Cci Computerworks, LLC v. Evernet Consulting, LLC

221 Conn.App. 491

302 A.3d 297

CCI COMPUTERWORKS, LLC v. EVERNET CONSULTING, LLC

AC 44975

Appellate Court of Connecticut.

Argued February 2, 2023

Officially Released September 5, 2023

Eric J. Garofano, New London, for the appellant-cross appellee (defendant).

Michael S. Bonnano, New London, for the appellee-cross appellant (plaintiff).

Moll, Cradle and Seeley, Js.

MOLL, J.

The defendant, Evernet Consulting, LLC, appeals from the judgment of the trial court rendered in favor of the plaintiff, CCI Computerworks, LLC, on the defendant's counterclaim asserting claims of breach of contract, unjust enrichment, and indemnification. On appeal, the defendant claims that the court improperly concluded that (1) the agreement executed by the parties attributed liability to the defendant, rather than to the plaintiff, for unemployment taxes, plus interest and penalties, assessed on the defendant by the Department of Labor (department), or (2) in the alternative, the plaintiff was not unjustly enriched by the defendant's payment of the unemployment taxes, interest, and penalties. We conclude that the court properly rendered judgment in the plaintiff's favor on the defendant's counterclaim. In addition, the plaintiff cross appeals from the judgment of the court rendered in its favor on count one of its second amended complaint asserting breach of contract. On cross appeal, the plaintiff claims that the court improperly (1) denied its motion in limine seeking to exclude evidence of a settlement offer, (2) admitted the settlement evidence in full into the record, (3) relied on the settlement evidence to conclude that it had failed to mitigate its damages, and (4) failed to adjudicate its claim that the defendant breached the parties’ agreement by crediting certain costs against the payments that the defendant owed pursuant to the agreement. We agree with the plaintiff's claims of error regarding the settlement evidence, but we disagree with the plaintiff's contention that the court overlooked one of its claims. Accordingly, we reverse in part the judgment of the trial court rendered on the plaintiff's second amended complaint, and we affirm the judgment in all other respects.

The following facts, as found by the trial court and which are not in dispute, and procedural history are relevant to our resolution of this appeal and this cross appeal. "[The plaintiff] was engaged in the business of providing computer system sales, service, and hardware, including installation, training, repair, and networking. [The plaintiff] maintained two store locations in Quaker Hill and Salem .... Edward Branson was one of the principals of [the plaintiff] along with Robert and Joanne Pokrinchak.

"[The defendant], owned by Eric Buhrendorf, was formed in 2007 and is a business supporting [information technology] systems for law firms and Connecticut businesses. In 2015, as Branson was looking toward retirement, the parties entered into an asset purchase agreement [(agreement)] .... Under the terms of the agreement, [the defendant] purchased [the plaintiff's] client list and goodwill, as well as the two physical locations of [the plaintiff's] stores in Quaker Hill and Salem ... which [the defendant] also acquired. The agreement provided that for a five year period, which ended in November, 2020, [the defendant] was to make monthly payments to Branson calculated at 65 percent of the monthly account profits for [the plaintiff's] former clients. The [agreement] specified a formula for determining the monthly account profits. ...

"The [agreement] stated that ‘[i]n the event of default by either [the plaintiff] or [the defendant], reasonable attorney's fees and costs incurred in the enforcement of this [a]greement shall be paid by the defaulting party. If [the defendant] should be in default of any payments due [to the plaintiff], there shall be an additional default rate of 2.5 [percent] per month added to the owed payment.’ ... [The plaintiff's] client list was imported into [the defendant's] business management tool, Autotask. Autotask was used to determine the payments to Branson under the agreement.

"In late 2016 and early 2017, [the defendant] experienced financial difficulties because some of the clients were not paying and/or being billed and the two physical locations of the [plaintiff's] former ... stores were not bringing in sufficient revenue to cover their overhead expenses. In an effort to keep the business going, Buhrendorf was required to make difficult decisions, including raising rates for clients and terminating employees. He also incurred significant personal debt. As a result of its financial difficulties, [the defendant] sent only partial payments to [the plaintiff] from February ... through August, 2017, and no payments for the months of September through December, 2017." (Citations omitted.)

