Opinion
No. NNHCV07-4026861S
December 21, 2007
MEMORANDUM OF DECISION RE APPLICATION FOR TEMPORARY INJUNCTION AND PREJUDGMENT REMEDY
A. PROCEDURAL HISTORY
This suit stems from the alleged violation of a non-solicitation agreement. On June 26, 2007, the defendant, Gerald U. Levine (Levine), left plaintiff insurance agency, Webster Insurance, Inc. (Webster). He then went to work at a rival insurance agency, Beecher Carlson, Inc., and began, inter alia, to accept the business of clients he had worked with while at Webster. Webster argues that accepting such business was in contravention of the non-solicitation agreement he had entered into with Webster.
Beecher Carlson, Inc., was named as a defendant on November 19, 2007.
Webster filed an application for a temporary injunction to enforce the terms of the non-solicitation agreement on July 17, 2007. On July 30, the court, Silbert, J., ordered a show cause hearing to be held. Levine was served with the application for the temporary injunction and a verified complaint on July 31, and entered his appearance on August 16. Webster filed an amended verified complaint on September 13, and on September 19, filed a motion for a prejudgment remedy (PJR) seeking to attach $2 million of Levine's assets. Levine filed his verified answer, which asserted special defenses, on October 15. A hearing commenced on October 23 and ended the following day. Both parties submitted post-trial briefs.
The amended verified complaint includes one count alleging breach of contract and one count alleging a violation of CUTPA.
Levine's verified answer includes six special defenses as to both counts — the NSA is unenforceable for lack of consideration; the NSA is against public policy and thus unenforceable; contractual obligations owed by Levine were discharged by virtue of Webster's material breach of contractual obligations; Webster has adequate remedies at law and has not suffered, and will not suffer, irreparable harm; estoppel; and unclean hands. Levine also includes as a special defense to the CUTPA claim that he acted in good faith at all times.
B. FACTS
From the evidence presented at the hearing, the court finds the following facts. Levine has been an insurance broker/producer since 1974. Prior to February 2000, Levine, along with Dan Carter, Christopher Brodeur and Dave Pugliese, owned the Louis Levine Insurance Agency (LLIA). On February 1, 2000, they sold their business to Webster.
LLIA was bought by Damman Associates, Inc., which became Webster Insurance on February 26, 2002.
Levine, who acted as the representative for LLIA stockholders, executed a sales purchase agreement (SPA) (Ex. 2) with Webster as well as an employment agreement (EA) (Ex. 3) and a non-solicitation agreement (NSA) (Ex. 4). These agreements, as well as a stockholder's letter (Ex. 5), are dated February 1, 2000.
Brodeur, Carter and Pugliese also executed employment and non-solicitation agreements with Webster. Carter retired and is selling insurance in Florida. Brodeur and Pugliese are still at Webster.
The purchase price for LLIA was $8 million. In consideration for the sale of LLIA, Levine personally received 39.94% of the purchase price in cash and stocks — $700,000, net of debt, and 14,172 shares of Webster Financial common stock (Stock). In exchange, Webster took possession of all of LLIA's accounts, including Levine's "book of business."
At the time of the sale, his shares of Stock were worth approximately $382,000; when Levine took possession of the stock in August 2002, his shares were worth about $524,000. Webster Financial is Webster's parent company.
Levine became an executive vice president and regional director of Webster. The EA guaranteed him a minimum salary of $202,000 per year, as well as discretionary bonuses and participation in an incentive plan. It also included a non-competition clause, which is not at issue in the present case. The EA was for a three-year term. Levine was to integrate his existing book of business into Webster, increase business from existing clients and obtain new clients. Levine also integrated two long-time LLIA employees, Judith Traux and Elaine Desrosier, into Webster.
Levine also executed the NSA, which would be in effect for two years after his separation from Webster.
During his seven-year tenure with Webster, Levine focused on seven key accounts. Levine admitted that Webster had been very good to him — his book had increased in value by $300,000 to $400,000 and stood at $1.3 million in 2006. Levine's tenure at Webster, however, was not without difficulty. In January 2002, John Queirolo, (Queirolo) Webster's president and CEO, informed Levine that Webster would not be renewing the EA. Consequently, Levine worked at Webster from February 2003, as an at-will employee. He did continue to receive compensation commensurate with the EA, though his salary was no longer guaranteed.
