Town of Stratford v. Devron Wilson (2013)

MEMORANDUM OF DECISION

The plaintiff the town of Stratford brings a three-count action against the defendant, Devron Wilson, a former employee.   In the complaint, the plaintiff alleges three claims for money had and received, unjust enrichment and conversion.   All of these claims arise out of its payment to Wilson of $4,803.86 and his retention of that money.   In turn, Wilson counterclaims for bad faith litigation.   The case was tried before this court on March 5, 2013.

I

FACTS

On August 1, 2012, the parties stipulated to the following facts.   From March 30, 2009, through December 11, 2009, the defendant was employed as Assistant to the Mayor of the plaintiff.   He was hired by then-mayor James Miron through an at-will agreement which entitled him to certain benefits, including a contract salary of $50,000 per year and a 37.5–hour work week.

After Miron lost his reelection campaign for Mayor, the defendant decided to accept Miron's offer of termination.   Upon the defendant's termination, he was paid for accrued benefits in a “cash-out” included in his last paycheck.   Miron personally approved a “Termination Notice” listing the categories and hours to be used in determining the cash-out to be paid to the defendant as well as others.   Prior to this notice, the defendant had made no formal or written claim for the cash-out.   The value of the cash-out was calculated using a nominal hourly rate and was subject to withholding and other deductions.

Mayor John A. Harkins assumed the office of mayor of the plaintiff on December 14, 2009.   In January 2010, the plaintiff sent the defendant a W–2 form, which included the cash-out income for social security purposes along with appropriately itemized deductions.   The defendant, however, later received written notice that the plaintiff claimed a debt of $4,803.86.

The parties provided evidence as to additional facts of import to this decision at trial.   The court will make evidentiary findings as they are necessary to the determination of the parties' claims.

The plaintiff argues that Miron improperly computed some of the defendant's benefits and improperly included others in the cash-out.   Specifically, it argues he improperly included excess hours for perfect attendance days, vacation days, and professional development days in the cash-out even though perfect attendance payments were no longer used.   The plaintiff also claims the defendant had only 17.5 vacation days rather than the twenty he was paid for and the mayor did not conduct the evaluations necessary to justify awarding professional development days.   The total value of these errors amounted to $4,803.86, and the plaintiff seeks full reimbursement.   The defendant counterclaims for damages in excess of $15,000 and attorneys fees for bad faith litigation because the plaintiff refused to mediate or discuss settlement, and initially announced the suit in the newspaper rather than contacting the defendant prior thereto, which caused the defendant difficulty when seeking new employment.

II

MONEY HAD AND RECEIVED

The plaintiff's first claim is for money had and received.¹  In order to prevail on this count, the plaintiff must demonstrate that the payment was made “by mistake where the payor is free from any moral or legal obligation to make the payment and the payee in good conscience has no right to retain it ․ The real ground for recovery is the equitable right of the plaintiff to the money.”  Bridgeport Hydraulic Co. v. Bridgeport, 103 Conn. 249, 261–62, 130 A. 164 (1925);  see also Stratford v. Castater, 136 Conn.App. 522, 528–29, 46 A.3d 945, cert. denied, 307 Conn. 903, 53 A.3d 218 (2012);  Stratford v. Castater, Superior Court, judicial district of New Haven, Docket No. CV 10 6011629 (March 15, 2011, Lager, J.);   aff'd, 136 Conn.App. 522, 46 A.3d 945, cert. denied, 307 Conn. 903, 53 A.3d 218 (2012);  Koch v. Stop & Shop Company, Inc., Superior Court, judicial district of New London, Docket No. CV 02 0561277 (February 11, 2003, Hurley, J.T.R.).  “Originally an action for the recovery of debt, favored because more convenient and flexible than the common law action of debt, [money had and received] has been gradually expanded as a medium for recovery upon every form of quasi-contractual obligation in which the duty to pay money is imposed by law, independently of contract, express or implied in fact.”  Norwich v. Lebanon, 200 Conn. 697, 708, 513 A.2d 77 (1986).   In Stratford v. Castater, supra, Docket No. CV 10 6011629, the court considered these same issues relating to another former employee of the plaintiff, Eric Castater, who was terminated at the same time as the defendant.   The Castater court found that Miron's powers as mayor were sufficiently broad to allow him to make the payments in question, and that in addition, the defendant accepted the money in good faith.  Stratford v. Castater, supra, Docket No. CV 10 6011629.   Likewise, this court must first determine whether the cash-out payments were made by mistake by determining whether the mayor had the power to alter the cash-out amount under the town charter, and then decide whether equity warrants the court invalidating the transfer of funds.

“It has been well established that a city's charter is the fountainhead of municipal powers ․ The charter serves as an enabling act, both creating power and prescribing the form in which it must be exercised ․ Agents of a city, including [its commissions], have no source of authority beyond the charter ․ In construing a city charter, the rules of statutory construction generally apply ․” Fennell v. Hartford, 238 Conn. 809, 813, 681 A.2d 934 (1996).

