Wall Systems, Inc. v. Pompa , 324 Conn. 718 ( 2017 )

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WALL SYSTEMS, INC. v. WILLIAM POMPA ET AL.
(SC 19734)
Rogers, C. J., and Palmer, Eveleigh, McDonald, Espinosa and Robinson, Js.
Argued December 13, 2016—officially released March 7, 2017
Benjamin M. Wattenmaker, with whom, on the brief,
was John M. Wolfson, for the appellant-appellee
(plaintiff).
Gerald A. Del Piano, with whom was P. Jo Anne
Burgh, for the appellees-appellants (named defendant
et al.).
Opinion
ROGERS, C. J. The primary issue raised by this appeal
and cross appeal is the range of monetary remedies
available to an employer once it has proven that its
employee breached his common-law duty of loyalty.
The plaintiff, Wall Systems, Inc., appeals from the judg-
ment of the trial court awarding it damages of $43,200,
plus statutory interest and attorney’s fees, after con-
cluding that the defendant, William Pompa, had
breached his duty of loyalty by working simultaneously
for the plaintiff and for a competitor, and further, by
accepting three kickbacks from a subcontractor in con-
nection with his work for the plaintiff. The court, as
part of its remedy, imposed a constructive trust on a
bank account held jointly by the defendant and his wife,
Jill Pompa.1
On appeal, the plaintiff claims that the trial court, in
fashioning a remedy for the defendant’s breach of loy-
alty, improperly declined to order that the defendant
forfeit all of the compensation he had received during
the period in question, both from the plaintiff and from
its competitor. The defendant responds that the court’s
ruling in this regard was a proper exercise of its discre-
tion, but he claims in the cross appeal that the damages
award, in other respects, lacked evidentiary support.
Jill Pompa contends that the court’s imposition of a
constructive trust on the joint bank account was unjusti-
fied because there was no proof that she had partici-
pated in any of the defendant’s wrongdoing or that the
monies gained from that wrongdoing had been depos-
ited in the account. We conclude that the trial court’s
award of damages had sufficient evidentiary support
and that the court’s refusal to order additional monetary
relief was an appropriate exercise of its discretion, but
that the court’s imposition of a constructive trust on the
joint bank account was not warranted on the evidence
presented. Accordingly, we affirm in part and reverse
in part the judgment of the trial court.
The following facts, which either were found by the
trial court or are not disputed, are relevant to the appeal.
The plaintiff is a building contractor comprised of vari-
ous divisions. The defendant began working for the
plaintiff in or around 1995, when the company was
under different management, and ultimately became
the head of its exterior insulation finish systems divi-
sion.2 As division head, the defendant’s duties included
finding the plaintiff jobs with general contractors, esti-
mating and bidding jobs, hiring and negotiating with
subcontractors, obtaining materials, overseeing work,
ensuring proper billing, and arranging payment for sub-
contractors. The defendant was considered part of the
plaintiff’s management team. He was well compensated
by the plaintiff, receiving a base salary plus annual
bonuses. From 2005 to 2010, the defendant received a
total of approximately $894,000 in compensation from
the plaintiff.
Among the subcontractors working regularly for the
plaintiff, who were hired and supervised by the defen-
dant, were MK Stucco, LLC (MK Stucco), and B-Jan
Stucco, LLC (B-Jan). MK Stucco was owned by Michael
Kowalczyk, and B-Jan was co-owned by Michael
Bochenek and his father.
In 2005, Richard Valerio, who previously had worked
for the plaintiff as an employee and a subcontractor,
became the plaintiff’s owner. In the years that followed,
the defendant received less compensation than that to
which he believed he was entitled, leading to a break-
down in the employer-employee relationship.
Because he was dissatisfied with his reduced income
from the plaintiff, the defendant began to work for MK
Stucco as an independent contractor, doing estimating
work for jobs that MK Stucco then would bid on. From
2005 to 2010, the defendant received a total of approxi-
mately $89,782 in compensation from MK Stucco for
this work.3 The defendant never informed Valerio that
he was working for MK Stucco, nor did he ask permis-
sion to do so. Some of the jobs that the defendant
estimated for MK Stucco were jobs on which the plain-
tiff also submitted bids.4
In the spring of 2010, Valerio became suspicious,
believing that the defendant was working against com-
pany interests. Around that time, Bochenek informed
Valerio that the defendant was demanding kickbacks
from the plaintiff’s subcontractors, in essence, increas-
ing the cost of their jobs by adding extra work to their
contracts, then demanding that one half of the addi-
tional amount paid by the plaintiff be returned, in cash,
to the defendant personally. The plaintiff terminated
the defendant’s employment in October, 2010, and filed
this action against him at that time. At some point there-
after, Valerio learned that the defendant also had been
working for MK Stucco.
In a revised complaint dated July 11, 2011, the plaintiff
alleged that the defendant had breached the duty of
loyalty that he owed by virtue of his employment by,
inter alia, charging kickbacks to subcontractors and
performing work on his own behalf, rather than the
plaintiff’s, during the plaintiff’s work day. He further
claimed that the defendant’s actions constituted conver-
sion, statutory theft and fraud. The plaintiff claimed
that the defendant’s malfeasance had caused it damages
of more than $500,000 and that, in light of the statutory
theft allegations, it was entitled to treble damages.5 As to
both the defendant and Jill Pompa, the plaintiff alleged
unjust enrichment and requested that the trial court
impose a constructive trust over both of their assets,
contending that those assets included moneys belong-
ing to the plaintiff that the defendant wrongfully had
obtained.6 The defendant filed a cross complaint and
counterclaims against the plaintiff and Valerio alleging,
in essence, that the plaintiff had not paid him all of the
compensation to which he was entitled.
