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holding that "the doctrine of promissory estoppel is not inapplicable solely because the plaintiff's contract was for employment at will."
Summary of this case from Ridgeway v. Royal Bank of Scot. Grp.Opinion
No. 397881
May 3, 2004
MEMORANDUM OF DECISION
The motion before the court requires it to determine whether an employer may be liable for fraud, negligent misrepresentation or promissory estoppel where the employer breaches its contract to hire an individual after she leaves prior employment, to which she cannot return, in reliance on the new employment contract.
The complaint generally alleges the following. The plaintiff was employed by IBASE, a temporary employment agency. She was assigned work at the office of the defendant, Unilever, from May 2001 to August 31, 2001 and was assigned to a project that was scheduled to continue through at least the end of 2001, but which actually continued beyond that period. While she was working on the project the defendant requested IBASE's permission to tender the plaintiff an offer of full-time employment and informed the plaintiff that if she accepted the offer, her employment would no longer be limited to the length of the IBASE project.
Between July 2001 and August 15, 2001, the defendant interviewed the plaintiff and gave her a verbal offer of employment, which she accepted. On August 15, 2001, the defendant gave the plaintiff a written offer of employment that included an annual base salary of $75,000, a bonus plan and an incentive plan. The plaintiff then ended her employment with IBASE.
On August 31, 2001, the plaintiff reported for her first day of work and was told that the defendant was "rescinding" its offer. The defendants represented to the plaintiff that she was not qualified for the job.
The plaintiff's complaint is in three counts, intentional misrepresentation, or fraud, negligent misrepresentation and promissory estoppel. The defendant has moved to strike all three counts on the grounds that the complaint alleges only a contract for employment at will. The defendant reasons that since, under a contract at will, the defendant could have terminated the employment relationship a moment after it had commenced, logically it should be able to do so before it had commenced.
"The purpose of a motion to strike is to contest . . . the legal sufficiency of the allegations of any complaint . . . to state a claim upon which relief can be granted." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003). "A motion to strike challenges the legal sufficiency of a pleading . . . [I]t admits all facts well-pleaded; it does not admit legal conclusions or the truth or accuracy of opinions stated in the pleadings." (Internal quotation marks omitted.) Doe v. Yale University, 252 Conn. 641, 694, 748 A.2d 834 (2000). "In ruling on a motion to strike, the court is limited to the facts alleged in the complaint. The court must "construe the facts in the complaint most favorably to the plaintiff." (Internal quotation marks omitted.) Faulkner v. United Technologies Corp., 240 Conn. 576, 580, 693 A.2d 293 (1997). In other words, the court must "construe the complaint in the manner most favorable to sustaining its legal sufficiency." (Internal quotation marks omitted.) Bouchard v. Sundberg, 80 Conn. App. 180, 191, 834 A.2d 744 (2003). Further, "pleadings must be construed broadly and realistically, rather than narrowly and technically." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, supra, 262 Conn. 497; Gazo v. Stamford, 255 Conn. 245, 260-61, 765 A.2d 505 (2001); Doe v. Yale University, supra, 252 Conn. 667; Edwards v. Tardif, 240 Conn. 610, 620, 692 A.2d 1266 (1997).
I
As a threshold issue, the court addresses whether the contract of employment was for at-will employment, where either party could terminate the employment relationship at any time and for any reason, or an offer of employment for a definite term. In its memorandum of law in support of the motion to strike, the defendant argues that the written offer was for at-will employment and was silent as to duration. The defendant further argues that the parol evidence rule prevents the plaintiff from relying on alleged oral "explanations" or "understandings" to alter the clear language of the written offer. The defendant also asserts that the alleged oral representations regarding contract duration were not sufficiently definite to manifest the defendant's intent to employ the plaintiff for a specific period of time.
Plaintiff's memorandum in opposition to the defendant's motion to strike does not address this issue.