The town council has a variety of budgetary and employment powers.   The Stratford town charter contains the following provisions regarding the power of the town council.   Section 2.2.1 gives the town council “the power to make, alter and repeal resolutions and ordinances (a) relative to the regulation of the various departments ․ [and] (e) relative to the appropriation of town funds ․” Section 2.2.5 provides that the “Council shall fix the salaries of the Mayor and of all Council or Mayoral appointees ․ The council shall further have the power to approve or disapprove wage and salary schedules recommended by the Mayor for administrative department employees.”   In his testimony in Stratford v. Castater, offered as an exhibit in the present case, Miron stated that the mayor proposes the salary but the town council sets the salary schedule when it accepts the budget.

The Stratford town charter contains other provisions which grant the mayor broad authority.   Section 1.2 grants the mayor the power to administer and supervise “all departments, agencies and offices of the Town,” and specifically to “act as the bargaining agent and personnel director for the Town, with the exception of the Board of Education, in all labor and employment matters, including authority to retain the services of labor consultants and attorneys to assist in such matters.”   The mayor also has the power to select, appoint and hire department heads, and to adopt and update “written policy for ․ hiring all Town employees for positions in accordance with approved job descriptions.”   The charter provides in § 2.2.14 that “[t]he power to appoint persons to employment, granted to the Mayor by this Charter, shall be exercised solely and exclusively by him or her.”   Finally, § 5.6.6, Payments, states that “[p]ayments by the Town shall be made as certified by the head of the appropriate department or other division of the town government as approved by the director of finance.   Payments shall be authorized by the director of finance and the Mayor.”   The mayor is required by § 6.2.1 to submit the annual budget to the Council, but he is not explicitly required to seek authorization for specific salary terms.

In addition, the defendant's employment agreement states in its appendix that the mayor has the discretion to modify, change or alter the benefit descriptions.   In his testimony, Miron stated that a modification of an employment agreement was “a de facto modification of those terms that I as the Mayor had the authority to—to do.”   Ex. 10, p. 16 ln. 8–9.   He also acknowledged that the town council approves salaries, but stated that they do not oversee benefits when an employee separates from the town.   Ex. 10, p. 17 ln. 12–18.   Miron stated that he believes § 1.2 gives him the power to modify compensation agreements.   Ex. 10, p. 42–44.   Finally, Miron noted that there are no ordinances or Town Council resolutions governing the cash-out process.   Ex. 10, p. 52.

The court concludes that Miron did not exceed his authority, therefore the payments were not made by mistake.

The court will also consider whether the defendant is equitably entitled to retain the cash-out.   The defendant's W–2, provided by the town after the end of Miron's term, included the cash-out as part of his wages.   Ex. A. The defendant further claimed that he paid taxes on the cash-out.   Trial Transcript, March 5, 2013, p. 16.   The defendant finally claimed that he did not receive notice that the town believed it had overpaid him until he read about it in the newspaper.  Id.

Based on the testimony, the court determines that the defendant did in good conscience retain the cash-out benefits that he received from the town.   Judgment shall enter in favor of the defendant on the first count, for money had and received.

III

UNJUST ENRICHMENT

The plaintiff next makes a claim for recompense under a theory of unjust enrichment.   In order to prevail on this claim, the ultimate question is:  “Did [the defendant], to the detriment of someone else, obtain something of value to which [the defendant] was not entitled?”  Franks v. Lockwood, 146 Conn. 273, 278, 150 A.2d 515 (1959);  Stratford v. Castater, supra, Docket No. CV 10 6011629.  “A right of recovery under the doctrine of unjust enrichment is essentially equitable, its basis being that in a given situation it is contrary to equity and good conscience for one to retain a benefit which has come to him at the expense of another ․ With no other test than what, under a given set of circumstances, is just or unjust, equitable or inequitable, conscionable or unconscionable, it becomes necessary in any case where the benefit of the doctrine is claimed, to examine the circumstances and the conduct of the parties and apply this standard ․ Unjust enrichment is, consistent with the 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.”  Vertex, Inc. v. Waterbury, 278 Conn. 557, 573, 898 A.2d 178 (2006).   The Castater court found that the plaintiff failed to prove that the defendant was not entitled to the payment, or that the payment was detrimental to it.  Stratford v. Castater, supra, Docket No. CV 10 6011629.   Finally, the court found that because the defendant had paid taxes on the money, “it would be inequitable to apply the doctrine of unjust enrichment against him to order restitution in the town's favor.”  Id. Like Castater, the plaintiff in the present case paid taxes on the cash-out benefit.   In addition, as noted above, the plaintiff failed to prove that the defendant was not unjustly enriched.   This court finds that it would be inequitable to apply the doctrine to the defendant.