After a bench trial, the trial court held that the defen-
dant had violated his duty of loyalty to the plaintiff by
working for MK Stucco, a competitor of the plaintiff,
and by receiving compensation for that work. It found
that, although the plaintiff had performed only estimat-
ing duties for MK Stucco, and not bidding work, some
of the jobs at issue had been bid on by both MK Stucco
and the plaintiff. See footnote 4 of this opinion. In the
court’s view, the defendant’s actions in this regard were
deliberate, wrongful and intentional. The court further
concluded, however, that the plaintiff had failed to
prove that it had suffered any financial harm as a result
of those actions. Specifically, there was no evidence
that the plaintiff had lost any bids to MK Stucco due
to the defendant’s work for both companies, or that
the defendant had worked for MK Stucco during the
plaintiff’s work day rather than on evenings or week-
ends, as he had testified without contradiction. More-
over, the plaintiff had not produced any evidence to
show how much it would have earned on the jobs it
purportedly had lost wrongfully, even assuming that
the lost jobs were attributable to the defendant’s actions
or inactions.
The trial court held additionally that the defendant
had breached his duty of loyalty to the plaintiff by
engaging in a kickback scheme with B-Jan, but not
with any other subcontractors.7 It relied particularly on
testimony from Bochenek as to three jobs on which B-
Jan was working as a subcontractor and, according to
Bochenek, the defendant had effected an increase to
the contract price and, thereafter, required B-Jan to
return one half of the price increase, in cash, to the
defendant personally. Because the amount of the con-
tract increases for those jobs were, respectively, $7000,
$1400 and $6000, the court concluded that the total
proven damages to the plaintiff, as a result of the kick-
back scheme, were $14,400, i.e., the aggregate of the
individual increases. The court further concluded that
the defendant’s actions vis-a`-vis B-Jan constituted con-
version, statutory theft, fraud and unjust enrichment
and, on the basis of the statutory theft, tripled the dam-
ages found to result in an award to the plaintiff in
the amount of $43,200. Finally, the court imposed a
constructive trust against both the defendant and Jill
Pompa, reasoning that ‘‘[t]he latter, by having a joint
bank account with [the defendant], was in receipt and
holds some of the [moneys] which were taken illegally
by [the defendant].’’ As to the defendant’s counterclaim
for unpaid bonuses, the trial court rejected it as unsup-
ported by the evidence.
Regarding the plaintiff’s contention, advanced in its
trial brief, that the defendant should be required to
forfeit all of the compensation he had earned from both
the plaintiff and from MK Stucco during the period
of his disloyalty, the trial court, in a footnote in its
memorandum of decision, stated only that it was ‘‘not
persuaded.’’ In response to the plaintiff’s motions for
articulation/clarification and reconsideration, the court,
after hearing argument, reiterated that there was no
evidence that the plaintiff had been harmed due to the
defendant’s working for MK Stucco, and it observed
that the plaintiff also had failed to prove its allegations
as to the defendant requiring kickbacks from any sub-
contractor other than B-Jan. The court cited the amount
of damages it had found flowing from the B-Jan kick-
backs and noted that, even trebled, that amount was
insignificant in comparison to the amount of compensa-
tion that the plaintiff believed the defendant should
have to forfeit. The court elaborated that the plaintiff
had worked for MK Stucco on his own time, and there
was no evidence that that work had interfered with his
work for the plaintiff. In making its ruling, the court
expressly stated that it ‘‘has the discretion as to what
damages go to the plaintiff . . . .’’ After an additional
hearing was held for the determination of attorney’s
fees,8 a final judgment was rendered. This appeal and
cross appeal followed. Both the plaintiff and the defen-
dant challenge the propriety of the trial court’s mone-
tary remedy, while Jill Pompa contends that the
imposition of a constructive trust was unwarranted. We
will address these claims in turn.
I
The plaintiff claims that the trial court, as a matter
of law, improperly declined to order the defendant to
forfeit everything he had earned between 2005 and 2010,
because certain authority provides that a disloyal
employee is not entitled to the compensation he was
paid during a period of disloyalty. According to the
plaintiff, when an employee, such as the defendant here,
is radically unfaithful, or wilfully breaches his duty of
loyalty, his employer is entitled to recover the employ-
ee’s entire salary, and that such is the case even when
there is no proof of specific damages to the employer.
In the plaintiff’s view, given the facts found, and the trial
court’s legal conclusions that the defendant committed
fraud, conversion and statutory theft, the court was
required to order the remedy of forfeiture. The plaintiff
claims additionally that the defendant, due to his breach
of loyalty, also should be required to disgorge the com-
pensation that he had received from MK Stucco, regard-
less of whether he had worked for MK Stucco on his
own, or the plaintiff’s, time. In support of its conten-
tions, the plaintiff relies on substantial extrajurisdic-
tional jurisprudence and various provisions of the
Restatement of Agency, and it claims that the court,
when fashioning its remedy, failed to acknowledge and
apply those authorities although the plaintiff had dis-
cussed them in its trial memoranda.
The defendant responds that the amount of damages
to be awarded for an employee’s breach of his duty of
loyalty is a matter within a trial court’s discretion. He
further contends that, given all of the circumstances,
the trial court in the present case properly exercised
its discretion in declining to order him to forfeit all of
the compensation that he had earned from the plaintiff,
and to disgorge that which he had received from MK
Stucco, during his period of disloyalty. In the defen-
dant’s view, such a remedy would have been inequitable
and harsh, particularly in light of the plaintiff’s failure
to prove that it had suffered any harm as a result of
his working for MK Stucco. In response, the plaintiff
points out that the court did find that it had suffered
a financial loss in connection with the kickback scheme
and that, in any event, proof of such a loss is unneces-
sary particularly because the defendant’s breach was
wilful and intentional.
