Sitar v. Syferlock Tech. Corp.

211 Conn.App. 406

272 A.3d 730

Paul SITAR et al.

v.SYFERLOCK TECHNOLOGY CORPORATION

AC 44244

Appellate Court of Connecticut.

Argued November 29, 2021

Officially released March 29, 2022

Ryan P. Driscoll, Milford, for the appellants (plaintiffs).

Colin B. Connor, for the appellee (defendant).

Moll, Suarez and Lavine, Js.

MOLL, J.

The plaintiffs, Paul Sitar and Joseph Stage, appeal from the judgment of the trial court, following a court trial, insofar as the court concluded that they were not entitled to double damages and attorney's fees and declined to award prejudgment interest on the amounts awarded to them. On appeal, the plaintiffs claim that the trial court (1) erred in finding that there was no bad faith, arbitrariness, or unreasonableness on the part of the defendant, Syferlock Technology Corporation, to support an award of double damages and attorney's fees with respect to the plaintiffs’ claims for failure to pay wages pursuant to General Statutes § 31-72,¹ and (2) abused its discretion in not awarding prejudgment interest pursuant to General Statutes § 37-3a (a).² We conclude that the record is inadequate for our review, and, accordingly, we decline to review the plaintiffs’ claims and, thus, affirm the judgment of the trial court.

The following facts, as found by the trial court in its memorandum of decision and/or as stipulated by the parties,³ and procedural history are relevant to our resolution of this appeal. In January, 2005, Sitar left his prior employment to work full-time for Grid Data Security, Inc. (GDS), a business entity formed to develop onetime password generation technology. Sitar worked at GDS from January, 2005, until late August, 2007. Stage began working at GDS in May, 2007, as its senior vice president of corporate development and worked there until approximately September 1, 2007. In August, 2007, Robert D. Russo, the president and treasurer of GDS, as well as an investor therein, called the loans that he had made to GDS, and, upon accepting GDS’ patents as settlement of his loans, transferred the patents and goodwill to the defendant.

On September 1, 2007, Sitar began working as the defendant's chief executive officer (CEO) and remained in that role until September, 2010. In September, 2010, the defendant hired Christopher Cardell as its new CEO and changed Sitar's title to founder and president. Sitar's change in title did not alter his daily duties or the terms of his compensation, and he continued as founder and president until September, 2011.

The defendant had no "[human resources] person" during Cardell's employment as CEO, and Cardell performed human resources functions such as managing employees, maintaining employment agreements, and assuming responsibility for employee benefits administration. When Cardell became CEO, he did not determine whether the defendant had any signed employment agreements for its employees, and he did not determine whether Sitar had an executed employment agreement with the defendant until the present case was initiated. From the defendant's files, Cardell ultimately produced a copy of Sitar's employment agreement, which was signed by Sitar but not by the defendant. The agreement was titled "Agreement Regarding Certain Conditions of Employment" dated September 1, 2007 (Sitar contract). The Sitar contract contained the defendant's offer for the position of "Chief Executive Officer" with terms including an "[a]nnual base salary of $12,500 per month," specifically, a "base salary [of] $150,000 per annum or such rate as the Board of Directors shall designate from time to time ... which salary shall be payable in regular installments and as agreed and referenced in the September 1, 2007 offer letter and in accordance with the [defendant's] general payroll practices and shall be subject to customary withholding." The Sitar contract provided that it contained the entire understanding of the parties, it superseded "any prior agreements" between Sitar and the defendant, any amendments thereto required the prior written consent of the defendant and the "Executive" (an undefined term), and Sitar would serve as CEO "under the supervision and direction of the Board of Directors." The defendant provided Sitar with a healthcare plan, reimbursed him for documented company-related expenses, and issued to him, for each tax year from 2007 through 2011, W-2 forms, which reflected the amounts that he earned as its employee.

Stage entered into a written contract with the defendant dated September 1, 2007 (Stage contract). Both Stage and the defendant signed the Stage contract, and it contained many provisions that are similar or identical to the provisions in the Sitar contract, including the integration and amendment clauses. The Stage contract set forth, however, the following term: "Annual base salary of $12,500 per month to be paid on the last day of each month. Paid as follows: September 1, 2007, forward: $6,250 paid; $6,250 accrued," "Full monthly pay upon reaching adequate sales/cash flow or upon adequate financing (subject to financing terms)," and "Accrual amounts back-paid upon reaching adequate sales/cash flow or upon adequate financing (subject to financing terms)."

