Opinion
HHDCV155038642
02-14-2017
Columbia Dental, P.C. v. David S. Dombkowski
UNPUBLISHED OPINION
MEMORANDUM OF DECISION
Nina F. Elgo, J.
In a trial before this court, the plaintiff, Columbia Dental, P.C., presented evidence pursuant to its lawsuit against a former employee, David S. Dombkowski. Columbia Dental has alleged in its seven-count complaint the following causes of action: 1) Common-law conversion; 2) statutory theft pursuant to General Statutes § 53-119; 3) unjust enrichment; 4) breach of implied in fact contract; 5) breach of the implied covenant of good faith and fair dealing; 6) breach of the duty of loyalty; and 7) violation of the Connecticut Unfair Trade Practices Act. These allegations arise out of the plaintiff's claim that Dombkowski ordered and used for his own private business raw portrait teeth that were paid for by the plaintiff. The defendant has denied each and every claim.
The parties do not dispute that the plaintiff's burden of proof is the preponderance of the evidence standard. The burden of persuasion in an ordinary civil case is met if the evidence: induces a reasonable belief that it is more probable than not that the fact in issue is true. Clark v. Drska, 1 Conn.App. 481, 485-86, 473 A.2d 325 (1984).
The plaintiff is a corporation which provides dental services, including the measurement, fabrication and installation of portrait dentures. Dr. Abbas Mohammadi is the president of Columbia Dental and oversees all aspects of the business. During the relevant period of time, from January 1, 2013 through September 3, 2014, the plaintiff operated ten branch offices throughout Connecticut with its headquarters at 483 Middle Turnpike West in Manchester. At its headquarters, the plaintiff employed a number of laboratory technicians who specialized in one of three divisions, crown and bridge, dentures and orthodontics. The headquarters housed the main laboratory, which is one of two laboratories in the state, but the only one which fabricated portrait dentures. Once made, the portrait dentures were then dispersed to patients throughout the branch offices in the state.
Portrait dentures, as opposed to classic dentures, which were also fabricated by the plaintiff, are of a higher quality and a significantly more expensive type of denture. As a result, the plaintiff's practice was to order raw portrait teeth only as needed pursuant to prescriptions received from dentists working from the various branches. The plaintiff's exclusive vendor for raw portrait teeth was the company, Henry Schien Dental (Henry Schien), which received orders only from the main laboratory and delivered them only to the main laboratory as well.
Moreover, although there were three technicians in the denture division, including the defendant, during the relevant period of time, the defendant primarily ordered and physically received all of the portrait teeth that were delivered by Henry Schien. The defendant also fabricated virtually all of the portrait dentures produced by the plaintiff. In addition, the defendant also frequently called in orders to Henry Schien, impersonating Patrick Annicelli, the Henry Schien sales account representative who handled all the sales for Columbia Dental. When Annicelli confronted him with this practice of calling in orders and impersonating him, the defendant claimed that it was because he wanted to be sure that Annicelli received credit for the sale. This practice persisted, however, even though Annicelli advised the defendant that he gets credit no matter who calls in the order and that it was not a significant commission.
Based on concerns expressed by various technicians in the main laboratory, Angelica Ingrassia, the laboratory manager, and Dr. Mohammadi began to investigate a significant discrepancy between large shipments of raw portrait teeth and their respective sales invoices, with the relatively small number of portrait teeth actually on hand at the laboratory and the records documenting the numbers of patients receiving portrait dentures. The defendant also received visits from strangers at the laboratory who were not patients at the plaintiff's practice. On one occasion, the defendant escorted one of the visitors out to the parking lot and was observed performing dental work on the individual in an automobile.