We agree with the plaintiff that the remedies of forfei-
ture of compensation paid by an employer, and dis-
gorgement of amounts received from third parties, are
available when an employer proves that its employee
has breached his or her duty of loyalty, regardless of
whether the employer has proven damages as a result
of that breach. Nevertheless, the remedies are not man-
datory upon the finding of a breach of the duty of
loyalty, intentional or otherwise, but rather, are discre-
tionary ones whose imposition is dependent upon the
equities of the case at hand. Moreover, while certain
factors, including harm to the employer, should not
preclude a finding that the employee has committed a
breach of the duty of loyalty, they nevertheless may be
considered in the fashioning of a remedy. Here, because
the trial court properly exercised its broad discretion
when it awarded damages but declined to order forfei-
ture or disgorgement, we will not disturb its judgment
on this basis.
We begin with the applicable standard of review. As
a general matter, ‘‘[t]he trial court has broad discretion
in determining whether damages are appropriate. . . .
Its decision will not be disturbed on appeal absent a
clear abuse of discretion.’’ (Internal quotation marks
omitted.) Votto v. American Car Rental, Inc., 273 Conn.
478, 483, 871 A.2d 981 (2005). Our review of the amounts
of monetary awards rendered pursuant to various equi-
table doctrines is similarly deferential. Walpole Wood-
workers, Inc. v. Manning, 307 Conn. 582, 588, 57 A.3d
730 (2012). The plaintiff claims, however, that in light
of the authority it identified and the trial court’s other
findings and conclusions, the court’s decision not to
order forfeiture of the defendant’s compensation, or
disgorgement of the pay he received from MK Stucco,
was improper as a matter of law. When a trial court’s
legal conclusions are challenged, ‘‘our review is plenary
and we must decide whether [those] conclusions are
legally and logically correct and find support in the
facts that appear in the record.’’ (Internal quotation
marks omitted.) David M. Somers & Associates, P.C.
v. Busch, 283 Conn. 396, 407, 927 A.2d 832 (2007); see
also Walpole Woodworkers, Inc. v. Manning, supra, 307
Conn. 588 (applicability of equitable doctrine in particu-
lar case is question of law); Ravetto v. Triton Thalassic
Technologies, Inc., 285 Conn. 716, 725, 941 A.2d 309
(2008) (applying plenary review to employees’ claim
that they were entitled, as matter of law, to double
damages and attorney’s fees that generally were discre-
tionary under applicable statute).
This court previously has recognized the viability of
a claim by an employer against its employee for a breach
of the duty of loyalty, which is grounded in agency
principles.9 See Town & Country House & Homes Ser-
vice, Inc. v. Evans, 150 Conn. 314, 317–18, 189 A.2d 390
(1963) (employee breached duty of loyalty by soliciting
employer’s customers for his own competing business
while still working for employer); Breen v. Larson Col-
lege, 137 Conn. 152, 153–55, 157, 75 A.2d 39 (1950)
(academic dean breached duty of loyalty to college
by secretly undermining administration’s position as
to potential legal claim, defaming college in process);
Phoenix Mutual Life Ins. Co. v. Holloway, 51 Conn.
310, 314–15 (1884) (insurance agent breached duty of
loyalty to insurer by failing to remit premium payments
as previously agreed).
‘‘The relationship of principal and agent implies trust
or confidence by the principal in the agent, and the
agent is obligated to exercise the utmost good faith,
loyalty and honesty toward his principal or employer.
. . . The general principle for the agent’s duty of loyalty
according to the Restatement is that the agent must
act solely for the benefit of the principal in matters
connected with the agency.’’ (Citation omitted.) News
America Marketing In-Store, Inc. v. Marquis, 86 Conn.
App. 527, 535, 862 A.2d 837 (2004), aff’d, 276 Conn. 310,
885 A.2d 758 (2005); see also 2 Restatement (Third),
Agency § 8.01, comment (b), p. 250 (2006) (‘‘the general
fiduciary principle requires that the agent subordinate
the agent’s interests to those of the principal and place
the principal’s interests first as to matters connected
with the agency relationship’’).
An employee’s ‘‘duty of loyalty includes . . . the
duty not to compete . . . and the duty not to disclose
confidential information.’’ (Internal quotation marks
omitted.) News America Marketing In-Store, Inc. v.
Marquis, supra, 86 Conn. App. 535; see also 2
Restatement (Third), supra, § 8.04, p. 301; id., § 8.05, p.
314. An employee’s duty to refrain from competition
with his employer during the employment relationship
‘‘encompasses competitive action taken directly by the
[employee] with the [employer], actions taken by the
[employee] on behalf of third-party competitors of the
[employer], and other assistance furnished by the
[employee] to the [employer’s] competitors.’’ 2
Restatement (Third), supra, § 8.04, comment (a), p. 301.
This is the case even when the employee does not use
the employer’s property or confidential information
when competing with the employer. Id., comment (b),
p. 301.
The duty of loyalty also includes the duty to refrain
from acquiring material benefits from third parties in
connection with transactions undertaken on the
employer’s behalf. 2 Restatement (Third), supra, § 8.02,
p. 280. This rule bars the collection of secret commis-
sions and kickbacks, ‘‘which might cause the employee
to act at the expense or detriment of his or her
employer.’’ In re Tri-Star Technologies Co., 257 B.R.
