Burns v. RBS Securities, Inc. ( 2014 )

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BRYAN BURNS v. RBS SECURITIES, INC.
(AC 34958)
Lavine, Sheldon and Bishop, Js.
Argued April 7—officially released July 8, 2014
(Appeal from Superior Court, judicial district of
Stamford-Norwalk, Genuario, J.)
Lewis H. Chimes, for the appellant (plaintiff).
Daniel J. Krisch, with whom were Don A. Innamor-
ato, pro hac vice, and, on the brief, Scott S. McKessy
and John T. McDonald, pro hac vice, for the appellee
(defendant).
Opinion
LAVINE, J. In this breach of contract action, the plain-
tiff, Bryan Burns, appeals from the judgment of the trial
court in favor of the defendant, RBS Securities, Inc.,
doing business as Royal Bank of Scotland/Greenwich
Capital, rendered after a trial to the court. On appeal, the
plaintiff claims that the court improperly (1) determined
that he had no contractual right to a cash bonus and
(2) excluded a statement made during an unrelated
legal proceeding in the United Kingdom by a person
purported to be an employee of the defendant. We
affirm the judgment of the trial court.
The following facts and procedural history are rele-
vant to this appeal. The plaintiff is a former employee
of the defendant, a global financial services firm head-
quartered in the United Kingdom. In 1987, the plaintiff
interviewed with Bill Finley, a vice president of Green-
wich Capital (Greenwich). The plaintiff was extended,
and accepted, an offer of employment with Greenwich.
The plaintiff testified that during the 1987 interview,
Finley described Greenwich’s compensation practices
as ‘‘total compensation,’’ which included a salary and
a yearly bonus component. According to the plaintiff,
Finley informed him that bonuses were a significant
part of employee compensation.
After joining Greenwich as an analyst, the plaintiff
worked hard and was rewarded for his efforts, rising
quickly through the ranks at Greenwich. In 1993, he
became a supervisor in the operations division. Years
passed, and following a series of mergers and acquisi-
tions, the defendant acquired Greenwich. Notwith-
standing the merger, the plaintiff’s basic pattern of
compensation remained the same. In each year from
1987 until the first quarter of 2008, the plaintiff received
a salary and a year-end bonus paid in cash. The value
of the bonuses varied each year depending on the fiscal
health of his employer and the plaintiff’s job per-
formance.
During the course of the plaintiff’s employment with
the defendant, the defendant published an employee
policy manual and required that each employee certify
in writing that ‘‘he received and was familiar with the
employee policy manual.’’ The 2007 edition of the man-
ual, in a section entitled ‘‘Salary and Bonus,’’ provided:
‘‘Salaries are paid to all [of the defendant’s employees]
biweekly. In addition, most [employees] will be eligible
to receive a discretionary bonus at the end of each year.
Typically, bonuses are paid in March of the following
year based on the previous year’s performance.
Whether to award a bonus, and if so, the amount of
any bonus, is determined at the sole and exclusive dis-
cretion of [the defendant]. In general, the factors [the
defendant] may consider . . . include the performance
of the [f]irm [and] the employee’s performance . . . .
As provided above, whether or not an employee
receives a bonus and the amount of the bonus is entirely
within the discretion of [the defendant].’’
During the plaintiff’s tenure with the defendant, he
reported directly to a number of supervisors. From
2005, and until the plaintiff’s resignation in June, 2009,
the plaintiff reported to Shawn Brosko. Brosko testified
that relative to the defendant’s total compensation pol-
icy, he never made any representation to the plaintiff
that he would receive a cash bonus every year. Rather,
Brosko testified, he told the plaintiff that he would be
eligible for a discretionary bonus following the close
of each fiscal year. He further elaborated that getting
a bonus one year did not mean that an employee would
get one the next year. Brosko also testified that a small
number of employees had contracts entitling them to
a guaranteed bonus, but that these agreements were
always made in writing and signed by the defendant’s
chief executive officer.
Brosko also testified that the plaintiff was responsible
for the supervision of a number of employees and that
part of this responsibility included determining whether
these subordinate employees would receive a bonus,
and if so, in what amount. Brosko testified that the
plaintiff, in his capacity as a supervisor, was required
to follow the employee manual and instruct employees
that even if a bonus was paid in a current year, he did
not have the authority to guarantee that a similar bonus
would be paid the following year. Jackqueline Hayes,
an employee whom the plaintiff supervised, testified
that before she was awarded a bonus for the year she
would meet with the plaintiff to discuss her perfor-
mance. Hayes testified that on the basis of these meet-
ings, she understood that the award of a bonus was
discretionary.
