Walter Whitney v. J.M. Scott Associates, Inc. et al. (2014)

MEMORANDUM OF DECISION

INTRODUCTION

This case was tried to the court over a period of seventeen days, beginning on May 21, 2013, and concluding on July 30, 2013.   The parties filed their post-trial briefs on December 4, 2013, which was thirty days after they each received a complete set of trial transcripts.   The parties filed simultaneous reply briefs on December 18, 2013.

The plaintiff's claims include breach of contract, breach of the covenant of good faith and fair dealing, fraud, and violation of the Connecticut Unfair Trade Practices Act (“CUTPA”).   The defendants, in addition to answering the complaint, filed a counterclaim, alleging breach of contract, abuse of process and vexatious litigation.

The plaintiff, Walter Whitney, alleges that his claims involve, primarily, three separate agreements, all executed in March 2002.   Those agreements include an employment agreement (“EA”), a stock option purchase agreement (“SOPA”), and a supplemental letter agreement (“SLA”).   The plaintiff brought his claims against the defendants, James M. Scott, Jr. (“Scott”) and Scott Swimming Pools, Inc. (“SSP”).¹

The plaintiff claims that he was hired by SSP in 2002, but was terminated without adequate cause on December 22, 2006.   He claims that he had, and has, rights under the SOPA that survive his termination.   In contrast, the defendants claim that the plaintiff was properly terminated from his employment and that he breached the EA. The defendants claim that they owe no damages to the plaintiff and that, pursuant to their counterclaims, the plaintiff must compensate them for their losses.

The court finds for the plaintiff on counts one, four, five, six and seven.   The court finds for the defendants on count ten.   The court finds for the plaintiff, and against the defendants, as to all of the defendants' counterclaims.

I

FACTUAL BACKGROUND

This case arises out of a business relationship between Scott and the plaintiff.²  Scott is the president and majority stockholder of the other two defendants, SSP and JMSA. On March 20, 2002, the plaintiff entered into three agreements with Scott and/or SSP. The EA, which Scott signed in his capacity as president of SSP, contemplated that the plaintiff would work for Scott for five years, after which time Scott would retire and the plaintiff would take ownership of SSP. The second contract was the SOPA, signed by Scott both individually and as president of SSP. Both agreements were supplemented with the SLA, and all agreements became effective in March 2002.

Before entering into the various agreements, the plaintiff reviewed and relied upon the accuracy of SSP's financial statements, tax returns and corporate records.   Scott and SSP concealed information that should have been in the financial statements or in notes to those financial statements, including deferred compensation liabilities owed to Scott that, by March 2007, exceeded $2.5 million.

The plaintiff worked for Scott and SSP for well over four years when, for the first time, Scott informed the plaintiff that he would not sell SSP to the plaintiff.   On December 16, 2006, Scott gave the plaintiff a five-day notice of intent to terminate the plaintiff's employment.   The plaintiff's employment was terminated on December 22, 2006, approximately three months before the plaintiff would have been allowed to purchase SSP, pursuant to the SOPA.

In January 2007, the plaintiff claimed a right to arbitrate the dispute with Scott and SSP. Arbitration began on September 28, 2007, and continued until August 14, 2009, when Scott claimed that he lacked funds to continue the arbitration.   The plaintiff then elected to proceed with this action, filing a proposed writ, summons and complaint on November 6, 2009.   After substantial motion practice, the plaintiff filed the operative complaint on June 4, 2012.   The defendants filed an answer, special defenses and counterclaims on September 24, 2012.   The plaintiff replied to the defendants' special defenses and answered their counterclaims on October 2, 2012.

Count one of the second amended revised complaint (“complaint”) alleges fraud as to SSP and Scott;  count four alleges breach of contract as to SSP and Scott relative to the SOPA and the SLA;  count five alleges breach of contract as to SSP relative to the EA and the SLA;  count six alleges breach of the covenant of good faith and fair dealing as to SSP and Scott relative to the EA and the SLA;  count seven alleges breach of the covenant of good faith and fair dealing as to SSP and Scott relative to the SOPA and the SLA;  and count ten alleges a CUTPA violation as to SSP and Scott.³

The defendants' answer to the complaint includes eight special defenses, and the “proposed amended setoffs and counterclaims” include multiple counts.   The first count of the counterclaim alleges breach of the EA;  the second count alleges breach of the SOPA;  the third count was withdrawn;  the fourth, fifth and sixth counts allege abuse of process;  the seventh count was withdrawn;  and counts eight through ten, alleging vexatious litigation, were previously stricken [54 Conn. L. Rptr. 677].   In their post-trial memorandum, the defendants seek relief under the second, fourth, fifth and sixth counts of the counterclaim.

Trial commenced on May 21, 2013.   In 2001, the plaintiff was fifty-one years of age.   The plaintiff holds a Bachelor of Science degree from Boston University and a Master's Degree in Business Administration in banking and finance, a degree that he received in 1980.   He has taken additional courses since obtaining his MBA. His employment background includes ownership of a construction company, JBL Construction.   He also worked for a bank in New York City, where he developed property for the bank, and he worked for a real estate company that was also involved in retail and manufacturing.   He then worked for New Milford Savings Bank for ten years.

The plaintiff's responsibility at New Milford Savings included the resolution of non-performing loans and he handled a book of some $40 million in loans.   Thereafter, he transitioned to commercial lending, which was where he first came into contact with the defendants.   Something of a polymath, the plaintiff also holds a swimming pool plumber's license, is certified in fork lift operations, and held a license to engage in home improvement sales.   During the course of his employment with SSP, the plaintiff took seminars and classes in the maintenance and service of equipment, such as heaters and decorative cement.   Indeed, the plaintiff has lengthy experience in the field of swimming pools, starting with pool maintenance when he was fourteen and engaging in swimming pool construction work in college.   In the late 1990s, the plaintiff actually purchased a pool from SSP and participated in the construction of the pool himself, using his own heavy earth moving equipment to dig the hole for the pool.

In 2001, Scott was sixty-three years of age.   He holds a general equivalency diploma.   His parents developed the swimming pool business in the 1930s, and he took ownership of the company in the 1960s, paying for the company at the rate of $10,000 per year.   He made those payments out of his salary and SSP's profits.   Scott also has real estate interests, a business also started by his father.   Scott claims that his real estate interests made him wealthy and his SSP income made him “well to do.”

In January 2001, the plaintiff contacted Scott to discuss banking business that involved Scott and New Milford Savings.   In the course of that meeting, Scott told the plaintiff that Scott's son and nephew were to be his successors at the company, but that they were no longer with the company.   Scott raised the possibility of the plaintiff “helping” Scott with the business, because Scott no longer wished to run it himself, preferring to spend more of his time in Tortola.   Scott told the plaintiff that the business was very lucrative, that he would teach the plaintiff the business and the plaintiff would be well compensated.   The plaintiff explained that he would need a “good package” if he were to leave New Milford Savings in view of his secure, senior position, his pension, his age and his family obligations.

The parties then began an ongoing discussion about the nature of the prospective relationship.   Eventually, the plaintiff retained counsel to assist him in the negotiations.   Scott, too, had the assistance of counsel and he also involved an accountant in the negotiations.   Prior to executing any agreements with the defendants, the plaintiff and his attorney asked to review certain corporate records, including SSP's general ledger, but they were told that SSP did not have a general ledger.

The plaintiff's review of the records that were provided to him revealed that SSP had annual gross receipts consistently in the $5–7 million range, and that Scott averaged $200,000 per year in compensation.   Scott's position yielded him many other benefits.   Specifically, Scott enjoyed racing Porsche automobiles, and SSP owned three Porsche racing cars, employed a full-time Porsche mechanic, and expended at least $100,000 annually to support the car racing expenses.   SSP also provided personal landscaping services to Scott, made payments to Scott's real estate company, and SSP employees worked off-season on other Scott business interests.   The records also showed that, in 2000, SSP had made some $242,000 in loans to Scott.   Pl.'s Ex. (“PX”) 12, n.6. Moreover, Scott took regular trips to Tortola and traveled to Florida to race his Porsche.   The corporate books showed travel and entertainment expenses of $68,000.

The records suggested a cash flow of about ten percent of gross sales, yet the cash flow did not appear on the corporate books and records.   Based on Scott's representations, the plaintiff concluded that the cash flow was going to the other services that Scott was taking from SSP. The plaintiff planned for those services to end once he took over the company, and he also saw other opportunities to reduce expenses.   Thus, the plaintiff concluded that he would be able to address his obligations, and more, from the restored cash flow.

The various agreements that emerged from the discussions between the parties combined to create a scenario in which the plaintiff would become the owner of twenty shares of SSP stock;  he would work for Scott and SSP for a period of five years;  and, in five years, he would acquire the right to purchase the balance of SSP stock for $1.27 million at seven percent interest over a period of ten years, in order to delay recognition of income to Scott.   The plaintiff also agreed to a consulting agreement with Scott that would yield up to $1 million in additional payments to Scott over a five-year period.   Scott, for his part, agreed not to restructure SSP's debt during the five-year period of the plaintiff's employment and not to sell SSP assets or increase its liabilities.   Further, Scott agreed that all loans to or from Scott and his family members were to be fully paid before the plaintiff took ownership of SSP.

After the agreements were executed in March 2002, the plaintiff began his employment for SSP and Scott.   The transition was not an easy one.   Scott soon embarked upon a course of shifting the direction of the company, shrinking the service and supply departments because he wanted to supply to construction companies and not the public.   Scott did not consult with the plaintiff before making that decision, and, indeed, there is little evidence that Scott engaged in any meaningful course of conduct that one would expect to find in an owner engaged in succession planning.   Instead, Scott kept a rigid hold on the helm of SSP, a hold he never really relinquished during the plaintiff's tenure at SSP. In fact, a number of employees, who should have reported to the plaintiff, went around the plaintiff and continued their former practice of reporting to Scott, a practice that Scott did not discourage.   The plaintiff found Scott to be routinely critical of many of his SSP employees, and employee turnover was high and frequent.

The plaintiff persevered, attempting to fulfill his duties under the EA. He tried to revise procedures and implement a coordinated computer software program;  he developed new forms;  and he held weekly meetings in an effort to coordinate operations among the various departments.   The plaintiff even created a business plan and submitted it to Scott;  PX 30;  but Scott never commented on the plan.   In 2006, Scott closed the supply and service departments without consulting the plaintiff.

Although the plaintiff received bonuses throughout his tenure, he was never given a performance review or an evaluation.   In August 2006, Scott told the plaintiff that he would not sell the company to the plaintiff, despite their agreement.   Scott did not, at any time, attribute his decision to the plaintiff's job performance.   Thereafter, in October 2006, on a single day, Scott sent seven memoranda to the plaintiff, all criticizing the plaintiff's work.   In December 2006, Scott terminated the plaintiff's employment.   On December 21, 2006, the plaintiff notified Scott that he intended to exercise his rights under their three agreements, including his right to purchase the company.   PX 33.   Scott refused to honor the agreements, and the plaintiff did, in fact, exercise his right to arbitration.   After two years in arbitration, Scott's counsel sent an email to the plaintiff, indicating that his “client” had advised him that “it” lacked the funds to carry on with the arbitration.   At trial, the defendants argued that this email referred, only, to SSP. After the defendants refused to honor their obligation to pay for their share of the arbitration, the plaintiff filed his lawsuit.

II

PARTIES' ARGUMENTSAPlaintiff's Position

The plaintiff opened his post-trial argument by addressing two preliminary issues of law.   The first issue involves SSP's motion to amend its response to the plaintiff's request for admission (“RFA”) number twenty, a response in which SSP admitted that certain documents were provided to the plaintiff on December 18, 2006, and that certain documents attached to the RFA were the only documents SSP allegedly referenced in its termination letter to the plaintiff or in its synopsis memoranda regarding the plaintiff's alleged shortcomings.   The plaintiff's second preliminary issue is his claim that an arbitration ruling on a “motion to dismiss or summary judgment” should not be given preclusive effect.

Next, the plaintiff argues that the evidence at trial established that SSP breached the employment agreement by terminating the plaintiff without the requisite “adequate cause,” and by failing to effect the plaintiff's termination pursuant to the terms of the EA. The plaintiff argues that both defendants breached the SOPA by refusing to allow the plaintiff to exercise his right to purchase SSP. The plaintiff contends that the defendants openly refused to permit him to exercise his rights under the SOPA and then terminated his employment, not only without adequate cause but also in bad faith.

The plaintiff's third claim is that the defendants breached the covenant of good faith and fair dealing throughout his employment with SSP, beginning with the defendants' nondisclosure of key financial information continuing through to the plaintiff's unwarranted termination and beyond.   Fourth, the plaintiff argues that the defendants engaged in fraud, particularly by failing to disclose Scott's deferred compensation claim owed to him by SSP. The plaintiff also argues that the defendants fraudulently claimed that they had no funds to continue the arbitration.   Fifth, the plaintiff argues that the defendants violated CUTPA as evidenced by numerous instances of the defendants' bad faith conduct.   The plaintiff also contends that the evidence shows that he suffered substantial injury, not outweighed by any other consideration, and that the injury could not have been avoided.

The plaintiff claims damages of four million dollars under the SOPA;  up to $80,000, plus interest, for the alleged breach of the arbitration clauses;  $141,000 for breach of the EA, plus interest;  and four million dollars under CUTPA, plus interest, attorneys fees and costs.