629, 635–36 (Bankr. D. Mass. 2001).
If an employer can prove an employee’s breach of
his or her duty of loyalty, there are a variety of remedies
potentially available.10 An employer, like the plaintiff
here, may invoke the court’s equitable authority when
seeking monetary relief, particularly when it has diffi-
culty proving damages. ‘‘The law of restitution and
unjust enrichment . . . creates a basis for an [employ-
ee’s] liability to [an employer] when the [employee]
breaches a fiduciary duty,’’ even when no loss to the
employer is shown. 2 Restatement (Third), supra, § 8.01
comment (d) (1), p. 258. More specifically, if an
employee realizes a material benefit from a third party
in connection with his breach of the duty of loyalty, the
employee ‘‘is subject to liability to deliver the benefit, its
proceeds, or its value to the [employer].’’ Id.; see also
id., § 8.02, comment (e), p. 285. Accordingly, ‘‘[a]n
employee who breaches the fiduciary duty of loyalty
may be required to disgorge any profit or benefit he
received as a result of his disloyal activities,’’ regardless
of whether the employer has suffered a corresponding
loss. Efird v. Clinic of Plastic & Reconstructive Sur-
gery, P.A., 147 S.W.3d 208, 220 (Tenn. App. 2003); see
also NCMIC Finance Corp. v. Artino, 638 F. Supp. 2d
1042, 1084–85 (S.D. Iowa 2009) (requiring disloyal
employee to disgorge commissions he earned from third
party for diversion of employer’s business prospects).
Additionally, ‘‘an employer may seek forfeiture of its
employee’s compensation.’’ Cameco, Inc. v. Gedicke,
157 N.J. 504, 519, 724 A.2d 783 (1999); 2 Restatement
(Third), supra, § 8.01, comment (d) (2), pp. 258–59. For-
feiture of a disloyal employee’s compensation, like dis-
gorgement of material benefits received from third
parties, is an equitable rather than a legal remedy. Wen-
zel v. Hopper & Galliher, P.C., 830 N.E.2d 996, 1001
(Ind. App. 2005); Kaye v. Rosefielde, 223 N.J. 218, 231,
121 A.3d 862 (2015); Burrow v. Arce, 997 S.W.2d 229,
245 (Tex. 1999). It ‘‘is derived from a principle of con-
tract law: if the employee breaches the duty of loyalty
at the heart of the employment relationship, he or she
may be compelled to forego the compensation earned
during the period of disloyalty. The remedy is substan-
tially rooted in the notion that compensation during a
period in which the employee is disloyal is, in effect,
unearned.’’ Kaye v. Rosefielde, supra, 233; see also Bur-
row v. Arce, supra, 237–38. ‘‘Forfeiture may be the only
available remedy when it is difficult to prove that harm
to [the employer] resulted from the [employee’s] breach
or when the [employee] realizes no profit from the
breach. In many cases, forfeiture enables a remedy to be
determined at a much lower cost to litigants. Forfeiture
may also have a valuable deterrent effect because its
availability signals [employees] that some adverse con-
sequence will follow a breach of fiduciary duty.’’ 2
Restatement (Third), supra, § 801, comment (d) (2),
p. 259; see also Burrow v. Arce, supra, 238. Notably,
however, even in cases in which a court orders forfei-
ture of compensation, the forfeiture normally is appor-
tioned, that is, it is limited to the period of time during
which the employee engaged in disloyal activity.11
The Restatement (Second) of Agency included provi-
sions specifically addressing the disgorgement of mate-
rial benefits received from third parties and forfeiture
of compensation as a result of an employee’s disloyalty.
See Restatement (Second), Agency §§ 403, 469 (1958).
These rules were expressed in a fashion that suggested
that their application was mandatory once a breach of
the duty of loyalty was found. The plaintiff relies on
these provisions, and on cases in which the remedies
appear to have been ordered more or less automatically
following such a breach. See, e.g., Jet Courier Service,
Inc. v. Mulei, 771 P.2d 486, 499–500 (Colo. 1989); ABC
Trans National Transport, Inc. v. Aeronautics For-
warders, Inc., 90 Ill. App. 3d 817, 837–38, 413 N.E.2d
1299 (1980); Maritime Fish Products, Inc. v. World-
Wide Fish Products, Inc., 100 A.D. 2d 81, 91, 474
N.Y.S.2d 281 (1984). In the plaintiff’s view, once the
trial court found that the defendant had engaged in a
wilful and intentional breach of the duty of loyalty, the
court was required to order forfeiture of the defendant’s
compensation from the plaintiff, as well as dis-
gorgement of the pay he earned from MK Stucco, and
its failure to do so was reversible error. We are not per-
suaded.
Unlike the Restatement (Second) of Agency, the most
recent version of the Restatement discusses these reme-
dies, along with the others previously summarized,
more generally in the commentary sections accompa-
nying the rules that outline the duties of agents. See 2
Restatement (Third), supra, § 8.01, comment (d), pp.
257–60; id., § 8.02, comment (e), p. 285. There, they are
articulated in less absolute terms. As to forfeiture, the
commentary acknowledges and the case notes further
indicate that, although it is a well recognized remedy,
courts do not apply it in uniform fashion. Id., § 8.01,
comment (d) (2), pp. 259–60; see also id., § 8.01, report-
er’s notes, pp. 277–80. Moreover, our research discloses
a large number of cases expressly recognizing that the
remedy is a discretionary one.12 After review and consid-
eration of the alternatives, we conclude that permitting
trial courts to employ forfeiture of compensation or
disgorgement of material benefits as a discretionary
matter, after consideration of all the facts and circum-
stances of a particular case, is both the proper and
superior approach.