Stage left his employment with the defendant in March, 2011. Sitar resigned from his positions with the defendant on September 2, 2011.

On July 5, 2016, the plaintiffs commenced this action asserting that the defendant owed them unpaid wages. On March 9, 2020, the plaintiffs filed their second amended complaint (i.e., the operative complaint), which asserted the following counts: (1) on behalf of Sitar, breach of written contract (count one), breach of oral contract (count two), and failure to pay wages pursuant to § 31-72 (count three); and (2) on behalf of Stage, breach of written contract (count four), breach of oral contract (count five), and failure to pay wages pursuant to § 31-72 (count six).

In count one, Sitar alleged that the defendant owed him $157,245 in accrued unpaid salary pursuant to the Sitar contract. In count two, Sitar alleged that Russo had promised to pay him certain moneys carried over from GDS, that such promise constituted a verbal contract, and that the defendant was bound thereby and owed him $280,250 in connection therewith. In count three, Sitar alleged that the defendant had "arbitrarily, unreasonably, and in bad faith" failed to pay him the foregoing wages, thus entitling him to double damages and attorney's fees pursuant to § 31-72. In count four, Stage alleged that the defendant owed him $114,244.60 in accrued unpaid salary pursuant to the Stage contract. In count five, Stage alleged that Russo had promised to pay him certain moneys carried over from GDS, that such promise constituted a verbal contract, and that the defendant was bound thereby and owed him $43,750 in connection therewith. In count six, Stage alleged that the defendant had "arbitrarily, unreasonably, and in bad faith" failed to pay him the foregoing wages, thus entitling him to double damages and attorney's fees pursuant to § 31-72. On March 10, 2020, the defendant filed an amended answer and special defenses.

The matter was tried to the trial court, Pierson , J. , on February 25, 26, and 27, 2020. On July 24, 2020, the court rendered judgment (1) in favor of Sitar on his claims for breach of written contract (count one) and failure to pay wages pursuant to § 31-72 (count three), (2) in favor of Stage on his claims for breach of written contract (count four) and failure to pay wages pursuant to § 31-72 (count six), and (3) in favor of the defendant on the plaintiffs’ respective claims for breach of oral contract (counts two and five).⁴

As to Sitar, with respect to count one, the court concluded that Sitar had proven the formation of the Sitar contract and the defendant's breach thereof by virtue of its failure to pay Sitar the amount of $157,245 for work he performed while in the defendant's employ. In this connection, the court expressly rejected the defendant's first special defense that no agreement existed between it and Sitar because the Sitar contract was not signed by Russo on its behalf. With respect to count three, the court concluded: "While the defendant's breach of contract in failing to pay [Sitar] accrued wages violated § 31-72, this failure was not arbitrary or unreasonable and did not constitute bad faith. Although the defendant did not prevail on its defense of the claim brought under the Sitar contract, it had good faith reasons to believe that it did not owe Sitar amounts under that document, including without limitation the fact that its designated representative did not sign the Sitar contract. ‘[It] is well established ... that it is appropriate for a plaintiff to recover attorney's fees, and double damages under [ § 31-72 ], only when the trial court has found that the defendant acted with bad faith, arbitrariness or unreasonableness.’ ... Ravetto v. Triton Thalassic Technologies, Inc. , 285 Conn. 716, 724, 941 A.2d 309 (2008). Bad faith, unreasonableness, or arbitrariness has not been demonstrated here; to the contrary, the defendant has shown good faith reasons—albeit reasons rejected by the court—for failing to pay Sitar accrued salary. As a result, the court declines to award Sitar double damages or attorney's fees as provided by § 31-72."

As to Stage, with respect to count four, the court concluded that, because "the record demonstrates that the defendant had ‘adequate’ sales and cash flow to pay Stage accrued salary," the defendant breached the Stage contract (the existence of which was undisputed) by failing to pay him accrued salary in the amount of $114,244.60. With respect to count six, the court concluded that, although the defendant's foregoing breach of the Stage contract constituted a violation of §...