B

Defendants' Position

The defendants deny that any of their alleged conduct constitutes fraud, and argue that, to the extent the plaintiff was unaware of Scott's deferred compensation agreement, it was up to the plaintiff to ask for more information.   The defendants also deny having breached the EA, contending that the plaintiff was fired for adequate cause.   The defendants challenge the plaintiff's credibility and ask the court to credit the testimony of their witnesses.   The defendants claim that, even if a breach of any agreement is established, the plaintiff's recovery is limited by the terms of a liquidated damages clause.   Finally, they deny any violation of CUTPA.

Turning to their defenses, the defendants argue that all of the plaintiff's claims are barred by the applicable statute of limitations;  the fraud claims are barred by res judicata, in view of an arbitration decision and the “economic loss doctrine;” and the SOPA claims are barred by the statute of frauds.

The defendants filed multiple counterclaims.   First, they argue that the plaintiff breached the SOPA by refusing to sell his stock to SSP “and/or” Scott.   Second, they argue that, during the arbitration, the plaintiff made meritless claims of fraudulent inducement and they are entitled to a hearing in order to develop their claim for attorneys fees.   Third, the defendants seek attorneys fees based on their argument that the plaintiff revealed confidential information in violation of a promise not to do so.   The defendants' fourth and final contention is that they are entitled to a hearing on damages suffered as a result of the plaintiff's application for a temporary restraining order without having provided the court with certain material facts.

C

Plaintiff's Reply

In his reply brief, the plaintiff, in addition to asserting that he complied with his obligations under the EA and that he was terminated without adequate cause, also restates and expands upon his original claim that the defendants breached the SOPA, committed fraud, and violated CUTPA.

The plaintiff also responded to the defendants' defenses and counterclaim.   The plaintiff claims that the statute of limitations relied upon by the defendants does not bar the plaintiff's claims because the one-year statute of limitations applies to actions for specific performance of a real estate contract and, thus, does not apply to the claims involving the SOPA. Second, he claims that the three-year statute of limitations applicable to the fraud and CUTPA claims was tolled due to the defendants' continuing course of conduct.   The plaintiff disagrees with the defendants' argument regarding the economic loss doctrine, contending that the defendants made fraudulent representations prior to executing the EA, SOPA and/or SLA. Consequently, he argues, those fraudulent representations are actionable, independent of claims arising from the defendants' breach of subsequently-executed contracts.   Next, the plaintiff claims that this court should not give res judicata effect to the arbitrator's interlocutory ruling because the plaintiff had no avenue by which to appeal that ruling.

The plaintiff summarizes his damage claims by asserting that, although the EA provides for liquidated damages, there is no such provision in the SOPA or the SLA. He also argues that he made efforts to mitigate his damages.

Finally, the plaintiff claims that the defendants' counterclaims fail for multiple reasons, including his contention that he did not breach the SOPA. He also argues that he did not engage in abuse of process, both as a matter of law and fact.

D

Defendants' Reply

In their reply memorandum, the defendants argue that the evidence was insufficient to establish that the plaintiff was wrongfully terminated;  that the defendants engaged in fraudulent conduct;  or that Scott had previously breached similar promises to sell SSP to three other men, including Scott's son.

The defendants also argue that the plaintiff will suffer no prejudice if the defendants are allowed to amend their responses to the plaintiff's requests for admission.   The defendants claim, further, that the arbitrator's interlocutory ruling should be given preclusive effect, even though the arbitration was terminated.

Next, the defendants contend that they did not anticipatorily breach the contract because the plaintiff, himself, breached the contract and was terminated for cause.   Similarly, they argue that they did not breach the covenant of good faith and fair dealing.   The defendants contend that they did not engage in fraud, but rather that the plaintiff did not exercise due diligence.   They argue that the plaintiff's evidence does not reach, as it must, the “clear and convincing” level.   The defendants assert that the claim that they lacked funds to continue with the arbitration was not fraudulent because, as soon as it was made, the plaintiff believed the claim was fraudulent and, therefore, cannot have relied on the defendants' claim.

Finally, the defendants reject the plaintiff's CUTPA claim because the allegedly fraudulent conduct was incidental to the defendants' primary business.   They also reject the claims regarding emotional distress because those claims were not specially pleaded, and reiterate their claim that the statute of limitations bars all of the plaintiff's claims.

III

DISCUSSION

This case was tried to the court.  “It is well established that [i]n a case tried before a court, the trial judge is the sole arbiter of the credibility of the witnesses and the weight to be given specific testimony.”  (Internal quotation marks omitted.)  Blasco v. Commercial Linens, LLC, 133 Conn.App. 706, 709, 36 A.3d 737 (2012).   The role of the trier of fact is to assess “the credibility of the witnesses ․ on the basis of its firsthand observation of [the witnesses'] conduct, demeanor and attitude.”  (Internal quotation marks omitted.)  Cohen v. Roll–A–Cover, LLC, 131 Conn.App. 443, 450, 27 A.3d 1, cert. denied, 303 Conn. 915, 33 A.3d 739 (2011).

In the present case, as in many cases, the testimony by the plaintiff and his witnesses, and the testimony by Scott and his witnesses, was frequently diametrically opposed and irreconcilable.   The court had ample opportunity to observe the conduct, demeanor and attitude of each witness, to evaluate the testimony and to relate the testimony of each witness to the exhibits in the case.   In considering the evidence, in addition to evaluating the testimony and exhibits, the court also drew reasonable inferences from the facts established in this case.   The court also took into consideration direct and circumstantial evidence that was admitted in the course of the trial.

The court evaluated all witnesses who came before it, taking into account not only their spoken testimony, but also their ability to perceive the things about which they testified;  their ability to recall relevant facts and events;  any interest that they may have had in the outcome;  the reasonableness of their testimony;  and any contradictions that arose between their testimony and other evidence introduced at trial.   The court's findings of fact, including its decision to credit some witnesses and not others, are based upon all of the foregoing factors.

A

Motion to Amend the Requests for Admission

“A party's response to a request for admission is binding as a judicial admission unless the judicial authority permits withdrawal or amendment therefore.”  Westbrook v. ITT Hartford Group, Inc., 60 Conn.App. 767, 772–73 n.11, 761 A.2d 242 (2000).   An amendment should not be permitted if it will “mislead the opposing party, take unfair advantage of the opposing party or confuse the issues, or if there has been negligence or laches attaching to the offering party.”  Kelley v. Tomas, 66 Conn.App. 146, 178, 783 A.2d 1226 (2001).

On or about December 18, 2006, the plaintiff was presented with a letter indicating that he had previously been notified of his “failure to comply with [his] performances [sic] numerous times verbally and numerous times in writing as further outlined in the attached SYNOPSIS OF MEMOS issued by me [Scott] and for me [Scott] by Lisa Burns, Bob Tata, and Fay.” PX 32.   There were three attachments to that letter (hereinafter, the “synopsis memos”).   The first attachment was a December 4, 2006, one-page memorandum from Scott to the plaintiff, entitled “Synopsis of Memos issued by James M. Scott and for James M. Scott by Lisa Burns and by Bob Tata (250+ memos).”   The second attachment was another one-page memorandum, also dated December 4, 2006, from Scott to the plaintiff, entitled “Synopsis of Memos issued by James M. Scott and for James M. Scott by Fay (24 memos).”   The third attachment was yet another December 4, 2006 memorandum from Scott to the plaintiff, entitled “Synopsis of Memos issued by James M. Scott and for James M. Scott.”   The latter memorandum was two pages in length.   None of the “250+ memos” or “24 memos” was appended to the synopsis memos.

The plaintiff filed requests for admission (“RFA”), to which SSP responded on August 20, 2012.   RFA number 19 asked SSP to admit that “the documents attached hereto as Exhibit Q are a true and accurate copy of the documents you allege are referenced in the memoranda attached hereto as Exhibit D.” ⁴ SSP's response to RFA 19 was “admitted.”   RFA 20 asked SSP to admit that it possessed no documents, other than those attached as Exhibit Q, that were referenced in Exhibit D. SSP's response to RFA 20 was, again, “admitted.”

On July 17, 2013, almost two months after trial began, SSP moved to amend their August 20, 2012 response to RFA 20.   Specifically, SSP claimed that it had additional documents, beyond those included in “Exhibit Q,” that were purportedly referenced in the synopsis memos.   SSP referred to “approximately 25 exhibits ․ offered by the defendants (not all admitted at present but the Exhibit List is not available to counsel until Court [sic] ).   Many were admitted after the plaintiff represented that he had no prejudice since he had obtained such documents in the arbitration and claimed no surprised [sic] by them.”

The plaintiff asserts that the defendants are attempting to add thirty-six, not twenty-five, additional exhibits,⁵ and objects to the request to amend on the basis that he relied on SSP's admissions to evaluate the documents that supposedly supported the termination letter.   See PX 32.   The plaintiff claims that it is unfair and prejudicial to permit SSP to “amend” its response to the RFA because the plaintiff relied on SSP's admission to prepare his trial strategy.   In contrast, SSP argues that the plaintiff is not prejudiced by the request to amend because he had actual notice of the documents at issue, prior to trial.   Further, SSP argues that these documents should now be admitted in order to permit a “full and accurate presentation of the merits” of the case.

The court agrees with the plaintiff.   A central issue in this case is whether Scott had just cause for terminating the plaintiff.   The defendants rely heavily on PX 32 as justification for terminating the plaintiff.   However, none of the documentation referred to within the synopsis memos was appended thereto, and the plaintiff's attempt to determine exactly what led to his termination has been, through much of the litigation, a frustrating effort to identify, let alone hit, what may be fairly characterized as a “moving target.”

As will be discussed in more detail, the court is convinced that Scott decided to end the plaintiff's employment, not due to any shortcomings on the plaintiff's part, but rather because Scott did not want to live up to his end of the bargain.   The court concludes that the synopsis memos were false and misleading, and they reflect Scott's attempt to retroactively justify his decision to terminate the plaintiff by papering the file with a false written record.   The court's conclusion that the claims in PX 32 were not based in fact are supported not only by the plaintiff's difficulty in identifying the documents referred to in the synopsis memos, but also by the defendants' own difficulty in producing those documents in a timely manner.

The plaintiff's requests for admission were dated July 23, 2012, some five and one-half years after Scott terminated the plaintiff.   It is inconceivable that, in that span of time, the defendants were unable to accumulate and identify the documents referred to in the synopsis memos.   Indeed, if the representations in PX 32 were truthful, the entire collection of supporting documentation would necessarily have been gathered before the synopsis memos were generated and should, therefore, have been identified and segregated from all other business records prior to December 4, 2006, the date each of the synopsis memos was allegedly written.

The plaintiff was entitled to know which documents formed the basis of the synopsis memos, he sought this information through requests for admission, and the defendants were the only ones in a position to know exactly which documents were the subjects of the synopsis memos.⁶  This case is exceptionally document intensive, and it would be unfair and prejudicial to the plaintiff to allow the defendants to amend their response to RFA 20 ⁷ well after the commencement of the trial.   The defendants offer no legitimate explanation for not having answered RFA 20 differently when the request was first presented.   The defendants' motion to amend its response to the plaintiff's RFA is denied.

B

Arbitration Ruling

Initially, the plaintiff sought relief through arbitration and so notified the defendants in January 2007.   After pre-arbitration negotiations proved unsuccessful, the plaintiff sought to exercise his option to purchase SSP. The defendants declined to permit that purchase and arbitration began in September 2007.   The arbitration proceeded for nearly two years until, on August 14, 2009, counsel for the defendants sent an email to the American Arbitration Association, stating:  “My client informs me that it has no funds to pay for the continuation of the arbitration at this time ․” ⁸ Prior to August 14, 2009, the arbitrator had concluded that the plaintiff's fraudulent inducement claim should be dismissed.   Defs.' Ex. (“DX”) A. The defendants assert that this ruling should be given preclusive effect.   Thus, the issue presented is whether a ruling issued in the course of an aborted arbitration proceeding should—or must—be given preclusive effect.

Neither party has identified authority resolving this precise question.   However, our Supreme Court has concluded that, with regard to a decision of an administrative agency, it is not ordinarily appropriate to give such a decision preclusive effect unless there is an opportunity for judicial review.   Convalescent Center of Bloomfield, Inc. v. Dept. of Income Maintenance, 208 Conn. 187, 195–201, 544 A.2d 604 (1988).   The authority cited by the defendants either fails to apply to the situation before this court or, when carefully considered, supports the plaintiff.

The defendants claim that an arbitrator's decision is binding, as res judicata, in subsequent judicial proceedings, even when the arbitration decision is not confirmed by the Superior Court.   The defendants rely, first, on Murphy v. Metropolitan Property & Casualty Ins. Co., Superior Court, judicial district of Middlesex, Docket No. CV–07–5003333–S (June 30, 2009, Burgdorff, J.) (48 Conn. L. Rptr. 179).   However, in that case, the arbitration was completed and the unsuccessful party had the opportunity to appeal the arbitrator's final decision.   The defendants also rely on Tierney v. Renaud Morin Siding, Inc., Superior Court, judicial district of Fairfield, Docket No. CV–08–5014179–S (October 29, 2008, Gilardi, J.) (46 Conn. L. Rptr. 599).   In that case, as in Murphy, the arbitrator not only reached a final decision, but the arbitration award was, in fact, appealed to the Superior Court and the court declined to modify or vacate the award.   Tierney v. Murray, Superior Court, judicial district of Fairfield, Docket No. CV–06–5002655–S (August 22, 2007, Gilardi, J.).   Most significantly, the defendants' reliance on Jacobs v. Yale University, Superior Court, judicial district of New Haven, Docket No. CV–277513–S (September 21, 2000, Blue, J.), is misplaced in that Jacobs indirectly supports the plaintiff.