As we previously have explained herein, forfeiture
and disgorgement are not legal remedies, but rather,
are equitable ones. Generally speaking, ‘‘equitable
determinations that depend on the balancing of many
factors are committed to the sound discretion of the
trial court.’’ (Internal quotation marks omitted.) Wendell
Corp. Trustee v. Thurston, 239 Conn. 109, 114, 680 A.2d
1314 (1996); see also Connecticut Bank & Trust Co.
v. Winters, 225 Conn. 146, 162, 622 A.2d 536 (1993).
‘‘[C]ourts exercising their equitable powers are charged
with formulating fair and practical remedies appro-
priate to the specific dispute. . . . In doing equity, [a]
court has the power to adapt equitable remedies to
the particular circumstances of each particular case.’’
(Citation omitted; internal quotation marks omitted.)
Kaye v. Rosefielde, supra, 223 N.J. 231. ‘‘[E]quitable
discretion is not governed by fixed principles and defi-
nite rules . . . .’’ (Internal quotation marks omitted.)
Id. Rather, implicit therein ‘‘is conscientious judgment
directed by law and reason and looking to a just result.’’
(Internal quotation marks omitted.) Id.
Equitable discretion is especially appropriate in cases
involving breaches of the duty of loyalty due to their
highly fact specific nature. Id., 230–31. ‘‘The contexts
giving rise to claims of employee disloyalty are so varied
that they preclude the mechanical application of
abstract rules of law.’’ Cameco, Inc. v. Gedicke, supra,
157 N.J. 516. ‘‘[T]o require an agent to forfeit all compen-
sation for every breach of fiduciary duty, or even every
serious breach, would deprive the remedy of its equita-
ble nature and would disserve its purpose of protecting
relationships of trust.’’ Burrow v. Arce, supra, 997
S.W.2d 241. In short, ‘‘the remedy of forfeiture must fit
the circumstances presented.’’ Id.; see also American
Timber & Trading Co. v. Niedermeyer, 276 Or. 1135,
1155, 558 P.2d 1211 (1976) (‘‘[t]he remedy of restoration
of compensation is an equitable principle and its appli-
cability is dependent upon the individual facts of
each case’’).
For the foregoing reasons, we conclude that discre-
tionary application of the remedies of forfeiture and
disgorgement is both proper and desirable. In determin-
ing whether to invoke these remedies, a trial court
should consider all of the facts and circumstances of
the case before it. The following list of factors, which
we have gleaned from existing jurisprudence, is not
intended to be exhaustive, nor will every factor neces-
sarily be applicable in all cases: the employee’s position,
duties and degree of responsibility with the employer;
the level of compensation that the employee receives
from the employer; the frequency, timing and egre-
giousness of the employee’s disloyal acts; the wilfulness
of the disloyal acts; the extent or degree of the employ-
er’s knowledge of the employee’s disloyal acts; the
effect of the disloyal acts on the value of the employee’s
properly performed services to the employer; the poten-
tial for harm, or actual harm, to the employer’s business
as a result of the disloyal acts; the degree of planning
taken by the employee to undermine the employer; and
the adequacy of other available remedies, as herein
discussed. See Rockefeller v. Grabow, 136 Idaho 637,
643, 39 P.2d 577 (2001); Kaye v. Rosefielde, supra, 223
N.J. 237; Cameco, Inc. v. Gedicke, supra, 157 N.J. 521–22;
Futch v. McAllister Towing of Georgetown, Inc., 335
S.C. 598, 609, 518 S.E.2d 591 (1999); Burrow v. Arce,
supra, 997 S.W.2d 243; Hartford Elevator, Inc. v. Lauer,
94 Wis. 2d 571, 586, 289 N.W.2d 280 (1980). ‘‘The several
factors embrace broad considerations which must be
weighed together and not mechanically applied.’’ Bur-
row v. Arce, supra, 243. ‘‘[T]he judicial task is to search
for a fair and reasonable solution in light of the relevant
considerations’’; Cameco, Inc. v. Gedicke, supra, 522;
and to avoid unjust enrichment to either party. Hartford
Elevator, Inc. v. Lauer, supra, 586. Additionally, when
imposing the remedy of forfeiture of compensation,
depending on the circumstances, a trial court may in
its discretion apply apportionment principles, rather
than ordering a wholesale forfeiture that may be dispro-
portionate to the misconduct at issue. See footnote 11
of this opinion. Conversely, the court may conclude
that all compensation should be forfeited because the
‘‘employee’s unusually egregious or reprehensible con-
duct pervaded and corrupted the entire [employment]
relationship.’’ Futch v. McAllister Towing of George-
town, Inc., supra, 610.
Turning to the case at hand, we conclude that the
trial court was aware of the applicable law and properly
recognized that its decision whether to order the relief
sought by the plaintiff was a discretionary one, and
further, that the court properly exercised its discretion
to deny that relief. Regarding the court’s awareness of
the applicable legal principles, the plaintiff comprehen-
sively discussed disgorgement and forfeiture in its post-
trial brief, citing to extensive jurisprudence, and it
presented oral argument on those remedies at a hearing
on its posttrial motions. At the outset of that hearing,
the trial court explicitly stated that it had read the
parties’ briefs. Moreover, in denying the plaintiff’s
requests for disgorgement and forfeiture, the trial court
expressly recognized that it was making a discretionary
ruling. In these circumstances, we are not persuaded
by the plaintiff’s contention that the court failed to
appreciate and apply the applicable law. See Kaczynski
v. Kaczynski, 294 Conn. 121, 130, 981 A.2d 1068 (2009)
(‘‘[a]bsent a record that demonstrates that the trial
court’s reasoning was in error, we presume that the
trial court correctly analyzed the law and the facts in
rendering its judgment’’ [internal quotation marks
omitted]).