On four Saturdays between June 10, 2014 and August 15, 2014, the defendant and Ingrassia were in the main laboratory from 7:00 a.m. to 12:00 p.m. Ingrassia observed that several cases of portrait teeth which had been previously delivered and were present in the morning but were missing after the defendant left at 12:00 p.m. Between August 10, 2014 and September 3, 2014, the defendant worked during the week in the plaintiff's Bristol laboratory. Although he had been transferred, he still had access to his keys to the main laboratory and was permitted to continue placing orders for portrait teeth, and continued to work in the main laboratory on Saturdays. During that period of time, the plaintiff's records indicate that 1716 portrait teeth were ordered and purchased but that portrait teeth dentures were installed on only seventeen patients. Assuming a maximum use of twenty-eight portrait teeth per each patient, 1240 portrait teeth were unaccounted for during that period of time.
On September 3, 2014, Dr. Mohammadi with Graciela Panuncio, the manager of the Bristol branch, met with the defendant and confronted him about stealing raw portrait teeth materials which were missing. After the defendant admitted that he had taken the portrait teeth, Dr. Mohammadi demanded that he record in writing a list of items he had taken. Dr. Mohammadi then left the room and allowed the defendant to compose the list in the presence of Panuncio. In a subsequent meeting with Jeffrey Smith, the defendant admitted that he had been doing dental repair work for Dr. Chung and other dentists and had taken the items from the list he had drafted. The defendant was immediately terminated from his employment with the plaintiff.
From January 1, 2013 through September 3, 2014, the plaintiff spent $51,791.60 on raw portrait teeth materials. During that same period, however, only 179 patients required a full set of portrait dentures, costing the plaintiff $41.60 per patient for each set of raw portrait teeth. Therefore, the actual total cost to the plaintiff of raw portrait teeth used for patients amounts to $7,446.40. Based on a maximum of 28 teeth used per patient, the plaintiff's records revealed that 11, 876 portrait teeth were ordered but not accounted for. Based on the evidence, the defendant's admissions of wrongdoing, and all proven inferences, this court can find with reasonable certainty that at least $40,000 worth of portrait teeth raw materials were wrongly appropriated by the defendant during that period of time.
Count one: Conversion
The tort of " [c]onversion occurs when one, without authorization, assumes and exercises ownership over property belonging to another, to the exclusion of the owner's rights." (Internal quotation marks omitted.) Wellington Systems, Inc. v. Redding Group, Inc., 49 Conn.App. 152, 169, 714 A.2d 21, cert. denied, 247 Conn. 905, 720 A.2d 516 (1998). " The term owner is one of general application and includes one having an interest other than the full legal and beneficial title . . . The word owner is one of flexible meaning, and it varies from an absolute proprietary interest to a mere possessory right . . . It is not a technical term and, thus, is not confined to a person who has the absolute right in a chattel, but also applies to a person who has possession and control thereof." (Internal quotation marks omitted.) Deming v. Nationwide Mutual Ins. Co., 279 Conn. 745, 770-71, 905 A.2d 623 (2006). Conversion does not need intent, but it " requires the owner to be harmed by a defendant's conduct." Id., 771, citing Howard v. MacDonald, 270 Conn. 111, 129 n.8, 851 A.2d 1142 (2004).
This court concludes, by a preponderance of the evidence, that the defendant wrongfully appropriated more than 10, 000 portrait teeth for his own use, allowing the orders of portrait teeth to be billed to the plaintiff. The evidence indicates that he exercised exclusive control over an overwhelming number of orders of portrait teeth which were delivered to the main laboratory and missing. The evidence indicates that the defendant had his own dental business and provided no credible evidence from either his witnesses or himself to rebut the direct and circumstantial evidence of his appropriation of portrait teeth materials paid for by the plaintiff. Because the plaintiff paid for these materials, the court finds that they owned them and that the defendant permanently deprived the plaintiff of their possession and use of property belonging to them. The court therefore finds that the plaintiff has proved harm and damages as a result of the defendant's actions.
