act of yours; (ii) information that was rightfully in your possession before your engagement by ATI; or (iii) information obtained lawfully and in good faith from another party, emanating from an original source other than ATI. You acknowledge that the Confidential Information is of incalculable value to ATI, is the exclusive property of ATI, and has been developed at considerable expense to ATI, and that ATI would suffer damage if any of the Confidential Information were improperly disclosed or used. Accordingly, you will not, at any time during or after termination of this Agreement either directly or indirectly use, reveal, divulge or make known to any person, firm or entity any Confidential Information, regardless of whether developed, prepared, devised or otherwise created in whole or in part by your efforts, except and to the extent required to carry out your job for ATI. You agree that upon termination of this Agreement, for any reason whatsoever, and at any time, you will return all equipment, disks/tapes, documents or other media or instruments placed in your custody or obtained or generated by you during the course of your employment which concerns Confidential Information, including without limitation, any portable computer equipment or telecommunications devices. You will not retain any such copies or items for any purposes. You agree that the foregoing covenants shall also relate to Confidential Information, knowledge, knowhow and data conceived by, belonging to or concerning the clients of ATI."
Section 7 of the Agreement, entitled, "Non-Competition and Non-Inducement ," reads as follows: "During the term of this Agreement and for a period of three years thereafter, you will not, directly or indirectly, alone or as a partner, joint venture, officer, director, employee, consultant, agent, independent contractor or stockholder of any entity, solicit, interfere with or otherwise endeavor to entice away any person who was a client of ATI during the period of your employment, for the purpose of providing applied engineering services, sales representation, or any services of a similar kind or nature. Given the nationwide nature of ATI business, this restriction shall be applicable nationwide, as a series of separate covenants, one for each and every state of the United States and District of Columbia."
Section 8 of the Agreement, entitled, "Reasonableness of Covenants ," provides as follows: "You agree that the covenants contained herein are necessary for the protection of ATI’s legitimate business interests, are reasonable in scope and content, and are in consideration of your employment by ATI, and other good and adequate consideration."
Section 9 of the Agreement, entitled, "Specific Performance ," reads as follows: "You agree that a breach or threatened breach by you any of the foregoing covenants will cause irreparable harm to ATI, and that therefore in the event of a breach or threatened breach by you of any of the foregoing covenants, ATI shall be entitled to obtain, without bond, a temporary or permanent injunction to be issued by any competent court of law or equity, enjoining and restraining you from any breach or threatened breach of any covenant contained in this Agreement."
Section 12 provides that the Agreement "shall be construed in accordance with the laws of the State of Connecticut ..." Section 13 of the Agreement, entitled, "Survival ," reads as follows: "The provisions of this Agreement relating to confidentiality, noncompetition and non-inducement, reasonableness of covenants and specific performance, and the parties’ obligations thereunder, shall survive the termination of this Agreement." Section 14 of the Agreement, entitled, "Miscellaneous ," contains an integration clause which provides, in part, that "[t]his Agreement contains the entire agreement of the parties with respect to its subject matter and supersedes all prior agreements and understandings between you and ATI with respect thereto."
The Agreement concludes with the following typed text: "AVIONICS TECHNOLOGIES, INC. By: Jamie Lecker, President." Although the Agreement is not signed in ink by Lecker on behalf of the plaintiff, it is signed by the defendant beneath the following text: "ACKNOWLEDGED AND AGREED TO AS OF THE 31st DAY OF MAY 2007." The defendant began working for the plaintiff in May 2007, as its Vice President and COO, pursuant to the Agreement.
Since 2001- long before becoming employed by the plaintiff- the defendant provided DER consulting services to clients on an independent basis. This independent work was performed by the defendant personally, without any connection to a corporate employer. While performing this independent DER work, the defendant also provided DER consulting services through his employers, including the plaintiff, which work would result in the generation of a fee for the corporate employer.
Typically, the defendant’s DER work involved proposed modifications to existing aircraft, which involved the preparation of diagrams and drawings demonstrating how such modifications were to be performed. Charges for DER work varied widely depending on the extent and complexity of the project at issue, ranging from as little as $200 to as much as $10,000. When he performed DER services independently, the defendant would keep all of the fees earned for his services. When he performed DER services through the plaintiff, he would be paid 50% of the fee, with the plaintiff keeping the remainder, in accordance with the profit sharing provisions of the Agreement.
Prior to the defendant becoming employed by the plaintiff, the defendant became concerned about maintaining his certification as a DER. This occurred in 2005 and 2006 when, during a period of approximately sixteen months- and at a time during which the defendant claims to have been working up to 200 hours per week- the defendant did not perform any DER work. As a result, the defendant learned that his DER status might be jeopardized, as maintenance of a DER certification requires the performance of certain minimum DER work hours. After learning that he risked losing his DER designation due to inactivity, the defendant determined that, going forward, he would perform as much DER work as possible so as to avoid any risk of losing that designation again.
FAA Order 8100.8D reflects that a DER is to actively utilize his or her delegated authority.
According to the defendant, and in part because his inactivity in 2005-2006 jeopardized his DER certification, prior to signing the Agreement with the plaintiff, the defendant discussed with Lecker his "side business"- namely, providing DER services to clients independently. The defendant claims that he informed Lecker of the need for the defendant to perfofm independent DER work in order for him to maintain his DER status with the FAA, which was of great importance to the defendant.
In connection with his need to maintain his designation, the defendant purportedly requested that there be no reference to DER services in the Agreement, and that such services be omitted from the "Job Description " portion of the Agreement (Section 2), in order to allow the defendant to keep performing DER work on the side. The defendant considered such work to be completely separate from his employment responsibilities with the plaintiff. The defendant believed that the maintenance of his DER designation benefitted the plaintiff, that his performance of independent DER work complimented the plaintiff’s business and did not conflict with his professional responsibilities.
By contrast, in his testimony, Lecker denied that the defendant’s "side business" was discussed at the time the Agreement was entered into. Lecker further denied that the defendant requested permission, at any time, to perform DER consulting work on an independent basis. Lecker also denied that, prior to entering into the Agreement, or during his tenure with the plaintiff, the defendant ever disclosed that he performed independent DER work or that he intended to perform such work.
Lecker described the defendant as a very hard-working employee who was one of the most active DERs in the area. It is undisputed that when he first came to work for the plaintiff, the defendant performed DER work for existing clients of the plaintiff, and that he performed this work in the context of the plaintiff’s corporate operations, as its employee. In fact, Lecker valued the defendant’s ability to provide DER services to the plaintiff’s clients. The defendant performed DER services for the plaintiff’s clients, through the plaintiff, in order to contribute to its overall business efforts and to help build the company and its revenue stream- in other words, as part of his contribution to the establishment of the plaintiff’s business, in its initial entrepreneurial stage, as well as in its operations as a mature and established business.
At one point, the defendant was working so many hours that Lecker became concerned about the defendant’s workload. The defendant was exhausted and Lecker "forced" the defendant to take vacations. In 2014, the defendant stopped "running" some of the DER work he was performing through the plaintiff and started performing that work independently. This was in response to Lecker’s complaints to the defendant about the amount of time he was spending on DER work, stating that it was taking up too much of the defendant’s time and further, that it constituted a distraction from his other work for the plaintiff. In response, the defendant claims that he informed Lecker that he would not turn away DER work, and that he would keep performing such work to avoid any risk of jeopardizing his DER certification. The defendant testified that he was not concerned about his stated intention to perform DER "side work" to Lecker because Lecker purportedly knew that the defendant had engaged in such independent work before, without complaint. The independent DER work performed by the defendant came to him through inquiries initiated by third parties, including the plaintiff’s clients themselves.
It is undisputed by the parties, and the court finds, that the defendant never disclosed to Lecker or the plaintiff the fact that he was engaged in performing independent DER work for the plaintiff’s clients while he was employed by the plaintiff. In his testimony, the defendant admitted to performing work for a number of the plaintiff’s clients while he was employed by the plaintiff, including North American Surveillance Systems (NASS), Uniflight West Penn (West Penn), and Global Aviation Technologies (GAT). Some of the independent DER work performed by the defendant was for clientele that came to the defendant through the plaintiff. The defendant testified that he did not believe there was any need to disclose the fact that he was performing independent work for the plaintiff’s own clients.
In 2014, the defendant performed independent DER work for NASS while NASS was a client of the plaintiff. The plaintiff’s NASS project involved the development of an endless lighting system- which involved some DER work- although DER services did not constitute the lion’s share of that work. The defendant did not disclose to the plaintiff that he was performing independent DER work for NASS at the time when NASS was the plaintiff’s client in connection with the endless lighting system. The defendant also performed independent DER work for West Penn, an active client of the plaintiff, while the defendant was employed by the plaintiff.
In the spring of 2017, the Air Force was soliciting work for a project on an aircraft known as the C21. The plaintiff and its corporate teammate were interested in doing this work. At this time, GAT was a competitor of the plaintiff’s teammate. GAT had also been a client of the plaintiff during the defendant’s term of employment with the plaintiff.
The defendant performed independent DER work for GAT in 2017. An email from Lecker to the defendant, dated January 29, 2018, asked "what work" the plaintiff was performing for GAT. In response to this inquiry, the defendant did not disclose that he had performed, was performing, or intended to perform work for GAT. As a result of his belief that he had the right to perform independent DER work, including for the plaintiff’s clients, the defendant did not believe that it was necessary for him to discuss with or share with the plaintiff the fact that he was doing work for GAT. In the aftermath of this email exchange, the defendant continued to work independently for GAT in January, February and March 2018, again without disclosing such work to the plaintiff.
In March 2018, the defendant went to Europe on a business trip for the plaintiff, and at its expense, visiting three of the plaintiff’s clients in Ireland and one in Germany, as well as a regulatory agency in Germany. Although the plaintiff claims that the defendant spent part of his time on this trip engaged in developing business for himself, individually, and in engaging in conduct that amounted to self-dealing and the appropriation of the plaintiff’s business opportunities, the evidence presented at the hearing on the application was insufficient to support these claims.