Regarding the trial court’s discretionary ruling, the
plaintiff did not request apportionment.13 Rather, it
argued to the court that it was entitled to recover all
of the compensation that the defendant had received
from the plaintiff between 2005 and 2010, plus all of
his pay from MK Stucco, which together totaled approx-
imately $1 million. In declining to award those amounts
to the plaintiff, the trial court considered some of the
factors that we have enumerated herein. Specifically,
in its written opinion, the court observed that the defen-
dant’s disloyal acts were deliberate and intentional, and
it concluded that those acts constituted various other
torts. Additionally, the court made findings as to the
defendant’s managerial responsibilities, his substantial
compensation from the plaintiff and the specifics of his
disloyal acts. Nevertheless, in regard to the defendant’s
side work for MK Stucco, the court found that the plain-
tiff had failed to prove that its business had been harmed
as a result of the defendant’s actions, either because it
had lost bids that it otherwise would have been awarded
or because the defendant had performed duties for MK
Stucco during the plaintiff’s workdays.14 In regard to
the kickback scheme, the court reasoned that the plain-
tiff had failed to prove that much of what it had alleged
had even occurred, and the court concluded that the
plaintiff’s proven damages were negligible when com-
pared to the large amount the plaintiff was seeking to
recover. In the end, the court believed that the plaintiff’s
other remedies, which had led to a total award of
$87,643.71, were adequate. See footnote 8 of this opin-
ion. Notably, the court also denied the defendant’s
claims for unpaid wages.
In sum, the trial court weighed the specific facts
and circumstances of the case to arrive at a fair and
reasonable solution that, in the court’s view, was not
inequitable to either party. Accordingly, it properly
exercised its equitable discretion to deny the relief
requested. See Rockefeller v. Grabow, supra, 136 Idaho
643 (‘‘[t]here is no abuse of discretion where the trial
court perceives the issue in question as discretionary,
acts within the outer limits of its discretion and consis-
tently with the legal standards available . . . and
reaches its own decision through an exercise of
reason’’).
II
We now turn to the claims raised in the defendant’s
cross appeal, which can be disposed of in short order.
The defendant claims that the trial court’s calculation
of the damages that the plaintiff suffered as a result
of the three proven kickbacks from B-Jan was clearly
erroneous. In the defendant’s view, the evidence shows
that only one half of the $14,400 that the court awarded
to the plaintiff was justified, because the other one-
half properly was owed to B-Jan for extra work that it
actually had performed on the contracts at issue. We
do not agree.
In support of this claim, the defendant points to the
testimony of Bochenek, which was inconsistent on the
point in question and, at some points, seemingly sup-
portive of the view espoused by the defendant on
appeal. At other points, however, Bochenek’s testimony
supports the court’s finding, in essence, that the entire
amount of each contract increase at issue was an unwar-
ranted overcharge extracted from the plaintiff by the
defendant’s false representation as to the necessity of
extra work. The defendant generally attacks Bochen-
ek’s credibility.
It is well established that, even if there are inconsis-
tencies in a witness’ testimony, ‘‘[i]t is the exclusive
province of the trier of fact to weigh conflicting testi-
mony and make determinations of credibility, crediting
some, all or none of any given witness’ testimony. (Inter-
nal quotation marks omitted.) State v. Allen, 289 Conn.
550, 559, 958 A.2d 1214 (2008); see also, e.g., State v.
Alfonso, 195 Conn. 624, 633–34, 490 A.2d 75 (1985) (jury
entitled to believe witness even though testimony was
‘‘varied and contradictory’’). ‘‘It is not our role to reeval-
uate the credibility of witnesses or to overturn factual
findings of a [trial] court unless they are clearly errone-
ous.’’ (Internal quotation marks omitted.) State v. Buhl,
321 Conn. 688, 708, 138 A.3d 868 (2016). ‘‘If there is
any reasonable way that the [trier of fact] might have
reconciled the conflicting testimony before [it], we may
not disturb [its] [credibility determination].’’ (Internal
quotation marks omitted.) Id.
We conclude that the trial court, on the testimony
before it, reasonably could have found that the plaintiff
sustained damages in the entire amount of the contract
increases at issue. Accordingly, we will not disturb that
factual finding.
III
Finally, Jill Pompa claims that the trial court improp-
erly imposed a constructive trust over her assets,
namely, the bank account that she held jointly with the
defendant, because there was no evidence that any of
the money that the defendant received as kickbacks
from B-Jan ever was deposited in that account.15 We
agree.
We review a trial court’s decision to impose a con-
structive trust deferentially. ‘‘[T]he trial court’s determi-
nation must stand unless it is clearly erroneous or
involves an abuse of discretion.’’ Wendell Corp. Trustee
v. Thurston, supra, 239 Conn. 114.
‘‘A court may construct a remedy when an [employee]
profits through a breach of fiduciary duty by imposing
a constructive trust on the [employer’s] profits.’’ 2
Restatement (Third), supra, § 8.01, reporter’s notes, p.