Throughout the plaintiff’s employment, the bonuses
he received often exceeded his yearly salary. For his
work in the calendar years of 2005 and 2006, he was
paid an annual salary of $200,000 each year, and was
awarded $310,000 and $351,000 in bonus compensation,
respectively, for each year. Each bonus was paid in
cash during the first quarter of the following year.
In 2007 and 2008, the financial performance of the
defendant declined as the global financial crisis
unfolded. In 2007, this performance decline led to a
reduction in the bonus pool. Accordingly, in March,
2008, the plaintiff received a cash bonus in the amount
of $255,750 for the work he had done in 2007. Toward
the end of 2008, the defendant’s financial performance
continued to deteriorate. In order to stabilize the defen-
dant’s financial condition—which, according to one wit-
ness was on the verge of bankruptcy—the government
of the United Kingdom injected cash into the defendant
in October, 2008, and January, 2009. In exchange for
these cash infusions, the United Kingdom received an
ownership interest in the defendant and became its
largest shareholder.
During an international conference call with top exec-
utives of the defendant in late 2008, the plaintiff was
informed that bonuses ‘‘would not be paid like last
year.’’ In January, 2009, the plaintiff was informed that
those eligible for bonuses would be subject to a
‘‘deferral program.’’ In lieu of cash bonuses, the defen-
dant would defer bonus payments by issuing bonds that
would vest over a three year period, with vesting dates
in June, 2010, June, 2011, and June, 2012. The ‘‘deferral
program’’ also provided that, if an employee left the
defendant’s employ before the bonus vested, the bonus
would be forfeited.
In March, 2009, the plaintiff was awarded a deferred
bonus with a face value of $198,000, payable over three
years. He resigned in June, 2009, before the first vesting
date in June, 2010. The defendant determined that
because the plaintiff resigned prior to the first vesting
date in June, 2010, the plaintiff had forfeited his right
to a bonus.
Shortly thereafter, the plaintiff commenced this
action and alleged in a three count complaint (1) breach
of contract, (2) promissory estoppel, and (3) wrongful
withholding of wages pursuant to General Statutes § 31-
72. Following a trial to the court, the court found in
favor of the defendant on all of the plaintiff’s claims.
In its memorandum of decision, with respect to the
plaintiff’s breach of contract claim, the court found that
‘‘there never was a contractual agreement between the
plaintiff and the defendant pursuant to which the plain-
tiff was guaranteed bonuses each and every year.’’
Rather, the court found that ‘‘[t]he firm always retained
the right to determine whether or not there would be
any money available for bonuses and to withhold
bonuses in its sole discretion if it determined that there
was no money available.’’ The plaintiff thereafter
appealed from the judgment of the trial court, but only
as to his breach of contract claim.
I
The plaintiff first contends that the court erred when
it found that the defendant was not contractually obli-
gated to pay him a cash bonus for the 2008 calendar
year. Specifically, the plaintiff argues that the defen-
dant’s ‘‘total compensation policy’’ constituted an
implied contractual agreement requiring the defendant
to pay him a cash bonus every year and that the defen-
dant’s ‘‘deferral program’’ was a breach of this
agreement.
We begin with the pertinent principles of law and the
standard of review governing our disposition of the
plaintiff’s claims on appeal. ‘‘At the outset, we note that
all employer-employee relationships not governed by
express contracts involve some type of implied ‘con-
tract’ of employment.’’ Torosyan v. Boehringer Ingel-
heim Pharmaceuticals, Inc., 234 Conn. 1, 13, 662 A.2d
89 (1995). ‘‘An implied contract depends upon the exis-
tence of an actual agreement between the parties. . . .
Whether the parties have entered into such an
agreement is a question of fact. . . . It is the plaintiff’s
burden to prove, by a preponderance of the evidence,
that the defendants had agreed by either words or deeds
to recognize and undertake a contractual commitment
to pay a bonus for the preceding year . . . . Absent
specific contract language, whether there was a con-
tract, and the terms of that contract, are questions of
fact.’’ (Citations omitted.) Christensen v. Bic Corp., 18
Conn. App. 451, 454, 558 A.2d 273 (1989).
Therefore, ‘‘our review is limited to a determination
of whether the [court’s] findings are clearly erroneous.
. . . [W]e must determine whether they are legally and
logically correct and whether they find support in the
facts set out in the memorandum of decision; where
the factual basis of the court’s decision is challenged
we must determine whether the facts set out in the
memorandum of decision are supported by the evidence
or whether, in light of the evidence and the pleadings
in the whole record, those facts are clearly erroneous.
. . . Since the case was tried to the court, the trial
judge is the sole arbiter of the issues of weight and
credibility. . . . We must give the evidence the most
favorable reasonable construction to support the judg-
ment.’’ (Citations omitted; internal quotation marks
omitted.) Fortier v. Newington Group, Inc., 30 Conn.