Levine began to wonder whether Webster could provide him the support he needed to enlarge his business in his area of expertise — Indian gaming and hospitality. Levine testified that he constantly asked for more resources so that he might write more business, but felt that Webster was receptive to neither his requests, nor to his suggestions that Webster create a hospitality and gaming division. He tried to communicate his frustrations to management verbally and by e-mail for two or three years prior to leaving, but his words always fell upon deaf ears.
Levine also became worried about Webster's financial well being. He testified that he began to contemplate leaving Webster in October 2006, after receiving an e-mail from Merrill Lynch suggesting that Webster Financial sell off Webster. Then John Klecha, to whom Levine reported, began to withdraw promises regarding salary and commissions. Finally, at a meeting of producers on February 6, 2007, Webster's CFO highlighted the problems Webster faced, namely declining profits and a shrinking client base; discussed what Webster needed to accomplish in 2007; and indicated that Webster was a good target for acquisition. (Exhibits D, E.)
In May, Levine began to meet with representatives of Beecher Carlson. Webster is a regional insurance agency, based in Waterford, Connecticut, while Beecher Carlson, in contrast, is a national organization. When it opened an office in Old Lyme, Connecticut, it became a direct competitor of Webster. Beecher Carlson, unlike Webster, has a hospitality and gaming division. Levine accepted a position at Beecher Carlson at the beginning of June. Beecher Carlson agreed to indemnify Levine for any claim by Webster that Levine had violated the NSA. (Ex. 11.) Levine made no commitment to Beecher Carlson about which clients would follow him.
Levine said that he tried to give his notice in early June but could not get an appointment with Queirolo until the end of the month. He gave Queirolo his letter of resignation the week before his last day of work, which was June 26.
Before turning in his resignation, Levine had told Traux and Desrosier that he was leaving Webster. Both Traux and Desrosier are now employed by Beecher Carlson. Levine denies encouraging, soliciting or inducing them to leave Webster for Beecher Carlson, but admits he gave them the name of the person they should contact about employment. Levine told both of them that he had the NSA, but did not review it with either of them.
The week before Levine's last day at Webster, Levine gave Queirolo his letter of resignation. Queirolo asked Levine to give him a month before turning in his resignation because he was negotiating a takeover of Webster and there could be a lot of money in it for Levine. Shortly thereafter, Queirolo told Levine that the president of Webster Financial had authorized a check for Levine for $100,000 if he agreed to stay. The following Monday, Levine was corralled for a two- or three-hour meeting with Queirolo who told Levine he was close to selling Webster to Hub International and asked Levine to speak with Hub's president on the phone. Levine talked to him, but thought the conversation was fruitless as Hub was not active in the Indian gaming and hospitality market. The meeting and phone call confirmed his decision to leave Webster because he did not know what role he might have if Hub acquired Webster.
On June 29, Beecher Carlson issued a press release announcing that Levine was now managing director of the Old Lyme office of Beecher Carlson. Levine distributed the press release to everyone he knew, including the Webster clients he had worked with.
Levine testified that the only client whom he had told about his decision to leave Webster prior to his resignation was the Mashantucket Pequot Tribal Nation (MPTN). The MPTN had been a client of Levine's since 2000. In 2005, Webster had entered a consulting agreement with the MPTN. The agreement included a provision that it would be terminated if Levine left Webster. Ten to fourteen days before he resigned, Levine told them that he was going to Beecher Carlson, a company, that could offer him more support and stability. The MPTN then indicated that they would go with him. After Levine had left Webster, Webster tried to maintain a relationship with the MPTN, but MPTN would not return Webster's calls.
Levine testified that he had no conversations with any other Webster clients about his leaving Webster. Several clients, however, contacted him after he had left and told him that they wished him to continue servicing their accounts. Levine told these clients that they needed to send a broker of record letter to Webster, indicating that they would like Levine to handle their policies, and, essentially, that once their policies were up for renewal, they were leaving Webster.