At all times while he was employed by the plaintiff, the defendant felt free to pick and choose, and he selected unilaterally, the DER work that he decided to "run through" the plaintiff and that which he decided to perform independently on his own.
In his testimony, the defendant admitted to using a laptop, issued to him by the plaintiff, in connection with his "side business" of providing independent DER services. He also admitted to using his plaintiff-issued email to conduct independent business- for his own "convenience"- and that he corresponded with "side business" clients during regular business hours. In fact, when corresponding with "side business" clients by email, the defendant made use of an email signature block reflecting his association with the plaintiff, not his own independent business. Moreover, in connection with his "side business," the defendant made use of a cell phone number that he also used in connection with his work for the plaintiff. Thus, there was no way for the plaintiff’s customers or Others to distinguish between the defendant’s use of this number for independent business purposes, as opposed to the plaintiff’s business activities.
The defendant was paid a salary, as well as regular bonuses, some of which bonuses were distributed multiple times during the course of a calendar year. The defendant’s bonuses, also described as profit sharing, amounted to 50% of the annual operating profits of the plaintiff. During his employment with the plaintiff, there was one year in which he earned in excess of $500,000. In 2017, the defendant earned a base salary of $200,000, as well as $20,000-$30,000 in bonuses. In that same year, the defendant earned approximately $14,000 in fees from his independent DER work.
With respect to the factual dispute between the parties concerning whether the defendant ever discussed his intention. to perform DER work on an independent basis, either just prior to executing the Agreement and/or while he was employed by the plaintiff, the court finds that the defendant did not ever discuss with Lecker, or other representatives of the plaintiff, his intention to perform independent DER work. This finding is based on Lecker’s credible testimony on this point. In addition, it is based on the fact that the defendant failed to disclose to the plaintiff, either voluntarily or in response to a direct inquiry by Lecker, that he was working independently for the plaintiff’s clients- a failure that impacts negatively the credibility of the defendant’s testimony regarding purported discussions he had with the plaintiff regarding his independent DER activities.
Although the court finds that there were no discussions held by the parties concerning the defendant’s independent DER activities, the court also finds that the defendant honestly believed- based on his understanding of the Agreement and his historic practice that he had the right to provide independent DER services to third parties, including to clients of the plaintiff.
The foregoing conclusions raise an issue that was not addressed by the parties, either in their briefs or during the hearing on the plaintiff’s application- namely, whether the court may consider the testimony of Lecker and the defendant concerning conversations that were held by them concerning the scope and meaning of the Agreement. Such testimony constitutes parol evidence, and as such, the court must address whether it may consider this evidence in interpreting the Agreement. A consideration of this question is necessary, even in the absence of any objections to parol evidence raised by the parties, because it implicates the legal relevance of the parol evidence heard by the court to the interpretation of the Agreement.
Our Supreme Court has observed repeatedly that the parol evidence rule is not an exclusionary rule of evidence, but a substantive rule of contract law. Weiss v. Smulders, 313 Conn. 227, 248, 96 A.3d 1175 (2014); Alstom Power, Inc. v. Balcke-Durr, Inc., 269 Conn. 599, 609, 849 A.2d 804 (2004); Heyman Associates No. 1 v. Ins. Co. of Pennsylvania, 231 Conn. 756, 779, 653 A.2d 122 (1995); TIE Communications, Inc. v. Kopp, 218 Conn. 281, 288, 589 A.2d 329 (1991). As stated by the court in Heyman Associates No. 1 v. Ins. Co. of Pennsylvania, supra, 780, "[t]he rule is premised upon the idea that when the parties have deliberately put their engagements into writing, in such terms as import a legal obligation, without any uncertainty as to the object or extent of such engagement, it is conclusively presumed, that the whole engagement of the parties, and the extent and manner of their understanding, was reduced to writing. After this, to permit oral testimony, or prior or contemporaneous conversations, or circumstances, or usages [etc.], in order to learn what was intended, or to contradict what is written, would be dangerous and unjust in the extreme." (Internal quotation marks omitted.) Put another way, "[t]he parol evidence rule ordinarily prohibits a court from considering extrinsic evidence in interpreting an agreement when that evidence tends to alter the explicit terms of the agreement." Battalino v. Van Patten, 100 Conn.App. 155, 167, 917 A.2d 595, cert. denied, 282 Conn. 924, 925 A.2d 1102 (2007). Parol evidence offered solely to vary or contradict the written terms of an integrated contract is not deficient per se, as an evidentiary matter; rather, such evidence is legally irrelevant. TIE Communications, Inc. v. Kopp, supra, 288. As observed by the court in Weiss, "[t]he parol evidence rule does not of itself ... forbid the presentation of parol evidence, that is, evidence outside the four corners of the contract ... but forbids only the use of such evidence to vary or contradict the terms of [an integrated] contract. Parol evidence offered solely to vary or contradict the written terms of an integrated contract is, therefore, legally irrelevant." (Internal quotation marks omitted.) Weiss v. Smulders, supra, 249. By contrast, "[p]arol evidence is admissible (1) to explain an ambiguity appearing in the instrument; (2) to prove a collateral oral agreement which does not vary the terms of the writing; (3) to add a missing term in a writing which indicates on its face that it does not set forth the complete agreement; or (4) to show mistake or fraud." Jay Realty, Inc. v. Ahearn Development Corp., 189 Conn. 52, 56, 453 A.2d 771 (1983).
"In order for the bar against the introduction of extrinsic evidence to apply, the writing at issue must be integrated, that is, it must have been intended by the parties to contain the whole agreement ... and to be a final expression of one or more terms of [the] agreement ..." (Citation omitted; internal quotations marks omitted.) Tallmadge Bros., Inc. v. Iroquois Gas Transmission System, L.P., 252 Conn. 479, 503, 746 A.2d 1277 (2000). "The parol evidence rule does not apply ... if the written contract is not completely integrated ... As a threshold matter, therefore, a court must conduct an inquiry ... as to whether there is an integrated agreement." (Citation omitted; emphasis in original; internal quotation marks omitted.) Conn Acoustics, Inc. v. Xhema Construction, Inc., 88 Conn.App. 741, 745, 870 A.2d 1178 (2005); see 2 Restatement (Second), Contracts § 209(2) (1981) ("[w]hether there is an integrated agreement is to be determined by the court as a question preliminary to determination of a question of interpretation or to application of the parol evidence rule"); id., § 213, comment (b), p. 129 (in applying parol evidence rule, court must make preliminary determination that there is integrated agreement); see also Weiss v. Smulders, supra, 313 Conn. 249 (after discussing principles underlying parol evidence rule, noting that, "[w]ith these principles in mind, we turn to the language contained in the [subject] agreement").
"The intent of the parties determines whether the written agreement was the final repository of any oral agreements. If the court determines that the parties intended the writing to be an integrated agreement, the oral agreements are not considered when determining the contractual obligations of the parties." Conn Acoustics, Inc. v. Xhema Construction, Inc., supra, 88 Conn.App. 746.
Turning to the facts of this case, the parties clearly intended the Agreement to be integrated. This is reflected in Section 14, entitled, "Miscellaneous ," which contains an integration clause that reads, in part: "This Agreement contains the entire agreement of the parties with respect to its subject matter and supersedes all prior agreements and understandings between you and ATI with respect thereto. No amendment to the terms of this Agreement shall be valid unless made in writing and signed by you and by the President of ATI."
Despite the integrated nature of the Agreement, the court considers the parol evidence offered by the parties in connection with the defendant’s DER activities, as that evidence was offered to explain ambiguities in Section 2 of the Agreement relating to the scope of the defendant’s job responsibilities, and the evidence did not tend to alter any explicit term of Section 2. Considering that evidence, the court credits Lecker’s testimony to the effect that the parties did not agree to exempt the provision of DER services from the scope of the defendant’s job description, as set forth in Section 2.
On April 3, 2018, Lecker approached the defendant and informed him that due to the tension that had built up between them, the plaintiff and the defendant needed to find a way to terminate their employment relationship. Lecker suggested a separation agreement. He also suggested possible ways in which the plaintiff and the defendant could continue to work together, albeit not as employer and employee. Lecker proposed the following options: (1) that the defendant work as a consultant for the plaintiff; (2) that the defendant work as the plaintiff’s general manager under a new employment contract; or (3) that the defendant work in an undefined position with a new enterprise to be undertaken by the plaintiff with other investors. The defendant was not interested and declined all these proposals. He departed the plaintiff on the morning of April 4, 2018.
At the time of his departure, the defendant copied thousands of files from his laptop onto an external drive; this process took several hours. The information that he copied was largely "personal" in nature and included all of his "side business" files. Any of the plaintiff’s files that the defendant had on the hard drive of his company-issued laptop were already saved on the plaintiff’s main server, and any emails that had program value for the plaintiff were also saved. The defendant did not delete any files from the plaintiff’s server. He also did not take any files containing the plaintiff’s confidential or proprietary information, or trade secrets. The defendant did not discuss with Lecker or others employed by the plaintiff his methodology for deleting files and email communications from his company-issued laptop. Moreover, he did not prepare a transition memorandum in connection with his departure from the plaintiff.
Approximately three weeks after his departure from the plaintiff, the defendant was contacted by the plaintiff about accessing the company-owned laptop used by the defendant while he was employed by the plaintiff. While the plaintiff had physical possession of the laptop, it was having difficulty with the password necessary to access it. The defendant provided the necessary password information upon request. In addition, while employed by the plaintiff, the defendant used a "Dropbox" account to communicate with the FAA. Lecker was unaware of this. When the defendant left his employment with the plaintiff, he did not provide the plaintiff with the Dropbox password used in connection with FAA communications. However, there were no files located in the Dropbox that were not available on the plaintiff’s server.
