State of Connecticut Commissioner of Labor v. Linda Lough (2014)

MEMORANDUM OF DECISION RE MOTION FOR SUMMARY JUDGMENT

The Connecticut Commissioner of Labor brought this action for unpaid wages pursuant to General Statutes § 31–72 and the common law.   The plaintiff seeks to hold the defendant, Linda Lough, personally responsible for the alleged failure of International Bridge and Iron Company (IBIC), a bankrupt corporation, to pay vacation benefits to terminated employees in accordance with the provisions of a collective bargaining agreement.   The defendant has moved for summary judgment, asserting that based on the undisputed facts she cannot be held liable for the company's alleged failure because she was not the employer and did not have ultimate responsibility or authority to set the hours of employment and to pay wages.   For the reasons stated below, the motion for summary judgment is denied.

I

Factual and Procedural Background

In count one of the complaint, the commissioner alleges that IBIC was a Connecticut corporation that regularly transacted business in Connecticut between January 1, 2009, and February 26, 2010, when it closed.   IBIC is in bankruptcy and is not a party to this action.   IBIC was a party to a collective bargaining agreement with the International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers' Union, Shopmen's Local Union No. 832 (union).   The union filed a complaint with the commissioner, claiming that one or more of its members who were employees of IBIC were not paid all of their accrued vacation time under an April 1, 2009 collective bargaining agreement upon termination of their employment when the company closed in 2010.   The commissioner conducted an investigation and determined that IBIC failed to pay fifty-seven employees the full amount of vacation pay to which they were entitled under the collective bargaining agreement, in violation of General Statutes §§ 31–71b, 31–71c, 31–76k and 31–71g.

The plaintiff further alleges that, at all relevant times, the defendant, Linda Lough, was the executive vice president of IBIC, a company founded by her late father, Joseph Bachta.   The complaint alleges that Lough was responsible for all insurance and employee benefits issues and that she had the authority to set the hours and scope of work, and to cause earned wages to be paid, without the consent or agreement of any other corporate officer.   The plaintiff also alleges that Lough asserted certain defenses in the administrative proceeding in bad faith and has intentionally and unreasonably refused to pay the accrued earned vacation pay.   The total claimed to be wrongfully withheld is $59,108.15.   The commissioner seeks to double that amount pursuant to General Statutes § 31–72 and also seeks interest, attorneys fees and costs.

The second count incorporates the first count in its entirety and adds a paragraph seeking recovery under the alternative theory of quantum meruit.   The third count incorporates the first count in its entirety and adds a paragraph seeking recovery under the alternative theory of unjust enrichment.   The fourth count incorporates the first count and seeks civil penalties under General Statutes § 31–69a.   The fifth count incorporates the first count and seeks recovery under the alternative theory of a breach of the covenant of good faith and fair dealing.

The defendant has moved for summary judgment on all counts, claiming that Lough was not the ultimate responsible authority and was not the specific cause of the wage violation and therefore cannot be held liable for IBIC's violations under General Statutes § 31–72.   In support of her motion, she has provided both her own affidavit and an affidavit by Chad Knappenberger, the former payroll coordinator of IBIC. Both affiants attest that Joseph Bachta was the ultimate decisionmaker for the corporation.   Lough's affidavit states that she was trained as an engineer but had no experience in the bridge building industry before she joined IBIC in 2003 as her father's assistant.   She avers that she merely implemented the executive decisions made by her father and did not control any employee relations matters.   Both Lough and Knappenberger allege that the decision to deny the claim for additional vacation pay was made by Joseph Bachta alone, and Knappenberger's affidavit attaches an undated handwritten note, purportedly by Bachta, containing some calculations with respect to vacation pay.   Lough attests that her father died on November 29, 2010.   In addition to her claim that she lacked the requisite control to be held personally liable on all counts, Lough seeks summary judgment on counts two and three because the plaintiff's claims are based on the existence of an express contract, precluding recovery under the equitable theories of quantum meruit or unjust enrichment.

The plaintiff opposed the motion for summary judgment and submitted the affidavit of Anthony Rosaci, the union representative who negotiated and executed the collective bargaining agreement on behalf of the union.   Rosaci avers that Lough executed the collective bargaining agreement on behalf of IBIC;  that the agreement contains numerous provisions relating to pay, including vacation pay;  that Lough regularly handled and made final decisions for IBIC regarding grievances in which Rosaci was involved;  that at no time did Lough or her father ever indicate to Rosaci that Lough lacked authority to execute collective bargaining agreements or settle grievances;  and that Lough represented IBIC at a meeting to discuss settlement of the wage claim on May 3, 2011, after her father's death.