Levine did not tell any of the former Webster clients he now services at Beecher Carlson that he could not accept their business because of the NSA. Levine concedes he is servicing former Webster clients and that he will get 77-80% of the business he had from clients he wrote for Webster at Beecher Carlson. Eight accounts that he had at Webster comprise about ninety percent of his book at Beecher Carlson. His book is currently worth $1,250,000.
See Ex. 6 for list of Webster clients who have submitted broker of letter records.
The former Webster clients will continue to pay Webster until their policies are up for renewal. Under the terms of the NSA, Levine or Beecher Carlson would be obligated to pay Webster $20,000 or $30,000 now. About $684,000 will accrue to Beecher Carlson by January 1, 2008. Upon the renewal of all the policies Levine serviced for which Webster has received broker of record letters, $900,000 could potentially accrue to Beecher Carlson.
Beecher Carlson is currently only billing $20,000 to $30,000 in fees from former Webster clients.
DISCUSSION A. TEMPORARY INJUNCTION
"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 (2000). "[T]he issuance of an injunction rests within the sound discretion of the trial court." (Internal quotation marks omitted.) Anderson v. Latimer Point Management Corp., 208 Conn. 256, 262, 545 A.2d 525 (1988). "The plaintiff seeking injunctive relief bears the burden of proving facts which will establish irreparable harm as a result of that violation . . . injunctive relief may not lie where it is predicated on the fears and apprehensions of the party applying for it or where it would be incompatible with the equities of the case; . . . and likewise the power of equity to grant such relief may be exercised only under demanding circumstances . . . The extraordinary nature of injunctive relief requires that the harm complained of is occurring or will occur if the injunction is not granted. Although an absolute certainty is not required, it must appear that there is a substantial probability that but for the issuance of the injunction, the party seeking it will suffer irreparable harm." Karls v. Alexandra, 179 Conn. 390, 401-02, 426 A.2d 784 (1980)."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." Waterbury Teachers Ass'n. v. Freedom of Information Commission, 230 Conn. 441, 446, 645 A.2d 978 (1994).
"A party seeking injunctive relief has the burden of alleging and proving irreparable harm and lack of an adequate remedy at law." Lydall v. Ruschmeyer, 282 Conn. 209, 236, 919 A.2d 421 (2007). Webster asserts that this court need not consider whether it has suffered irreparable harm due to Levine's actions and whether it lacks an adequate remedy at law because Levine has conceded both elements in the NSA. See, e.g., POP Radio, LP v. News America Marketing In-store, Inc., 49 Conn.Sup. 566, 578, 898 A.2d 863 [ 40 Conn. L. Rptr. 332] (2005). ("If not an admission, at least is evidence and a recognition of the reality that money damages would not be sufficient to remedy the loss"). But see Custard Insurance Adjusters v. Nardi, Superior Court, judicial district of Ansonia-Milford, Docket No. CV 98 0061967 (April 20, 2000, Corradino, J.) ("[p]rivate parties cannot dictate a conclusion that injunctive relief is required . . . The agreement to this effect is probably some evidence, however, that at least the parties were of the opinion that a remedy at law would be inadequate. Under our law: A party seeking injunctive relief has the burden of proving irreparable harm and lack of an adequate remedy at law." (Internal quotation marks omitted.)). Levine's concession in the NSA, is then, merely evidence which the court may weigh in determining whether Webster has met its burden of proof with regard to irreparable harm and lack of an adequate remedy at law.
The NSA, section 3(b), provides: "The Employee acknowledges that the restrictions contained herein are reasonable and necessary to protect the legitimate business interests of the Company and the Parent and that the Company would not issue the stock to him in the absence of such restrictions. By reason of the foregoing, the Employee agrees that if he violates any of the provisions of this Agreement, the Company and the Parent would sustain irreparable harm and, therefore, the Employee hereby irrevocably and unconditionally (i) agrees that in addition to any other remedies which the Company and/or Parent may have under this Agreement or otherwise at law or in equity, all of which remedies shall be cumulative, the Company and the Parent shall be entitled to apply to any court of competent jurisdiction for preliminary and permanent injunctive relief and other equitable relief, (ii) agree that such relief and any other claim by the Company or the Parent pursuant hereto may be brought in any court of general jurisdiction in Connecticut; (iii) consent to the nonexclusive jurisdiction of any such court in any such suit, action or proceeding, and (iv) waive any objection which he may have to the laying of venue of any suit, action or proceeding in any such court." See also, section 3(f): "In the event of a breach or threatened breach by the Employee of any of the provisions hereof, the Company and the Parent shall be entitled to injunctive relief and the Employee agrees that it shall not be a defense to any request for such relief that the Company and/or the Parent has an adequate remedy at law."