Although the defendant’s failure to prepare a departure memorandum or otherwise discuss procedures for the transfer and deletion of the plaintiff’s files from his company-issued computer may not have constituted an ideal business practice, on the record presented, the court does not find that the defendant misappropriated, destroyed or otherwise misused confidential information or trade secrets belonging to the plaintiff.
Moreover, the defendant testified, credibly, that at no time has he ever intended to harm the plaintiff. The court makes this finding despite the fact that after leaving his employment, the defendant admitted to making disparaging personal remarks about Lecker to Dan Mansfield, an individual associated with West Penn.
The defendant was and is currently able to provide DER services to clients, unlimited by geography, meaning that he can work for hundreds of potential clients who are not the plaintiff’s customers and were not customers of the plaintiff during the defendant’s term of employment. The defendant’s name and contact information are listed in the DER guidebook. The defendant obtains clients for his independent DER services from inquiries that come to him through the FAA Consultant DER Directory, which is available on-line. The foregoing directory lists the defendant’s Portage, Pennsylvania address as well as his personal cell phone number. He also obtains DER clients by "word of mouth." The defendant is able to make a living without performing work for the plaintiff’s former or current clients.
Upon leaving his employment with the plaintiff, in April 2018, the defendant began working as President of AeroConsulting, LLC, in Portage, Pennsylvania. According to the defendant’s resume, in this capacity, he is engaged in providing "[a]ircraft certification and engineering consulting services. Provides Systems & Equipment DER and RS-DER services. Approval of data for major alterations and repairs- Form 337 approvals. Part 25 EWIS approvals. Management of FAA certification projects. Development and management of Supplemental Type Certification (STC) projects. Foreign airworthiness authority validation projects."
Lecker testified credibly that after the defendant left his employment with the plaintiff, the defendant continued to provide engineering consulting services to entities that were clients of the plaintiff during the term of the defendant’s employment, and that the defendant continues to provide such services.
The description of the defendant’s current business, as set forth in his curriculum vitae, overlaps with and includes the DER services provided by the defendant to the plaintiff’s clients- both through the plaintiff and independently- during his term of employment with the plaintiff. Given this overlap, the defendant’s stated belief that he had the right to service the plaintiff’s clients on an independent basis during his tenure with the plaintiff, and Lecker’s credible testimony that the defendant has, in fact, done business with the plaintiff’s clients since leaving his employment with the plaintiff, the court concludes that the defendant has provided services to the plaintiff’s clients, since leaving the plaintiff’s employ, including applied engineering services and services of a similar kind or nature. Lecker also testified, credibly, that the defendant’s independent DER activities, both during and after his term of employment with the plaintiff, damaged the plaintiff’s client relationships and goodwill. The defendant’s independent activities interfered with the ongoing relationships that the plaintiff had with certain clients, including without limitation by depriving the plaintiff of having additional business exchanges and experiences with those clients.
LEGAL STANDARD
A temporary injunction is an equitable remedy. Aqleh v. Cadlerock Joint Venture II, 299 Conn. 84, 97, 10 A.3d 498 (2010) ("[i]n general, a court may, in its discretion, exercise its equitable power to order a temporary injunction ... upon a proper showing" [internal quotation marks omitted] ); General Statutes § 52-471(a) ("[a]ny judge of any court of equitable jurisdiction may, on motion, grant and enforce a writ of injunction, according to the court of proceedings in equity"). "Equity is [j]ustice administered according to fairness as contrasted with the strictly formulated rules of common law ... The term equity denotes the spirit and habit of fairness, justness, and right dealing which would regulate the intercourse of [persons] ... Equity takes into consideration fairness to both the plaintiff and the defendant." (Citation omitted; internal quotation marks omitted.) Krasowski v. Fantarella, 51 Conn.App. 186, 199, 720 A.2d 1123 (1998), cert. denied, 247 Conn. 961, 723 A.2d 815 (1999).
"A party seeking injunctive relief has the burden of alleging and proving irreparable harm and lack of an adequate remedy at law ... A prayer for injunctive relief is addressed to the sound discretion of the court ..." (Internal quotation marks omitted.) Aposporos v. Urban Redevelopment Commission, 259 Conn. 563, 571, 790 A.2d 1167 (2002), accord New Breed Logistics, Inc. v. CT INDY N.H. TT, LLC, 129 Conn.App. 563, 570-71, 19 A.3d 1275 (2011). "The principal purpose of a temporary injunction is to preserve the status quo until the rights of the parties can be finally determined after a hearing on the merits." (Internal quotation marks omitted.) Rustici v. Malloy, 60 Conn.App. 47, 56, 758 A.2d 424, cert. denied, 254 Conn. 952, 762 A.2d 903 (2000). As noted by our Supreme Court, "[a] party seeking injunctive relief must demonstrate that: (1) it has no adequate remedy at law; (2) it will suffer irreparable harm absent an injunction; (3) it will likely prevail on the merits; and (4) the balance of equities tips in its favor." (Internal quotation marks omitted.) Wellswood Columbia, LLC v. Hebron, 327 Conn. 53, 59 n.5, 171 A.3d 409 (2017), citing Aqleh v. Cadlerock Joint Venture II, L.P., supra, 299 Conn. 97.
What exactly is necessary to establish irreparable harm and the lack of an adequate remedy at law, in the context of noncompete cases, has been the subject of some debate in our trial court. One line of cases holds that "[t]he standard for granting a temporary injunction to enforce a covenant not to compete ... is ... different in that the plaintiff does not need to prove irreparable harm. While ordinarily proof of imminent harm is essential, in this type of case there is no such requirement. It has long been recognized in this state that a restrictive covenant is a valuable business asset which is entitled to protection ... Irreparable harm would invariably result from a violation of the defendant’s promises ... The reason for this is that such a plaintiff’s actual injury is not susceptible of determination to its entire extent but is estimable largely by conjecture and prediction ... The standard is also different in that the plaintiff does not have to demonstrate that there is no adequate remedy at law. [Although] the plaintiff could maintain a claim for damages as to each violation that causes injury the difficulty of proof and the inefficiency of repetitive suits render inadequate the use of successive remedies at law, and injunctive relief is therefore warranted to protect the plaintiff from harm which the restrictive covenant was intended to prevent." (Citations omitted; internal quotation marks omitted.) Sabatasso v. Bruno, Superior Court, judicial district of New Haven at Meriden, Docket No. CV- 03-0284486-S (April 8, 2004, Tanzer, J.) (36 Conn.L.Rptr. 851, 852).
In POP Radio, LP v. News America Marketing In-Store, Inc., 49 Conn.Supp. 566, 576, 898 A.2d 863 (2005), the Superior Court referred to the foregoing line of trial court decisions "not as controlling authority of course, but because they collectively appear to develop a theme that combines the concepts of the inherent difficulties of proving harm that might not occur until the future and the need to enjoin an ongoing breach of an agreement that devalues the agreement itself and potentially the company’s goodwill, both of which are business assets."
The court in POP Radio, LP goes on to cite another line of Superior Court decisions "requiring a showing of irreparable harm to support an injunction that is based on a breach of a noncompetition agreement." Id. Faced with these two disparate lines of cases, the POP Radio, LP court concluded that "Connecticut law supports a distinctly moderated level of proof ... to establish the elements of irreparable harm and lack of an adequate remedy at law necessary for the issuance of a temporary injunction when the circumstances involve an alleged breach of a noncompetition agreement. Although this court will not go so far as to say that these two elements are automatically established ... the realities of attempting to prove irreparable harm in circumstances, such as here, when the competition has not yet, or only barely commenced, counsel toward the imposition of a more lenient standard that allows for a certain amount of informed prediction of future results to be weighed by the court as evidence than otherwise might normally be the case." (Citation omitted.) Id., 577.
This court concludes that "[i]f the named defendant is threatening a breach of the restrictive covenant, there can be no question that the plaintiff is entitled to an injunction restraining the breach, irrespective of whether the damage it will suffer is great or small." Lampson Lumber Co. v. Caporale, 140 Conn. 679, 685, 102 A.2d 875 (1954). Moreover, this court agrees with the view expressed in Music, v. Opticare Eye Health Centers, Inc., Superior Court, judicial district of Waterbury, Complex Litigation Docket, Docket No. X02-CV-9900155663-S (August 9, 2000, Hodgson, J.), that "[i]rreparable injury and lack of an adequate remedy at law are considered to be established by the nature of the threatened conduct where a party seeks to enforce a covenant not to compete," and it joins the line of cases so holding. See Ineo, LLC v. Lenehan, Superior Court, judicial district of Middlesex, Docket No. CV-186019598-S (February 20, 2018, Pierson, J.) (66 Conn.L.Rptr. 72, 75).
DISCUSSION
I
A threshold issue presented in this case is whether the noncompete provision of the Agreement is enforceable. In New Haven Tobacco Co., Inc. v. Perrelli, 11 Conn.App. 636, 63839, 528 A.2d 865 (1987) (Perrelli I ), our Appellate Court outlined the factors to be considered by the trial court in reviewing a noncompete agreement as follows: "(1) the length of time the restriction is to be in effect; (2) the geographical area covered by the restriction; (3) the degree of protection afforded to the interest of the party in whose favor the covenant is made; (4) the restrictions imposed on the employee’s ability to pursue his occupation; and (5) the potential for undue interference with the interests of the public." In outlining these five factors, the court observed that the "test enunciated above should be viewed as disjunctive rather than conjunctive. A finding of [unreasonableness] in any one of the factors will be enough to hold the covenant unenforceable." Id., 639 n.2; accord New Haven Tobacco Co. v. Perrelli, 18 Conn.App. 531, 533-34, 559 A.2d 715 (Perrelli II ), cert. denied, 212 Conn. 809, 564 A.2d 1071 (1989). Of necessity, these factors must be considered in light of the evidence presented to the court on a case-by-case basis. "Under our law, the party challenging the enforceability of a non-compete has the burden of proving that it is not enforceable ..." (Citation omitted.) Braman Chemical Enterprises, Inc. v. Barnes, Superior Court, judicial district of New Haven, Docket No. CV-064020633-S (December 12, 2006, Silbert, J.) (42 Conn.L.Rptr. 547, 549).