"As a general rule, contracts of permanent employment, or for an indefinite term, are terminable at will." D'Ulisse-Cupo v. Board of Directors of Notre Dame High School, 202 Conn. 206, 211 n. 1, 520 A.2d 217 (1987). That is, unless "the discharge contravenes a clear mandate of public policy"; Sheets v. Teddy's Frosted Foods, Inc., 179 Conn. 471, 474, 427 A.2d 385 (1980); or the parties expressly or impliedly agree otherwise; Torosyan v. Boehringer Ingelheim Pharmaceuticals, Inc., 234 Conn. 1, 15-16, 662 A.2d 89 (1995); Coelho v. Posi-Seal International, Inc., 208 Conn. 106, 116, 544 A.2d 170 (1988); or a party is estopped by his representations from terminating an employment contract; Stewart v. Cendant Mobility Services Corp., 267 Conn. 96, 837 A.2d 736 (2003); then the contract of employment may be terminated by either party for any reason or no reason. Magnan v. Anaconda Industries, Inc., 193 Conn. 558, 562-63, 479 A.2d 781 (1984); Carter v. Bartek, 142 Conn. 448, 450, 114 A.2d 923 (1955); Boucher v. Godfrey, 119 Conn. 622, 627, 178 A. 655 (1935).
The plaintiff argues that the defendant's "offer included the understanding of the parties that the plaintiff's employment term . . . would last longer than [the] Unilever project" and that because the Unilever project was scheduled to continue through at least the end of 2001, the defendants stated a definite term of employment. The court disagrees. The complaint neither alleges a definite term of employment nor can the court infer a definite term from the complaint. While the parties may have expected the plaintiff's employment to last at least until the end of the year, the contract term is, nonetheless, indefinite. Accordingly, the parties' agreement was for an at-will employment relationship.
II
The court turns to whether any of the three tort claims alleged by the plaintiff are legally sufficient. The court finds it analytically helpful to address the three counts of the compliant in inverse order.
Count three alleges promissory estoppel and alleges that the defendant "made a clear and definite promise to the Plaintiff of full-time Employment for a term that would last longer than the project she had been working on as a temporary employee of IBASE." As a result of the promise of employment, the plaintiff alleges that, in reliance upon the defendant's offer, she ended her previous employment with IBASE.
The defendant argues, in its memorandum of law in opposition to the motion to strike, that based on Parker v. Ginsburg Development, Superior Court, judicial district of Stamford/Norwalk at Stamford, Docket No. CV 02 0188873 (February 3, 2003, Lewis, J.T.R.) ( 34 Conn. L. Rptr. 55), promissory estoppel is not available in the at-will employment context. Conversely, the plaintiff argues that she has sufficiently pleaded each element of promissory estoppel.
The parties have not cited, nor has the court's research unearthed, any appellate authority in Connecticut discussing whether a party may bring an action in tort for promissory estoppel based on a would-be employer's failure to make good on its promise of at-will employment, in the absence of any claim that the failure was the product of a violation of public policy. With the exception of Parker v. Ginsburg Development, LLC, Superior Court, judicial district of Stamford/Norwalk at Stamford, Docket No. CV 02 0188873 (February 3, 2003, Lewis, J.T.R.) ( 34 Conn. L. Rptr. 55), neither have the parties nor the court has found any Superior Court cases on point. Parker v. Ginsburg Development, LLC, moreover, is on appeal to the Appellate Court.
A.