Webster also asserts that when an injunction is sought to enforce the terms of a restrictive covenant, irreparable harm and lack of an adequate remedy at law are considered established. See, e.g., Kim's Hair Studio, LLC v. Rogers, Superior Court, judicial district of Middlesex, Docket No. CV 05 4002444 (July 20, 2005, Aurigemma, J.) [ 39 Conn. L. Rptr. 668]; Century 21 Access America v. Lisboa, Superior Court, judicial district of Ansonia-Milford, Docket No. CV 03 081901 (July 22, 2003, Ronan, J.) ( 35 Conn. L. Rptr. 272); Sagarino v. SCI Connecticut Funeral Services, Inc., Superior Court, judicial district of New Britain, Docket No. CV 00 0499737 (May 22, 2000, Aurigemma, J.) [ 27 Conn. L. Rptr. 281].
Other Superior Courts have required a showing of irreparable harm to support an injunction based on a breach of a restrictive covenant. See, e.g., Haims, Buzzeo Co. v. Wikstrom, Superior Court, judicial district of Stamford-Norwalk, Docket No. CV 02 0190077 (September 8, 2003, Lewis, J.T.R.) (Defendant accountant sold her business to plaintiffs and joined their firm but left after a year; her original clients followed her. Court held that plaintiffs did not meet burden of proof that they would be irreparably harmed if an injunction was not issued — the only clients that left were originally clients of the defendant.); G7Systems v. Ginthwain, Superior Court, judicial district of Tolland at Rockville, Docket No. CV 01 76334 (September 17, 2001, Klaczak, J.); New England Eyecare of Waterbury v. New England Eyecare, Superior Court, judicial district of Waterbury, Docket No. 099465 (January 18, 1991, Blue, J.) [ 3 Conn. L. Rptr. 724] (court refused to issue a temporary injunction because it found "not one scintilla" of evidence that an alleged breach of a noncompetition agreement had any impact on plaintiff's business; asserted that money damages would be appropriate unless plaintiff lost goodwill or was likely to be put out of business).
The case at hand is distinguishable from Kim's Hair et al. In Kim's Hair, for example, the defendant set up shop near plaintiff in violation of her restrictive covenant and, having taken a list of customer phone numbers, began to actively solicit them. Kim's Hair Studio, LLC v. Rogers, supra, Superior Court, Docket No. CV 05 4002444.
"The extraordinary nature of injunctive relief requires that the harm complained of is occurring or will occur if the injunction is not granted. Although an absolute certainty is not required, it must appear that there is a substantial probability that but for the issuance of the injunction, the party seeking it will suffer irreparable harm." Wallingford v. Werbiski, 274 Conn. 483, 494, 877 A.2d 749 (2005). It is clear that Webster has not demonstrated that there is a substantial likelihood that but for the temporary injunction it would suffer irreparable harm.
Webster also asserts that damages are not an adequate remedy because "only with injunctive relief will Webster have a chance to get back business Levine wrongfully accepted." The court is not persuaded. While Webster's lost profits may be estimable largely by conjecture, Webster presented evidence that the defection of Levine's clients diminished the value of Webster by $1.3 million. Lost profits or business value, if quantifiable, is compensable with money damages. See Loveridge v. Pendleton Woolen Mills, Inc., 788 F.2d 914, 917-18 (2d Cir. 1986) (if lost profit is provable, it would be compensable in money damages); Securities Industry v. Garfield, 469, U.S. District Court, Docket No. 3:06 cv 2005 (D.Conn., January 9, 2007) (loss of contract compensable); Iron Mountain Information Management, Inc. v. Taddeo, U.S. District Court, Docket No. 06-CV-2164 (E.D.N.Y., June 30, 2006) (loss of business, if it is not remote or speculative, but actual, is a quantifiable injury). Webster has not proven that it has no adequate remedy at law.