Count Two: Statutory Theft
General Statutes § 52-564 provides: " [a]ny person who steals any property of another, or knowingly receives and conceals stolen property, shall pay the owner treble his damages." " The elements that [a plaintiff] must prove to obtain treble damages under the civil theft statute, § 52-564, are the same as the elements required to prove larceny, pursuant to General Statutes § 53a-119 . . . A person commits larceny when, with intent to deprive another of property or to appropriate the same to himself or a third person, he wrongfully takes, obtains or withholds such property from an owner . . . It must be shown that (1) there was an intent to do the act complained of, (2) the act was done wrongfully, and (3) the act was committed against an owner . . . The essential cause of action is a wrongful exercise of dominion over personal property of another." (Internal quotation marks omitted.) Kosiorek v. Smigelski, 138 Conn.App. 695, 713, 54 A.3d 564 (2012).
Based on all the foregoing findings of fact, and given that the defendant's admission and reasonable inferences which can be made from his conduct, this court also finds that the defendant intended wrongfully to deprive the plaintiff of property belonging to it. The court finds that the plaintiff has met its burden of proof as to the statutory theft count.
Count Three: Unjust Enrichment
" A right of recovery under the doctrine of unjust enrichment is essentially equitable, its basis being that in a given situation it is contrary to equity and good conscience for one to retain a benefit which has come to him at the expense of another . . . Plaintiffs seeking recovery for unjust enrichment must prove (1) that the defendants were benefited, (2) that the defendants unjustly did not pay the plaintiffs for the benefits, and (3) that the failure of payment was to the plaintiffs' detriment." (Internal quotation marks omitted.) New Hartford v. Connecticut Resources Recovery Authority, 291 Conn. 433, 451-52, 970 A.2d 592 (2009). " The question is: Did [the defendant], to the detriment of someone else, obtain something of value to which [the defendant] was not entitled?" Id., 452
The court finds that considering the defendant's work as a dental technician specializing in portrait denture fabrication, his admission that he stole the portrait teeth raw materials, that he has his own home laboratory, that these materials were valuable and that the defendant has done work for other dentists outside of the work performed by the plaintiff, and based on the conclusions of law and findings of facts already found, the plaintiff has proved the ground of unjust enrichment against the defendant.
Count Four: Implied Contract
" An implied contract is an agreement between the parties which is not expressed in words but which is inferred from the acts and the conduct of the parties." Brighenti v. New Britain Shirt Corp., 167 Conn. 403, 406, 356 A.2d 181 (1974). " Such contracts, where not express, may be implied in fact and generally arise both from the parties' conduct and their reasonable expectations." Yale Diagnostic Radiology v. Estate of Fountain, 267 Conn. 351, 359, 838 A.2d 179 (2004). The plaintiff argues that the defendant's employment with the plaintiff implies an agreement that the defendant would perform his work honestly. This court is not persuaded that this ground is applicable and is a basis for relief under these facts. This ground is dismissed.
Count Five: Breach of Implied Covenant of Good Faith and Fair Dealing
" To constitute a breach of this covenant, the acts by which a defendant allegedly impedes the plaintiff's right to receive benefits that he or she reasonably expected to receive under the contract must have been taken in bad faith." Alexandru v. Strong, 81 Conn.App. 68, 80-81, 837 A.2d 875 (2004). " The elements of a cause of action alleging a breach of the implied duty of good faith and fair dealing are as follows: (1) the plaintiff and the defendant were parties to a contract under which the plaintiff reasonably expected to receive certain benefits; (2) that the defendant engaged in conduct that injured the plaintiff's right to receive some or all of those benefits; and (3) that when committing the acts by which it injured the plaintiff's right to receive benefits he reasonably expected to receive under the contract, the defendant was acting in bad faith." Canino v. Peerless Ins. Co., Superior Court, judicial district of Hartford, Docket No. CV-13-6043986-S, (January 15, 2014, Huddleston, J.). Regarding this final element, it is clear that " [i]f the plaintiff fails to set forth factual allegations that the defendant acted in bad faith, a claim for breach of the implied covenant will not lie." (Internal quotation marks omitted.) TD Bank, N.A. v. J& M Holdings, LLC, 143 Conn.App. 340, 349, 70 A.3d 156 (2013).