App. 505, 509–10, 620 A.2d 1321, cert. denied, 225 Conn.
922, 625 A.2d 823 (1993).
The plaintiff claims that the court ‘‘ignored . . .
uncontradicted testimony’’ that the defendant was obli-
gated to pay him a cash bonus. Our review of record,
however, convinces us that the court’s factual findings
as set out in its well reasoned memorandum of decision
are supported by the evidence and are not clearly
erroneous.
In this case, the trial court’s findings are supported
by the record. The evidence presented to the court
included the testimony of the plaintiff’s direct supervi-
sor, Brosko, who stated that the plaintiff was never
guaranteed a cash bonus, but rather was told that he
was merely eligible for a bonus that could be awarded
on the basis of a number of discretionary factors. The
supervisor’s testimony was consistent with that of the
plaintiff himself, who testified that he was told he would
be ‘‘eligible’’ for a yearly bonus and that the amount of
the bonus would be at the discretion of the defendant.
Furthermore, both the testimony of Brosko and the
plaintiff was consistent with the defendant’s employee
handbook, which the plaintiff acknowledged in writing
that he understood. The 2007 handbook language pro-
vided that bonuses were discretionary in nature, and
subject to, among other things, the financial health of
the company and employee performance.
The gravamen of the plaintiff’s claim on appeal is
essentially that the court ignored evidence of the defen-
dant’s history of paying yearly bonuses in cash in
determining that there was no contractual obligation
to pay bonuses. Although the plaintiff has demonstrated
that there was such a pattern and that he received cash
bonuses in varying amounts throughout his employ-
ment, the mere practice or custom of an employer does
not, by itself, create a contractual obligation. See Chris-
tensen v. Bic Corp., supra, 18 Conn. App. 456 (‘‘con-
tracts are not created by evidence of customs and
usage’’).1 Rather, the plaintiff had the ‘‘burden to prove,
by a preponderance of the evidence, that the defendants
had agreed by either words or deeds to recognize and
undertake a contractual commitment to pay a bonus
. . . .’’ (Emphasis added.) Id., 454. In this case, the
record supports the court’s finding that the defendant’s
pattern of awarding cash bonuses to the plaintiff was
consistent with a discretionary bonus program and not
a contractual obligation to award him a yearly cash
bonus.
As the trial court noted, ‘‘[t]he undisputed evidence
indicates that the [defendant’s] performance in 2008
was so abysmal that the highest levels of management
determined that there was no money available for cash
bonuses at all . . . [and] that the firm would have gone
bankrupt had it not been for a government bailout by
the United Kingdom. Rather than change the rules after
the fact, as the plaintiff claims, the defendant simply
determined that there was no cash available for bonuses
and exercised its discretion to not make any money
available for a bonus pool to be distributed. [The
deferred bonus program] is not a change in the [defen-
dant’s compensation policies], as alleged by the plain-
tiff, but rather an application of the [policies] to an
unprecedented fiscal calamity. Indeed, the plaintiff does
not seem to have a credible method of calculating [his]
claim if the defendant, rather than engaging in the
deferred award program, simply issued zero dollars for
bonuses or one dollar for [a] bonus.’’2
‘‘[A] finding of fact is clearly erroneous [only] when
there is no evidence in the record to support it . . .
or when although there is evidence to support it, the
reviewing court on the entire evidence is left with the
definite and firm conviction that a mistake has been
committed.’’ (Emphasis added; internal quotation
marks omitted.) Groton v. Yankee Gas Services Co.,
224 Conn. 675, 691, 620 A.2d 771 (1993). On the basis
of our review of the record, we cannot say that we are
left with the firm conviction that a mistake has been
made. Rather, the court properly concluded that the
plaintiff was merely eligible for discretionary bonus
compensation and that a deferred bonus resulting from
abysmal business performance was consistent with the
terms of his employment.3
II
The plaintiff also claims that the court erroneously
‘‘excluded an exhibit that indicated that the British gov-
ernment provided a sufficient cash infusion to pay year-
end bonuses.’’ Specifically, the plaintiff contends that
the court abused its discretion when it sustained the
defendant’s objection to the admission of a four page
witness statement made during litigation in the United
Kingdom by Julian Ingleby, purportedly the ‘‘head of
Executive Reward’’ for the defendant.
The following additional facts are relevant to this
claim. At trial, the plaintiff sought to admit exhibit 21,
an undated and unsigned affidavit purportedly made by
Ingleby during litigation in London, United Kingdom.