The requirement for issuance of a temporary injunction is that the plaintiff be likely to prevail on the merits. Levine raises two arguments against Webster's likelihood of success on the merits — first, that the NSA is not valid because Levine did not receive adequate consideration; and second, that the NSA is unenforceable as a restrictive covenant.
The NSA provides: "In consideration of the issuance of the Stock and of his employment by the Company pursuant to the Employment Agreement and the closing transactions contemplated by the Stock Purchase Agreement, the Employee agrees . . ." (Ex. 4, § 2(a).)
Webster asserts that the SPA, EA and NSA are to be read together, and in doing so it becomes apparent that the consideration Levine received for the NSA was not just the Stock, but the sale of LLIA and his position at Webster as well. However, Levine emphasizes that the terms of Webster's acquisition of the LLIA and his employment are set out at great length in two other separate and independent contractual instruments, namely the SPA and the EA. Each of these agreements serve a distinct purpose and is necessarily supported by distinct consideration. The SPA identifies the $8 million sale price as consideration. The EA identifies the employment of Levine and subsequent access to resources and confidential information as consideration for the covenants therein, which include a non-competition covenant. The only consideration solely belonging to the NSA is the Stock.
"To constitute sufficient consideration for a promise, an act or promise not only must be a detriment to the promisee but must be bargained for and given in exchange for the promise." Fisher v. Jackson, 142 Conn. 734, 737-38, 118 A.2d 316 (1955). Levine argues that consideration given in exchange for a restrictive covenant should "give rise to the employer's interest in restraining the employee from competing." Alex v. Johnson, 209 S.W.3d 644, 648-49 (Tex. 2006). A confidentiality agreement is an example of such a covenant because confidential information is given to an employee in exchange not to disclose it. Id., 647. This approach would cast doubt on the sufficiency of the consideration given Levine, as shares of stock alone do not give rise to the employer's interest in restraining a former employee.
Moreover, one cannot merely pay another to restrict competition. An agreement between two strangers in which a covenant not to compete was supported merely by a payment of money is unenforceable. Restatement (Second) of Contracts, section 187 cmt b. See also Wolfs New Process Abrasive Wheel v. Resnik, 16 Conn.Sup. 415 (1950) (consideration of $100 a week for defendant's broad promise to not compete was illegal as an unreasonable restraint on trade); Hayes v. Parklane, 24 Conn.Sup. 218, 189 A.2d 522 (1963).
The court next examines the validity and enforceability of the NSA. The inquiry as to the validity and enforceability of the restrictive covenant itself requires a balancing of the equities between plaintiff and defendant. Scott v. General Iron Welding Co., 171 Conn. 132, 137, 368 A.2d 111 (1976). In Robert S. Weiss Associates, Inc. v. Wiederlight, 208 Conn. 525, 529 n. 2, 546 A.2d 216 (1988) (factors to be considered in evaluating the enforceability of a restrictive covenant include, inter alia, "the fairness of the protection accorded to the employer . . ."
In order to be valid and binding, a covenant which restricts the activities of an employee following the termination of his employment must be partial and restricted in its operation in respect either to time or place, . . . and must be reasonable — that is it should afford only a fair protection to the interest of the party in whose favor it is made and must not be so large in its operation as to interfere with the interests of the public.
"In the present case, the NSA imposes no specific geographic restriction, rather it provides: "the Employee will not, without the prior written consent of the Company or the Parent, directly or indirectly solicit or accept insurance agency brokerage business from, or perform any of the services included within the Parent's, the Company's or its insurance affiliates' business for any Client with whom the Employee has had business relations or who was a Client of the Parent, the Company or its insurance affiliates during any period in which the Employee worked for the Company or the Parent, and in each case, who was a Client on the date of the termination of the Employee's employment with the Company or the Parent or within one (1) year before such date." (Ex. 4, § 2(a)(2).)