Unlike the situation before this court, the arbitrator in Jacobs reached, what Judge Blue concluded was, a final decision.  Id. Judge Blue noted, first, our Supreme Court's conclusion that “[n]o satisfactory reason can be assigned why an award, which the parties have expressly stipulated should be final as to the subject submitted, should not be as conclusive as a court-rendered judgment.”  (Internal quotation marks omitted.)  Id., quoting Corey v. Avco–Lycoming Division, 163 Conn. 309, 318, 307 A.2d 155 (1972), cert. denied, 409 U.S. 1116, 93 S.Ct. 903, 34 L.Ed.2d 699 (1973).   Judge Blue cited, as well, to our Supreme Court's statement that “ordinarily a factual determination made in final and binding arbitration is entitled to preclusive effect.”   (Emphasis added;  internal quotation marks omitted.)  Jacobs v. Yale University, supra, Superior Court, Docket No. CV–277513–S, quoting Genovese v. Gallo Wine Merchants, Inc., 226 Conn. 475, 483, 628 A.2d 946 (1993);  see Haynes v. Yale–New Haven Hospital, 243 Conn. 17, 21 n.5, 699 A.2d 964 (1997) (containing language to the same effect).

It is apparent that the critical factor in these cases is missing from the present case, to wit, a completed arbitration.   In the present case, there was no final arbitration award and, no opportunity for the plaintiff to appeal the arbitrator's decision.⁹  This court concludes that the principles expressed in Convalescent Center of Bloomfield, Inc. v. Dept. of Income Maintenance, supra, 208 Conn. 187, govern the situation before this court.   In the absence of a final arbitration award, the plaintiff had no opportunity to seek review of the arbitrator's interlocutory ruling.   In the absence of a final award, and, therefore, in the absence of an opportunity to obtain judicial review, the arbitrator's interlocutory decision should not, and indeed cannot, be given preclusive effect.¹⁰  The court finds against the defendants on their second special defense and on the fourth count of their counterclaim.

C

Employment Agreement and the Supplemental Letter Agreement

Count five of the complaint alleges that SSP breached the EA and the SLA. “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.)  300 State, LLC v. Hanafin, 140 Conn.App. 327, 330, 59 A.3d 287 (2013).   There is no dispute that the EA is an express employment contract, properly executed by the plaintiff and Scott, as president of SSP, on March 31, 2002.   PX 21.   Similarly, there is no dispute that the SLA is a contract, properly executed by the plaintiff and Scott, individually and as president of SSP, on March 20, 2002.   PX 20.

The EA detailed the plaintiff's employment obligations, which included individual responsibilities as well as responsibilities that the plaintiff could not meet without Scott's cooperation.   Specifically, the EA called upon the plaintiff and Scott to coordinate strategies to improve SSP's profitability;  to improve relationships with subcontractors and suppliers, and develop new products;  and to establish quarterly goals and objectives for the plaintiff's employment.   The plaintiff's individual responsibilities were, principally, to prepare a department-by-department budget for March 2003, a business plan for the years 2003 to 2005, and to assess personnel, information systems and needs.   PX21 § 3.

The court's factual findings, regarding the events that took place at SSP, are based on all of the factors previously discussed in this opinion concerning factfinding by the court, and also upon the differing motives of the parties.   The plaintiff, in accepting the offer of employment with the defendants, carefully considered the fact that, in order to work with the defendants, he would be leaving secure employment that had potential for future growth.   He was fifty-one years old at the time he signed the EA, knowing that, if the plan did not succeed, he might have to seek new employment at age fifty-six.   He retained the services of an attorney to assist him in examining SSP's books and records.   The plaintiff was highly motivated to expend every effort to make his association with the defendants a successful one.

Scott, on the other hand, had no intention of ever selling SSP to the plaintiff.   His motivation was to recruit a talented, dedicated upper management employee, take advantage of that employee's skills and work ethic, and then terminate that employee before having to honor the agreement he had entered into.   The court finds that Scott was also interested in having the plaintiff allied with SSP because the plaintiff had close ties with a financial institution that Scott had used, in the past, to obtain financing.

Prior to entering into the employment agreement with the plaintiff, Scott had made representations to his son, Jonathan Scott, and to his nephew, William Drakeley, in the 1990s, that Scott was tiring of the business and wanted to sell it to them in approximately five years.   However, even though Scott used the expression “five-year plan,” it was never clear when the five-year period was to begin.   Nonetheless, Jonathan Scott and Drakeley trusted Scott and relied on his promise.   In the end, Drakeley worked for SSP for eleven years;  Jonathan Scott worked for SSP for twelve years.

Scott never provided his son or Drakeley with the SSP financial information that they requested, nor did Drakeley and Jonathan Scott ever work out the terms of a purchase agreement with Scott.   Jonathan Scott did have discussions with his father about purchasing SSP and paying for the purchase over time with SSP revenues.   However, Scott never honored his agreement to sell SSP to his son and to Drakeley.   Instead, in 2000, Scott rehired Arnold Gunderson, a former SSP employee.   After his return, Gunderson advised Drakeley that he would be buying SSP. Now certain that Scott would never sell them the business, Drakeley and Jonathan Scott left the company in 2000.

Scott had reached out to Gunderson around December 1999 and January 2000.   Gunderson was rehired with the job title of “Acting President,” and Scott told Gunderson that he was tiring of the business, that his son could not run the business, and that he wanted Gunderson to become president of SSP. Gunderson then drafted a “letter of intent,” without the aid of counsel, and gave it to Scott, but Scott never returned a signed copy of that letter.   In January 2000, Gunderson had a discussion with Scott concerning Scott's plan to eventually sell SSP to Gunderson;  something that Gunderson understood would happen over a three-to-five-year time frame.   Gunderson knew that he would not be in a position to buy SSP without an understanding of SSP's finances, and so he requested access to the books, a request which Scott ignored.   Within one year, Scott told Gunderson that he was being demoted to the position of a commission-only salesman and, in December 2000, Gunderson left the company.   PX 57.

After Gunderson left the company, the plaintiff happened to visit SSP in January 2001 to discuss banking issues.   During that visit, Scott told the plaintiff that he had recently lost a senior manager, that he needed to replace that person, and that he was tired and wanted to spend more time in Tortola.

If Scott had sold SSP to any of the people to whom he made such promises, his control over the company would have disappeared and, ultimately, his income would have diminished.   However, Scott learned that he could find a steady stream of motivated employees to work hard for SSP, by implying—or even promising—that he would sell them the company.

The court finds that the plaintiff fully performed his obligations under the EA. The court credits the plaintiff's testimony regarding his efforts to meet his contractual obligations while at SSP. The plaintiff learned the various aspects of the SSP operations, oversaw the work of many employees, worked up to eighty hours per week and, in addition, he was SSP's most productive salesperson during several of the years he was with SSP. Moreover, the plaintiff made efforts to improve SSP's operations, but received little support from Scott.   When the plaintiff offered Scott a marketing plan, Scott took no action, not even reviewing the plan with the plaintiff.   The plaintiff also prepared and submitted a business plan to Scott, but Scott claimed that it did not conform to what he wanted.   Scott did not, however, offer the plaintiff any guidance as to an acceptable form of business plan.

The court finds that the plaintiff fully performed his obligations under the EA and finds against the defendants on their sixth and eighth special defenses, as well as on the first count of their counterclaim.

In fact, the court finds that it was Scott, not the plaintiff, who breached the EA. From the outset, Scott did not supply the plaintiff with the information he requested prior to signing the EA. Scott never advised the plaintiff of deferred compensation obligations that Scott had arranged for himself, compensation that, Scott later claimed, exceeded $2.5 million.¹¹  Nor did Scott eliminate officer “loans” from SSP, which, in 2002, were over $660,000.   In fact, in the SLA, Scott had promised to eliminate those loans, but, instead of doing so, they rose to over $1.1 million by 2007.

Scott never included the plaintiff, who was an SSP shareholder, in the SSP shareholder meetings that typically included Scott, his wife and a fifty-year SSP employee, Fay Platt.   A typical example of such a meeting is reflected in PX 102, which includes the minutes of an October 2, 2006 shareholder meeting, entitled “Special Shareholders/Board of Directors” meeting.   The attendees included James Scott as SSP president, treasurer and director;  Susan Scott as vice-president and director;  and Fay Platt as secretary.   At the outset, the minutes note that no notice of the meeting was sent to the shareholders.   The only shareholder not included in the meeting was the plaintiff.   Perhaps not surprisingly, the “officers and directors” present, i.e., Scott and his wife, voted to waive the obligation to give notice of the meeting.¹²

At the October 2, 2006 meeting, Scott presented a September 29, 2006 demand letter from JMSA, which sought payment of over $1 million in outstanding loans, plus interest.   That letter, attached to the minutes, is addressed to SSP and is signed by Scott, as president of JMSA. According to the minutes, Scott moved that SSP respond to JMSA by stating that SSP's cash position made it impossible to respond to the demand.   Scott and his wife voted in favor of the latter motion and, accordingly, the minutes reflect a second attachment, a letter dated October 2, 2006, addressed to JMSA and signed by Scott, as president of SSP, stating that SSP had a negative cash balance and was unable to respond to the demand.

Such meetings provided Scott with opportunities, of which Scott fully availed himself, to create corporate obligations to himself or JMSA, all at the expense of the plaintiff's interests—and to do so in a manner unknown to the plaintiff.   Indeed, on March 13, 2007, after Scott terminated the plaintiff's employment, but while the plaintiff was still an SSP shareholder, SSP held another shareholders' meeting at which Scott and his wife voted to respond to the JMSA “demand” letter, previously the subject of the October 2, 2006 meeting.   SSP voted to respond to that demand letter by selling buildings owned by SSP in partial satisfaction of the $1 million dollar loan to SSP. The sale price was $325,000, even though a 1999 town appraisal showed the buildings' market value at more than $1.4 million.   In the SLA, Scott had promised that SSP would sell those same buildings to Scott on or before March 31, 2003.   Scott was to finance the latter purchase with a ten-year note to SSP. The March 2007 sale of the buildings from SSP to JMSA served to deprive SSP of its primary asset, and, by selling that asset for less than one-quarter of the market value, the sale only reduced SSP's $1.1 million “obligation” to JMSA by $325,000.   The minutes also show that due to the sale, SSP acquired an additional obligation in that it would, in the future, lease its space from JMSA. DX LLL.

The purpose of transferring the SSP asset to JMSA in such a manner was to diminish the value of SSP, permitting Scott to claim that SSP was insolvent in 2007.   Under the terms of the SOPA, the insolvency of SSP would serve to terminate the agreement, thereby terminating the plaintiff's right to purchase SSP. PX 3, § 8.2(b).  The court credits the deposition testimony of John Marsalisi, an expert witness, who testified that SSP was not, in fact, insolvent in March 2007.   See PX 119 at 67, 241.

In the summer of 2006, as the time approached for Scott to sell SSP to the plaintiff, Scott found himself in difficulties that had not arisen when he breached his promises to his son, to Drakeley and to Gunderson.   As opposed to Scott's “arrangements” with his son, Drakeley or Gunderson, Scott was bound to the plaintiff by the EA, SOPA and SLA. The obligations created by those contracts could only be avoided, even in part, if Scott could find a way to legitimately terminate the plaintiff's employment.   However, the EA itself provided that the plaintiff could only be terminated for adequate cause, which was defined as a “conviction of or a plea of guilty ․ or a continued breach of [the plaintiff's] duties and obligations arising under [the EA] or of any written policy, rule, or regulation of [SSP] ․” PX 21, § 8.3. The court finds that the plaintiff established that his conduct at SSP did not give rise, in any way, to “adequate cause” for termination.

The court notes that the EA contemplated more than an isolated breach of some company policy before such a breach could constitute “adequate cause” for termination.   Instead, it defined a “continued breach” as a breach that continued for five days after Scott provided the plaintiff with written notice specifying the breach.

On August 27, 2006, Scott told the plaintiff that he would not sell him SSP.¹³ Scott did not, however, criticize the plaintiff's work at that meeting.   The plaintiff reminded Scott of the contracts, to which Scott replied that he would just tear them up.   The court concludes that Scott realized that the plaintiff would not simply walk away, as had Scott's son, Drakeley and Gunderson, and Scott determined that the only way to avoid his contractual obligations was to terminate the plaintiff's employment.

Scott faced a significant obstacle in terminating the plaintiff's employment because, until October 4, 2006, Scott had not sent the plaintiff any written notice that the plaintiff was in breach of any SSP policy, rule or regulation.   Suddenly, on that day, some six months before Scott would be compelled to sell SSP to the plaintiff, Scott prepared no less than seven separate memoranda which supposedly supported his effort to terminate the plaintiff.   A review of those memoranda make clear that, for the most part, they are a pastiche of routine issues, more focused on mistakes by other employees or unverified customer complaints, as opposed to breaches of policy, rules or regulations by the plaintiff.   DX M, W, X, Z, AA, BB and CC. The plaintiff testified that he made every effort to immediately address the issues raised in those memoranda, and Scott never claimed that the plaintiff failed to do so.   Thus, the October 4, 2006 memoranda did not provide adequate cause, under the EA, to terminate the plaintiff.