In this case, the defendant did not argue either in his briefs or during the hearing on the plaintiff’s application- that the noncompete provision of the Agreement is unenforceable. In fact, the defendant conceded in his post-hearing brief that the subject covenant is valid. Def.’s Post-Hearing Br., at 5 ("[f]or purposes of this injunction hearing, Defendant will not contest that the covenant at issue is valid and enforceable"). Given the foregoing concession by the defendant, and the fact that the burden is on the defendant to demonstrate a lack of enforceability, an analysis of the enforceability of the noncompete provision of the Agreement is unnecessary and its validity is presumed for purposes of the plaintiff’s application.
II
The plaintiff’s first claim sounds in breach of contract. "The elements of a breach of contract claim are the formation of an agreement, performance by one party, breach of the agreement by the other party, and damages." (Internal quotation marks omitted.) CCT Communications, Inc. v. Zone Telecom, Inc., 327 Conn. 114, 133, 172 A.3d 1228 (2017).
Addressing each of the foregoing elements in turn, the plaintiff has demonstrated the formation of an agreement between the parties, namely, the written Agreement. During the hearing on the plaintiff’s application, the defendant implied that the Agreement should not be enforced against him because it was not signed by the plaintiff. This argument fails.
This argument was not advanced by the defendant in his pre-hearing or post-hearing briefs.
It is undisputed that the Agreement was executed by the defendant, the party against whom the plaintiff seeks to enforce the Agreement. In addition, it is well established in our law that the absence of a signature to a contract does not necessarily defeat its validity. "Parties are bound to the terms of a contract even though it is not signed if their assent is otherwise indicated." (Internal quotation marks omitted.) Original Grasso Construction Co. v. Shepherd, 70 Conn.App. 404, 411, 799 A.2d 1083, cert. denied, 261 Conn. 932, 806 A.2d 1065 (2002). In fact, "[o]ne enjoying rights is estopped from repudiating dependent obligations which he has assumed; parties cannot accept benefits under a contract fairly made and at the same time question its validity." (Internal quotation marks omitted.) Green v. Connecticut Disposal Service, Inc., 62 Conn.App. 83, 95, 771 A.2d 137, cert. denied, 256 Conn. 912, 772 A.2d 1124 (2001); see also Schwarzchild v. Martin, 191 Conn. 316, 321-22, 464 A.2d 774 (1983) ("[i]n the absence of a statute requiring a signature ... parties may become bound by the terms of a contract, even though they do not sign it, where their assent is otherwise indicated, such as by the acceptance of benefits under the contract" [internal quotation mark omitted] ); Ullman, Perlmutter & Sklaver v. Byers, 96 Conn.App. 501, 505-06, 900 A.2d 602 (2006). In this case, the defendant accepted and received benefits under the contract for several years, including without limitation salary and bonuses. Thus, the plaintiff has proven the formation of a contract between the parties that may be enforced against the defendant.
Moreover, it is undisputed that the plaintiff performed its obligations under the contract, most notably, by way of paying the defendant salary and bonuses, as well as providing the benefits he was due, under the Agreement. The defendant does not contest the plaintiff’s contractual performance.
In addition, the plaintiff has proven that the defendant breached the Agreement. This conclusion requires, in the first instance, an examination and interpretation of two discrete sections of the Agreement, namely, Sections 2 ("Job Description ") and 7 ("Non-Competition and Non-Inducement "). "A contract must be construed to effectuate the intent of the parties, which is determined from the language used interpreted in light of the situation of the parties and the circumstances connected with the transaction ... [T]he intent of the parties is to be ascertained by a fair and reasonable construction of the written words and ... the language used must be accorded its common, natural, and ordinary meaning and usage where it can be sensibly applied to the subject matter of the contract ... Where the language of the contract is clear and unambiguous, the contract is to be given effect according to its terms." (Internal quotation marks omitted.) Alstom Power, Inc. v. Balcke-Durr, Inc., supra, 269 Conn. 610. "[nth any issue of contract interpretation, we begin with the language of the contract ... Although ordinarily the question of contract interpretation, being a question of the parties’ intent, is a question of fact ... [w]here there is definitive contract language, the determination of what the parties intended by their contractual commitments is a question of law." (Internal quotation marks omitted.) DeLeo v. Equate & Cirone, LLP, 180 Conn.App. 744, 761, 184 A.3d 1264 (2018).
Section 2 of the Agreement is drafted broadly, and reflects that the engineering services division of the plaintiff, over which the defendant would have executive authority, "will be providing design and consulting services to existing or prospective ATI clients." Clearly, such design and consulting services, which are not limited in any way, encompass any DER services provided the plaintiff’s clients. However, the foregoing language describes the services to be provided by the plaintiff’s engineering services division, not by the defendant individually. Although it may be fairly implied that, given the defendant’s executive position with the division, his responsibility for providing such services is understood, this language is not sufficiently definitive to establish the defendant’s professional responsibilities, under the Agreement, as a matter of law.
Section 2 further provides, specifically with reference to the defendant, that "[y]ou will be responsible for estimating project costs, preparing proposals, submitting bids, staffing projects with an appropriate number of qualified contractors, project management, cost reporting and customer interface ... You will at all times use diligent efforts and skills to promote the business of ATI and will follow prudent and ethical design and consulting practices." Certainly, the provision of DER services to the plaintiff’s own clients would be consistent with the foregoing language. However, and as it does not make specific reference to DER services, the subject portion of Section 2 is not sufficiently definitive to allow the court to conclude, as a matter of law, that the defendant’s responsibilities necessarily included rendering DER services to the plaintiff’s clients. Despite this, the court concludes that the plaintiff has presented sufficient facts to demonstrate that the defendant’s provision of DER services to the plaintiff’s clients was within the scope of his employment description, as set forth in Section 2 of the Agreement.
Without question, the defendant performed DER services for the plaintiff’s clients, through the auspices of the plaintiff’s corporate operation and pursuant to his employment with the plaintiff, during his tenure as an executive with the plaintiff. This conduct, in and of itself, is sufficient to support a finding that the rendition of DER services was within the purview of the defendant’s job responsibilities, as set forth in Section 2.
Moreover, having found that the parties did not have any discussions- either prior to the execution of the Agreement or during the term of the defendant’s employment with the plaintiff- in which the parties agreed that the provision of independent DER services by the defendant would be exempted from the scope of his professional responsibilities, the court concludes that the provision of DER services to the plaintiff’s clients was, in fact, part of the defendant’s job responsibilities.
Having concluded that the provision of DER services was within the scope of the defendant’s job responsibilities, the court turns to a consideration of Section 7 of the Agreement. Section 7 contains the noncompete provision on which the plaintiff’s breach of contract claim is based. Without question, the DER services provided by the defendant independently constituted "applied engineering services ... or any services of a similar kind or nature," as set forth in Section 7. The remaining issue is whether, by providing such services, the defendant "directly or indirectly ... solicit[ed], interfere[d] with or endeavor[ed] to entice away any person who was a client of ATI during the period of [the defendant’s] employment," in violation of Section 7.
The evidence introduced was insufficient to support a conclusion that the defendant solicited the plaintiff’s clients in connection with his provision of independent DER services. The word "solicit" means "to make petition to" or "to approach with a request or plea." Merriam-Webster’s Collegiate Dictionary (11th Ed. 2012); see also Black’s Law Dictionary (10th Ed. 2014) (defining "solicitation" as "[t]he act or an instance of requesting or seeking to obtain something; a request or petition"). There was no credible evidence presented to demonstrate that the defendant petitioned, approached, requested or pleaded with any of the plaintiff’s clients to obtain independent DER work. In this regard, the defendant testified, and the court finds, that the independent DER work performed by the defendant came to him through inquiries initiated by third parties- namely, the plaintiff’s clients themselves. Although the defendant’s failure to disclose these inquiries to the plaintiff and his provision of services to them on an independent basis may have been wrongful, the defendant did not breach Section 7 of the Agreement by soliciting the plaintiff’s clients.
This does not end the court’s inquiry. Section 7 of the Agreement may also be violated if the defendant directly or indirectly "interfere[d] with or endeavor[ed] to entice away any person who was a client of ATI during the period of [the defendant’s] employment ..." The court cannot say that the defendant’s independent DER activities "interfered with" the plaintiff’s clients- the words "interfered with" being unclear, particularly in the context of the defendant’s provision of independent DER services.
By contrast, there is sufficient evidence presented to conclude that the defendant directly or indirectly "enticed away" clients of the plaintiff, in violation of Section 7 of the Agreement. By agreeing to provide independent DER services to entities that were customers of the plaintiff during the defendant’s employment with the plaintiff, without advising the plaintiff of these activities- and by providing such services to these clients both during and after his tenure of employment with the plaintiff- the defendant directly or indirectly enticed these clients away from doing business with the plaintiff. The court concludes that the defendant engaged in the more subtle act of enticing away the plaintiff’s clients, in contrast to the more overt conduct of solicitation. Enticement is conduct that does not involve outright petitioning or approaching- as is the case with solicitation- but rather, the more understated behavior of luring or inducing. Black’s Law Dictionary (10th Ed. 2014) (defining "entice" as "[t]o lure or induce").