273. A ‘‘[c]onstructive trust permits the claimant to
assert ownership of (i) specifically identifiable property
for which the defendant is liable in restitution or (ii)
its traceable product . . . . A claimant who can show
unjust enrichment, but who cannot identify such prop-
erty in the hands of the defendant, is not entitled to the
remedy of constructive trust.’’ 2 Restatement (Third),
Restitution and Unjust Enrichment § 55, comment (g),
p. 308 (2011); see also New Hartford v. Connecticut
Resources Recovery Authority, 291 Conn. 433, 466, 970
A.2d 592 (2009) (‘‘A claimant entitled to restitution from
property may obtain restitution from any traceable
product of that property, without regard to subsequent
changes of form. . . . A claimant seeking a construc-
tive trust must identify property in the hands of the
[defendant] that represents or embodies . . . property
obtained at the claimant’s expense or in violation of the
claimant’s rights.’’ [Citation omitted; internal quotation
marks omitted.]).
The plaintiff concedes that there was no evidence
that the defendant deposited kickback funds into the
joint account. It claims, however, that it is fair to infer
that he did, because the defendant testified that he
deposited his paychecks from MK Stucco there, and
there was no evidence that he and Jill Pompa had other
bank accounts. We are not persuaded.
Although a fact finder is entitled to draw fair and
reasonable inferences from the evidence presented, the
inference urged by the plaintiff falls short of that stan-
dard and amounts to mere conjecture. See State v. Jor-
dan, 314 Conn. 354, 385, 102 A.3d 1 (2014) (inferences
drawn must be reasonable and not ‘‘based on possibili-
ties, surmise or conjecture’’ [internal quotation marks
omitted]). The only evidence regarding the kickbacks
was that they were paid to the defendant in cash. It is
no more likely that the defendant would choose to
deposit this cash into his bank account than it is that
he would retain and make other use of it. Consequently,
the trial court’s imposition of a constructive trust is
unsupported by any evidence and cannot stand.
In sum, the trial court acted within its discretion and
with adequate evidentiary support in awarding dam-
ages, but refusing to order that the plaintiff forfeit all
of the compensation that he received during his period
of disloyalty, both from the plaintiff and from MK
Stucco. The court’s imposition of a constructive trust
was improper because the plaintiff failed to prove that
the kickbacks received by the defendant were traceable
to the joint bank account maintained by the defendant
and Jill Pompa.
The judgment is reversed only with respect to the
imposition of a constructive trust on the joint bank
account of the defendant and Jill Pompa and the case
is remanded with direction to vacate that portion of
the award; the judgment is affirmed in all other respects.
In this opinion the other justices concurred.
1
Jill Pompa also was named as a party defendant. For clarity, we refer
herein to William Pompa as the defendant and to Jill Pompa by name.
2
This division ‘‘built and installed quality facades for commercial and
residential applications.’’ It provided, inter alia, stucco for the exterior of
buildings.
3
Some of the 2010 income from MK Stucco was earned after the defendant
had ceased working for the plaintiff.
4
The evidence showed that, of the thirty-five jobs that the defendant had
estimated for MK Stucco between 2005 and 2010, eight were jobs on which
the plaintiff also had bid.
5
General Statutes § 52-564 provides: ‘‘Any person who steals any property
of another, or knowingly receives and conceals stolen property, shall pay
the owner treble his damages.’’
6
Around the same time that he brought the action against the defendant
and Jill Pompa, the plaintiff also brought separate actions against MK Stucco
and another subcontractor, General Construction System, LLC, and those
companies’ principals, alleging that they had aided and abetted the defen-
dant’s breaches of the duty of loyalty by participating in the kickback scheme.
MK Stucco filed a separate action against the plaintiff and Valerio, and
General Construction System, LLC, and its principal filed counterclaims, all
alleging that the plaintiff had failed to pay them for work they had performed.
The foregoing actions were tried together with the present case.
7
At the close of the plaintiff’s case on liability, the trial court had dismissed
its claims of aiding and abetting against MK Stucco, General Construction
System, LLC, and their principals due to lack of evidence. Thereafter, before
the trial concluded, the plaintiff entered confidential settlements with MK
Stucco, General Construction System, LLC, and their principals on their
claims and counterclaims, which then were withdrawn. In its memorandum
of decision addressing the claims against the defendant, the trial court
concluded, consistently with its dismissals of the aiding and abetting claims,
that the defendant had not breached his duty of loyalty by requiring kick-
backs from MK Stucco, General Construction System, LLC, or their prin-
cipals.
8
The trial court subsequently awarded the plaintiff attorney’s fees of
$24,609.75 and prejudgment interest of $19,833.96. See General Statutes § 37-
3a. It further reduced the amount of the constructive trust from $43,200 to
$14,400, reasoning that only the latter amount, representing the proven
kickbacks, had been deposited into the joint account of the defendant and
Jill Pompa.
9
‘‘Agency is the fiduciary relationship that arises when one person (a
‘principal’) manifests assent to another person (an ‘agent’) that the agent
shall act on the principal’s behalf and subject to the principal’s control, and
the agent manifests assent or otherwise consents so to act.’’ 1 Restatement
(Third), Agency § 1.01, p. 17 (2006). Agency principles apply in a wide range
of relationships, including those between employers and employees. Id.,
comment (c), p. 19. The duties stemming from an agency relationship,
however, are not necessarily required of all employees. ‘‘The scope of the
duty of loyalty that an employee owes to an employer may vary with the
nature of their relationship. Employees occupying a position of trust and
confidence, for example, owe a higher duty than those performing low-level
tasks.’’ (Internal quotation marks omitted.) Kaye v. Rosefielde, 223 N.J. 218,
230, 121 A.3d 862 (2015); see also NCMIC Finance Corp. v. Artino, 638 F.