While the exact score is uncertain, it is probably true that "[t]he majority of jurisdictions conclude that a cause of action does not exist where a prospective at-will employee is terminated before commencing work." Heinritz v. Lawrence University, 194 Wis.2d 606, 614, 535 N.W.2d 81 (1995); see annot., "Employer's State-Law Liability for Withdrawing, or Substantially Altering, Job Offer for Indefinite Period Before Employee Actually Commences Employment," 1 A.L.R. 5th 401 (1992). These courts generally hold that "reliance on a promise consisting solely of at-will employment is unreasonable as a matter of law since such a promise creates no enforceable rights . . ." Leonardi v. Hollywood, 715 So.2d 1007, 1010 (Fl.App. 1998), quoting, White v. Roche Biomedical Laboratories, Inc., 807 F. Sup. 1212, 1219-20 (D.S.C. 1992), aff'd, 998 F.2d 1011 (4th Cir. 1993). "[T]here could have been no reasonable basis for reliance on and no substantial change of position that was attributable to the promise [of employment] per se. The necessary premise of plaintiff's argument is that he relied on and changed his position in response to the promise that he would be employed for at least an infinitesimal period of time, independently of the promised infinitesimal period of employment itself. Plaintiff alleges that he was damaged `by foregoing other job search activities and refraining from registering for and taking the Massachusetts bar examination and accepting a practice opportunity in that state.' However, the same losses would have been incurred if plaintiff had been discharged immediately after he came to work rather than before." Slate v. Saxon, Marquoit, Bertoni Todd, 166 Or. App. 1, 7, 999 P.2d 1152, review denied, 330 Or. 375, 6 P.3d 1105 (2000) (involving a law firm that reneged on its promise of employment to a new lawyer). Further, "to hold otherwise would create an anomalous result and would undermine the doctrine of employment at-will in this state. If an employee such as the plaintiff is permitted to recover damages from a potential employer that breaks a promise of at-will employment before the employee begins to work, then the employee would be placed in a better position than an employee whose at-will employment is terminated at some point after he begins working . . ." White v. Roche Biomedical Laboratories, Inc., supra, 807 F. Sup. 1220; see Murtagh v. Emory University, 152 F. Sup.2d 1356, 1367 (N.D.Ga. 2001) (holding that under Georgia law "one cannot state a claim for promissory estoppel when the underlying promise is for at-will employment."); see also Sakelaris v. Rice/Maddox Partnership, 883 F. Sup. 64, 66 (D.S.C. 1995), and Leonardi v. Hollywood, supra, 715 So.2d 1009-10.
However, other courts have applied the doctrine of promissory estoppel to a situation where an employer withdraws from an agreement to employ before the prospective employee has started work. One court has noted the difference between discharging an employee after he has started work and failing to hire him after an agreement to do so. "Clearly, in a case in which the claimant has actually been hired, the employer has complied fully with his obligation. Should the employer decide after hire to discharge the employee or change the terms of employment, she is completely within her rights and in utter compliance with her promise. Much different, however, is the situation presented here. In the present dispute, [the employer] has promised to hire the appellants to at-will positions. That [the employer] may shortly thereafter fire them at-will — while perhaps diminishing the security or value of the employment — does not fully eradicate the binding quality of its promise. Clearly, a contract which by its terms can be immediately terminated after it is commenced precludes a claimant from maintaining an action upon discharge after hire. This, however, does not prevent the claimant from recovering damages sustained in reliance on a clear and unambiguous promise that is broken. While, in practical effect, it may be hard to distinguish the case in which an employee is fired a day after beginning work from the situation in which a potential employee is prevented from assuming a promised at-will position, the cases are different. In the former case, the employer has completely fulfilled his promise; in the latter, the promise has not been kept in any respect. In the end, we believe this distinction sufficient to tip the balance in favor of the burdened employee who has relied to his detriment on the unkept promise of the employer. Such a rule, we believe, encourages employers to take such promises seriously." (Emphasis in original.) Bower v. ATT, Technologies, Inc., 852 F.2d 361, 363-64 (8th Cir. 1998).
This court finds the arguments of the Eighth Circuit persuasive. As discussed infra., very real damages in the form of lost benefits may flow from the employer's refusal to allow the would-be employee even to begin work, although the employment could be properly terminated a moment later. Further, in light of previous Connecticut court decisions, this court opines that under these circumstances, the Supreme Court would apply the doctrine of promissory estoppel to the anticipatory breach of a contract for employment at-will.