"In order to be valid and binding, a covenant which restricts the activities of an employee following termination of his employment . . . should afford only a fair protection to the interest of the party in whose favor it is made . . ." Scott v. General Iron Welding Co., supra, 171 Conn. 137.
In the present case, the NSA provides more than a fair protection to Webster. Barring Levine from soliciting Webster clients would offer Webster fair protection. The NSA, however, goes further, prohibiting Levine from accepting the business and servicing the accounts of former Webster clients, regardless of whether Levine solicited them.
According to the NSA, Levine represents "that his experience and capabilities are such that the restrictions contained herein will not prevent him from obtaining employment or otherwise earning a living at the same general economic benefit as reasonably required by him." (Ex. 4, § 3(a).) Levine, it is true, has clients at Beecher Carlson who are not former Webster clients, and will not starve if he cannot work with the former Webster clients. Yet the NSA's restrictions do sharply curtail his ability to work with clients with whom he has a longstanding relationship and to practice in his area of expertise.
Finally, in order for a restrictive covenant to be reasonable "it must be determined that the employer is seeking to protect a legally recognized interest, and then, that the means used to achieve this end do not unreasonably deprive the public of essential goods and services." New Haven Tobacco Co. v. Perrelli, supra, 18 Conn.App. 536.
Webster is seeking to protect a legally recognized interest. See Torrington Creamery, Inc., v. Davenport, 126 Conn. 515, 521, 12 A.2d 780 (1940) (restrictive covenant is a valuable business asset), however, by restricting Levine from even "accepting" the business and "servicing" the accounts of former Webster clients, the NSA acts like an anti-sales agreement in that it limits third parties' choice with whom to do business. "[T]he burden inflicted on the public interest by the use of an `anti-sales' clause is greater than the one imposed by an `anti-solicitation' clause. In evaluating the validity of either of these restrictive covenants, however, the determinant is not whether the public's freedom to trade has been restricted in any sense, but rather whether that freedom has been restricted unreasonably." New Haven Tobacco Co. v. Perrelli, 11 Conn.App. 636, 639, 528 A.2d 865 (1987).
Webster looks to the same decision to assert that "[t]he public does not have an inherent right to do business with whomever it chooses when the individual of its choice has contracted away his ability to do business with the public." Id., 640 n. 3. Moreover, the court in the second New Haven Tobacco case said that it was not unreasonable that a limited group of the former employer's customers could not do business with the defendant. New Haven Tobacco Co. v. Perrelli, 18 Conn.App. 531, 537, 559 A.2d 715 (1989).
The case at hand is, however, distinguishable. The covenant at issue in the New Haven Tobacco cases prohibited the defendant from selling products similar to those sold by the plaintiff to any customers he had dealt with or become aware of during his employment with the plaintiff. New Haven Tobacco Co. v. Perrelli, supra, 11 Conn.App. 637. Queirolo admitted that no one at Webster could service the Indian gaming and hospitality accounts after Levine had left. Webster is effectively attempting to prohibit Levine and Beecher Carlson from providing clients with a product that Webster itself cannot provide. It is unreasonable to bar these clients from doing business with someone who actually has the particular expertise they need.
On balance, it is not likely that Webster will prevail on the merits as the NSA is not valid and enforceable as a restrictive covenant. The NSA is overbroad and gives far more protection to the employer than either the employee or the public. First, the NSA, by banning Levine from "accepting" and "servicing" the business of former Webster clients, affords more than fair protection to Webster. Second, it places an unreasonable burden on clients who need Levine's particular expertise.
Looking beyond the five Scott factors, it is also unlikely that Webster would prevail on the merits because it is questionable whether it provided adequate compensation for the NSA. Moreover, enforcing the NSA offers little benefit to Webster. Between the departure of Levine and the uncertainty of Webster's future, Webster was destined to lose some of this business. Instead of benefitting Webster, enforcing the NSA would only punish Levine and the former Webster clients.
For instance, Waterford, one of Levine's key clients, met with Webster after Levine left and was open to keeping their business with Webster. But after Webster made an announcement that it was going to look for strategic alternatives to owning Webster Insurance, Waterford sent in broker of record letters.