Supp. 2d 1042, 1082 (S.D. Iowa 2009) (one ‘‘in a position of responsibility
is considered [a]n agent [due to a] greater authority to act for the principal,
such as negotiating contracts, while [a nonagent] employee typically renders
services at the direction of the employer’’ [internal quotation marks omit-
ted]); Jet Courier Service, Inc. v. Mulei, 771 P.2d 486, 492 n.10 (Colo. 1989)
(duty of loyalty likely applicable only ‘‘where an employee has sufficient
authority to act for the employer or [has] access to confidential information
to make apt the principal/agent analogy’’).
10
The facts of a particular case may call for an injunction or an accounting.
Cameco, Inc. v. Gedicke, 157 N.J. 504, 518, 724 A.2d 783 (1999); see also 2
Restatement (Third), supra, § 8.01, comment (d) (1), p. 258; see, e.g., Town &
Country House & Homes Service, Inc. v. Evans, supra, 150 Conn. 318.
Additionally, the breach of the duty of loyalty may constitute a material
breach of the parties’ employment agreement, privileging the employer to
terminate that agreement prematurely. Breen v. Larson College, supra, 137
Conn. 157; see also 2 Restatement (Third), supra, § 801, comment (d) (1),
p. 258. Moreover, the employer may seek recovery of damages directly
attributable to the employee’s breach. Cameco, Inc. v. Gedicke, supra, 518;
see also 2 Restatement (Third), supra, § 801, comment (d) (1), p. 258; com-
pare News America Marketing In-Store, Inc. v. Marquis, supra, 86 Conn.
App. 535–36 (no damages recoverable in tort for breach of duty of loyalty
when no harm to plaintiff is proven). The damages awarded by the trial court
in the present case in connection with the defendant’s kickback scheme are
one example. See, e.g., Henry v. Concord Limousine, Inc., Docket No.
13-CV-0494 (JS) (WDW), 2014 WL 297303, *5 (E.D.N.Y. January 24, 2014)
(employer may recover bribes or kickbacks received by disloyal employee);
Twenty First Century L.P.I. v. LaBianca, 19 F. Supp. 2d 35, 41 (E.D.N.Y.
1998) (construction director and supervisor who colluded with contractors
to submit inflated invoices to owner in exchange for kickbacks held liable
for harm caused directly to owner by scheme). Generally, to recover money
damages, the employer must prove that they were sustained and that they
were proximately caused by the employee’s breach. Twenty First Century
L.P.I. v. LaBianca, supra, 41.
11
See Restatement (Second), Agency § 469, comment (b), p. 400 (1958);
id., § 456, comment (b), pp. 375–76 (operating together to limit forfeiture
to period of disloyalty when employee receives compensation that is appor-
tioned to periods of time or specified items of work). In short, if an employ-
ee’s disloyalty is confined to particular pay periods, so is the required
forfeiture of compensation. See Design Strategy, Inc. v. Davis, 469 F.3d
284, 300–302 (2d Cir. 2006) (applying New York law); Kaye v. Rosefielde,
supra, 223 N.J. 237–38; Jet Courier Service, Inc. v. Mulei, 771 P.2d 486,
499–500 (Colo. 1989). Conversely, if the compensation received by a disloyal
employee is not apportioned to particular time periods or items of work,
and his or her breach of the duty of loyalty is wilful and deliberate, forfeiture
of his or her entire compensation may result. See ABC Trans National
Transport, Inc. v. Aeronautics Forwarders, Inc., 90 Ill. App. 3d 817, 837–38,
413 N.E.2d 1299 (1980).
12
See Janssens v. Freedom Medical, Inc., Docket No. JFM-10-2042, 2011
WL 1642575, *6 (D. Md. April 29, 2011) (applying Pensylvania law); In re
Tri-Star Technologies Co., supra, 257 B.R. 637 (applying Massachusetts law);
Rockefeller v. Grabow, 136 Idaho 637, 647, 39 P.3d 577 (2001); Kaye v.
Rosefielde, supra, 223 N.J. 231; Futch v. McAllister Towing of Georgetown,
Inc., 335 S.C. 598, 607, 518 S.E.2d 591 (1999); American Timber & Trading
Co. v. Niedermeyer, 276 Or. 1135, 1155, 558 P.2d 1211 (1976); Burrow v.
Arce, supra, 997 S.W. 242–43; Cogan v. Kidder, Mathews & Segner, Inc., 97
Wash. 2d 658, 667, 648 P.2d 875 (1982); Hartford Elevator, Inc. v. Lauer,
94 Wis. 2d 571, 586, 584–85, 289 N.W.2d 280 (1980).
13
Valerio testified that the plaintiff was paid $1600 per week. In other
words, his compensation was apportioned to specific periods of time. Fur-
thermore, there was no evidence that the defendant’s disloyalty permeated
every week in 2005 through 2010; rather, it appears that it was sporadic.
14
The evidence showed that, between 2005 and 2010, the defendant had
estimated only thirty-five jobs for MK Stucco. See footnote 4 of this opinion.
In contrast, the defendant testified that he had worked on approximately
250 jobs per year for the plaintiff, while Valerio estimated that it was between
100 and 200. The total compensation received by the defendant from MK
Stucco during this period was a small fraction of that which he received
from the plaintiff.
15
Jill Pompa also contests the propriety of the constructive trust on the
basis that there was no evidence or finding of any wrongdoing on her
part. Because we agree with her initial claim, we need not address this
alternative one.