The breach of Section 7 also occurred after the defendant left his employment with the plaintiff, as the restriction of Section 7 applies "[d]uring the term of this Agreement and for a period of three years thereafter ..." (Emphasis added.) As stated previously, Lecker credibly testified that the defendant continued to perform work for the plaintiff’s clients after his termination on April 3, 2018. Thus, the plaintiff has proven a breach of the Agreement by the defendant.
Finally, the court concludes that the plaintiff suffered damages as a result of the defendant’s breach of contract. "The proper measure of damages for breach of a covenant not to compete is the nonbreaching party’s losses rather than the breaching party’s gains." Robert S. Weiss & Associates, Inc. v. Wiederlight, 208 Conn. 525, 542, 546 A.2d 216 (1988). The plaintiff suffered losses as a result of the defendant’s side business. The Agreement itself provides evidence to support this conclusion. Section 9 of the Agreement states, in part, that the defendant "agree[s] that a breach or threatened breach by you of any of the foregoing covenants will cause irreparable harm to ATI ..." Moreover, the plaintiff lost income in connection with the provision of DER services by the defendant on an independent basis, which services should have been provided through the plaintiff’s own operations, thereby depriving it of revenue. Furthermore, the defendant’s conduct in connection with the provision of independent DER services damaged the plaintiff’s goodwill and customer relationships.
For the foregoing reasons, the court finds that the plaintiff is likely to prevail on the merits of its breach of contract claim.
III
The plaintiff also claims that the defendant breached the covenant of good faith and fair dealing by competing with the plaintiff, in violation of the Agreement. "It is axiomatic that the ... duty of good faith and fair dealing is a covenant implied into a contract or a contractual relationship ... In other words, every contract carries an implied duty requiring that neither party do anything that will injure the right of the other to receive the benefits of the agreement ... The covenant of good faith and fair dealing presupposes that the terms and purpose of the contract are agreed upon by the parties and that what is in dispute is a party’s discretionary application or interpretation of a contract term ... To constitute a breach of [the implied covenant of good faith and fair dealing], the acts by which a defendant allegedly impedes the plaintiff’s right to receive benefits that he or she reasonably expected to receive under the contract must have been taken in bad faith ... Bad faith in general implies both actual or constructive fraud, or a design to mislead or deceive or another, or a neglect or refusal to fulfill some duty or some contractual obligation, not prompted by an honest mistake as to one’s rights or duties, but by some interested or sinister motive ... Bad faith means more than mere negligence; it involves a dishonest purpose." (Internal quotation marks omitted.) Financial Freedom Acquisition, LLC v. Griffin, 176 Conn.App. 314, 339, 170 A.3d 41, cert. denied, 327 Conn. 931, 171 A.3d 454 (2017), citing Capstone Building Corp. v. American Motorists Ins. Co., 308 Conn. 760, 794-95, 67 A.3d 961 (2013).
"An action for breach of the covenant of good faith and fair dealing requires proof of three essential elements, which the plaintiff must duly prove: first, that the plaintiff and the defendant were parties to a contract under which the plaintiff reasonably expected to receive certain benefits; second, that the defendant engaged in conduct that injured the plaintiff’s right to receive some or all of those benefits; and third, that when committing the acts by which it injured the plaintiff’s right to receive benefits it reasonably expected to receive under contract, the defendant was acting in bad faith." (Internal quotation marks omitted.) Hartley v. Boyd, Superior Court, judicial district of Waterbury, Complex Litigation Docket, Docket No. X02-CV-03-4004679-S (February 4, 2008, Eveleigh, J.).
The court determines that the plaintiff is unlikely to prevail on the merits of its claim for breach of the covenant of good faith and fair dealing, namely, because it failed to prove the necessary element of bad faith. Although the court concludes that the plaintiff is likely to demonstrate that the plaintiff and the defendant were parties to a contract under which the plaintiff reasonably expected to receive benefits, and further, that the defendant engaged in conduct that injured the plaintiff’s right to receive some or all of those benefits, the plaintiff has not demonstrated that, when committing the acts by which he injured the plaintiff’s rights, the defendant was acting in bad faith.
In this case, the court concludes that the defendant’s breach of contract was not prompted by an interested or sinister motive, and did not involve a dishonest purpose. The breach was prompted by an honest mistake by the defendant as to his contractual rights and duties. The defendant believed honestly, but erroneously, that he had the right to provide independent DER services to the plaintiff’s existing clients. Thus, the plaintiff is not likely to succeed on the merits of its claim for breach of the covenant of good faith and fair dealing.
IV
The plaintiff claims that the defendant breached his fiduciary duties to the plaintiff by engaging in self-dealing and committing other wrongful acts and omissions in violation of his duty of loyalty to the plaintiff. This presents a threshold issue, namely, whether a fiduciary relationship existed between the parties. "[A] prerequisite to finding a fiduciary duty is the existence of a fiduciary relationship ..." Ahern v. Kappalumakkel, 97 Conn.App. 189, 194, 903 A.2d 266 (2006). "In the seminal cases in which [the Supreme Court of Connecticut] has recognized the existence of a fiduciary relationship, the fiduciary was either in a dominant position, thereby creating a relationship of dependency, or was under a specific duty to act for the benefit of another ... In the cases in which this court has, as a matter of law, refused to recognize a fiduciary relationship, the parties were either dealing at arm’s length, thereby lacking a relationship of dominance and dependence, or the parties were not engaged in a relationship of special trust and confidence." (Internal quotation marks omitted.) Biller Associates v. Peterken, 269 Conn. 716, 723-24, 849 A.2d 847 (2004).
Our Appellate Court has held that "[a] plaintiff ... ha[s] the burden of establishing four essential elements with respect to her claim of breach of fiduciary duty: [1] [t]hat a fiduciary relationship existed which gave rise to ... a duty of loyalty ... an obligation ... to act in the best interests of the plaintiff, and ... an obligation ... to act in good faith in any matter relating to the plaintiff; [2] [t]hat the defendant advanced his or her own interests to the detriment of the plaintiff; [3] [t]hat the plaintiff sustained damages; [and] [4] [t]hat the damages were proximately caused by the fiduciary’s breach of his or her fiduciary duty." (Emphasis omitted; internal quotation marks omitted.) Rendahl v. Peluso, 173 Conn.App. 66, 100, 162 A.3d 1 (2017).
Of course, the foregoing test cannot be read to modify our Supreme Court’s prior holdings concerning the shifting burden of proof in breach of fiduciary duty cases. Although, in the first instance, it is the claimant’s burden to prove the existence of a fiduciary relationship, "[o]nce a fiduciary [relationship] is found to exist, the burden of proving fair dealing properly shifts to the fiduciary ... Furthermore, the standard of proof for establishing fair dealing is not the ordinary standard of fair preponderance of the evidence, but requires proof either by clear and convincing evidence, clear and satisfactory evidence or clear, convincing and unequivocal evidence." (Citations omitted; internal quotation marks omitted.) Dunham v. Dunham, 204 Conn. 303, 322-23, 528 A.2d 1123 (1987). "Proof of a fiduciary relationship, therefore, generally imposes a twofold burden on the fiduciary. First, the burden of proof shifts to the fiduciary; and second, the standard of proof is clear and convincing evidence." Murphy v. Wakelee, 247 Conn. 396, 400, 721 A.2d 1181 (1998); accord Papallo v. Lefebvre, 172 Conn.App. 746, 754, 161 A.3d 603 (2017). "Such burden shifting occurs in cases involving claims of fraud, self-dealing or conflict of interest." (Internal quotation marks omitted.) Id.
Without question, the defendant was under a special duty to act for the benefit of the plaintiff in connection with its business. Section 2 of the Agreement provides that the defendant "will at all times use diligent efforts and skills to promote the business of ATI ..." Moreover, the defendant was hired as Vice President and COO of the plaintiff when the plaintiff was a startup company, in part due to his exceptional abilities as an engineer and manager. He continued in that position with the plaintiff for an extended period of time, in excess of ten years. Given the circumstances of his hiring, and the special nature of his professional responsibilities while employed as an officer of the plaintiff, the defendant was in a fiduciary relationship with the plaintiff. As noted by our Supreme Court, "[a]n officer ... occupies a fiduciary relationship to the corporation ..." (Internal quotation marks omitted.) Pacelli Bros. Transportation, Inc. v. Pacelli, 189 Conn. 401, 407, 456 A.2d 325 (1983); see also Risdon-AMS (USA), Inc. v. Levine, Superior Court, judicial district of Waterbury, Docket No. CV-03-0181029-S (February 10, 2004, Schuman, J.) (36 Conn.L.Rptr. 534, 535) (holding that defendant "indisputably owed a fiduciary duty to [the plaintiff] as one of its vice presidents during the relevant time period and also as [the plaintiff’s] key player in its efforts to find an Asian manufacturer for its products"); accord Guth v. Loft, 23 Del.Ch. 255, 5 A.2d 503, 510 (Del. 1939) (Holding that "[c]orporate officers ... are not permitted to use their position of trust and confidence to further their private interests. While technically not trustees, they stand in a fiduciary relation to the corporation ...")
An officer owing fiduciary duties to his corporation, "occupies a position of the highest trust and therefore he is bound to use the utmost good faith and fair dealing in all his relationships with the corporation." (Internal quotation marks omitted.) Pacelli Bros. Transportation, Inc. v. Pacelli, supra, 189 Conn. 407. As stated famously by Chief Judge Cardozo in Meinhard v. Salmon, 249 N.Y. 458, 164 N.E. 545, 546 (1928): "Many forms of conduct permissible in a workaday world for those acting at arm’s length, are forbidden to those bound by fiduciary ties ... Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behavior." Moreover, our Supreme Court has expressed the view that it is "not inclined to relax these high standards which the law demands of fiduciaries." Pacelli Bros. Transportation, Inc. v. Pacelli, supra, 189 Conn. 408, citing Arrigoni v. Adorno, 129 Conn. 673, 679, 31 A.2d 32 (1943).