In Magnan v. Anaconda Industries, Inc., supra, 193 Conn. 563, the Connecticut Supreme Court stated that, "[i]n recent years we have witnessed substantial erosion of the employment at will rule." (Emphasis added.) The rule has been eroded not only by state and federal statutes; Id., 564 n. 11, n. 12, n. 13; but, in Connecticut, by judicial holdings that an employer's express or implied oral representations to the employee or in employment manuals and handbooks rebut the presumption of employment at-will; Torosyan v. Boehringer Ingelheim Pharmaceuticals, Inc., supra, 234 Conn. 14-18; Coelho v. Posi-Seal International, Inc., supra, 208 Conn. 106; Finley v. Aetna Life Casualty Co., 5 Conn. App. 394, 404-06, 499 A.2d 64 (1985), reversed on other grounds, 202 Conn. 190, 520 A.2d 208 (1987); and by the judicially created doctrine that discharge of the employee cannot contravene public policy. Sheets v. Teddy's Frosted Foods, Inc., supra, 179 Conn. 76-77; see also Magnan v. Anaconda Industries, Inc., supra, 193 Conn. 564-65 ("In appropriate circumstances . . . an agreement [to discharge an employee only for cause] may arise when an employee, in reliance on an implied representation that the position will not arbitrarily be terminated, leaves his current employment, or otherwise acts in reasonable and significant reliance on the representation" [emphasis added]). These cases further reflect that, while employment at-will remains the general rule; Cwelinsky v. Mobil Chemical Co., 267 Conn. 210, 226 n. 13, 837 A.2d 759 (2004); the Supreme Court has been vigilant in enforcing the rights of parties to contracts, generally, and the reasonable expectations of employees, in particular. See Stewart v. Cendant Mobility Services Corp., supra, 267 Conn. 96, 109-10 (finding that employee reasonably relied on her employer's assurances of continued employment when her husband began work for a competitor and that the employer's assurances were sufficiently promissory in nature); see also Sheets v. Teddy's Frosted Foods, Inc., supra, 179 Conn. 475 ("The argument that contract rights which are inherently legitimate may yet give rise to liability in tort if they are exercised improperly is not a novel one. Although private persons have the right not to enter into contracts, failure to contract under circumstances in which others are seriously misled gives rise to a variety of claims sounding in tort. See Kessler Fine, `Culpa in Contrahendo,' 77 Harv.L.Rev. 401 (1964)."). The overall sentiment of the Connecticut Supreme Court toward the at-will employment doctrine, as expressed in these cases, contrasts with that of other jurisdictions holding that the doctrine of promissory estoppel is inapplicable when an employee relies on a promise of employment for an indefinite period of time. See, e.g., Murtagh v. Emory University, supra, 152 F. Sup.2d 1366 ("Georgia courts have . . . strongly defended the concept of at-will employment . . .")
The representation need not explicitly state discharge may be only for cause. This may be implied in the employer's representations. Torosyan v. Boehringer Ingelheim Pharmaceuticals, Inc., supra, 234 Conn. 15-17; Coelho v. Posi-Seal International, Inc., supra, 208 Conn. 110-11, 113.
Moreover, Connecticut has adopted Section 90 of the Restatement Second [of Contracts] which states that "under the doctrine of promissory estoppel `[a] promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.'" (Internal quotation marks omitted.) D'Ulisse-Cupo v. Board of Directors of Notre Dame High School, supra, 202 Conn. 213. It is appropriate to look to the Restatement's illustrations of the application of the rule. Gomes v. Commercial Union Ins. Co., 258 Conn. 603, 609, 783 A.2d 462 (2001); see Vitanza v. Upjohn Co., 257 Conn. 365, 778 A.2d 829 (2001); Universal Underwriters Ins. Co. v. Smith, 253 Ga. 588, 590, 322 S.E.2d 269 (1984). The Restatement (Second), Contracts provides the following illustration of the application of § 90 to a set of facts analogous to those presented here: "A applies to B, a distributor of radios manufactured for a `dealer franchise' to sell C's products. Such franchises are revocable at will. B erroneously informs A that C has accepted the application and will soon award the franchise, that A can proceed to employ salesmen and solicit orders, and that A will receive an initial delivery of at least 30 radios. A expends $1,150 in preparing to do business, but does not receive the franchise or any radios. B is liable to A for the $1,150 but not for the lost profit on 30 radios." Restatement (Second), Contracts § 90, illustration 8 to comment d.
Concededly, the Court in Vitanza v. Upjohn Co., 257 Conn. 365, 376, 778 A.2d 829 (2001), suggested that the adoption of Restatement section is not necessarily adoption of comments thereto.