Scott's disingenuous and inept effort to “paper the file” in October 2006, deteriorated into blatant fraud when Scott attempted to fabricate “adequate cause” to terminate the plaintiff's employment in December 2006, just three months before Scott was obligated to sell SSP to the plaintiff.   On December 4, 2006, the plaintiff traveled to California to be with his dying father.   After his father passed away, the plaintiff returned to Connecticut.   When he reported to work on Monday, December 18, 2006, Scott presented the plaintiff with a letter, dated December 18, 2006, and three attachments to that letter, to wit, the synopsis memos.   PX 32.   The letter is a single page and the attachments total four pages.   Both the letter and the synopsis memos merit an extended analysis.

The December 18, 2006 letter gave the plaintiff five days “to provide proof that all the issues which we consider to be continuing breaches of your Employment Agreement are corrected to the level of the published Corporation History, Procedures, and Practices, and as outlined in the SYNOPSIS OF MEMOS.”   It stated that the plaintiff had been notified “for failure to comply with your performances [sic] numerous times verbally and numerous times in writing as further outlined in the attached SYNOPSIS OF MEMOS issued by me and for me by Lisa Burns, Bob Tata, and Fay. These issues have not been corrected by you to date.”   The letter is signed by Scott, as president for SSP.

The first of the three attached synopsis memos is a December 4, 2006 memorandum from Scott to the plaintiff, which refers to “250+ memos” issued by Scott and for Scott “by Lisa Burns and by Bob Tata.” None of the “250+ memos” was appended to the memorandum.   The second attachment is a December 4, 2006 memorandum from Scott to the plaintiff, which refers to “24 memos” “issued by ․ Scott and for ․ Scott by Fay.” Again, the “24 memos” were not appended.   The third attachment is a two-page memorandum from Scott to the plaintiff, entitled “synopsis of memos issued by ․ Scott and for ․ Scott.”   Similarly, although it identifies various other memoranda, none was appended to the two-page memorandum.   The December 18, 2006 letter and synopsis memos purport to show “adequate cause” for the plaintiff's termination.

As a result of Scott's failure to provide the plaintiff with the documents referenced in the synopsis memos, the plaintiff was faced with the impossible task of tracking down all of these underlying documents and “correcting” the issues presented therein, many of which were coming to the plaintiff's attention for the first time.   Moreover, he was supposedly expected to “correct” those issues within five days.

It seems logical that, if the underlying “250+ memos” and “24 memos” existed, then, prior to drafting the December 18, 2006 letter and synopsis memos, those documents would have been collected and could easily have been provided to the plaintiff.   The evidence, however, makes clear that the December 18, 2006 letter and the synopsis memos constituted a bad faith effort to create “adequate cause” for termination when no such cause existed.

First, Scott never located—or at least never introduced into evidence—the totality of the underlying memoranda referenced in the synopsis memos.   The memoranda that Scott did introduce into evidence were, for the most part, routine internal business correspondence discussing pool installations, customer inquiries and requests for information among SSP staff.   Scott's own witness, Bob Tata, testified that, in December 2006, Scott asked him to produce his “Walter Whitney file,” which Tata did.   Tata testified that his “Walter Whitney file” was not a “job performance” file, but rather contained memoranda and notes about pool projects for which Tata needed answers.   Tata maintained such files for various SSP employees to whom he sent memoranda in the normal course of business.   In fact, many of the memoranda, which Scott claims were illustrations of the plaintiff's deficient work performance, were actually routine business memoranda addressed to multiple people including, on some occasions, Scott himself.   Tata testified that any of the addressees on the memoranda could have provided the requested information.   On direct examination, Tata testified that the plaintiff “probably did” give him the answers he sought.

In fact, Tata was one of the few defendants' witnesses who did not attempt to advocate for the defendants.   His testimony about the memoranda amply illustrates that, in December 2006, Scott was searching for an excuse to satisfy the “adequate cause” requirement of the EA, permitting him to terminate the plaintiff's employment.   Scott wanted documentation that he could use to show the plaintiff's “deficient” work performance, and, in the course of that effort, he grasped at a wide variety of routine business correspondence that did not make such a showing.   At trial, Scott testified that it was his perception, under the various agreements with the plaintiff, that he could terminate the plaintiff's employment at any time, for any reason.¹⁴  The court concludes, therefore, that Scott viewed the need to “paper the file” as some sort of insignificant formality.

The court finds that multiple conclusions are appropriate, after reviewing the December 18, 2006 letter and the synopsis memos, and considering them in conjunction with the testimony of the witnesses and the memoranda introduced into evidence.   First, the documents underlying the synopsis memos do not demonstrate inadequate performance by the plaintiff.   Second, it was impossible for the plaintiff to “correct” the “shortcomings” set forth in those documents within five days as a result of the defendants' failure to provide those documents.   Third, the foregoing conclusions mandate a finding that SSP materially breached the EA because the plaintiff was not terminated in accordance with its terms.

The fifth count of the complaint also alleges that SSP breached the EA when it failed to comply with Section 9, by declining to pay its share of the arbitration costs.   See PX 21 (disputes arising from the EA were to be addressed through arbitration).   The court agrees and finds that SSP breached the EA when it failed to pay its share of the costs of completing the arbitration, which brought the arbitration to a premature end.   The facts surrounding SSP's breach of Section 9 of the EA will be discussed in more detail in sections III E and F of this decision.

The SLA, which is also the subject of count five of the complaint, is a March 20, 2002 letter intended to supplement both the EA and the SOPA.¹⁵ Paragraph two of the SLA provides that “[t]here will be no outstanding loans to or from [SSP] from ․ Scott, any family member of Scott, or any entity owned by Scott or owned by any family member of Scott on or after March 31, 2007.”   PX 20, ¶ 2.

In March 2002, Scott was allegedly owed $1.6 million in deferred compensation;  an obligation that he did not disclose to the plaintiff when the EA, SOPA and SLA were executed, or at any time during the plaintiff's employment at SSP. Moreover, not only did Scott make no effort to eliminate that obligation but those obligations increased and, as of March 2008, Scott claimed that SSP owed him $2.5 million in deferred compensation.

Further, in 2002, Scott had outstanding officer loans from SSP that totaled more than $660,000.   Similar to the deferred compensation obligation, not only did Scott make no effort to eliminate those loans during the period of the plaintiff's employment with SSP, those loans actually increased to over $1.1 million by 2007.   The court finds that Scott did not reveal those increased loans to the plaintiff during the plaintiff's employment with SSP, nor did the plaintiff ever approve those loans.   The court finds that SSP breached the SLA both with regard to Scott's deferred compensation and with regard to Scott's officer loans.

For foregoing reasons, the court finds in favor of the plaintiff on count five of the complaint.   The court also finds that SSP failed to meet its burden relative to the special defenses applicable to the fifth count,¹⁶ and that SSP failed to meet its burden of proof relative to the first and fourth counts of the counterclaim, insofar as those counts implicate the EA and the SLA.¹⁷

D

Stock Option Purchase Agreement and Supplemental Letter Agreement

Count four alleges that the defendants engaged in anticipatory breach of the SOPA and the SLA. There is no dispute that the SOPA and, as previously discussed, the SLA are express contracts, properly executed by the plaintiff and Scott, both individually and as president of SSP, on March 20, 2002.   PX 3;  PX 20.

“An anticipatory breach of contract occurs when the breaching party repudiates his duty before the time for performance has arrived ․ Its effect is to allow the nonbreaching party to discharge his remaining duties of performance, and to initiate an action without having to await the time for performance ․ The manifestation of intent not to render the agreed upon performance may be either verbal or nonverbal ․ and is largely a factual determination in each instance.”  (Internal quotation marks omitted.)  Cottman Transmission Systems, Inc. v. Hocap Corp., 71 Conn.App. 632, 639, 803 A.2d 402 (2002).   “Repudiation can occur either by a statement that the promisor will not perform or by a voluntary, affirmative act that indicates inability, or apparent inability, substantially to perform.”  Gilman v. Pedersen, 182 Conn. 582, 584, 438 A.2d 780 (1981).   Once repudiation is proven, the plaintiff “need show only that he would have been ready, willing and able to perform had there been no repudiation.”  McKenna v. Woods, 21 Conn.App. 528, 534, 574 A.2d 836 (1990).

Section 3.1 of the SOPA provides that the plaintiff had the right to purchase Scott's stock in SSP at any time between April 1, 2007, and July 1, 2007, for a purchase price of $1,270,873.   By letter dated December 21, 2006, the plaintiff advised Scott that he intended to exercise his stock purchase option “in the spring.”   PX 33.   The plaintiff repeated that position in a January 26, 2007 letter from his counsel to Scott.   PX 35.

The court credits the plaintiff's testimony that, on August 27, 2006, Scott told the plaintiff that he would not sell the company to the plaintiff.   In response to the plaintiff's reminder of their contractual agreements, Scott stated that he didn't care, that he would tear up the contracts, and that he would bankrupt the company before he would sell it to the plaintiff.   Scott stated that, if necessary, he would start the company under another name and move all of the employees to that new company.   At no time during that discussion did Scott state that his decision was due to the plaintiff's job performance or, indeed, that his decision bore any relationship to the plaintiff's job performance.   Trial Tr. vol. 1, 170–71, May 21, 2013.   On direct examination, Scott did not deny that the August 27, 2006 meeting took place, that he told the plaintiff that he would not honor his agreement to sell SSP, or that he would rip up the agreements.   He simply testified that he did not “recall” those events.   Trial Tr. vol.   16B, 44, July 25, 2013.

In October 2006, an SSP employee, Lisa Burns, informed Scott of her intention to resign from SSP because she did not want to work with the plaintiff.   Scott told Burns that he wanted her to continue with SSP and, in fact, she did not leave SSP, despite having submitted her letter of resignation.   Instead, on or prior to December 4, 2006, Scott directed Burns to gather every memorandum she had written to the plaintiff while he was employed at SSP. That was the first time he had made such a request of her.   Scott asked Burns to prepare a summary of those memos.   The summary that she prepared;  DX DD;  became one of the synopsis memos given to the plaintiff on December 18, 2006.   PX 32.   Once the plaintiff's employment was terminated, Burns was given an increase in her salary and became the acting general manager of SSP, a position she held until she left SSP in 2009.   Approximately two months before the trial in this case, Burns was rehired by Scott to work as an independent contractor for SSP.

In August 2009, after the arbitration had been underway for approximately two years, SSP claimed that it had “no funds” to pay for its share of the arbitration, approximately $33,000.   As a result, the arbitration did not proceed to resolution.   SSP did not offer any evidence that it attempted to seek a waiver or reduction in the American Arbitration Association (“AAA”) fees, even though that possibility may have been available.   PX 55.

The evidence is conclusive, and the court finds, that SSP had the funds necessary to complete the arbitration.   Further, even if SSP needed additional funds to complete the arbitration, this court concludes that, based on the ease with which Scott transferred liquid and real assets among himself, his wife, SSP and JMSA, Scott could have readily acquired those funds.   Although Scott was a party to the arbitration and there is no evidence that he lacked the funds, he nonetheless did not pay the arbitration fees for which he was personally obligated under the SOPA.

The plaintiff has established the following facts by clear and convincing evidence:  SSP's representation that it lacked the funds to continue the arbitration was false;  Scott, acting as president of SSP, knew that the representation was false;  the false representation was made to disrupt the arbitration proceeding, possibly in the hope that the plaintiff would abandon his claims rather than begin again with a civil suit;  and the plaintiff did initiate a civil suit which has greatly protracted this case to the plaintiff's detriment.   The claim that SSP lacked the funds to continue the arbitration was fraudulent.   See Miller v. Appleby, 183 Conn. 51, 54–55, 438 A.2d 811 (1981) (elements of fraud).

Scott, the president of SSP, had ample personal funds in August 2009, and SSP had significant funds on deposit in the summer of 2009.   In 2009, Scott owned JMSA, a business that possessed real property with a fair market value in the millions of dollars.   Moreover, Scott and his wife owned a home worth over a million dollars, and Scott testified that he had a practice of “borrowing” funds from his wife when he needed funds for SSP operations.   Scott testified that, over the years, he had “given” his wife approximately $500,000 and that, from time to time, he would “borrow” operating funds from his wife and then later repay those “loans” with interest.¹⁸

The court finds that the claim that SSP lacked the relatively minimal funds needed to continue the arbitration was false, and also finds that SSP's failure to complete the arbitration was part of the defendants' ongoing effort to deprive the plaintiff of his contractual rights.   SSP's unwarranted failure to complete the arbitration was yet another example of SSP's failure to abide by the terms of the SOPA and the EA, both of which called for the resolution of disputes through arbitration.

Based on the foregoing findings of fact, the court concludes that the defendants repudiated their duties to the plaintiff before the time for performance arrived.   This conclusion is based, inter alia, on Scott's clear statement to the plaintiff that he would not honor his written promises;  the SSP corporate actions that conflicted with the requirements of the EA and the SOPA;  and on Scott's efforts, both individually and as president of SSP, in October 2006 and December 2006 to concoct excuses to terminate the plaintiff's employment.   The plaintiff fully established that he was ready, willing and able to perform his obligations under the EA, the SOPA and the SLA, had there been no repudiation of the SOPA and the SLA by the defendants.

