Morales v. Pentec, Inc.

57 Conn. App. 419

749 A.2d 47

NANCY MORALES v. PENTEC, INC., ET AL.

(AC 18653)

Appellate Court of Connecticut.

Argued December 16, 1999.

Officially released April 18, 2000.

Schaller, Hennessy and Dupont, JS. Cynthia W. Sheppard, with whom, on the brief, was Robert I. Reardon, Jr., for the appellant (plaintiff).

Edward Maum Sheehy, with whom, on the brief, was Michael R. Brandt, for the appellees (defendants).

Opinion

DUPONT, J.

The plaintiff, Nancy Morales, brought this action in a three count complaint against the defendants, PenTec, Inc., and Michael E. Callahan, for breach of an employment contract with regard to a pension and profit sharing plan in the first count, medical benefits in the second count and failure to pay wages pursuant to General Statutes § 31-72 in the third count. The trial court directed a verdict in favor of the defendants as to the latter claim. The jury returned a verdict in favor of the plaintiff in the amount of $26,500 on the first count and $2670 on the second count. On appeal, the plaintiff claims that the court improperly (1) directed the verdict in favor of the defendants on count three, (2) ordered a remittitur in the amount of $17,220 on count one and (3) instructed the jury as to the plaintiffs claim for medical benefits.

The following facts and procedural history are relevant to our resolution of this appeal. The plaintiff and her husband were the original owners of PenTec, Inc., which provided pension consulting for small businesses. The two started the company in 1983 and were its only full-time employees. They established two pension plans through the company to provide benefits to themselves. Under the money purchase plan, the company would contribute to the pension plan 10 percent of what a full-time employee earned during one plan year. A key employee such as the plaintiff could waive her compensation, meaning that she could elect to have some or all of her salary exempted from the calculation of the company's required 10 percent contribution. The second plan was the profit sharing plan and trust, under which the company could contribute up to 15 percent of an employee's salary to the plan at its option, depending on whether it had profits for that year. The company also adopted a medical reimbursement plan. Under this plan, the company was required to reimburse all full-time employees for medical expenses actually incurred, including those for routine medical, dental, vision and hearing care. The company also purchased a major medical policy. Thus, all of the plaintiffs health care costs were covered under either the major medical plan or the self-insured portion of the company's medical plan while she and her husband were the company's full-time employees.

In 1987, the plaintiffs husband died. Thereafter, the plaintiff decided to sell the company to the defendant Michael E. Callahan. Callahan also bought the name PenTec, Inc., and started a new corporation named PenTec, Inc., the other defendant in this action. As part of the purchase and sale of the company, the plaintiff and Callahan executed an employment agreement. The agreement provided that the plaintiff was to render consulting and advisory services to PenTec, Inc., for a period commencing with the date of the agreement, June 19, 1987, through March 31, 1991. The plaintiff was to receive a salary of $82,500 from April through March 31 of each year, except that for the partial year 1987-88, the salary was to be $52,500.

The agreement also provided in relevant part: "Company shall take over and administer the pension and welfare programs in which [the plaintiff] participated while employed by her corporation, PENTEC, INC., provided that [the plaintiff] shall continue as a Trustee under such plans. [The plaintiff] shall continue to be eligible to participate in all pension, profit sharing and similar plans of Company for the benefit of its employees and executives. Any employer contributions made to these plans on behalf of [the plaintiff] shall be considered to be part of her salary referred to above.... [The plaintiff] shall be provided with the same level of medical benefits as previously provided by PENTEC INC., at no cost to her. Reimbursement for or insurance premiums for medical benefits shall be in addition to the compensation referred to above."

In addition to what she was required to do under the employment agreement, the plaintiff worked in the office of PenTec, Inc., until June, 1988. For this work, she was paid a salary of $40,000 in addition to the payments made to her under the employment agreement.

At an annual meeting of the board of directors of Pentec, Inc., on May 27, 1988, the plaintiff and the defendants agreed that no contributions would be made by either PenTec, Inc., or the plaintiff to the money purchase pension plan or the profit sharing plan and trust for the year ending March 31, 1988. For the plan year ending March 31, 1989, the plaintiff elected to waive that part of her salary paid under the employment agreement in connection with both pension plans. She made no contributions to either plan for the plan year ending March 31, 1989.