" Bad faith in general implies both actual or constructive fraud, or a design to mislead or deceive another, or a neglect or refusal to fulfill some duty or some contractual obligation, not prompted by an honest mistake as to one's rights or duties, but by some interested or sinister motive . . . Bad faith means more than mere negligence; it involves a dishonest purpose." (Internal quotation marks omitted.) De La Concha of Hartford, Inc. v. Aetna Life Ins. Co., 269 Conn. 424, 433, 849 A.2d 382 (2004). " Every contract carries an implied covenant of good faith and fair dealing requiring that neither party do anything that will injure the right of the other to receive the benefits of the agreement . . . To constitute a breach of that covenant, the acts by which a defendant allegedly impedes the plaintiff's right to receive benefits that he or she reasonably expected to receive under the contract must have been taken in bad faith . . . Under that rule, the implied covenant of good faith and fair dealing obviously rests upon the express terms of the contract and the parties' reasonable expectations thereunder." (Internal quotation marks omitted.) Weissman v. Koskoff, Superior Court, judicial district of Hartford, Docket No. CV-10-6012922-S, (January 19, 2011, Sheldon, J.), aff'd sub nom. Weissman v. Koskoff, Koskoff & Bieder, P.C., 136 Conn.App. 557, 46 A.3d 943 (2012). " As a logical corollary of that rule, our appellate courts have declared that, [a] claim for breach of the implied covenant of good faith and fair dealing must be based on the terms of the contract and cannot be applied to achieve a result contrary to the express terms." (Internal quotation marks omitted.) Id.
In this case, the plaintiff demonstrated that the defendant was employed by the plaintiff and that in exchange for his services to the plaintiff as a dental technician, the defendant received a salary. In performing these duties as an employee for the plaintiff, the defendant was subject to an implied covenant of good faith and fair dealing to the extent that the plaintiff had a reasonable expectation that in the exercise of his employment duties, the defendant would not appropriate materials belonging to the plaintiff, and would not conduct transactions during work hours not related to the plaintiff's business, including, but not limited to, dealing with the dental needs of individuals not patients or customers of the plaintiff. The employee handbook of Columbia Dental specifically states that while employees may hold outside jobs, they " may not receive an income or material gain from individuals outside Columbia Dental for materials, procedures or services rendered while performing their job." Although there is no evidence of how much the defendant may have profited from wrongfully using raw portrait teeth materials, the defendant has admitted to stealing those materials and working for other dentists. This court concludes that the plaintiff has proven this ground as well.
Count Six: Breach of Duty of Loyalty
In News America Marketing In-Store, Inc. v. Marquis, 86 Conn.App. 527, 535, 862 A.2d 837 (2004), aff'd, 276 Conn. 310, 314, 885 A.2d 758 (2005), the Appellate Court wrote: " A party may recover for breach of loyalty in tort. In a tort action, harm is a necessary element of the prima facie case. 2 Restatement (Second), Agency, Liability for Loss Caused § 401, comment (b) (1958) . . . 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. 3 Am.Jur.2d, Agency § 205 (2002). 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. The general duty of loyalty includes . . . the duty not to compete . . . and the duty not to disclose confidential information." (Citation omitted; internal quotation marks omitted.) Id. " An agency relationship exists when one is engaged to perform services on behalf of another, and is subject to that person's control or right to control the manner in which the task is performed." Miller Foods, Inc. v. Schubert-Loughran, Superior Court, judicial district of Hartford, Docket No. CV-02-0815760-S, (May 20, 2009, Tanzer, J.) Similarly, the court in Marinos v. Poirot, 132 Conn.App. 693, 699-700, 33 A.3d 282 (2011), aff'd, 308 Conn. 706, 66 A.3d 860 (2013), also recognized the breach of duty of loyalty as a cause of action.