The court finds in favor of the plaintiff on count four of the complaint.   The court finds against the defendants on their eighth special defense and on the second count of their counterclaim.¹⁹

E

Covenant of Good Faith and Fair Dealing

Count six of the complaint alleges that the defendants breached the covenant of good faith and fair dealing relative to the EA and SLA. Count seven alleges that the defendants breached the covenant of good faith and fair dealing relative to the SOPA and the SLA.

“Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.”  (Internal quotation marks omitted.)   Warner v. Konover, 210 Conn. 150, 154, 553 A.2d 1138 (1989).  “[A] claim for breach of the implied covenant of good faith and fair dealing is not legally sufficient unless a dishonest purpose or sinister motive is alleged.”   (Internal quotation marks omitted.)   Wolverine Fire Protection Co. v. Tougher Industries, Superior Court, judicial district of Hartford, Docket No. CV–01–0805554–S (June 20, 2001, Hale, J.) (29 Conn. L. Rptr. 731, 733).  “Bad faith in general implies both actual or constructive fraud, or a design to mislead or deceive 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.”  (Citation omitted;  internal quotation marks omitted.)  Habetz v. Condon, 224 Conn. 231, 237, 618 A.2d 501 (1992).  “A mere conclusory allegation of bad faith unsupported by any factual allegations, is insufficient to sustain a claim of bad faith.”  (Internal quotation marks omitted.)  Wolverine Fire Protection Co. v. Tougher Industries, supra.

The facts found and fully articulated by this court, in sections III C and III D of this decision, also support a finding, supported by clear and convincing evidence, that the defendants breached the covenant of good faith and fair dealing with regard to the EA, the SOPA, and the SLA. Without repeating in detail all of the court's factual findings regarding the business relationship between the plaintiff and the defendants, the evidence requires the conclusion, and the court finds, that Scott never intended to abide by his bargain to sell SSP to the plaintiff.   Even in their preliminary discussions, before any formal agreement was effected, Scott failed to disclose to the plaintiff, when in fairness he should have done so, the massive deferred compensation obligation that Scott had arranged for himself.   That obligation, alone, was a burden on SSP's financial and operational future that should have been revealed to the plaintiff.

The defendants claim that the plaintiff is at fault for, in effect, failing to ask enough questions or failing to press for further disclosure from Scott and SSP. The court disagrees.   The plaintiff made scrupulous efforts to obtain and review SSP's books and records but the defendants deliberately withheld the documents that would have revealed the deferred compensation agreement.   Further, during the plaintiff's employment, Scott and SSP excluded the plaintiff—a shareholder—from shareholder meetings where the plaintiff would have had an opportunity to explore, not only deferred compensation obligations, but also transfer of SSP assets and the status of loans from SSP to Scott.   Scott excluded the plaintiff from much of the day-to-day decision making and cooperation that was contemplated by the EA. Instead of transferring increasing authority and responsibility to the plaintiff, Scott progressively distanced the plaintiff from the inner workings of SSP, he diminished the plaintiff's authority within the organization, and he undercut the plaintiff's authority with employees over whom the plaintiff should have had more, not less, responsibility over the course of the five-year agreement.

Scott never planned to live up to his bargain.   From the outset, he planned to dishonor his promise in the same manner he had dishonored his promises to his son, his nephew and to Gunderson.   He obtained the services of a talented, dedicated and highly motivated employee, the plaintiff, and then, after obtaining the benefit of those services for fifty-seven months of a sixty-month term, he fabricated an excuse to terminate the plaintiff's employment.

The court finds that Scott, both individually and as president of SSP, was dishonest with the plaintiff, and he intended to, and did, deceive the plaintiff before entering into the EA, SOPA and SLA, as well as after the parties executed those agreements.   Scott, either individually, as president of SSP, or both, refused to meet his contractual obligations under all three agreements.

For the foregoing reasons, the court finds in favor of the plaintiff on counts six and seven of the complaint.   The court finds against the defendants on their first, sixth, and eighth special defenses and finds against the defendants on the second count of their counterclaim.

F

Fraud

In the first count of his complaint, the plaintiff alleges common-law fraud as to both defendants.  “Under the common law ․ it is well settled that the essential elements of fraud are:  (1) a false representation was made as a statement of fact;  (2) it was untrue and known to be untrue by the party making it;  (3) it was made to induce the other party to act upon it;  and (4) the other party did so act upon that false representation to his injury.”   (Internal quotation marks omitted.)  Leonard v. Commissioner of Revenue Services, 264 Conn. 286, 296, 823 A.2d 1184 (2003).  “All of these ingredients must be found to exist ․ Additionally, [t]he party asserting such a cause of action must prove the existence of the first three of [the] elements by a standard higher than the usual fair preponderance of the evidence, which ․ we have described as clear and satisfactory or clear, precise and unequivocal.”   (Internal quotation marks omitted.)  Harold Cohn & Co. v. Harco International, LLC, 72 Conn.App. 43, 51, 804 A.2d 218, cert. denied, 262 Conn. 903, 810 A.2d 269 (2002).   The burden is on the plaintiff to prove each of these elements by clear and convincing evidence.  Duplissie v. Devino, 96 Conn.App. 673, 680–81, 902 A.2d 30, cert. denied, 280 Conn. 916, 908 A.2d 536 (2006).²⁰

The plaintiff has established, by clear and convincing evidence, that the defendants fraudulently failed to disclose Scott's deferred compensation obligation when the plaintiff requested access to SSP's financial statements, tax returns and corporate records prior to entering into the EA, SOPA, and/or SLA. The court finds credible the testimony of expert witness Edward Ronan that Scott's deferred compensation obligation should have been included in the SSP financial statements.   To conclude that the plaintiff was at fault for not discovering the foregoing obligation, which exceeded $1.6 million, is untenable, particularly in view of the evidence that the information should have been included in the financial statements provided to the plaintiff.

This is a case in which the defendants wanted the plaintiff to enter into the EA, SOPA and SLA so that the plaintiff would fill the company's need for a skilled and talented manager.   The court finds that the plaintiff would not have entered into any of those agreements if he had known of the deferred compensation agreement.   The defendants withheld the deferred compensation information in order to induce the plaintiff to execute the agreements at issue.   Such deliberate nondisclosure was fraudulent.   See Egan v. Hudson Nut Products, Inc., 142 Conn. 344, 347–48, 114 A.2d 213 (1955) (fraud by nondisclosure).   The defendants revealed significant financial information to the plaintiff, thus giving rise to a duty to make full and fair disclosure about SSP's finances, yet they deliberately withheld information, of which they were fully aware, regarding one of SSP's largest financial obligations.   The latter conduct, in the context of this case, was fraudulent.   See Duksa v. Middletown, 173 Conn. 124, 127, 376 A.2d 1099 (1977) (“[a] party who assumes to speak ‘must make a full and fair disclosure as to the matters about which he assumes to speak’ ”).²¹

The defendants engaged in a fraudulent scheme that began in 2001 and early 2002 with the nondisclosure of Scott's deferred compensation obligations and continued through August 14, 2009, when the defendants falsely claimed that they lacked the funds to continue the arbitration.   See section III D, supra.   The court finds in favor of the plaintiff on count one of the complaint, and against the defendants as to their first, sixth and eighth special defenses.

G

CUTPA

In the tenth count of the complaint, the plaintiff alleges that the defendants violated CUTPA, General Statutes § 42–110b(a), which provides in relevant part that “[n]o 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 certain acts constitute a violation of [CUTPA], we have adopted the criteria set out in the cigarette rule by the federal trade commission ․ (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 [competitors or other business persons].”  (Internal quotation marks omitted.)  Williams Ford, Inc. v. Hartford Courant Co., 232 Conn. 559, 591, 657 A.2d 212 (1995).  “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. ․  Thus a violation of CUTPA may be established by showing either an actual deceptive practice ․ or a practice amounting to a violation of public policy.”  (Citations omitted;  internal quotation marks omitted.)   Cheshire Mortgage Service, Inc. v. Montes, 223 Conn. 80, 106, 612 A.2d 1130 (1992).

In sixteen separate subparagraphs, the plaintiff alleges conduct by the defendants that constitutes unfair or deceptive acts under CUTPA.   The bulk of those claims involve the defendants' failure to include Scott's deferred compensation agreement on the financial statements produced to the plaintiff.   They also include Scott's threat to destroy the written agreements;  the “looting” of SSP by doubling officer loans to Scott in violation of those agreements;  the manner in which SSP buildings were transferred;  and the false claim that SSP was insolvent in 2007.

There must be aggravating factors present, such as bad faith conduct or violation of some concept of fairness, in order sufficiently to plead a CUTPA claim based upon a breach of contract.   See Landmark Investment Group, LLC v. Chung Family Realty Partnership, LLC, 125 Conn.App. 678, 708, 10 A.3d 61 (2010), cert. denied, 300 Conn. 914, 13 A.3d 1100 (2011) (upholding finding of aggravating factors sufficient to prove a violation of CUTPA where, in addition to a breach of an employment contract, the defendant engaged in multiple false misrepresentations and other acts exhibiting “a pattern of bad faith conduct, seeking to escape its contractual obligations unfairly while negotiating a more favorable offer with ․ a third party”).

This court has found that events described in the tenth count of the complaint, at paragraphs 51a through 51q, did, indeed, take place.   The court has already concluded that the defendants' conduct was fraudulent.   The court also finds that the conduct described in the foregoing paragraphs of count ten constituted a scheme.   That scheme was composed of a related, orchestrated series of actions designed to deprive the plaintiff of his contractual rights by means that were unfair and deceptive.   The defendants' course of conduct was both unethical and unscrupulous, and it caused grievous financial injury to the plaintiff.

The defendants' principal argument is that it did not violate CUTPA because a CUTPA claim may not lie “for activities that are incidental to an entity's primary trade or commerce.”  (Internal quotation marks omitted.)  Sovereign Bank v. Licata, 116 Conn.App. 483, 494, 977 A.2d 228 (2009), appeal dismissed, 303 Conn. 721, 36 A.3d 662 (2012).   The defendants argue that neither Scott nor SSP is in the business of selling businesses or stock options, but rather, the defendants are in the business of selling swiniming pools.   In response, the plaintiff contends that our Supreme Court has not directly addressed this issue, and that the defendants rely on Appellate Court authority that does not conform to the legislative intent that CUTPA be liberally construed.

Our Appellate Court has held that “a plaintiff must have at least some business relationship with the defendant in order to state a cause of action under CUTPA.”  (Emphasis in original.)  Pinette v. McLaughlin, 96 Conn.App. 769, 778, 901 A.2d 1269, cert. denied, 280 Conn. 929, 909 A.2d 958 (2006);  see Ventres v. Goodspeed Airport, LLC, 275 Conn. 105, 157, 881 A.2d 937 (2005), cert. denied, 547 U.S. 1111, 126 S.Ct. 1913, 164 L.Ed.2d 664 (2006) (alleged business relationship between land trust and airport held insufficient to support a CUTPA claim, rejecting argument that land trust and airport were competing for airspace).²²  In the present case, although there is obviously a business relationship between the plaintiff and the defendants, the defendants are not in the business of selling businesses.   Even though the plaintiff is correct that Scott agreed to sell SSP on three separate occasions, Scott never actually consummated any of those sales.   Although the question is a close one, the court finds that the defendants are in the business of selling swimming pools, not businesses.   The defendants' conduct in their dealings with the plaintiff, even though unscrupulous, was incidental to their primary trade or commerce.   Consequently, the CUTPA claim cannot prevail.   Phillips Industrial Service Corp. v. Connecticut Light & Power Co., Superior Court, judicial district of Waterbury, Complex Litigation Docket, Docket No. X02–CV–98–04099665–S (June 18, 1999, Sheldon, J.) (24 Conn. L. Rptr. 641, 643) (“ ‘mere’ unscrupulousness in the conduct of business activities is not actionable under CUTPA unless it occurs in that portion of such activities which constitutes the conduct of any trade or commerce ․” (emphasis in original)).

For all of the foregoing reasons, the court finds for the defendants on count ten of the complaint.

H

Statute of Limitations

In their first special defense, the defendants allege that the causes of action set forth in the plaintiff's first, sixth, seventh and tenth counts are barred by the applicable statute of limitations, General Statutes § 52–577.²³  The plaintiff claims that the statute of limitations does not bar his claim because of the continuing course of conduct doctrine.²⁴

The “continuing course of conduct” doctrine will toll the statute of limitations “[w]hen the wrong sued upon consists of a continuing course of conduct ․” (Internal quotation marks omitted.)  Giulietti v. Giulietti, 65 Conn.App. 813, 833, 784 A.2d 905, cert. denied, 258 Conn. 946, 788 A.2d 95 (2001).   In Watts v. Chittenden, 301 Conn. 575, 587–88, 22 A.3d 1214 (2011), our Supreme Court explained that, “[i]n examining the use of the continuing course of conduct doctrine, we are mindful of the nature of the doctrine as Chief Judge Richard Posner of the Seventh Circuit Court of Appeals has explained:  A violation is called ‘continuing,’ signifying that a plaintiff can reach back to its beginning even if that beginning lies outside the statutory limitations period, when it would be unreasonable to require or even permit him to sue separately over every incident of the defendant's unlawful conduct.   The injuries about which the plaintiff is complaining in [these] case[s] are the consequence of a numerous and continuous series of events ․ When a single event gives rise to continuing injuries ․ the plaintiff can bring a single suit based on an estimation of his total injuries, and that mode of proceeding is much to be preferred to piecemeal litigation despite the possible loss in accuracy.   But in [cases in which the continuing course of conduct doctrine is applicable, each incident increases the plaintiff's injury].   Not only would it be unreasonable to require him, as a condition of preserving his right to have [the full limitations period] to sue ․ to bring separate suits [during the limitations period] after each [incident giving rise to the claim];  but it would impose an unreasonable burden on the courts to entertain an indefinite number of suits and apportion damages among them.”  (Internal quotation marks omitted.)

