Opinion
No. CV 04-0830656
April 19, 2006
MEMORANDUM OF DECISION
The plaintiff, Synesis, Inc., sues defendants in five counts: the First Count against defendant, Martinez Associates, LLC (Martinez) in breach of contract for the unpaid amount owed for services rendered by plaintiff's employee; Second Count against Hamilton Sunstrand Corporation (Hamilton), in a promissory estoppel and detrimental reliance; Third Count against Hamilton and defendant, Nucon, Inc., in agency, Fourth Count against Martinez and Hamilton in quantum meruit and unjust enrichment; and Fifth Count against Hamilton for violating the Connecticut Unfair Trade Practices Act.
The facts are as follows: Plaintiff is a software engineering corporation engaged in the business of providing engineering services to aerospace businesses. Plaintiff's president, Kevin Johnson, contracted with Nucon for himself to work for Hamilton. Hamilton had a contract with Nucon to provide its staffing needs. Nucon collected the resumes of technical employees and forwarded them to Hamilton who chose the employees it felt qualified. Hamilton negotiated the rate of pay with Nucon for the employees and Nucon negotiated the salary with its employees. Nucon's staffing services to Hamilton included: providing qualified leased employees, recruiting, orientating, training, screening, security checking, negotiating the salary, and paying the employees. Nucon remained solely responsible for the wages, unemployment, social security and other taxes of such employees who at all times remained the employees of Nucon and not of Hamilton.
The contract further provided that Nucon would mentor two Small, Disadvantaged, Minority and/or Women-Owned businesses (hereinafter referred to as "SDB") so designated by the Small Business Administration and identified by Hamilton). Of the two SDBs Nucon mentored, one was defendant Martinez. Hamilton used Martinez to meet its minority hiring goals in order to qualify for government contracts. The employees Martinez placed with Hamilton were not necessary minorities. Hamilton did not have a contract directly with Martinez. Hamilton dealt with Martinez as a mentored SDB of Nucon.
Plaintiff Synesis sought to have Mark Groves, one of its software engineers hired directly by Hamilton but Hamilton insisted Synesis contract with Martinez for Groves' services. Groves was a Caucasian. Synesis then entered into a contract with Martinez for Groves to be retained as an independent contractor at the hourly rate of $80.00 to work at Hamilton.
Groves began working at Hamilton on July 31, 2002. His hours were logged on Hamilton's Autotime system and on the basis of such hours logged, Martinez paid Synesis every four weeks in arrears.
Beginning in November 2002 Martinez fell behind in his payments and issued checks returned for insufficient funds. Johnson and Groves complained to Brenda Nufer, engineering supervisor at Hamilton. Nufer informed John Stolzenthaler of Hamilton's purchasing department, who directed Tia Filiault and Don Ball to "resolve this issue." They were successful and by January 3, 2003, Martinez caught up on his payments wit the plaintiff.
In January 2003, Filiault investigated the Martinez shortfalls and found the company had experienced cash flow shortages, in part because Hamilton was late in one month's payment, but had secured financing from a bank. Filiault's memo says that Martinez "gave his personal assurance this will not happen again . . . Our in-house bookkeeper, Beverly Kendall will monitor the Hamilton Sundstrand's payroll account on a daily basis . . . Ms. Kendall has been instructed to make this a priority."
Although Synesis was not being paid, Groves continued to work at Hamilton because, "I felt I had an obligation to provide my services to Hamilton for the work that needed to get done and I didn't want to leave them in the lurch — to have someone not do the work." On or about April 12, 2003, Filiault told Groves that he was switching his contract from Martinez to Arnold Hanifin and Groves should renegotiate with Hanifin. Groves testified Filiault also said, "I was told that they would contact Martinez to find out what payment arrangement would be for the money that I was owed and that I was not to contact neither [sic] Martinez that they would take care of it." Filiault denied telling Groves not to contact Martinez or promising that Hamilton would take care of the arrearage.
Groves also spoke to a Nucon representative, Kathy Fahey who she said Nucon would also pressure Martinez to get the payments owed to Synesis for his time. Filiault also testified that she contacted Nucon on the matter. Groves testified as follows:
Q. Did anyone tell you from Hamilton that Hamilton would force Martinez to pay what was owed to Synesis?
A. It was my impression they were going to get Martinez to pay.
Q. That's the assumption, no one told you that, you just assumed it.
A. Yes.
Mr. Johnson, the president of Synesis testified that he had a good faith belief that Hamilton would take care of the problem based on the fact that Hamilton was a large company and he thought that "working for a company that large you didn't think you were going to have any problems getting paid." He also testified that he expected Hamilton to pay because Hamilton received the benefits of Mr. Groves' work and he felt Hamilton had a duty to make sure that the people who are providing the services were getting paid. At the same time he conceded "there was no promise made by Hamilton to get payment for Groves' services."
On April 30, 2003, Martinez wired Synesis $5,800 leaving a balance due Synesis of $32,600 for services provided by Groves for ten weeks over the period from February 16, 2003 to May 4, 2003.