IV

CONVERSION

The plaintiff's final claim is for conversion.   The plaintiff included a conversion count in the complaint, but did not address it in its pretrial brief.   Based on the facts the plaintiff makes no case for conversion.  “The tort of [c]onversion occurs when one, without authorization, assumes and exercises ownership over property belonging to another, to the exclusion of the owner's rights ․ Thus, [c]onversion is some unauthorized act which deprives another of his property permanently or for an indefinite time;  some unauthorized assumption and exercise of the powers of the owner to his harm ․ The word owner is one of flexible meaning, and it varies from an absolute proprietary interest to a mere possessory right.”  Deming v. Nationwide Mutual Ins. Co., 279 Conn. 745, 770–71, 905 A.2d 623 (2006).

The Castater court found that the plaintiff had failed to frame a prima-facie case under the third claim, for conversion, because it failed to offer evidence establishing that the defendant's conduct was unauthorized, and that the defendant's conduct injured the plaintiff.  Stratford v. Castater, supra, Docket No. CV 10 6011629.   Therefore, the court dismissed the count.   Id. In addition, the court concluded that the defendant was authorized to receive the payments, therefore the conversion claim simply failed on the merits.  Id. Likewise this court finds that the defendant believed that he was receiving an appropriate cash-out benefit and that he was authorized to receive the payment, and judgment shall enter for the defendant on the third count as well.

V

COUNTERCLAIM:  BAD FAITH LITIGATION

The defendant claims attorneys fees, alleging bad faith litigation.   According to the “American rule” followed by Connecticut, “attorneys fees and ordinary expenses and burdens of litigation are not allowed to the successful party absent a contractual or statutory exception.”  ACMAT Corp. v. Greater New York Mutual Insurance Co., 282 Conn. 576, 582, 923 A.2d 697 (2007).   There is, however, “a bad faith exception to the American rule, which permits a court to award attorneys fees to the prevailing party on the basis of bad faith conduct of the other party or the other party's attorney.”  Broadnax v. New Haven, 270 Conn. 133, 179, 851 A.2d 1113 (2004).  “To determine whether the bad faith exception applies, the court must assess whether there has been substantive bad faith as exhibited by, for example, a party's use of oppressive tactics or its wilful violations of court orders;  [t]he appropriate focus for the court ․ is the conduct of the party in instigating or maintaining the litigation ․ As applied to a party, rather than to his attorney, a claim is colorable, for purposes of the bad faith exception to the American rule, if a reasonable person, given his or her first hand knowledge of the underlying matter, could have concluded that the facts supporting the claim might have been established.”  (Citations omitted;  internal quotation marks omitted.)   Maris v. McGrath, 269 Conn. 834, 847, 850 A.2d 133 (2004) (Awarding attorneys fees where trial court found that “the plaintiff had testified untruthfully, and it specifically found that the plaintiff's claims were ‘wholly without merit,’ ‘totally false,’ that ‘his testimony was not truthful,’ and that ‘this was not a matter of two good faith litigants ․’ Second, the matters about which the plaintiff repeatedly had testified untruthfully and in bad faith were matters particularly within his firsthand knowledge, namely, conversations between him and the defendant, and financial arrangements and transactions between them.”  Id., 848.)

The Castater court denied the defendant's request for attorneys fees, finding that both sides made good faith arguments and that the town was not required to engage in alternative dispute resolution.  Stratford v. Castater, Superior Court, judicial district of New Haven, Docket No. CV 10 6011629 (April 6, 2011).   In the present case, the defendant represented that his attorney tried to resolve the dispute but the plaintiff was unwilling to compromise.   Furthermore, the defendant claims that the matter could have been brought in the small claims docket, but that the plaintiff instead brought it on the regular civil docket in order to increase the defendant's cost of litigating it.   Finally, the defendant claims that the defamatory manner in which the town brought the charges, i.e. publicly announcing that the defendant had misappropriated money before contacting the defendant, prevented him from finding new employment for two years.   The defendant claims that this justifies the award of damages and attorneys fees.   The court finds that these facts justify the imposition of attorneys fees.

VI

CONCLUSION

Based on the foregoing, judgment shall enter for the defendant and against the plaintiff for the plaintiff's claims, and for the defendant and against the plaintiff for the defendant's counterclaim.

The Court has carefully calculated defendant's claim for attorney fees and orders that plaintiff pay the defendant Three Thousand Eight Hundred and Thirty–Five Dollars in attorney fees.

OWENS, J.T.R.

FOOTNOTES

FN1. “[A]n action for ‘money had and received,’ ․ is the equivalent of the more modern action for unjust enrichment.”  Gold v. Rowland, 296 Conn. 186, 202 n.15, 994 A.2d 106 (2010).   The court will consider the plaintiff's claims under both theories..  FN1. “[A]n action for ‘money had and received,’ ․ is the equivalent of the more modern action for unjust enrichment.”  Gold v. Rowland, 296 Conn. 186, 202 n.15, 994 A.2d 106 (2010).   The court will consider the plaintiff's claims under both theories.

Owens, Howard T., J.T.R.