The Supreme Court of Delaware emphasized and elaborated on these high standards in the seminal case of Guth v. Loft, supra, 5 A.2d 510, observing that "[a] public policy, existing through the years, and derived from a profound knowledge of human characteristics and motives, has established a rule that demands of a corporate officer ... peremptorily and inexorably, the most scrupulous observance of his duty, not only affirmatively to protect the interests of the corporation committed to his charge, but also to refrain from doing anything that would work injury to the corporation, or to deprive it of profit or advantage which his skill and ability might properly bring to it, or to enable it to make in the reasonable and lawful exercise of its powers. The rule that requires an undivided and unselfish loyalty to the corporation demands that there shall be no conflict between duty and self-interest. The occasions for the determination of honesty, good faith and loyal conduct are many and varied, and no hard and fast rule can be formulated. The standard of loyalty is measured by no fixed scale."
"The fiduciary duty comprises two prongs: a duty of care, and a duty of loyalty ... While the duty of care requires that the ... fiduciar[y] exercise [its] best care and judgment ... the duty of loyalty derives from the prohibition against self-dealing that inheres in the fiduciary relationship." (Internal quotation marks omitted.) Gurski v. Rosenblum & Filan, LLC, Superior Court, judicial district of Stamford, Docket No. CV- 00-0179063-S (February 23, 2001, D’Andrea, J.) (28 Conn.L.Rptr. 717, 718), citing Saginaw Products Corp. v. Cavallo, Superior Court, judicial district of New Haven, Docket No. CV-92-0326329-S (August 10, 1994, Burns, J.), aff’d, 40 Conn.App. 771, 673 A.2d 120 (1996); see also Ives Bros., Inc. v. Keeney, Superior Court, judicial district of Windham, Docket No. CV-06-4004952-S (October 27, 2009, Swords, J.) (in action seeking injunctive relief and monetary damages for alleged breach of contract containing noncompete clause as well as claim for breach of fiduciary duty, holding that "by virtue of the employment contract between the parties, the defendant owed the plaintiff a duty of loyalty and an obligation to act in the plaintiff’s best interest and good faith").
With respect to the duty of loyalty, "[i]t is a thoroughly well-settled equitable rule that any one acting in a fiduciary relation shall not be permitted to make use of that relation to benefit his own personal interest. This rule is strict in its requirements and in its operation. It extends to all transactions where the individual’s personal interests may be brought into conflict with his acts in the fiduciary capacity, and it works independently of the question whether there was fraud or whether there was good intention." (Internal quotation marks omitted.) Murphy v. Wakelee, supra, 247 Conn. 401-02, citing State v. Culhane, 78 Conn. 622, 628, 63 A. 636 (1906).
It is also well established in our law that an employee, such as the defendant, owes a duty of loyalty to his employer based on principles of agency. In a recent case, our Supreme Court referred to its previous recognition of "the viability of a claim by an employer against its employee for a breach of the duty of loyalty, which is grounded in agency principles." Wall Systems, Inc. v. Pompa, 324 Conn. 718, 730, 154 A.3d 989 (2017); see also 2 Restatement (Third), Agency, General Fiduciary Principle § 8.01 (2006) ("[a]n agent has a fiduciary duty to act loyally for the principal’s benefit in all matters connected with the agency relationship"). Although the plaintiff has not alleged it as a separate claim in its verified complaint, distinct from the breach of fiduciary duty count, there is division of opinion in the Superior Court as to whether a claimant may assert a cause of action for breach of the duty of loyalty that is independent of a claim for breach of fiduciary duty. Compare Robinson & Cole, LLP v. Ryan, Superior Court, judicial district of Hartford, Docket No. CV-11-6021702-S (December 5, 2011, Domnarski, J.) (53 Conn. L. Rptr . 63, 66) ("Connecticut recognizes a cause of action for breach of the duty of loyalty that is separate and distinct from an action for breach of fiduciary duty") with US Financial Group, Inc. v. Salazar, Superior Court, judicial district of Danbury, Docket No. CV-00-0339753-S (April 23, 2002, Moraghan, J.T.R.) (32 Conn. L. Rptr . 64, 65) ("[N]o separate cause of action exists in Connecticut for breach of the duty of loyalty. [T]he duty of loyalty derives from the prohibition against self-dealing that inheres in the fiduciary relationship ... [T]he duty of loyalty is actually a subset, or an element of, the breach of a fiduciary duty claim, rather than its own cause of action." [Internal quotation marks omitted.] ), citing Esposito v. Connecticut College, Superior Court, judicial district of New London, Docket No. 543055 (February 10, 1999, Mihalakos, J.). As the plaintiff has not alleged a breach of the duty of loyalty, separate from its breach of fiduciary duty claim, the court does not need to address the issue of whether such a claim may be maintained separately.
Related to the duty of loyalty is the corporate opportunity doctrine, which is relevant to the plaintiff’s breach of fiduciary duty claim. "The doctrine of corporate opportunity ... is but one phase of the cardinal rule of undivided loyalty on the part of fiduciaries. In other words, one who occupies a fiduciary relationship to a corporation may not acquire, in opposition to the corporation, property in which the corporation has an interest or tangible expectancy or which is essential to its existence ... In a leading case on the corporate opportunity doctrine the Supreme Court of Delaware stated the rule as follows: [I]f there is presented to a corporate officer or director a business opportunity which the corporation is financially able to undertake, is ... in the line of the corporation’s business and is of practical advantage to it, is one in which the corporation has an interest or reasonable expectancy, and, by embracing the opportunity, the self-interest of the officer or director will be brought into conflict with that of his corporation, the law will not permit him to seize the opportunity for himself." (Citations omitted; internal quotation marks omitted.) Katz Corp. v. T.H. Canty & Co., 168 Conn. 201, 208, 362 A.2d 975 (1975), citing Guth v. Loft, Inc., supra, 5 A.2d 511. Or, as stated somewhat more concisely by the Supreme Judicial Court of Massachusetts, "[t]he corporate opportunity doctrine is rooted in the principle that corporate directors and officers are bound by their duty of loyalty to subordinate their self-interests to the well being of the corporation." Demoulas v. Demoulas Super Markets, Inc., 424 Mass. 501, 677 N.E.2d 159, 180 (1997).
Turning to the facts of this case, the court concludes that the plaintiff is likely to prevail on the merits of its breach of fiduciary duty claim. To begin, while employed by the plaintiff, the defendant engaged in providing independent DER services to the plaintiff’s clients, which services could have been provided through the plaintiff, to its financial benefit. The defendant offered these services, pursuant to his "side business," principally to benefit himself- namely, (1) to maintain a DER certification that he was determined never to lose and (2) to earn money, however marginal such earnings were in comparison with the salary and bonuses he was paid by the plaintiff. The defendant decided unilaterally which customers of the plaintiff to service independently, through his "side business," and which to process through the plaintiff. Moreover, he provided independent services to the plaintiff’s customers without disclosing these activities to the plaintiff. The defendant had a fiduciary obligation to disclose the fact that he was providing such independent services to the plaintiff’s clients. See, e.g., Automatic Business Products Co. v. Hankinson, Superior Court, judicial district of Tolland, Docket No. 47066 (May 19, 1992, McWeeny, J.) (6 Conn.L.Rptr. 849, 850) (holding that "[t]he corporate opportunity doctrine is a rule of disclosure requiring the fiduciary to pass along information to his or her corporation where appropriate"). Furthermore, the defendant used the plaintiff’s property, including his company-issued laptop and email address, to service the plaintiff’s clients on an independent basis, including during company working hours. None of the foregoing conduct is consistent with the "utmost good faith and fair dealing" that was required of the defendant in his relationship with the defendant, nor can it be characterized as conduct consistent with "the punctilio of an honor the most sensitive." Thus, the defendant has not demonstrated, by clear and convincing evidence, that he dealt fairly with the plaintiff in connection with his independent DER work, both during his term of employment with the plaintiff, and at all times since.
The defendant attempts to minimize the improper nature of his actions by emphasizing that his "side business" imposed little to no operational cost on the plaintiff. Although this may be true, it does not alter the fact that his actions in connection with offering independent DER services to the plaintiff’s clients, while employed by the plaintiff, and without disclosing these activities to the plaintiff, constituted an obvious breach of his fiduciary duties. As explained by the court in Risdon-AMS (USA), Inc. v. Levine, supra, 36 Conn.L.Rptr. 536, "[the defendant] ... made some use of his ... telephone credit card [issued by the plaintiff], his ... computer [issued by the plaintiff], and his work time to further his personal business venture. While this misuse of time did not [impose] a significant cost impact on [the plaintiff] ... [the defendant’s] misuse of [the plaintiffs] property nonetheless illustrates that [the defendant] did not maintain the high standards and complete loyalty expected of fiduciaries ..." A similar conclusion is warranted here.
The plaintiff was damaged by the defendant’s independent DER activities. The plaintiff lost income as a result of the defendant’s providing independent DER services that otherwise would have been "run" through the plaintiff, thereby yielding income to the plaintiff. As previously noted, the defendant earned approximately $14,000 per year in connection with his "side business." Although not a large sum in comparison with the salary and bonuses paid to the defendant by the plaintiff, over a period of more than ten years, the income lost by the plaintiff is not insubstantial. The defendant is also liable to the plaintiff for making use of the plaintiff’s property to conduct his "side business." Moreover, in addition to losing income and suffering an improper use of its corporate property, the plaintiff lost goodwill, including the value attributed to providing DER services to existing clients in need- goodwill and the development of relationships that were, instead, coopted by the defendant individually and unilaterally.
Although the court does not find that the defendant was radically unfaithful to his trust or that he willfully breached his duty of loyalty, as noted by the court in Rison-AMS ( USA), Inc. v. Levine, supra, 36 Conn.L.Rptr. 536, "[t]here is authority in Connecticut and elsewhere for the forfeiture of the entire salary of an employee who has proven radically unfaithful to his trust or willfully breached his fiduciary duty of loyalty, even without proof of specific damages to the employer ." (Emphasis added.)