Hamilton continued making payments to Martinez for Groves' work with the knowledge that Synesis was not being paid by Martinez. When Groves had not received the balance due him, in January 2003 he spoke to Filiault who told him Hamilton couldn't do anything further for him. On April 30, 2003, Groves renegotiated his contract with Arnold Hanifin at a reduction in pay from what he had received from Martinez. On July 11, 2003, Hamilton terminated its relationship with Martinez.
I. First Count in Breach of Contract v. Martinez
Martinez has not only been defaulted, but the evidence clearly establishes that Martinez breached the contract with Synesis and Synesis is entitled to recover of the defendant Martinez the sum of $32,600.
II. Second Count in Promissory Estoppel Against Hamilton
The doctrine of promissory estoppel is well established in our law. As stated in Restatement (2nd) Contracts, Section 90, "A promise which the promissor should reasonably expect to induce action or forbearance on the part of the promissee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise." The fundamental element of a promissory estoppel therefore is "the existence of a clear and definite promise which a promissor could reasonably have expected to induce reliance." D'Ulisse-Cupo v. Board of Directors of Notre Dame High School, 202 Conn. 206, 213 (1987).
Here, after Synesis was not paid by Martinez for Groves' work in December 2002, Groves and Johnson complained to Brenda Nufer, Hamilton's supervising engineer. Nufer got the people from Hamilton's purchase department involved who prevailed on Martinez to catch up on the back payments.
In January 2003 Filiault investigated the Martinez problem and found that Martinez had a cash flow shortage, in part because Hamilton was late in its payments to Martinez. Filiault also discovered that Martinez had obtained bank financing and she received assurances that Martinez would make future payments. Filiault instructed a Hamilton bookkeeper to monitor the situation in order to be sure that Hamilton met its obligation to Martinez.
In April 2003 when Martinez again fell behind in its payments to Synesis, Groves and Johnson again sought Hamilton's help. Filiault did intervene by seeking the assistance of Nucon and also by contacting Martinez. Although there was some indication in Groves' testimony that Filiault mentioned she would seek to get a payment plan from Martinez, the court finds on the weight of all the evidence, that there was no promise made by Hamilton that it would pay Synesis for Groves' services and no promise by Hamilton that it would force Martinez to pay Synesis. Hamilton's response to Martinez' breach of contract was to terminate Martinez as a minority staff provider on April 12, 2003 and get Groves placed with Hanifin.
The efforts made by Hamilton to get Martinez to pay the first defaulted contracted amounts in December 2002 did not constitute a promise that Hamilton would continue to pressure Martinez to pay in the future.
Groves and Johnson assumed that Hamilton would act to have Martinez meet its contractual obligations from the fact that Hamilton was a large company, that it received the benefit of Groves' services, and that it was its duty to assure that people who worked at Hamilton got paid. But that assumption was not based on a promise by Hamilton to do that and the lack of "a clear and definite promise," ( D'Ulisse-Cupo v. Board of Notre Dame High School, supra at 213) defeats plaintiff's claim for recovery on the Second Count.
III. Third Count in Agency Against Nucon and Hamilton
Plaintiff alleges in its Third Count that defendant Martinez was acting as the agent of Nucon and Hamilton and the failure of Martinez to pay the plaintiff made Nucon and Hamilton liable as principals.
The basis principles for determining the existence of an agency relationship as stated in Wesley v. Schaller Subaru, Inc., 277 Conn. 526, 543 (2006), citing Beckinstein v. Potter Carrier, Inc., 191 Conn. 120 (1983): "Under § 1 of 1 Restatement (Second) of Agency (1958), `[a] agency is defined as the fiduciary relationship which results from manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act . . . Thus the three elements required to show the existence of an agency relationship include: (1) a manifestation by the principal that the agent will act for him; (2) acceptance by the agent of the undertaking; and (3) an understanding between the parties that the principal will be in control of the undertaking . . . The existence of an agency relationship is a question of fact . . . Some of the factors listed by the Second Restatement of Agency in assessing whether such a relationship exists include: whether the alleged principal has the right to direct and control the work of the agent; whether the agent is engaged in a distinct occupation; whether the principal or the agent supplies the instrumentalities, tools, and the place of work; and the method of paying the agent . . . In addition, [a]n essential ingredient of agency is that the agent is doing something at the behest and for the benefit of the principal . . . Finally, the labels used by the parties in referring to their relationship are not determinative; rather the court must look to the operative terms of their agreement or understanding. Beckinstein v. Potter Carrier, Inc., supra, 132-34."
Here Martinez was one of the mentored SDBs of Nucon and, with Nucon's consent, Martinez supplied employees to Hamilton. But Nucon was not involved in Martinez's placement of Groves with Hamilton and so there was no principal-agency relationship between Martinez and Nucon, at least with respect to Groves' placement.