Here as in Bower v. ATT, Technologies, Inc., supra, 852 F.2d 366, "illustration 8 of Comment d is `on all fours' with the present case and supports [the plaintiff's claim for] recovery. Clearly, the dealer franchise, revocable at will, is functionally analogous to the situation present here involving a promise for employment at-will. As in the present case, the contract cannot be fully enforced because the franchisor can revoke it at will. However, justice requires that the disappointed franchisee receive recompense for damages sustained in reliance on representations by the franchisor. [The plaintiff] here also deserve[s] to be made whole for whatever damages [she] can prove were suffered in reliance on [the employer's] representations of future employment." (Emphasis in original.)
For these reasons, the court holds that the doctrine of promissory estoppel is not inapplicable solely because the plaintiff's contract was for employment at will.
B.
The court examines whether the plaintiff has adequately alleged a cause of action for promissory estoppel.
Connecticut has recognized that the elements of promissory estoppel are: (1) a clear and definite promise which a promisor could reasonably have expected to induce reliance; (2) the party against whom estoppel is claimed must do or say something calculated or intended to induce another party to believe that certain facts exist and to act on that belief; and (3) the other party must change its position in reliance on those facts, thereby incurring some injury. Torrington Farms Assn. v. Torrington, 75 Conn. App. 570, 576 n. 8, 816 A.2d 736, cert. denied, 263 Conn. 524, 823 A.2d 1217 (2003).
First, whether a promise of at-will employment is sufficiently clear and definite to be promissory; Stewart v. Cendant Mobility Services Corp., supra, 267 Conn. 109; and whether reliance is unreasonable are questions of fact. Williams Ford, Inc. v. Hartford Courant Co., 232 Conn. 559, 579-80, 657 A.2d 212 (1995). Here, the complaint alleges that the defendant made a verbal offer of employment in July 2001, followed by a written offer of employment on August 15, 2001 that included "an annual base salary of $75,000.00, bonus incentive plan and full benefits . . ." The plaintiff also alleges that the defendant requested IBASE's permission to tender her an offer of employment, informed her of its intention to offer her full-time employment that would last beyond the IBASE project, interviewed her, verbally offered an offer of employment and later provided a written offer that included the above-stated terms. These facts, if true, sufficiently allege that the plaintiff's reliance on the defendant's clear and definite offer was reasonable.
Indeed, to say that reliance on an offer of at-will employment is unreasonable as a matter of law, conflicts with "the public interest in labor mobility . . ." CVD, Inc. v. Raytheon Co., 769 F.2d 842, 852 (1st Cir. 1985), cert. denied, 475 U.S. 1016, 106 S.Ct 1198, 89 L.Ed.2d 312 (1986); Kroeger v. Stop Shop Co., Inc., 13 Mass. App. 310, 329, 432 N.E.2d 566 (1982), appeal denied, 386 Mass. 1102, 440 N.E.2d 1175 (1982); Bingham v. American Screw Products, 398 Mich. 546, 248 N.W.2d 537 (1976). "The geographic mobility of labor . . . can aid in equalizing wages and work conditions for comparable employments. It helps to distribute workers where the need is greatest. It may provide workers with an opportunity to use their capacities and abilities most effectively. Altman, Availability for Work, p. 204." (Internal quotation marks omitted.) Bridgeport Metal Goods Manufacturing Co. v. Administrator, 2 Conn. App. 1, 4, 475 A.2d 329 (1984).
Second, the plaintiff alleged that the defendant gave the plaintiff both a verbal and written offer of employment and was "well acquainted with Plaintiff's job qualifications as a result of her work for Defendant as an IBASE employee." The plaintiff further alleged the defendant "knew at the time it made its offer of employment that Plaintiff's qualifications were not a match for the offered position." Thus, the defendant's conduct was calculated to induce the plaintiff to believe she was qualified for the position and that the defendant would employ her. The plaintiff has, therefore, adequately alleged the second element of promissory estoppel, that the defendant did or said something calculated to induce her to believe that certain facts existed and to act on that belief.
Third, the plaintiff alleges that she resigned from her position at IBASE and "ceased in her efforts to locate other full-time employment in reliance upon Defendant's offer." Further, the plaintiff alleges that the defendant caused the plaintiff "harm, including lost earnings, lost benefits, damage to her professional representation [sic] and emotional distress."