V
Connecticut has long recognized "a cause of action for tortious interference with contract rights or other business relations." (Internal quotation marks omitted.) Robert S. Weiss & Associates, Inc. v. Wiederlight, supra, 208 Conn. 535. "A claim for tortious interference with contractual relations requires the plaintiff to establish (1) the existence of a contractual or beneficial relationship, (2) the defendant[’s] knowledge of that relationship, (3) the defendant[’s] intent to interfere with the relationship, (4) the interference was tortious, and (5) a loss suffered by the plaintiff that was caused by the defendant[’s] tortious conduct." (Internal quotation marks omitted.) Appleton v. Board of Education, 254 Conn. 205, 212-13, 757 A.2d 1059 (2000). "[F]or a plaintiff successfully to prosecute such an action it must prove that the defendant’s conduct was in fact tortious. This element may be satisfied by proof that the defendant was guilty of fraud, misrepresentation, intimidation or molestation ... or that the defendant acted maliciously ... [A]n action for intentional interference with business relations ... requires the plaintiff to plead and prove at least some improper motive or improper means ... [A] claim is made out [only] when interference resulting in injury to another is wrongful by some measure beyond the fact of the interference itself." (Citations omitted; internal quotation marks omitted). Robert S. Weiss & Associates, Inc. v. Wiederlight, supra, 536.
The court concludes that the plaintiff is not likely to prevail on its claim of tortious interference with business relations, because it has not demonstrated that the defendant’s conduct was wrongful "by some means beyond the fact of the interference itself." As discussed previously, by engaging in his "side business," the defendant breached his fiduciary duty of loyalty and appropriated corporate opportunities belonging to the plaintiff. These breaches rise out of the high standard of conduct to which fiduciaries are held in Connecticut. In concluding that this high standard of conduct was breached, however, the court does not find that the defendant engaged in fraud, intimidation or molestation, or acted maliciously in any way. The plaintiff has not demonstrated any improper motive on the part of the defendant. Again, and however erroneous the conclusion, the defendant believed that he was within his rights to provide DER services to the plaintiff’s clients on an independent basis, principally for the purpose of maintaining his DER designation. In doing so, he did not intend to harm the plaintiff or otherwise act maliciously or with nefarious motives. Given this, the court concludes that the plaintiff is not likely to prevail on its claim of tortious interference with business relations.
VI
General Statutes § 42-110b(a) provides that "No person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." In determining whether or not the conduct at issue constitutes an unfair or deceptive trade practice, courts must apply the so-called "cigarette rule," which requires the court to consider: "(1) [w]hether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise- whether, in other words, it is within at least the penumbra of some common law, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers ... All three criteria do not need to be satisfied to support a finding of unfairness. A practice may be unfair because of the degree to which it meets one of the criteria or because to a lesser extent it meets all three." (Citations omitted; internal quotation marks omitted.) Jacobs v. Healey Ford-Subaru, Inc., 231 Conn. 707, 725, 652 A.2d 496 (1995); accord Landmark Investment Group, LLC v. CALCO Construction & Development Co., 318 Conn. 847, 880-81, 124 A.3d 847 (2015).
As noted by our Supreme Court, "the federal courts have abandoned [the cigarette rule] in favor of a more stringent test known as the substantial unjustified injury test. See 15 U.S.C. § 45(n) (2012)." Artie’s Auto Body, Inc. v. Hartford Fire Ins. Co., 317 Conn. 602, 622 n.13, 119 A.3d 1139 (2015). However, as "the legislature has given no indication that it disapproves of our continued use of the cigarette rule as the standard for determining unfairness under CUTPA"; id. ; that test continues to be applied by the Connecticut courts in the context of CUTPA claims.
Here, the plaintiff claims that the defendant’s wrongful competition with the plaintiff, and his diversion of the plaintiff’s business opportunities, constituted unfair methods of competition and/or deceptive acts or practices in the conduct of trade or commerce; offended public policy, was immoral, oppressive, unethical and unscrupulous; and caused substantial injury to the plaintiff, thereby violating CUTPA.
To the extent the plaintiff’s claim is based on its breach of contract claim, it is well established that, "a breach of contract may, but does not necessarily, rise to a level of a CUTPA violation ... [I]n the absence of aggravating unscrupulous conduct, mere incompetence [in performing a contract] does not by itself mandate a trial court to find a CUTPA violation." (Citation omitted; internal quotation marks omitted.) Ulbrich v. Groth, 310 Conn. 375, 432-33, 78 A.3d 76 (2013). "There must be some nexus with a public interest, some violation of a concept of what is fair, some immoral, unethical, oppressive or unscrupulous business practice or some practice that offends public policy." Muniz v. Kravis, 59 Conn.App. 704, 715, 757 A.2d 1207 (2000). "When [Connecticut Superior Courts] have permitted a CUTPA cause of action based on a breach of contract there generally has been some type of fraudulent behavior accompanying the breach or aggravating circumstances ... Conduct that has been held to be substantial aggravating circumstances sufficient to support CUTPA claims includes fraudulent representations, fraudulent concealment, false claims ... and multiple breaches of contract." (Internal quotation marks omitted.) Always There Home Care v. Dube, Superior Court, judicial district of Waterbury, Docket No. CV-14-6022487-S (March 17, 2015, Brazzel-Massaro, J.) (59 Conn.L.Rptr. 958, 960). "[W]hether a defendant’s acts constitute ... unfair trade practices under CUTPA, is a question of fact for the trier." (Internal quotation marks omitted.) Ulbrich v. Groth, supra, 433.
In this case, the plaintiff has demonstrated multiple breaches of contract, namely, the multiple occasions on which the defendant directly or indirectly endeavored to entice away the plaintiff’s clients during the period of his employment by providing independent DER services to those clients. Moreover, these breaches of contract were aggravated by the fact that the provision of DER services by the defendant, on an independent basis, was in breach of his fiduciary duty of loyalty to the plaintiff. This breach of fiduciary duty involved not only self-dealing and a usurpation of corporate opportunities, but a failure to disclose his activities to the plaintiff, including in response to a direct inquiry by Lecker in January 2018. See, e.g., Greene v. Orsini, 50 Conn.Supp. 312, 316, 926 A.2d 708 (2007) ("[a] misrepresentation can constitute an aggravating circumstance that would allow a simple breach of contract claim to be treated as a CUTPA violation; it would, in effect, be a deceptive act"). Moreover, the fact that the defendant’s conduct may not have been motivated by the intent to mislead the plaintiff does not undermine the plaintiff’s CUTPA claim. "[S]ince CUTPA does not require proof of intent to deceive, to mislead or to defraud, [even an] innocent misrepresentation can amount to a CUTPA violation." (Internal quotation marks omitted.) Reich v. Spencer, Superior Court, judicial District of Hartford, Docket No. CV-07-5012682-S (December 10, 2010, Peck, J.). For these reasons, the court concludes that the plaintiff is likely to succeed on the merits of its CUTPA claim.
VII
Finally, the plaintiff also asserts a claim in unjust enrichment. "Unjust enrichment is, consistent with principles of equity, a broad and flexible remedy ... Plaintiffs seeking recovery for unjust enrichment must prove (1) that the defendants were benefitted, (2) that the defendants unjustly did not pay the plaintiffs for the benefits, and (3) that the failure of payment was to the plaintiffs’ detriment." (Internal quotation marks omitted.) Vertex, Inc. v. Waterbury, 278 Conn. 557, 573, 898 A.2d 178 (2006).
The remedy of unjust enrichment is available only when a claimant has no remedy by way of breach of contract. "Unjust enrichment applies wherever justice requires compensation to be given for property or services rendered under a contract, and no remedy is available by an action on the contract ... A right of recovery under the doctrine of unjust enrichment is essentially equitable ..." (Emphasis added.) Id. ; accord United Coastal Industries, Inc. v. Clearheart Construction Co., 71 Conn.App. 506, 512, 802 A.2d 901 (2002) ("[u]njust enrichment is a legal doctrine to be applied when no remedy is available pursuant to a contract").
As the court concludes that plaintiff is likely to succeed on the merits of its breach of contract claim, it must determine that the plaintiff is unlikely to succeed on a claim for unjust enrichment, as these remedies are mutually exclusive. Russell v. Russell, 91 Conn.App. 619, 638, 882 A.2d 98 ("unjust enrichment and breach of contract are mutually exclusive theories of recovery"), cert. denied, 276 Conn. 924, 925, 888 A.2d 92 (2005), citing Gagne v. Vaccaro, 255 Conn. 390, 401, 766 A.2d 416 (2001) ("lack of a remedy under the contract is a precondition for recovery based upon unjust enrichment").
VIII
The discussion above reflects the court’s determination that the plaintiff is likely to prevail on the merits of its breach of contract, breach of fiduciary duty and CUTPA claims. The question remains whether, in light of its likely success on the merits on these three counts, the plaintiff is entitled to the temporary injunctive relief sought. This requires the court to determine whether the plaintiff has no adequate remedy at law and will suffer irreparable harm absent an injunction, and whether the balance of the equities tips in favor of the plaintiff Wellswood Columbia, LLC v. Hebron, supra, 327 Conn. 59 n.5.
Although the plaintiff has remedies at law pursuant to its breach of contract, breach of fiduciary duty and CUTPA claims, the court concludes that those remedies are inadequate in the context of this case. As noted above, "[i]rreparable injury and lack of an adequate remedy at law are considered to be established by the nature of the threatened conduct where a party seeks to enforce a covenant not to compete." (Internal quotation marks omitted.) Ineo, LLC v. Lenehan, supra, 66 Conn.L.Rptr. 75. In this case, as the plaintiff seeks to enforce the noncompete provision of the Agreement where the defendant has not only threatened but has actually violated the noncompete provision at issue, the plaintiff has demonstrated both irreparable injury and the lack of an adequate remedy at law.