II

Standard for Summary Judgment

“Summary judgment is a method of resolving litigation when pleadings, affidavits, and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.”  (Internal quotation marks omitted.)  Grenier v. Commissioner of Transportation, 306 Conn. 523, 534–35, 51 A.3d 367 (2012).

“[T]he ‘genuine issue’ aspect of summary judgment requires the parties to bring forward before trial evidentiary facts, or substantial evidence outside the pleadings, from which the material facts alleged in the pleadings can warrantably be inferred ․ A material fact has been defined adequately and simply as a fact which will make a difference in the result of the case.”   (Citation omitted;  internal quotation marks omitted.)  Buell Industries, Inc. v. Greater New York Mutual Ins. Co, 259 Conn. 527, 556, 791 A.2d 489 (2002).  “In ruling on a motion for summary judgment, the court's function is not to decide issues of material fact ․ but rather to determine whether any such issues exist.”  (Internal quotation marks omitted.)  RMS Residential Properties, LLC v. Miller, 303 Conn. 224, 233, 32 A.3d 307 (2011).

“In seeking summary judgment, it is the movant who has the burden of showing the nonexistence of any issue of fact.”  (Internal quotation marks omitted.)   Ramirez v. Health Net of the Northeast, Inc., 285 Conn. 1, 10–11, 938 A.2d 576 (2008).  “[O]nly evidence that would be admissible at trial may be used to support or oppose a motion for summary judgment.”  Nash v. Stevens, 144 Conn.App. 1, 15, 71 A.3d 635, cert. denied, 310 Conn. 915, 76 A.3d 628 (2013).  “As the party moving for summary judgment, the [movant] is required to support its motion with supporting documentation, including affidavits.”   Heyman Associates No. 1 v. Insurance Co. of Pennsylvania, 231 Conn. 756, 796, 653 A.2d 122 (1995).   Likewise, “[t]he existence of the genuine issue of material fact must be demonstrated by counteraffidavits and concrete evidence.”  (Internal quotation marks omitted.)  Deutsche Bank National Trust Co. v. Shivers, 136 Conn.App. 291, 296, 44 A.3d 879, cert. denied, 307 Conn. 938, 56 A.3d 950 (2012).

III

The Issue of Control

The court concludes that there are disputed issues of material fact relating to Lough's control over employees' pay.  General Statutes § 31–72 provides in relevant part:  “When any employer fails to pay an employee wages in accordance with the provisions of sections 31–71a to 31–71i, inclusive, ․ the Labor Commissioner may bring any legal action necessary to recover twice the full amount of unpaid wages ․ and the employer shall be required to pay the costs and such reasonable attorneys fees as may be allowed by the court.”   “Employer” is defined in relevant part by § 31–71a as “any individual, partnership, association, joint stock company, trust, corporation ․ employing any person.”   The Supreme Court has construed “employer” to include “an individual who possesses the ultimate authority and control within a corporate employer to set the hours of employment and pay wages and therefore is the specific or exclusive cause of improperly failing to do so.”  Butler v. Hartford Technical Institute, Inc., 243 Conn. 454, 462, 704 A.2d 222 (1997).   The Appellate Court has further held that the term “employer” can include more than one person where the evidence shows that two or more individuals share authority and control over wages, hours of work, and other conditions of employment.   See Petronella v. Venture Partners, Ltd., 60 Conn.App. 205, 214, 758 A.2d 869 (2000).

The defendant argues that Rosaci's counteraffidavit fails to raise a genuine issue of material fact as to control of the employees' wages and hours of work because (1) Rosaci was an outsider who was not privy to the internal workings of the company, and (2) Rosaci's affidavit is consistent with a finding that Lough was authorized to negotiate and execute the collective bargaining agreement but that her father held the ultimate decision-making authority.   On a motion for summary judgment, however, the court is required to construe the record in the light most favorable to the nonmovant—here, the Commissioner.   From the evidence presented in Rosaci's affidavit that is based on his personal knowledge (not including statements in the affidavit that may rely on hearsay), it can be inferred that IBIC held Lough out as the person with authority to manage employment issues such as negotiating and executing collective bargaining agreements, including provisions governing hours of work and wages, and serving as the final step within the company in the handling of grievances.   Moreover, based on Rosaci's undisputed statement that Lough represented the company in settlement discussions with the Department of Labor after her father's death, at which point the company still refused to pay the disputed wages, it can reasonably be inferred that Lough was a person with authority and control over decisions regarding payment of the vacation wages at some point in time.   Construing the conflicting affidavits in the light most favorable to the nonmovant, the court concludes that there are genuine issues of material fact with respect to the defendant's control over employees' wages.   In view of that disputed issue of fact, summary judgment is denied.