The plaintiff commenced the present action against the defendant on September 11, 2017. In its two count second amended complaint, dated March 29, 2021 (operative complaint), the plaintiff pleaded alternative claims of breach of contract and unjust enrichment. The plaintiff alleged in relevant part that the defendant (1) beginning in February, 2017, failed to remit the full monthly payments owed pursuant to the agreement, ¹ and (2) violated the agreement by crediting certain costs attributed to the Salem and Quaker Hill stores against the payments that it owed. In its answer to the operative complaint, dated April 28, 2021, the defendant admitted that it had failed to make full payments to the plaintiff from February through December, 2017; however, by way of a special defense, the defendant alleged that it had "tendered to the plaintiff the full payments due under the ... agreement, including the contractual interest due under the agreement and reasonable attorney's fees and costs, but the plaintiff refused to receive the same and continues to refuse to receive the same despite the defendant having ever since remained, and still is, ready and willing to pay to the plaintiff, but the plaintiff has hitherto refused to receive the same." ² The defendant also admitted to taking into account certain costs charged to the Salem and Quaker Hill stores when calculating the payments owed under the agreement, but it denied that the agreement prohibited that practice.

On November 22, 2019, with leave of the court, Knox , J. , the defendant filed a three count counterclaim asserting claims of breach of contract, unjust enrichment, and indemnification. The defendant alleged that the plaintiff was liable for more than $10,000 in unemployment compensation taxes that had been assessed against the defendant after the effective date of the agreement. On June 26, 2020, the plaintiff filed an answer denying the defendant's substantive allegations. ³

The case was tried to the court, Jongbloed, J. , over the course of three days in March and April, 2021. Branson and Buhrendorf testified at trial, and the court admitted several exhibits in full into the record. Following the close of evidence, the parties filed posttrial briefs and reply briefs.

On September 2, 2021, the court issued a memorandum of decision. As to the plaintiff's second amended complaint, the court rendered judgment in the plaintiff's favor on count one asserting breach of contract. ⁴ The court found that the parties did not dispute that the defendant had breached the agreement by making either partial or no payments from February through December, 2017, with the amounts of missed payments, exclusive of contractual interest, totaling $30,183.89.

The court determined, however, that the plaintiff had failed to mitigate its damages by rejecting two checks tendered to it by the defendant on January 29, 2018, evidence of which was (1) the subject of a motion in limine filed by the plaintiff on March 24, 2021, which the court denied on the record on March 25, 2021, and (2) admitted in full over the plaintiff's objection. As relief, the court awarded the plaintiff $30,183.89, plus interest and reasonable attorney's fees as provided for in the agreement; however, as a result of the plaintiff's failure to mitigate its damages, the court declined to award the plaintiff any contractual interest accrued "beyond January 29, 2018."

With respect to the defendant's counterclaim, the court rendered judgment in favor of the plaintiff. As the court summarized, "[the defendant] has filed a counterclaim against [the plaintiff] alleging that after the ... agreement became effective, the ... [department] made the determination ⁵ that [the defendant] was the successor [employer] to [the plaintiff] and that, therefore, [the plaintiff's] unemployment liability would be attributed to [the defendant]. ⁶ Thus, [the plaintiff's] experience charges would be added to [the defendant's] new registration number for experience years ending June 20, 2014, through June 30, 2017. This sharply increased [the defendant's] benefit charges, resulting in a significant increase in [the defendant's] contribution rates for the years 2016–2020 and additional unemployment taxes of $930 for 2016, $3606.34 for 2017, $3465 for 2018, $1547.95 for 2019, and $755.23 for 2020. These amounts plus additional interest totaled [$11,883.83]. [The defendant] appealed the decision by [the department] increasing the contribution rates and the appeal was denied. On July 10, 2019, [the department] issued a letter to [the defendant] informing it that a tax lien was filed with the Secretary of the State in Hartford. Thereafter, [the defendant] paid the [department] lien amount and deducted $10,016.28 from its payments to [the plaintiff] under the [agreement]. ... [The defendant] seeks damages of $1867.55 for the additional unemployment liability not included in the $10,016.28, which [the defendant] had deducted from the ... payments [to the plaintiff]." (Footnotes added.)

The court further found that "the [department] independently...