Although the court concludes that the plaintiff satisfies the two necessary elements of irreparable injury and an inadequate remedy at law, it is appropriate to address the defendant’s arguments on these points. To begin, the defendant argues that the only evidence presented regarding the plaintiff’s losses related to the defendant’s alleged misappropriation of work from the plaintiff and misuse of company data. According to the defendant, these losses can be compensated adequately by money damages, thereby barring temporary injunctive relief. Def.’s Post-Hearing Br., at 11. The court disagrees. In so arguing, the defendant overlooks several important facts. By signing the Agreement, the defendant agreed that "a breach or threatened breach by [the defendant] of [the covenant not to compete] will cause irreparable harm to [the plaintiff], and that therefore in the event of a breach or threatened breach ... [the plaintiff] shall be entitled to obtain, without bond, a temporary or permanent injunction ... enjoining [the defendant] and restraining [the defendant] from any breach or threatened breach of any covenant contained in this Agreement." As noted by the court in POP Radio, LP v. News America Marketing In-Store, Inc., supra, 49 Conn.Supp. 578, an acknowledgement by a party to a contract, to the effect that a breach will cause irreparable harm, "is, if not an admission, at least evidence and a recognition of the reality that money damages would not be sufficient to remedy the loss." Thus, although "[p]rivate parties cannot dictate a conclusion that injunctive relief is required ... [an] agreement to this effect is ... some evidence ... that ... the parties were of the opinion that a remedy at law would be inadequate." Custard Ins. Adjusters, Inc. v. Nardi, Superior Court, judicial district of Ansonia-Milford, Docket No. CV-98-0061967-S (April 20, 2000, Corradino, J.).
The court concluded, above, that the defendant did not misappropriate any of the plaintiff’s confidential information or trade secrets.
In addition, the defendant disregards other intangible harm suffered by the plaintiff as a result of the defendant’s breach of contract and fiduciary duties- namely, the plaintiff’s loss of goodwill. Goodwill has been defined as "[a] business’s reputation, patronage, and other intangible assets that are considered when appraising the business, esp. for purchase; the ability to earn income in excess of the income that would be expected from the business viewed as a mere collection of assets." (Emphasis added.) Black’s Law Dictionary (10th Ed. 2014) It has been defined similarly as "(1): the favor or advantage that a business has acquired especially through its brands and its good reputation; (2): the value of projected earnings increases of a business especially as part of its purchase price; and (3) the excess of the purchase price of a company over its book value which represents the value of goodwill as an intangible asset for accounting purposes." (Internal quotation marks omitted.) Sana Bro, LLC v. Sham, LLC, Superior Court, judicial district of New Britain, Docket No. CV-15-6028376-S (October 29, 2015, Young, J.) Without question, the plaintiff has an interest in protecting its goodwill.
Taken together with the defendant’s acknowledgement, set forth in the Agreement, that a breach of the noncompete provisions of the Agreement would cause the plaintiff irreparable harm, Lecker’s credible testimony to the effect that the plaintiff has suffered a loss of goodwill and damage to its client relationships is sufficient to demonstrate irreparable harm to the plaintiff. See, e.g., Ferguson v. Jones, Superior Court, judicial district of New Britain, Docket No. CV-13-6018967-S (May 22, 2013, Tanzer, J.T.R.) ("[b ]ased on the evidence and reasonable inferences drawn, the court finds [the plaintiff] has sustained his burden [of showing] a reasonable likelihood of success on the merits for an injunction ... based on the allegations of the complaint, in particular, breach of the operating agreement and breach of fiduciary duty"); see also Ellis v. McDaniel, 95 Nev. 455, 596 P.2d 222, 224 (1979) (entering modified preliminary injunction against physician subject to noncompete agreement and "[r]ecognizing that the good will and reputation of the Clinic are valuable assets and that certain of its ... patients are likely to follow [the physician] on his departure"); Wegman v. Altieri, 55 Misc.3d 1216(A), 57 N.Y.S.3d 667 (2015) (finding that plaintiff established "a likelihood of success on [his] breach of fiduciary duty [and] unfair competition ... claims" and holding that plaintiff was entitled to preliminary injunction), aff’d, 149 A.D.3d 1582, 51 N.Y.S.3d 460 (2017). As a result, the plaintiff has established the irreparable harm and lack of adequate remedy at law necessary to maintain a request for injunctive relief.
IX
Although the plaintiff has demonstrated that, with respect to its claims based on the noncompete provision of the Agreement, the plaintiff has no adequate remedy at law, will suffer irreparable harm absent an injunction, and will likely prevail on the merits, the court must also address the additional injunctive relief sought by the plaintiff. This includes the plaintiff’s request for a temporary injunction that the defendant (1) be enjoined and restrained from directly or indirectly using the plaintiff’s confidential information; (2) that the defendant be ordered to provide the plaintiff with access to all materials and communications with any of the plaintiff’s clients; and (3) that the defendant be ordered to provide the plaintiff with access to his Dropbox account. For the following reasons, the plaintiff has not introduced evidence sufficient to warrant the issuance of temporary injunctive relief with respect to these items.
The plaintiff has not shown that the defendant misappropriated its confidential information, either during the term of his employment or thereafter. Thus, the plaintiff has not demonstrated that it faces immediate or irreparable harm with respect to its confidential information, and injunctive relief is not warranted. Ineo, LLC v. Lenehan, supra, 66 Conn.L.Rptr. 80 (concluding that plaintiff was not entitled to temporary injunctive relief where defendant was under contractual and fiduciary obligations not to divulge plaintiff’s proprietary information, "and the plaintiff has not demonstrated that it faces immediate and irreparable harm absent entry of the requested temporary injunctive relief").
As for the request to compel the defendant to, provide the plaintiff with materials and communications pertaining to its clients, as well as access to the defendant’s Dropbox account, the court declines to exercise its equitable powers. The materials and information sought by the plaintiff may be obtained through the process of pre-trial discovery. Practice Book § 13-1 et seq. As a result, the plaintiff has a remedy by which it may obtain the information and documentation it seeks without recourse to the extraordinary remedy of injunctive relief. Moreover, the plaintiff has not shown that it will suffer irreparable harm absent an injunction requiring that the defendant produce the information and materials sought. As a result, the court will not require the defendant to provide, pursuant to a temporary injunction, the information, materials and access sought by the plaintiff.
X
Finally, in connection with the plaintiff’s request for injunctive relief based on the noncompete provision of the Agreement- and having concluded that the plaintiff has no adequate remedy at law, will suffer irreparable harm absent an injunction, and is likely to prevail on the merits the court must also balance the equities. To begin, the court considers those factors that favor enforcement of the restrictive covenant, as requested by the plaintiff. Here, the Agreement was entered into by the defendant, an educated, experienced and sophisticated engineer and businessperson. He executed the Agreement with bargaining power comparable to, if not greater than, that of the plaintiff, a startup company. In addition, the plaintiff- a small business venture in a large industry- hired the defendant when it was just beginning operations. The defendant was employed, in an executive capacity, for his particular expertise and ability as an engineer and manager, to assist the plaintiff in establishing and growing its business. As such, the noncompete provisions of the Agreement were of special and particular importance to the plaintiff. Furthermore, the defendant was DER certified, which certification was valuable to the plaintiff. Moreover, the defendant provided DER services to the plaintiff’s clients while he was employed by the plaintiff. In executing his duties as an executive of the plaintiff, the defendant owed the plaintiff duties of loyalty that imposed upon him high standards of behavior that required him to refrain from self-dealing and taking for himself corporate opportunities that belonged to the plaintiff. Moreover, as a fiduciary, he was obliged to disclose to the plaintiff the fact that he was providing individual DER services to its clients. All of these factors favor the issuance of a temporary injunction requiring the defendant to comply with the noncompete provision contained in the Agreement signed by him.
In connection with a balancing of the equities, the defendant urges the court to "consider the needs of the clients who the [defendant] would be prohibited from offering services to." Def.’s Post-Hearing Br., at 16. In connection with this argument, the defendant contends that "[i]t is unreasonable to bar these clients from doing business with someone who actually has the particular expertise they need." (Internal quotation marks omitted.) Def.’s Post-Hearing Br. at 16, citing Webster Ins, Inc. v. Levine, Superior Court, judicial district of New Haven, Docket No. CV-07-4026861-S (December 21, 2007, Meadow, J.T.R.). This argument is not persuasive, as the clients referred to by the defendant are able to obtain DER services from the numerous other certified DERs listed in the on-line FAA Consultant DER Directory. The defendant does not have a monopoly on offering such services, and his inability to provide DER services to those clients who were clients of the plaintiff during the defendant’s term of employment, does not impact negatively- in any meaningful way- the needs of those clients. They may obtain these services elsewhere without undue burden.
Certainly, a factor that weighs against the enforcement of the restrictive covenant is the fact that it will impact negatively the defendant’s unfettered ability to pursue his profession. However, as the defendant testified himself, he is able to earn a living without servicing customers that were clients of the plaintiff while he was employed by the plaintiff. Thus, the equities weigh in favor of enforcing the noncompete provision of the Agreement against the defendant by way of temporary injunction.
CONCLUSION
For the foregoing reasons, the plaintiff’s application is granted in part and denied in part, and the court enters an order, as follows:
(1) Until further order of this court, or April 3, 2021, whichever is earlier, the defendant is hereby enjoined and restrained from directly or indirectly endeavoring to entice away any person who was a client of the plaintiff during the period of his employment, for the purpose of providing applied engineering services, sales representation or any services of a similar kind or nature; and
(2) All additional temporary injunctive relief requested by the plaintiff is denied.