IV

Quantum Meruit and Unjust Enrichment

The defendant also seeks summary judgment on counts two and three on the ground that recovery is unavailable under quantum meruit or unjust enrichment because the plaintiff has pleaded the existence and breach of an express contract in each of those counts.   The plaintiff objects and argues that the defendant waived her right to challenge the legal sufficiency of the pleadings by failing to file a motion to strike counts two and three.

The Supreme Court has observed that the use of a motion for summary judgment instead of a motion to strike to challenge the legal sufficiency of a complaint may be unfair to the nonmoving party because the granting of a defendant's motion for summary judgment puts the plaintiff out of court, while the granting of a motion to strike allows the plaintiff to replead his or her case.   See Larobina v. McDonald, 274 Conn. 394, 401, 876 A.2d 522 (2005).   The Supreme Court has also recognized, however, that a motion for summary judgment may properly be treated as a motion to strike when the plaintiff does not claim that he or she should have been allowed to replead.  Id. Accordingly, the court has held that a motion for summary judgment may be used to test the legal sufficiency of a pleading if it is clear on the face of the complaint that it is legally insufficient and that an opportunity to amend it would not help the plaintiff.  Id. “[T]he use of a motion for summary judgment to challenge the legal sufficiency of a complaint is appropriate when the complaint fails to set forth a cause of action and the defendant can establish that the defect could not be cured by repleading.”  Id. However, “a party does not waive its right to replead by arguing that the pleading is legally sufficient, but offering, if the court were to conclude otherwise, to amend the pleading.”  American Progressive Life & Health Ins. Co. of New York v. Better Benefits, LLC, 292 Conn. 111, 124, 971 A.2d 17 (2009).

In this case, the plaintiff has objected to the use of summary judgment to test the sufficiency of the pleading because, if granted, it would deprive the plaintiff of an opportunity to replead.   The defendant has the burden of showing that the alleged defects in the second and third counts could not be cured by repleading.

“Parties routinely plead alternative counts alleging breach of contract and unjust enrichment [and quantum meruit], although in doing so, they are entitled only to a single measure of damages arising out of these alternative claims ․ Under this typical belt and suspenders approach, the equitable claim is brought in an alternative count to ensure that the plaintiff receives some recovery in the event that the contract claim fails.”  (Citations omitted.)  Stein v. Horton, 99 Conn.App. 477, 485, 914 A.2d 606 (2007).

Several recent decisions in Superior Court cases have held that it is improper to incorporate the allegations of a breach of contract into an unjust enrichment claim, reasoning that incorporating allegations of the breach of contract into a count of unjust enrichment violates the alternative pleading rule requiring separate and distinct counts.   See J & N Electric, Inc. v. Notkins, Superior Court, judicial district of New Haven, Docket No. CV 08 5020144 (May 20, 2009, Keegan, J.) (47 Conn. L. Rptr. 804, 805) (granting motion to strike unjust enrichment claim because plaintiff incorporated allegation of breach of express contract into that claim);  Burke v. The Boatworks, Inc., Superior Court, judicial district of Stamford–Norwalk at Stamford, Docket No. CV 04–4001838 (July 26, 2005, Jennings, J.) (similar).  Other courts, however, have concluded that it is not improper to allege the formation of an express agreement, but not its breach, in an unjust enrichment count.   See O'Malley v. Devivo, Superior Court, judicial district of New Britain, Docket No. CV 09–4019885 (May 7, 2010, Trombley, J.) (49 Conn. L. Rptr. 801).

In this case, the plaintiff has incorporated the allegations of formation of an express agreement and the allegations of breach of that agreement in the second and third counts.   Had the defendant moved to strike those counts, the motion might have been granted on that ground.   But the defendant has not shown that the plaintiff could not cure the purported defects by repleading.   In this context, the court concludes that summary judgment is inappropriate.   Accordingly, the defendant's alternative grounds for summary judgment are rejected.

For the reasons stated above, summary judgment is denied as to all counts.

BY THE COURT,

Sheila A. Huddleston, Judge

Huddleston, Sheila A., J.