In order to trigger the continuing course of conduct doctrine, a plaintiff must demonstrate that the defendant committed an initial wrong and breached a duty that remained in existence after commission of the original wrong.   Giulietti v. Giulietti, supra, 65 Conn.App. 834.  “Where [our Supreme court has] upheld a finding that a duty continued to exist after the cessation of the ‘act or omission’ relied upon, there has been evidence of either a special relationship between the parties giving rise to such a continuing duty or some later wrongful conduct of a defendant related to the prior act.”  (Emphasis added.)  Fichera v. Mine Hill Corp., 207 Conn. 204, 210, 541 A.2d 472 (1988).  “[T]hat continuing wrongful conduct may include acts of omission as well as affirmative acts of misconduct ․” (Internal quotation marks omitted.)  Haas v. Haas, 137 Conn.App. 424, 433, 48 A.3d 713 (2012).  “The continuing course of conduct doctrine is conspicuously fact-bound.”  (Internal quotation marks omitted.)  Id.

In the present case, the first count of the complaint alleges fraud, and the sixth and seventh counts allege breach of the covenant of good faith and fair dealing.  General Statutes § 52–577 provides that “[n]o action founded upon a tort shall be brought but within three years from the date of the act or omission complained of.”   Fraudulent misrepresentation, as alleged in count one of the complaint, is a tort;  Kramer v. Petisi, 285 Conn. 674, 684 n.9, 940 A.2d 800 (2008);  and so is subject to the provisions of General Statutes § 52–577.

Counts six and seven allege violations of the covenant of good faith and fair dealing, and are not governed by General Statutes § 52–577.  “[A] claim brought pursuant to a contract, alleging a breach of the implied covenant of good faith and fair dealing, sounds in contract because [e]very contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement ․ To constitute a breach of [that duty], 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 ․ Such a claim is therefore subject to the six year contract statute of limitations as provided in § 52–576.”  (Citation omitted;  internal quotation marks omitted.)  Bellemare v. Wachovia Mortgage Corp., 94 Conn.App. 593, 610, 894 A.2d 335 (2006), aff'd on other grounds, 284 Conn. 193, 931 A.2d 916 (2007).²⁵  As will be discussed, the defendants' fraudulent conduct continued through August 14, 2009.   Thus, counts six and seven are not barred by the six-year statute of limitations.

As this court previously found, the defendants defrauded the plaintiff beginning prior to the 2001 execution of the EA, SOPA and SLA, and they continued that course of fraudulent conduct during and after the plaintiff's tenure with SSP. The transfer of the SSP buildings on March 31, 2007, was a part of the defendants' fraudulent scheme, as was the August 14, 2009 false claim that the defendants lacked the funds to continue the arbitration.²⁶

The defendants now claim that their August 14, 2009, email, asserting that “my client informs me that it has no funds to pay for the continuation of the arbitration at this time,” indicated only that SSP lacked funding for the arbitration, not that Scott, himself, lacked funds.   The court finds this claim to be disingenuous and disagrees with the defendants' view of the matter.   The arbitration involved both SSP and Scott, individually.   The SOPA, which Scott signed in his individual capacity, imposed an obligation on “the parties,” which includes Scott, to share the costs of the arbitration.   Furthermore, the arbitration named Scott, individually and as president of SSP. PX 37.   Thus, even though he was a party to the arbitration, Scott, as an individual, never attempted to pay the costs of continuing the arbitration.   The fraudulent conduct that began in 2001 and continued to August 14, 2009, was conduct by Scott, acting both individually and as president of SSP.

This action was served on April 14, 2011, well within three and six years of August 14, 2009.   Therefore, the statute of limitations will not serve to bar the claims in counts one, six or seven.   The court finds against the defendants on their first and fourth special defenses.

I

Statute of Frauds

In their third special defense, the defendants contend that all counts implicating the option to purchase real estate are in violation of the statute of frauds and so are barred by General Statutes § 52–550.  General Statutes § 52–550(a) provides in relevant part:  “No civil action may be maintained in the following cases unless the agreement, or a memorandum of the agreement, is made in writing and signed by the party, or the agent of the party, to be charged ․ (6) upon any agreement for a loan in an amount which exceeds fifty thousand dollars.”

Our Supreme Court has “previously ․ applied the doctrine of equitable estoppel to bar a party from asserting the statute of frauds as a defense so as to prevent the use of the statute itself from accomplishing a fraud ․ When estoppel is applied to bar a party from asserting the statute of frauds, however, we also require that the party seeking to avoid the statute must demonstrate acts that constitute ‘part performance’ of the contract. ․  Specifically, [t]he acts of part performance ․ must be such as are done by the party seeking to enforce the contract, in pursuance of the contract, and with the design of carrying the same into execution, and must also be done with the assent, express or implied, or knowledge of the other party, and be such acts as alter the relations of the parties ․ The acts also must be of such a character that they can be naturally and reasonably accounted for in no other way than by the existence of some contract in relation to the subject matter in dispute ․ In the context of the statute of frauds, therefore, we sometimes have referred to the application of estoppel as the ‘doctrine of part performance ․’ “ (Citations omitted;  internal quotation marks omitted.)   Glazer v. Dress Barn, Inc., 274 Conn. 33, 60–62, 873 A.2d 929 (2005).

The only option to purchase real estate that is even arguably at issue appears in paragraph five of the SLA. That paragraph provides that, if the plaintiff exercises the option set forth in the SOPA, “Scott will grant you the option to purchase the buildings and the property on which they are located at the then current market value.”   The plaintiff opposes the defendants' argument that the real estate purchase option set forth in the SLA is barred by the statute of frauds.   However, the plaintiff also takes the position that he does not seek specific enforcement of paragraph five of the SLA. Pl.'s Response Mem. 28.   Therefore, the issue of whether the statute of frauds applies in this case is moot and the court will not address this issue further.

J

Damages

The plaintiff seeks damages for breach of the SOPA and SLA;  for breaches of the arbitration clauses;  for breaches of the EA;  and for fraud and violation of CUTPA.   In their fifth special defense, the defendants claim that the plaintiff has received $35,538.23 toward any sums due under the EA, SOPA and SLA. In their seventh special defense, they argue that Scott is not individually liable under the EA. In their memorandum, they contend that the plaintiff's breach of contract damages, if any, are limited to a liquidated damages provision.   The defendants failed to address the damages issue relative to the plaintiff's claim of fraud.

(a)

Damages for Breach of Contract

The court has found that SSP breached the EA, and that both SSP and Scott breached the SOPA and the SLA, all of which are contracts.  “It is axiomatic that the sum of damages awarded as compensation in a breach of contract action should place the injured party in the same position as he would have been in had the contract been performed ․ The injured party ․ is entitled to retain nothing in excess of that sum which compensates him for the loss of his bargain ․ Guarding against excessive compensation, the law of contract damages limits the injured party to damages based on his actual loss caused by the breach ․ The concept of actual loss accounts for the possibility that the breach itself may result in a saving of some cost that the injured party would have incurred if he had had to perform ․ In such circumstances, the amount of the cost saved will be credited in favor of the wrongdoer ․ that is, subtracted from the loss ․ caused by the breach in calculating [the injured party's] damages.”  (Internal quotation marks omitted.)  Hees v. Burke Construction, Inc., 290 Conn. 1, 7–8, 961 A.2d 373 (2009).   It is also well established “that the burden of proving damages is on the party claiming them ․ When damages are claimed they are an essential element of the plaintiff's proof and must be proved with reasonable certainty.”  (Internal quotation marks omitted.)  FCM Group, Inc. v. Miller, 300 Conn. 774, 804, 17 A.3d 40 (2011);  see Carrano v. Yale–New Haven Hospital, 279 Conn. 622, 646, 904 A.2d 149 (2006) (“[d]amages are recoverable only to the extent that the evidence affords a sufficient basis for estimating their amount in money with reasonable certainty” (internal quotation marks omitted)).

(1)

Stock Option Purchase Agreement and Supplemental Letter Agreement

The plaintiff asserts that the “benefit of the bargain” under the SOPA is $4 million, based on the value of the balance of the SSP stock he would have acquired, i.e., the value of ninety percent of the SSP stock, less the purchase price stated in the SOPA, together with the income he reasonably expected to earn as owner of SSP. Pl.'s Post–Trial Mem. 33.   He argues that this reflects his expectation interest and will put him in as good a position as he would have been had the defendants performed under the agreements.   See Little Mountains Enterprises, Inc. v. Groom, 141 Conn.App. 804, 809, 64 A.3d 781 (2013).   He also seeks interest, at the rate of ten percent, from March 2007, the date of the breach, to the present.  General Statutes § 37–3a.

This court concludes that the evidence as to what the plaintiff “reasonably expected to earn” as owner of SSP is too speculative to form the basis for an award of damages.   The vagaries of SSP's probable future growth and performance under the plaintiff's leadership preclude the court from determining damages based on the foregoing theory.   See American Diamond Exchange, Inc. v. Alpert, 302 Conn. 494, 510–11, 28 A.3d 976 (2011).

A more reliable damage calculation lies with the plaintiff's alternate “benefit of the bargain” contention.   The latter calculation is based on the salary the plaintiff was paid during his employment with SSP, plus benefits, for the ten-year period he planned to own SSP after he purchased it in 2007, reduced by the earnings he acquired from substitute employment and unemployment compensation.

As of October 1, 2002, the plaintiff was being paid $142,153, plus benefits valued at $32,850.   See PX 21, ¶ 4.   Thus, the plaintiff's total annual compensation package was $175,003.   That figure, over ten years, equals $1,750,030.   The plaintiff's substitute employment and unemployment compensation after his employment was terminated totaled $408,970.60.   That figure, subtracted from $1,750,030, equals $1,341,059.40.   The court finds that the latter figure is an appropriate measure of the “benefit of the bargain” owed to the plaintiff as damages resulting from the defendants' breach of the SOPA.

The defendants argue that the SOPA limits the plaintiff's damage claim.   The SOPA provides that the plaintiff had until March 31, 2007, to exercise the right to purchase Scott's stock for $906,115.   The defendants argue that Section 2.3(a) of the SOPA provides that the plaintiff would have to sell his stock back to Scott “upon termination for any reason.”   Defs.' Post–Trial Mem. 16, December 4, 2013.

The defendants' argument does not accurately reflect the language of Section 2.3(a) of the SOPA. That section provides in relevant part that “[i]f Whitney's employment by the Company terminates or Whitney terminated his employment with the Company for any reason other than death,” then Whitney was obligated to sell his stock back to the defendants.   The use of the disjunctive “or” makes clear that the termination “for any reason other than death” language only applies if Whitney terminated his employment.   See State v. Vakilzaden, 272 Conn. 762, 771 n.15, 865 A.2d 1155 (2005) (use of the disjunctive “or” makes clauses separated by that word independent and equal in weight).   The reference to a situation in which the plaintiff's employment “terminates” is not similarly unrestricted.   Therefore, a fair reading of the SOPA, read as a whole, requires the conclusion that actions by Scott or SSP leading to the plaintiff's termination are governed by the SOPA provisions involving termination for “adequate cause.”   Compare PX 3 ¶¶ 2.3(e), (f) with PX 21 ¶ 8.3. “When interpreting a contract, we construe the contract as a whole and all relevant provisions are considered when determining the intent of the parties.”  (Citations omitted;  internal quotation marks omitted.)  Hilb Rogal & Hobbs Co. v. Randall, 115 Conn.App. 89, 96, 971 A.2d 796, cert. granted on other grounds, 293 Conn. 913, 978 A.2d 1110, 293 Conn. 934, 981 A.2d 1078 (2009).

The SOPA addresses a situation where, as here, the plaintiff is terminated without adequate cause, and provides that, if the plaintiff is paid the damages allowed by the EA, he will also be paid $26,000 for his shares of SSP stock plus taxes due for the transfer.   PX 3 ¶ 2.3(f).  The SOPA also gave the plaintiff the right, exercisable after April 1, 2007, but before July 1, 2007, to purchase Scott's SSP stock for $1,270,873.   That purchase, if it had taken place, would have triggered additional, subsequent obligations between the parties.

Paragraph 8.4 is the relevant provision of the EA that was referenced in the SOPA regarding damages upon termination.   That paragraph provides that, if the plaintiff was terminated without adequate cause, his damages are limited to “the lesser of his actual damages or the sum of $150,000 plus [$26,000 for the price of his SSP shares and the taxes due on the transfer of those shares] ․” PX 21 ¶ 8.4. Although the SOPA refers to the damages allowed under the EA, the SOPA does not provide that, in the event the defendants breach the SOPA, the plaintiff's sole remedy for his termination for inadequate cause is the price to be paid for his SSP shares.   In short, the SOPA does not include a liquidated damages clause.