Hamilton did not have a contract with Martinez but an arrangement for Martinez to provide employees for Hamilton. Hamilton and Martinez were in separate businesses. Martinez was in the business of locating potential employees that met Hamilton's qualifications and paying them. Hamilton was in the aeronautical business. Hamilton did not control the manner of Martinez performing its business. The companies were entirely separate entities, engaged in different occupations. While it is true that Martinez performed a staffing service at the request and on behalf of Hamilton, it was really no different than a supplier selling materials used in the construction of an airplane or a dealer selling the cars manufactured by an automobile maker. Wesley v. Schaller Subaru, Inc., supra. There was no evidence that Martinez consented to be Hamilton's agent. Macomber v. Travelers Property Casualty Corp., 261 Conn. 620, 639, FN 12 (2002). Plaintiff has failed to prove a principal-agency relationship between Hamilton and Martinez.
IV. Fourth Count in Quantum Meriut and Unjust Enrichment Against Martinez and Hamilton
The doctrines of quantum meriut and unjust enrichment rest upon restoring to the plaintiff services rendered, or money or goods of which he or she was deprived that benefitted another. Burns v. Koellner, 11 Conn.App. 375, 384 (1987). Quantum meriut does not depend upon the existence of a contract and is a remedy available to one who renders work, labor or services for the benefit of another who has been unjustly enriched. Unjust enrichment is the remedy available to one who confers money or property on another and the doctrine applies when no remedy is available on a contract. Both arise out of the need to avoid unjust enrichment and are based on the postulate that it is contrary to equity and fairness for the defendant to retain a benefit at the expense of the plaintiff. Gagne v. Vaccaro, 255 Conn. 390, 401 (2001).
As stated in United Coastal Industries, Inc. v. Clear Hart Construction Co., 71 Conn.App. 506, 513 (2002); the lack of a remedy, "under a contract is a precondition to recovery based on unjust enrichment or quantum meriut." Because there was a contract between Synesis and Martinez, and Martinez breached it by failing to pay Synesis for the services performed by Groves, plaintiff cannot recover in quantum meriut against Martinez.
As for plaintiff's claim against Hamilton, the evidence reveals that although Hamilton received the benefit of Groves' services, it paid Martinez for them. The cases are clear that under such circumstances Hamilton may have been enriched but not unjustly so. In Providence Electric Co. v. Sutton Place, Inc., 161 Conn. 242, where the plaintiff supplied appliances for a general contractor who was paid for them by the owner of the building, the plaintiff could not recover for those appliances against the owner. As stated by the court, "If, however, Sutton Place [owner of the premises] has paid its contractor, Eastern, for those appliances, then the enrichment, in the absence of fraud, has not been unjust . . . While the plaintiff has proved enrichment, it has failed to prove that enrichment to be unjust, and the judgment against Sutton Place cannot stand." Id. at p. 246-47.
Likewise in Garwood Sons Construction v. Centos, 8 Conn.App. 185, 188 (1986), the court held, "In this case, the plaintiff clearly demonstrated that [defendant] Centos derived a benefit from the plaintiff's agreement with [defendant] Rock, that is, carpentry services properly performed on the premises. Yet, if Centos paid its contractor (Rock) for these services, then the enrichment in the absence of fraud was not unjust. While the plaintiff has proved enrichment, it has failed to prove that enrichment to be unjust, and the judgment must stand [in favor of Centos]."
Based on the authority of those cases, the plaintiff cannot recover on Hamilton on Count Four sounding in unjust enrichment. CT Page 7254
IV. The Fifth Count for Violation of CUTPA Against Hamilton
The plaintiff claims Hamilton violated CUTPA by misleading governmental clients by knowingly using minority companies as shells for non-minority companies actually providing services under government contracts. Plaintiff asserts in its brief, "Hamilton used non-minority personnel (Groves and Johnson) from Synesis, a non-minority company, to do the work, but claimed all services were performed by Nucon and Martinez (the shell companies) who were a minority contractor. This practice was most definitely followed to intentionally mislead government contractors."The plaintiff has failed to prove this claim. It has failed to show that minority staffing companies like Martinez violated any government regulations in hiring non-minority personnel to work at Hamilton. Moreover, even if the practice was a violation of public policy, it did not injure the plaintiff or affect plaintiff's claim for its unpaid compensation.
The plaintiff also claims that Hamilton violated CUTPA by promising to Synesis and Groves that it would prevail upon Martinez to pay for Groves' services. Again, the plaintiff failed to prove that claim. As indicated above, the evidence established that Hamilton did not make any such promise. Groves' and Johnsons' assumption that Hamilton would get plaintiff paid cannot be the basis for a violation of CUTPA.
As a consequence the court finds that the plaintiff cannot recover on the Fifth Count.
Based on the foregoing, judgment may enter for plaintiff against Martinez for $32,600. Although Nucon has been defaulted, plaintiff has failed to establish a cause of action against Nucon, so judgment may enter for defendant Nucon, and, also, based on the evidence and the law, judgment may enter for the defendant Hamilton.