Compare Williams v. Almquist, Superior Court, judicial district of Litchfield, Docket No. CV 06 5000595 (October 30, 2007, Marano, J.) [ 44 Conn. L. Rptr. 375] ("devaluing property without a clear beneficiary is not reasonable"); Desarbo v. Reichert, Superior Court, judicial district of New Haven, Docket No. CV 01 0456013S (September 24, 2003, Munro, J.) (denying enforcement of covenant not to compete where plaintiff no longer had any business interest to protect).
Finally, although "[i]t can hardly be maintained that honesty in business is any less the concern of public policy than is restraint against competition," Welles v. O'Connell, 23 Conn.Sup. 335, 341, 183 A.2d 287 (1962) (internal quotation marks omitted), it is also against public policy to allow someone to buy off the free choice of third party, as Queirolo admitted was the intent of the NSA. See Hayes v. Parklane, supra, 24 Conn.Sup. 221 ("[c]ontracts which have for their object merely the removal of a rival or competitor in business are unlawful").
Accordingly, application to enforce the non-solicitation (NSA) is denied.
CT Page 21897
B. APPLICATION FOR PREJUDGMENT REMEDY
Webster has also filed an application for a PJR in which it seeks to attach $2 million of Levine's assets. "The role of the court in considering an award of a prejudgment remedy is well established. Pursuant to our prejudgment remedy statutes (C.G.S. § 52-278d). The trial court's function is to determine whether there is probable cause to believe that a judgment will be rendered in favor of the plaintiff in a trial on the merits . . . The plaintiff does not have to establish that he will prevail, only that there is probable cause to sustain the validity of the claim . . . The court's role in such a hearing is to determine probable success by weighing probabilities . . . The legal idea of probable cause is a bona fide belief in the existence of the facts essential under the law for the action and such as would warrant a man of ordinary caution, prudence and judgment, under the circumstances, in entertaining it . . . Probable cause is a flexible common sense standard. It does not demand that a belief be correct or more likely true than false." (Citation omitted; internal quotation marks omitted.) J.K. Scalan Co. v. Construction Group, Inc., 80 Conn.App. 345, 349-50, 835 A.2d 79 (2003).Webster must show that it has a valid breach of contract claim. "The elements of a breach of contract action are the formation of an agreement, performance by one party, breach of the agreement by the other party and damages." (Internal quotation marks omitted.) Whitaker v. Taylor, 99 Conn.App. 719, 728, 916 A.2d 834 (2007).
Webster argues that it has established probable cause that it will succeed at trial on its breach of contract claim. At the hearing, Webster presented evidence of the existence of the contract, the NSA, which Levine admitted to having signed and understood. Webster argues that Levine told Desrosier and Traux he was leaving Webster and told them who to call at Beecher Carlson concerning getting employment there themselves. Levine also acknowledges that although he did not directly solicit the MPTN, he knew that because of his knowledge and experience they were bound to follow him. Levine has specialized in the insurance field the MPTN occupies and knew that no one else would be able to handle that account within Webster. Finally, Levine admitted that he accepted certain policy holders' business after he left Webster.
Webster also needs to show probable cause for the amount requested. "In undertaking the probable cause analysis that our present [prejudgment remedy] statute requires, a court is required to consider not only the validity of the plaintiff's claim but also the amount that is being sought." Union Trust Co. v. Heggelund, 219 Conn. 620, 625, CT Page 21898 594 A.2d 464 (1991). "[I]n an application for a prejudgment remedy, the amount of damages need not be determined with mathematical precision . . . A fair and reasonable estimate of the likely potential damages is sufficient to support the entry of a prejudgment attachment." (Internal quotation marks omitted.) Morris v. Cee Dee, LLC, 90 Conn.App. 403, 419, 877 A.2d 899 (2005).
Webster introduced evidence showing lost revenue of $1,101,393. (Ex. 6.) Although this amount is for only one year, a customer need not return to Webster for a policy after its renewal has expired. It is also likely that the loss of the accounts would affect the value of an agency. Thus, Webster has provided a reasonable basis for measuring loss. Therefore, the court finds that a prejudgment remedy in the amount of $2 million is granted.
CT Page 21899