(2)

Employment Agreement

As previously discussed, the EA provides for liquidated damages, owed by SSP to the plaintiff, in the amount of $150,000, plus the price of the plaintiff's SSP shares ($26,000) and the taxes due on the transfer of those shares, minus payments made in the amount of $35,538.23 (which the plaintiff does not dispute).   DX WW. The court awards the plaintiff $138,461.77 for SSP's breach of the EA.²⁷

(3)

Arbitration

Both Scott and SSP breached the arbitration agreement by not completing the arbitration proceeding as they had promised in the SOPA. The plaintiff calculates the cost of the arbitration, to him, at “approximately $65,000 to $80,000” but, in his testimony, he indicated that at least a portion of the latter figure includes his attorneys fees, which the court does not award for breach of the agreement to arbitrate.   The court awards the plaintiff $65,000 for his costs of arbitration.   PX 54;  PX 55.

(b)

Damages for Fraud

The plaintiff argues that he is entitled to “benefit of the bargain” damages for the defendants' fraud and violation of CUTPA.   See Leisure Resort Technology, Inc. v. Trading Cove Associates, 277 Conn. 21, 33, 889 A.2d 785 (2006).   The court has found for the defendants on the CUTPA claim and so will not consider any damages claim under CUTPA.

However, the court has found for the plaintiff on the claim of fraud, and so it is appropriate to assess the appropriate damages for the defendants' fraudulent conduct.  “[T]he general rule is that plaintiffs may not recover for the same loss in both contract and in tort.   If the damages for two causes of action are the same, then the damages award merges.”   22 Am.Jur.2d 71, Damages § 40 (2013).   Therefore, in order to determine whether the plaintiff is entitled to recover damages beyond those awarded for breach of contract, it is necessary to determine what damages, appropriate as a result of the defendants' fraudulent conduct, have not already been awarded for their breach of the EA, SOPA and SLA. See Ulbrich v. Groth, 310 Conn. 375, 406, 78 A.3d 76 (2013).

“In an action for fraud, the plaintiffs are entitled to punitive damages, in addition to general and special damages ․ The [purpose] of awarding punitive damages is not to punish the defendant for his offense, but to compensate the plaintiff for his injuries ․ The rule in this state as to torts is that punitive damages are awarded when the evidence shows a reckless indifference to the rights of others or an intentional and wanton violation of those rights.”   (Citations omitted.)  DeSantis v. Piccadilly Land Corp., 3 Conn.App. 310, 315, 487 A.2d 1110 (1985).

In the present case, the defendants not only cost the plaintiff the benefit of the bargain, but they also tricked him into leaving a secure employment position by making promises that they had no intention of keeping.   There were significant consequential damages to the plaintiff that arose from the defendants' fraudulent actions.   The defendants' false promises had the effect of usurping fifty-seven months of the plaintiff's working life.   It is true that the plaintiff was well-compensated during those fifty-seven months, but, at the end of that time, the defendants wrongfully and falsely terminated the plaintiff's employment.   The plaintiff was then faced with the prospect of acquiring new employment, but that prospect was burdened by the fact that he had been out of his primary occupation for nearly five years;  he was a job-seeker who had been terminated from his previous employment;  and he was fifty-six years of age when he was forced back into the job market.   Further, the secure financial future that had awaited him, had the defendants lived up to their promises, was completely eliminated by the defendants' wrongful actions.

The defendants made their initial misrepresentations to the plaintiff for the purpose of inducing him to accept employment with SSP, knowing that, in the end, he would be sorely injured by their conduct.   The best that can be said of the defendants is that they were recklessly indifferent to the rights of the plaintiff.   The plaintiff is entitled, not only to the benefit of the bargain, but also to punitive damages for the damage done to his employment prospects and for depriving him of a financial future that he lost due to the defendants' fraudulent conduct.

Based on all of the court's findings, the court concludes that it is appropriate to award the plaintiff $250,000 in punitive damages.²⁸

K

Breach of Confidentiality Agreement

In the fifth count of the defendants' counterclaim, they allege that the plaintiff improperly disclosed confidential financial information in violation of a confidentiality agreement, dated October 15, 2008, involving the plaintiff, SSP and Scott.   The defendants contend that the disclosure caused them to “suffer loss of competitive advantage ․” The defendants argue that the plaintiff's breach of the agreement is established by the court's orders that appear in the court file at numbers 102.01, 113.01, 124, 151.01 and 151.02.²⁹

This court has concluded that the documents at issue cannot, pursuant to the rules of this court, remain sealed.   See Ruling No. 220.20, September 25, 2013 [56 Conn. L. Rptr. 860].   Second, the defendants did not establish, and the court does not find, that any documents filed with this court “caused them to suffer loss of competitive advantage ․” Even if the defendants had made such a showing, the relief they seek in their memorandum is limited to “a hearing ․ to prove the attorneys fees incurred by SSP.” Defs.' Post–Trial Mem. 34.   The confidentiality agreements upon which the defendants rely do not provide for an award of attorneys fees in the event that either party breaches any of those agreements.   See DX GGG.

“[W]e have often explained that Connecticut adheres to the ‘American rule’ regarding attorneys fees.   Under the ‘American rule,’ in the absence of statutory or contractual authority to the contrary, a successful party is not entitled to recover attorneys fees or other ordinary expenses and burdens of litigation ․ There are few exceptions.   For example, a specific contractual term may provide for the recovery of attorneys fees and costs ․ or a statute may confer such rights.”  (Citations omitted;  internal quotation marks omitted.)  Total Recycling Services of Connecticut, Inc. v. Connecticut Oil Recycling Services, LLC, 308 Conn. 312, 326–27, 63 A.3d 896 (2013).   The defendants did not establish, nor even claim, that any such exception to the “American rule” applies in this case.   The court finds for the plaintiff on the fifth count of the counterclaim.

IV

CONCLUSION

For all of the foregoing reasons, the court finds for the plaintiff on counts one, four, five, six and seven.   The court finds for the defendants on count ten.   The court awards damages to the plaintiff for counts one, four, five, six and seven in the amount of $1,544,521.10.   In addition, the court awards damages to the plaintiff for count seven in the amount of $250,000 for a total damage award of $1,794,521.10.   Of the foregoing damage total, $138,461.77 is owed by defendant SSP, only.   Scott and SSP are jointly and severally liable for the balance of the damage award.   The court allows interest to the plaintiff, and against both defendants, at the rate of ten percent per year.   General Statutes § 37–3a(a);  DiLieto v. County Obstetrics & Gynecology Group, P.C., 310 Conn. 38, 48–49, 74 A.3d 1212 (2013).   The court finds against the defendants on their counterclaims.

So ordered.

BY THE COURT,

John A. Danaher, III, J.

FOOTNOTES

FN1. J.M. Scott Associates, Inc. (“JMSA”) was also a named defendant but all claims against JMSA have been resolved or withdrawn..  FN1. J.M. Scott Associates, Inc. (“JMSA”) was also a named defendant but all claims against JMSA have been resolved or withdrawn.

FN2. The factual findings set forth throughout this opinion are the product of the court's review of all exhibits and the court's consideration of the testimony of all the witnesses that the court found to be credible, as more fully discussed, infra..  FN2. The factual findings set forth throughout this opinion are the product of the court's review of all exhibits and the court's consideration of the testimony of all the witnesses that the court found to be credible, as more fully discussed, infra.

FN3. The original second count now appears as the tenth count;  the third count was dismissed pursuant to the court's January 4, 2012 ruling in favor of JMSA's motion for summary judgment;  the eighth and ninth counts were previously withdrawn..  FN3. The original second count now appears as the tenth count;  the third count was dismissed pursuant to the court's January 4, 2012 ruling in favor of JMSA's motion for summary judgment;  the eighth and ninth counts were previously withdrawn.

FN4. At trial, “Exhibit Q” was introduced as an attachment to PX 1. It consists of a series of notes, memoranda, letters, and other assorted documents, most of which relate to a wide variety of issues regarding the swimming pools designed, installed and maintained by SSP. Some of the documents are typed memoranda and letters, but the majority are handwritten notes.   Some were directed to the plaintiff, some were copied to the plaintiff, and others do not refer to the plaintiff at all.   Also introduced at trial, as an attachment to PX 1, was the “Exhibit D” referenced in the request for admission.   Exhibit D is the same December 4, 2006 letter and synopsis memos comprising PX 32..  FN4. At trial, “Exhibit Q” was introduced as an attachment to PX 1. It consists of a series of notes, memoranda, letters, and other assorted documents, most of which relate to a wide variety of issues regarding the swimming pools designed, installed and maintained by SSP. Some of the documents are typed memoranda and letters, but the majority are handwritten notes.   Some were directed to the plaintiff, some were copied to the plaintiff, and others do not refer to the plaintiff at all.   Also introduced at trial, as an attachment to PX 1, was the “Exhibit D” referenced in the request for admission.   Exhibit D is the same December 4, 2006 letter and synopsis memos comprising PX 32.

FN5. Pl's Post–Trial Mem. at App. 2, December 4, 2013..  FN5. Pl's Post–Trial Mem. at App. 2, December 4, 2013.

FN6. The defendants argue that they should also be able to revisit their response to the request for admission because some or all of the documents at issue were admitted at trial.   The defendants are mixing two concepts.   The fact that the documents were admitted at trial does not require the conclusion that the defendants should be allowed to claim, years after the plaintiff was terminated and almost one year after they answered the plaintiff's request for admission, that the documents at issue were among those referenced in the synopsis memos..  FN6. The defendants argue that they should also be able to revisit their response to the request for admission because some or all of the documents at issue were admitted at trial.   The defendants are mixing two concepts.   The fact that the documents were admitted at trial does not require the conclusion that the defendants should be allowed to claim, years after the plaintiff was terminated and almost one year after they answered the plaintiff's request for admission, that the documents at issue were among those referenced in the synopsis memos.

FN7. In fact, although the defendants claim they are seeking to “amend” their response to RFA 20, they are, in fact, seeking to change their answer entirely, from “admitted” to “denied.”.  FN7. In fact, although the defendants claim they are seeking to “amend” their response to RFA 20, they are, in fact, seeking to change their answer entirely, from “admitted” to “denied.”

FN8. The defendants argue that the email reference to “it” is necessarily a reference to SSP, not Scott.   The court will address this claim, but nonetheless concludes, without hesitation, that SSP had more than adequate funds to pay for the arbitration.   Each party's share of the deposit and cost for the arbitration was approximately $33,000.   PX 55..  FN8. The defendants argue that the email reference to “it” is necessarily a reference to SSP, not Scott.   The court will address this claim, but nonetheless concludes, without hesitation, that SSP had more than adequate funds to pay for the arbitration.   Each party's share of the deposit and cost for the arbitration was approximately $33,000.   PX 55.

FN9. General Statutes § 52–417 permits an appeal to confirm an award “within one year after an award has been rendered ․” An appellant may also seek to vacate an award;  General Statutes § 52–418;  or may seek to modify or correct an award.  General Statutes § 52–419;  see General Statutes § 52–423 (permitting appeal of an award).   The defendants do not identify any authority supporting the proposition that the plaintiff had an avenue to appeal an arbitration decision when the arbitration was aborted and, as a result, there was no award.   It is true that a party to an arbitration may appeal to the Superior Court pendente lite to “protect the rights of the parties pending the rendering of the award and to secure the satisfaction thereof ․” General Statutes § 52–422.   However, such a pendente lite appeal would not have been available in this case.   See New England Pipe Corp. v. Northeast Corridor Foundation, 271 Conn. 329, 857 A.2d 348 (2004) (interlocutory orders issued in an arbitration are not normally subject to review)..  FN9. General Statutes § 52–417 permits an appeal to confirm an award “within one year after an award has been rendered ․” An appellant may also seek to vacate an award;  General Statutes § 52–418;  or may seek to modify or correct an award.  General Statutes § 52–419;  see General Statutes § 52–423 (permitting appeal of an award).   The defendants do not identify any authority supporting the proposition that the plaintiff had an avenue to appeal an arbitration decision when the arbitration was aborted and, as a result, there was no award.   It is true that a party to an arbitration may appeal to the Superior Court pendente lite to “protect the rights of the parties pending the rendering of the award and to secure the satisfaction thereof ․” General Statutes § 52–422.   However, such a pendente lite appeal would not have been available in this case.   See New England Pipe Corp. v. Northeast Corridor Foundation, 271 Conn. 329, 857 A.2d 348 (2004) (interlocutory orders issued in an arbitration are not normally subject to review).

FN10. The court agrees with the plaintiff that it would be particularly inappropriate to allow the defendants to benefit from an interlocutory order that could not be appealed when it was the defendants who prevented the arbitration from running its full course.   However, the court's conclusion is not based on which party caused the termination of the arbitration, nor does it turn on the factual basis for the termination.   Rather, it is based on the fact that preclusive effect should not be given to an arbitrator's interlocutory decision in the absence of an opportunity for any party to obtain judicial review of that decision..  FN10. The court agrees with the plaintiff that it would be particularly inappropriate to allow the defendants to benefit from an interlocutory order that could not be appealed when it was the defendants who prevented the arbitration from running its full course.   However, the court's conclusion is not based on which party caused the termination of the arbitration, nor does it turn on the factual basis for the termination.   Rather, it is based on the fact that preclusive effect should not be given to an arbitrator's interlocutory decision in the absence of an opportunity for any party to obtain judicial review of that decision.

FN11. The court does not credit Scott's testimony that he recalled telling the plaintiff, in 2001, about SSP's deferred compensation obligation to Scott..  FN11. The court does not credit Scott's testimony that he recalled telling the plaintiff, in 2001, about SSP's deferred compensation obligation to Scott.