Other Superior Court cases that support a separate cause of action sounding in breach of duty of loyalty include: Quality Cardiovascular Care, LLC v. Casey, Superior Court, judicial district of Waterbury, Docket No. CV-10-6004787-S, (March 25, 2013, Roche, J.) (" [t]he duty of loyalty extends out of the agency relationship"); Robinson & Cole, LLP v. Ryan, Superior Court, judicial district of Hartford, Docket No. CV-11-6021702-S (December 5, 2011, Domnarski, J.) (53 Conn.L.Rptr. 63, 64, ) (" [t]he court finds that both Connecticut law and sections of the Restatement (Second) of Agency support recognition of a duty of loyalty that is separate and distinct from a fiduciary duty"); Miller Foods, Inc. v. Schubert-Loughran, Superior Court, judicial district of Hartford, Docket No. CV-02-0815760-S, (May 20, 2009, Tanzer, J.)
The court finds that the plaintiff has met its burden of proof in establishing a breach of duty of loyalty cause of action. As an agent of the plaintiff, the defendant had a duty to act in good faith, loyalty and honesty toward his employer. The defendant's appropriation of valuable dental supplies and the use of employer time to pursue the defendant's business pursuits is clearly a violation of that duty from which the plaintiff has also provided compelling evidence of financial harm.
Count Seven: Connecticut Unfair Trade Practices Act
" To prevail on a CUTPA claim, the plaintiffs must prove that (1) the defendant engaged in unfair or deceptive acts or practices in the conduct of any trade or commerce . . . and (2) each class member claiming entitlement to relief under CUTPA has suffered an ascertainable loss of money or property . . ." (Citation omitted; internal quotation marks omitted.) Coppola Construction Co. v. Hoffman Enterprises Ltd. Partnership, 157 Conn.App. 139, 197, 117 A.3d 876, cert. denied, 318 Conn. 902, 122 A.3d 631 (2015). General Statutes § 42-110b(a) provides that " [n]o person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." " A plaintiff bringing a CUTPA claim may plead that an act or practice is either unfair, deceptive, or both." Smith v. Wells Fargo Bank, N.A., 158 F.Supp.3d 91 (D.Conn. 2016). " In determining whether a practice violates CUTPA, courts have used the cigarette rule adopted by the Federal Trade Commission, which looks to: (1) [w]hether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise--in other words, it is within at least the penumbra of some common law, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers, [competitors or other businesspersons] . . . All three criteria do not need to be satisfied to support a finding of unfairness. A practice may be unfair because of the degree to which it meets one of the criteria or because to a lesser extent it meets all three." (Internal quotation marks omitted.) Bentley v. Greensky Trade Credit, LLC, 156 F.Supp.3d 274 (D.Conn. 2015).
Although the plaintiff has established that the defendant was engaged in a practice that amounts to conversion and statutory theft, thereby meeting the first and second elements of a CUTPA claim, the question of whether the practices causes substantial injury to consumers, competitors or other business persons is less clear.
Not every contractual breach and not every misrepresentation rises to the level of a CUTPA violation. See Naples v. Keystone Building & Development Corp., 295 Conn. 214, 228, 990 A.2d 326 (2010); Hudson United Bank v. Cinnamon Ridge Corp., 81 Conn.App. 557, 571, 845 A.2d 417 (2004). " There must be some nexus with a public interest, some violation of a concept of what is fair, some immoral, unethical, oppressive or unscrupulous business practice or some practice that offends public policy." (Internal quotations marks omitted.) Gaynor v. Hi-Tech Homes, 149 Conn.App. 267, 276, 89 A.3d 373 (2014).
Moreover, " the employer-employee relationship does not fall within the definition of trade or commerce for the purposes of an action under CUTPA." Quimby v. Kimberly Clark Corp., 28 Conn.App. 660, 670, 613 A.2d 838 (1992). Also, " purely intracorporate conflicts do not constitute CUTPA violations . . ." Ostrowski v. Avery, 243 Conn. 355, 379, 703 A.2d 117 (1997).