In 1989, the defendants terminated the pension plans while the employment agreement was still in effect. As a result, the plaintiff could not participate in either pension plan for 1990 or 1991. The plaintiff thereafter rolled all of her assets in the pension plans into an individual retirement account (IRA).

Subsequent to the parties' execution of the employment agreement, the defendants amended the medical reimbursement plan. First, the defendants amended the plan to place a cap on the amount PenTec, Inc., would reimburse an employee for a claim and, second, the plan was amended to limit its covered expenses. The plaintiff incurred dental and medical expenses in the amount of $19,737.51, which she submitted to the defendants. The defendants denied reimbursement, claiming that the bills were not covered by the medical plan. The plaintiff brought the present action in three counts against the defendants by way of an amended complaint dated June 4, 1993. In the first count, the plaintiff alleged a breach of the employment agreement because the defendants failed to maintain a profit sharing and money purchase plan in which she was entitled to participate. In count two, the plaintiff also alleged a breach of the employment agreement because the defendants failed to provide the same level of medical benefits that she was entitled to prior to the sale of the company as required by the agreement. In count three, the plaintiff alleged that because of the defendants' failure to pay medical benefits and to make or allow the plaintiff to contribute to the pension plans, the defendants violated § 31-72.

The court directed a verdict in favor of the defendants on count three. The jury returned a verdict in favor of the plaintiff on count one in the amount of $26,500 and on count two in the amount of $2670. Thereafter, the court granted the defendants' motion for remittitur, finding that the verdict on count one was excessive and ordering the plaintiff to remit the amount of $21,220. After hearing reargument, the court reduced the order of remittitur to $17,220, and ordered that the verdict be set aside and that there be a new trial if the plaintiff failed to comply with the order of remittitur. This appeal followed.¹

I

The plaintiff first claims that the court improperly directed a verdict in favor of the defendants on count three. Count three alleges a cause of action pursuant to § 31-72 on the basis of the facts set forth in counts one and two. The first two counts allege a breach of an employment agreement, which the plaintiff claimed entitled her to certain pension, profit sharing and medical benefits.² We conclude that the court properly directed the verdict.

"The rules controlling appellate review of a directed verdict are well settled. Directed verdicts are not generally favored. A trial court's decision to direct a verdict can be upheld only when the jury could not reasonably and legally have reached any other conclusion.... We review a trial court's decision to direct a verdict for the defendant by considering all of the evidence, including reasonable inferences, in the light most favorable to the plaintiff." (Internal quotation marks omitted.) Phinney v. Casale, 40 Conn. App. 495, 499, 671 A.2d 851 (1996). A verdict may be directed where the decisive question is one of law or where the claim is that there is insufficient evidence to sustain a favorable verdict. Id.

The parties, in their briefs and at oral argument in this court, claim that the court directed a verdict on count three because it concluded that the plaintiff's pension and medical benefits did not constitute wages within the meaning of § 31-72. The defendants' oral motion for a directed verdict was based on this same claim. Our review of the transcript reveals that when the court directed the jury to render a verdict for the defendants, the court's only statement was that "there was insufficient evidence to find for the plaintiff on this claim." No memorandum of decision, pursuant to Practice Book § 64-1 (a) (6), was written by the court, and we do not know its reasoning. We review the claim of the plaintiff on the premise that the reason for the court's direction of the verdict is as stated by the parties and as requested by the defendants. See Lombardi v. J. A. Bergren Dairy Farms, Inc., 153 Conn. 19, 21, 213 A.2d 449 (1965).

Our consideration of whether the term "wages" in § 31-72 includes pension and medical benefits is guided by well established principles of statutory construction. "[T]he process of statutory interpretation involves a reasoned search for the intention of the legislature.... Wright Bros. Builders, Inc. v. Dowling, 247 Conn. 218, 226, 720 A.2d 235 (1998); State v. Albert, 50 Conn. App. 715, 719, 719 A.2d 1183 (1998), cert. granted on other...