FN12. The court notes that this meeting took place only two days before Scott, for the first time, sent memoranda to the plaintiff that, at least to some extent, directly criticized the plaintiff's work performance.   As discussed, Scott drafted and sent to the plaintiff seven separate memoranda, all dated October 4, 2006..  FN12. The court notes that this meeting took place only two days before Scott, for the first time, sent memoranda to the plaintiff that, at least to some extent, directly criticized the plaintiff's work performance.   As discussed, Scott drafted and sent to the plaintiff seven separate memoranda, all dated October 4, 2006.

FN13. On cross examination, Scott was asked if, in the summer of 2006, he told his construction crew that, no matter what his age, he would not leave SSP. After initially denying making that statement, Scott testified, “I might have said it.”   Trial Tr. vol.   17A, 15, July 30, 2013..  FN13. On cross examination, Scott was asked if, in the summer of 2006, he told his construction crew that, no matter what his age, he would not leave SSP. After initially denying making that statement, Scott testified, “I might have said it.”   Trial Tr. vol.   17A, 15, July 30, 2013.

FN14. On cross examination, Scott was asked if it was his view that he “could fire Mr. Whitney at any time, for any reason.”   Scott answered, “I think my agreement says that.”   Trial Tr. vol.   17A, 44, July 30, 2013..  FN14. On cross examination, Scott was asked if it was his view that he “could fire Mr. Whitney at any time, for any reason.”   Scott answered, “I think my agreement says that.”   Trial Tr. vol.   17A, 44, July 30, 2013.

FN15. Claims regarding the SOPA and the SLA's effect upon the SOPA are addressed infra..  FN15. Claims regarding the SOPA and the SLA's effect upon the SOPA are addressed infra.

FN16. The third special defense will be addressed in section III I of this opinion..  FN16. The third special defense will be addressed in section III I of this opinion.

FN17. Counterclaim counts eight, nine and ten were ordered stricken, Roche, J., on September 7, 2012 [54 Conn. L. Rptr. 677]..  FN17. Counterclaim counts eight, nine and ten were ordered stricken, Roche, J., on September 7, 2012 [54 Conn. L. Rptr. 677].

FN18. The court also finds that SSP owned three Porsche automobiles and a full-time Porsche mechanic to service those automobiles.   Scott acknowledged that he raced the cars, claiming that it was for the purpose of advertising SSP, in that the cars carried the SSP logo..  FN18. The court also finds that SSP owned three Porsche automobiles and a full-time Porsche mechanic to service those automobiles.   Scott acknowledged that he raced the cars, claiming that it was for the purpose of advertising SSP, in that the cars carried the SSP logo.

FN19. The second count of the counterclaim relies upon the fact that the plaintiff was terminated from his employment.   In view of the court's findings that the termination was fraudulent, the defendants cannot prevail on the second count of their counterclaim.   See Phoenix Leasing, Inc. v. Kosinski, 47 Conn.App. 650, 654, 707 A.2d 314 (1998) (court will not enforce a contractual provision when the party seeking enforcement of that provision engaged in fraud).   For the same reasons, the court finds against the defendants on the sixth count of their counterclaim..  FN19. The second count of the counterclaim relies upon the fact that the plaintiff was terminated from his employment.   In view of the court's findings that the termination was fraudulent, the defendants cannot prevail on the second count of their counterclaim.   See Phoenix Leasing, Inc. v. Kosinski, 47 Conn.App. 650, 654, 707 A.2d 314 (1998) (court will not enforce a contractual provision when the party seeking enforcement of that provision engaged in fraud).   For the same reasons, the court finds against the defendants on the sixth count of their counterclaim.

FN20. The plaintiff is permitted to bring claims in both breach of contract and fraud because the fraudulent scheme found by the court began prior to the execution of the contracts at issue.   Indeed, the defendants' fraudulent withholding of substantial and critical information from the plaintiff was intended to induce the plaintiff to enter into the three agreements at issue.   Thus, the economic loss doctrine does not preclude the plaintiff from bring both breach of contract and fraud claims.   Ulbrich v. Groth, 310 Conn. 375, 406, 78 A.3d 76 (2013)..  FN20. The plaintiff is permitted to bring claims in both breach of contract and fraud because the fraudulent scheme found by the court began prior to the execution of the contracts at issue.   Indeed, the defendants' fraudulent withholding of substantial and critical information from the plaintiff was intended to induce the plaintiff to enter into the three agreements at issue.   Thus, the economic loss doctrine does not preclude the plaintiff from bring both breach of contract and fraud claims.   Ulbrich v. Groth, 310 Conn. 375, 406, 78 A.3d 76 (2013).

FN21. Also see section III D of this decision for a discussion regarding SSP's fraudulent conduct relative to the arbitration proceeding..  FN21. Also see section III D of this decision for a discussion regarding SSP's fraudulent conduct relative to the arbitration proceeding.

FN22. In Ventres, it was alleged that the airport cut down trees on land trust property in order to maintain the airport's runway approach slope.  Id., 154.   The land trust attempted to support its CUTPA claim by arguing that it was in the business of protecting natural resources and the airport was competing with the land trust for the airspace occupied by the trees that were improperly removed.  Id., 157.   The Supreme Court rejected that argument, holding that such a conclusion “would convert every trespass claim involving business property into a CUTPA claim.”  Id. The Supreme Court also rejected the land trust's theory that it was “ ‘competing’ with the airport defendants for the rights to airspace over their properties.”  Id. The court found that their relationship “cannot be characterized as competitive in any ordinary business sense.   Rather, before the clear-cutting, the relationship was merely one of neighboring landowners.   After the clear-cutting, the relationship was one of landowner and trespasser.”  Id. Consequently, the court rejected the claim that there was a business relationship between the two defendants and held that the trial court had properly stricken the CUTPA cross claim.  Id., 157–58..  FN22. In Ventres, it was alleged that the airport cut down trees on land trust property in order to maintain the airport's runway approach slope.  Id., 154.   The land trust attempted to support its CUTPA claim by arguing that it was in the business of protecting natural resources and the airport was competing with the land trust for the airspace occupied by the trees that were improperly removed.  Id., 157.   The Supreme Court rejected that argument, holding that such a conclusion “would convert every trespass claim involving business property into a CUTPA claim.”  Id. The Supreme Court also rejected the land trust's theory that it was “ ‘competing’ with the airport defendants for the rights to airspace over their properties.”  Id. The court found that their relationship “cannot be characterized as competitive in any ordinary business sense.   Rather, before the clear-cutting, the relationship was merely one of neighboring landowners.   After the clear-cutting, the relationship was one of landowner and trespasser.”  Id. Consequently, the court rejected the claim that there was a business relationship between the two defendants and held that the trial court had properly stricken the CUTPA cross claim.  Id., 157–58.

FN23. The court has found against the plaintiff on the tenth count of the complaint and, therefore, will not discuss the applicability of the statute of limitations special defense relative to that count.   In addition, the court notes that the defendants' fourth special defense, purportedly applicable to all counts, alleges that the plaintiff's claims are barred by “General Statutes § 49–33a.”   No such statute exists.   The defendants may be referring to General Statutes § 47–33a, but that section applies to a claim for specific performance of a contract for the sale of real estate.   The plaintiff has not asserted a claim for specific performance of a sale of real estate to him.   He seeks specific performance of the SOPA and the SLA. The SOPA does not call for the transfer of real estate to the plaintiff;  and the plaintiff has made clear that he does not seek specific performance of paragraph five of the SLA, a paragraph that gives the plaintiff an option to purchase real estate.   Compare Compl.   Prayer for Relief ¶ 1 with Pl's Response Mem. 28, December 18, 2013.   The SOPA dealt with the plaintiff's right to purchase stock;  the SLA provided, at paragraph three, that Scott was to purchase SSP buildings in 2003.   In summary, General Statutes § 47–33a has no application to this case and the court will not further address the defendants' fourth special defense..  FN23. The court has found against the plaintiff on the tenth count of the complaint and, therefore, will not discuss the applicability of the statute of limitations special defense relative to that count.   In addition, the court notes that the defendants' fourth special defense, purportedly applicable to all counts, alleges that the plaintiff's claims are barred by “General Statutes § 49–33a.”   No such statute exists.   The defendants may be referring to General Statutes § 47–33a, but that section applies to a claim for specific performance of a contract for the sale of real estate.   The plaintiff has not asserted a claim for specific performance of a sale of real estate to him.   He seeks specific performance of the SOPA and the SLA. The SOPA does not call for the transfer of real estate to the plaintiff;  and the plaintiff has made clear that he does not seek specific performance of paragraph five of the SLA, a paragraph that gives the plaintiff an option to purchase real estate.   Compare Compl.   Prayer for Relief ¶ 1 with Pl's Response Mem. 28, December 18, 2013.   The SOPA dealt with the plaintiff's right to purchase stock;  the SLA provided, at paragraph three, that Scott was to purchase SSP buildings in 2003.   In summary, General Statutes § 47–33a has no application to this case and the court will not further address the defendants' fourth special defense.

FN24. In his reply, the plaintiff simply denied the defendants' first special defense.   The “continuing course of conduct doctrine ․ must be pleaded in avoidance of a statute of limitations special defense.”   Beckenstein Enterprises–Prestige Park, LLC v. Keller, 115 Conn.App. 680, 688, 974 A.2d 764, cert. denied, 293 Conn. 916, 979 A.2d 488 (2009).   Although the defendants appear to dispute the applicability of the continuing course of conduct doctrine to the facts of this case, the defendants did not argue that this doctrine is foreclosed to the plaintiff due to his failure to plead it pursuant to Practice Book § 10–57.   See Mollica v. Toohey, 134 Conn.App. 607, 611 n.3, 39 A.3d 1202 (2012)..  FN24. In his reply, the plaintiff simply denied the defendants' first special defense.   The “continuing course of conduct doctrine ․ must be pleaded in avoidance of a statute of limitations special defense.”   Beckenstein Enterprises–Prestige Park, LLC v. Keller, 115 Conn.App. 680, 688, 974 A.2d 764, cert. denied, 293 Conn. 916, 979 A.2d 488 (2009).   Although the defendants appear to dispute the applicability of the continuing course of conduct doctrine to the facts of this case, the defendants did not argue that this doctrine is foreclosed to the plaintiff due to his failure to plead it pursuant to Practice Book § 10–57.   See Mollica v. Toohey, 134 Conn.App. 607, 611 n.3, 39 A.3d 1202 (2012).

FN25. The Supreme Court did not grant certiorari with respect to the question of whether the six-year statute of limitations applies to claims of breach of the covenant of good faith and fair dealing, and explicitly stated that it would not address that claim.  Bellemare v. Wachovia Mortgage Corp., 284 Conn. 193, 195 n.2, 931 A.2d 916 (2007);  see Bellemare v. Wachovia Mortgage Corp., 280 Conn. 901, 907 A.2d 88 (2006) (denying certification with respect to this issue)..  FN25. The Supreme Court did not grant certiorari with respect to the question of whether the six-year statute of limitations applies to claims of breach of the covenant of good faith and fair dealing, and explicitly stated that it would not address that claim.  Bellemare v. Wachovia Mortgage Corp., 284 Conn. 193, 195 n.2, 931 A.2d 916 (2007);  see Bellemare v. Wachovia Mortgage Corp., 280 Conn. 901, 907 A.2d 88 (2006) (denying certification with respect to this issue).

FN26. The court notes, as well, that there existed a special relationship among Scott, SSP and the plaintiff in that the plaintiff was a minority shareholder in SSP and Scott was the majority shareholder.   Scott, by wrongfully terminating the plaintiff and barring the plaintiff from exercising his rights under the SOPA, breached his fiduciary duty to the plaintiff.  Pacelli Bros. Transportation, Inc. v. Pacelli, 189 Conn. 401, 407–08, 456 A.2d 325 (1983)..  FN26. The court notes, as well, that there existed a special relationship among Scott, SSP and the plaintiff in that the plaintiff was a minority shareholder in SSP and Scott was the majority shareholder.   Scott, by wrongfully terminating the plaintiff and barring the plaintiff from exercising his rights under the SOPA, breached his fiduciary duty to the plaintiff.  Pacelli Bros. Transportation, Inc. v. Pacelli, 189 Conn. 401, 407–08, 456 A.2d 325 (1983).

FN27. The court finds that the plaintiff made every appropriate effort to mitigate his damages following his wrongful termination of employment..  FN27. The court finds that the plaintiff made every appropriate effort to mitigate his damages following his wrongful termination of employment.

FN28. In his brief the plaintiff seeks damages for emotional distress.   However, he did not specially plead emotional distress, nor did he include a claim for emotional distress in his prayer for relief.  Kilduff v. Adams, Inc., 219 Conn. 314, 326, 593 A.2d 478 (1991) (such damages must be specially pleaded).   The court will not award damages for emotional distress..  FN28. In his brief the plaintiff seeks damages for emotional distress.   However, he did not specially plead emotional distress, nor did he include a claim for emotional distress in his prayer for relief.  Kilduff v. Adams, Inc., 219 Conn. 314, 326, 593 A.2d 478 (1991) (such damages must be specially pleaded).   The court will not award damages for emotional distress.

FN29. However, even though the defendants refer to orders 151.01 and 151.02 in their memorandum, they state, in a footnote to that discussion, that they are not seeking attorneys fees relative to those two orders..  FN29. However, even though the defendants refer to orders 151.01 and 151.02 in their memorandum, they state, in a footnote to that discussion, that they are not seeking attorneys fees relative to those two orders.

Danaher, John A., J.