The affidavit was disclosed to the plaintiff during dis-
covery and stated generally the terms of the United
Kingdom’s cash infusion into the defendant. The plain-
tiff sought to introduce the affidavit to show that the
defendant had cash on hand to pay cash bonuses to its
employees.4 He sought to admit the document as an
admission of a party opponent. At trial, the plaintiff
represented to the court that the document was pro-
duced as a response to a request for production that
asked for ‘‘[a]ll documents relevant in any way’’ or ‘‘[a]ll
documents reflecting in any manner the change in the
way [the defendant] awarded bonuses in 2008.’’ The
court responded, stating that ‘‘what you’re asking me
to admit into evidence effectively is an answer to a
question—and I don’t know what the question was.
. . . I don’t know what it was produced in response
to.’’ The court thereafter sustained the defendant’s
objection and ruled that the affidavit was not
admissible.
It is well established that ‘‘[t]he trial court’s ruling
on evidentiary matters will be overturned only upon a
showing of a clear abuse of the court’s discretion. . . .
[E]videntiary rulings will be overturned on appeal only
where there was an abuse of discretion and a showing
by the [plaintiff] of substantial prejudice or injustice. . .
[I]n determining whether there has been an abuse of
discretion, every reasonable presumption should be
made in favor of the correctness of the trial court’s
ruling . . . .’’ (Citation omitted; internal quotation
marks omitted.) Chicago Title Ins. Co. v. Bristol
Heights Associates, LLC, 142 Conn. App. 390, 403, 70
A.3d 74, cert. denied, 309 Conn. 909, 68 A.3d 662 (2013).
Pursuant to Connecticut Code of Evidence § 8-3 (1)
(C), ‘‘a statement by a person authorized by the party
to make a statement concerning the subject’’ is not
subject to the hearsay rule. However, ‘‘[b]efore evidence
can be admitted to show what an agent said, it must
be established that the agent was authorized by the
principal to make an admission. . . . The agency rela-
tionship must be proved by a fair preponderance of the
evidence.’’ (Citations omitted; internal quotation marks
omitted.) Chieffalo v. Norden Systems, Inc., 49 Conn.
App. 474, 478, 714 A.2d 1261 (1998).
In this case, for the affidavit to be admissible, the
plaintiff was required to establish that Ingleby had the
authority to speak on the defendant’s behalf. This he
did not do. The plaintiff relies on the affidavit itself to
prove the existence of this authority because Ingleby
testified that he was the head of ‘‘Executive Reward
[at the defendant],’’ and that he was responsible for
overseeing and administering the defendant’s bonus
program. It is well established that ‘‘agency cannot be
. . . proved . . . by the declarations of the [pur-
ported] agent. The agency must be proved in some
other way before the declaration of the agent can be
admissible against his principal.’’ Metropolitan Clean-
ers & Dyer, Inc. v. Tondola, 114 Conn. 244, 246, 158 A.
240 (1932).
The judgment is affirmed.
In this opinion the other judges concurred.
1
The plaintiff argues that the court ignored the ‘‘controlling precedent’’
of Ziotas v. Reardon Law Firm, P.C., 296 Conn. 579, 997 A.2d 453 (2010),
because, ‘‘[in that case], the Supreme Court affirmed the Appellate Court’s
determination that in an employer-employee relationship, a contract for a
discretionary bonus is an enforceable contract.’’
The holding in Ziotas, with respect to the employer’s contractual obliga-
tion to pay a bonus, turned on its own particular facts, including evidence
that a verbal promise had been made by the employer to the employee that
‘‘this has been a very successful year for the firm, and for you, and . . .
you’re going to get a bonus that fairly reflects that.’’ (Internal quotation
marks omitted.) Ziotas v. Reardon Law Firm, P.C., 111 Conn. App. 287,
300, 959 A.2d 1013 (2008), rev’d in part on other grounds, 296 Conn. 579,
997 A.2d 453 (2010). In this case, no such promise was made by the defendant.
2
The plaintiff also argues that the deferred bonus program breached the
defendant’s obligation of good faith and fair dealing toward him. This claim
fails because it was not alleged in the plaintiff’s complaint. It is also without
merit because, as discussed herein, the defendant was never contractually
obligated to pay the plaintiff a cash bonus.
3
In his brief, the plaintiff argues that the court misconstrued his claim
when it characterized his claim as one for a ‘‘guaranteed bonus.’’ The plaintiff
argues that ‘‘[he] has never claimed that he was entitled to a ‘guaranteed’
bonus. Total compensation meant that if one performed well, you received
a cash bonus at the end of the year. Although poor firm performance might
affect the amount of the bonus, a good performer still got a bonus.’’ We do
not believe that the court misconstrued the plaintiff’s claim.
4
The admissibility of the Ingleby affidavit is essentially a collateral issue
that is not relevant to whether the defendant was contractually obligated
to pay the plaintiff a bonus. Even if we assume that the affidavit was
improperly excluded, the error was harmless because the affidavit was
evidence of the defendant’s means to pay a bonus, not evidence of a legal
obligation to pay a bonus.