The court in Larsen Chelsey Realty Co. v. Larsen, 232 Conn. 480, 497-98, 656 A.2d 1009 (1995), noted that CUTPA was intended to protect businesses from unfair trade practices. " According to Representative Howard A. Newman, who reported the CUTPA legislation out of committee to the House of Representatives, the act 'gives honest businessmen great protection [against] deceptive or unscrupulous [businessmen] who by unfair methods of competition and deceptive advertising, etc., unlawfully divert trade away from law abiding businessmen.' 16 H.R. Proc., Pt. 14, 1973 Sess., p. 7323. Other supporters of the bill made similar comments. See, e.g., Conn. Joint Standing Committee Hearings, General Law, Pt. 2, 1973 Sess., p. 724, remarks of Stuart Dear, a member of the board of directors of the Connecticut Consumer Association (CUTPA will 'assist the businessman in not losing out to those members of the business community who won't play fair'); Conn. Joint Standing Committee Hearings, General Law, Pt. 1, 1978 Sess., pp. 307-08, remarks of Assistant Attorney General Robert M. Langer (CUTPA covers transactions 'between one business and another business')."
At the same time, " CUTPA is not limited to conduct involving consumer injury . . ." (Internal quotation marks omitted.) Fink v. Golenbock, 238 Conn. 183, 215, 680 A.2d 1243 (1996). In Fink, our Supreme Court found that a defendant who was a member of a professional corporation was in violation of CUTPA as a result of the court's finding that the defendant took certain actions designed to usurp the business and clientele of one corporation in favor of another. Id., 212. Similarly, the Court in Larsen Chelsey Realty Co. v. Larsen, supra, 232 Conn. 493-94, held that the defendant's tortious acts occurred outside the confines of the employer-employee relationship when the defendant, acting as a competitor, took actions that harmed the plaintiff. Thus, although the existence of an employment relationship or shared intracorporate status does not shield a defendant from CUTPA liability for all possible conduct; see, e.g., Fink v. Golenbock, supra, 238 Conn. 183; to determine whether a CUTPA violation has occurred, the court is required to scrutinize the parties' activities rather than merely their relationship. Larsen Chelsey Realty Co. v. Larsen, supra, 492.
Thus, in order to prevail, the plaintiff must still allege and prove untoward behavior which arises from the defendant's primary trade or business and which places the parties in direct competition with each other with respect to that business. Russell v. Russell, 91 Conn.App. 619, 647-48, 882 A.2d 98 (2005), cert. denied, 276 Conn. 924, 888 A.2d 92 (2005). " Such direct competition with that primary business will usually take the form of usurping . . . customers, employees or assets." (Internal quotation marks omitted.) Ruschmeyer v. Lydall, Inc., Superior Court, judicial district of Tolland, Docket No. CV-08-5002515-S, (June 2, 2009, Sferrazza, J.), citing Russell v. Russell, supra, 648.
This court concludes that the plaintiff has proven that the defendant is in violation of CUTPA as a result of his usurpation of assets and well as his apparent provision of dental fabrication services in his business dealings with other dentists in competition with the plaintiff and in the provision of services to patients at the workplace who were not receiving those services from the plaintiff.
Special Defenses
The defendant has asserted in his answer special defenses, specifically claiming that the action is barred by various statutes of limitation. Having failed to brief those claims, this court considers those defenses abandoned.
Damages
The plaintiff has also established multiple bases for damages. Pursuant to this court's finding in favor of the plaintiff in conversion, unjust enrichment, breach of the implied covenant of good faith and fair dealing, breach of duty of loyalty and CUTPA, this court awards $44,345.20 arising out of the defendant's appropriation of the portrait teeth. Because this court finds that the plaintiff is entitled to treble damages arising from the statutory theft claim, the plaintiff is awarded $133,035.60. Finally, the plaintiff is entitled to punitive damages in the form of attorneys fees pursuant to this court's finding of conversion and a violation of CUTPA. This court, however, does not find that the evidence supports damages in the form of reimbursement for compensation paid which the plaintiff claims arises out of the breach of the duty of loyalty count. The court thus awards $177,380.80 to the plaintiff and will consider an award of punitive damages upon the plaintiff's motion and affidavit for attorneys fees.