The defendant, however, argues that the plaintiff cannot establish that she sustained any damages because, any agreement being only for at-will employment, the defendant could have legally fired her a moment after her employment began. Therefore, reason the defendant, no damages can result if the defendant fires her a moment earlier, before the commencement of her employment. The court disagrees.
The Restatement (Second) Contracts § 90, in addition to stating the doctrine of promissory estoppel, also provides: "The remedy granted for breach may be limited as justice requires." Comment d to this Restatement section states, in pertinent part: "A promise binding under this section is a contract, and full-scale enforcement by nor remedies is often appropriate. But the same factors which bear on whether any relief should be granted also bear on the character and extent of the remedy. In particular, relief may sometimes be limited to restitution or to damages or specific relief measured by the extent of the promissee's reliance rather than by the terms of the promise."
"Thus, in harmonizing the law of employment at will with the doctrine of promissory estoppel, "[r]elief may be limited to damages measured by the promisee's reliance." Grouse v. Group Health Plan, Inc., 306 N.W.2d 114, 116 (Minn. 1981); see Grant v. New Departure Mfg. Co., 85 Conn. 421, 425-26, 83 A. 212 (1912); Comeaux v. Brown Williamson Tobacco Co., 915 F.2d 1264, 1272 (9th Cir. 1990) (limiting plaintiff's remedy to "reliance damages"). Relief to the plaintiff would also be limited by her duty to mitigate her damages; Safford v. Morris Metal Products Co., 97 Conn. 650, 656, 118 A. 37 (1922); when that issue is properly raised by the defendant. See generally Preston v. Keith, 217 Conn. 12, 21-22, 584 A.2d 439 (1991).
An employee's damages resulting from reliance on an employer's promise of employment may well be different where the employer withdraws from an agreement to employ an individual before the start date compared to what damages would be had the employer discharged the employee a moment after employment began. For example, an employee who leaves a previous job for another position which he never actually begins cannot collect unemployment compensation benefits. Alternatively, if the same employee begins the new job and is then terminated, he can collect such benefits. See General Statutes § 31-236(a)(2)(A). Also, where an employer participates in a group health insurance plan which covers employees from the inception of employment, the federal Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA), 29 U.S.C. § 1163(2), requires employers to provide employees with continuation coverage after separation from employment following a "qualifying event." Termination from employment constitutes a qualifying event. 29 U.S.C. § 1163(2). Thus, if the plaintiff had been terminated by the defendant after her employment had commenced, she may have been entitled to unemployment compensation benefits and additional benefits under COBRA. However, where an employer, as here, anticipatorily breaches the contract before the start date for employment, the would-be employee is deprived of these benefits. The importance of such benefits to the welfare of the individual employee and the employee's family can hardly be overstated.
General Statutes § 31-236 provides in relevant part: "(a) An individual shall be ineligible for benefits . . . (2)(A) If, in the opinion of the administrator, the individual has left suitable work voluntarily and without good cause attributable to the employer, until such individual has earned at least ten times such individual's benefit rate . . ."
In the Consolidated Omnibus Budget Reconciliation Act of 1986 ("COBRA"), Congress amended the Employee Retirement Income Security Act ("ERISA") to require that covered group health plans "provide . . . that each qualified beneficiary who would lose coverage . . . as a result of a qualifying event is entitled . . . to elect . . . continuation coverage under the plan." 29 U.S.C. § 1161(a).
Notably, the plaintiff's claims of damages expressly allege the loss of benefits.
While the doctrine of employment at-will "was considered necessary to preserve the autonomy of managerial discretion in the work place and the freedom of the parties to make their own contract"; Magnan v. Anaconda Industries, Inc., supra, 193 Conn. 563; the employer can retain such discretion by simply not making a contract of employment with the plaintiff. Conferring broad discretion on an employer to fire an at-will employee is qualitatively different from conferring broad discretion to render a prospective employee not only unemployed, but unable to obtain unemployment compensation benefits and health insurance, which the employee may have had with the former employer and justifiably expected to have at the new position.
The court holds that the plaintiff has adequately alleged that she changed her position in reliance on the defendant's representations, thereby incurring some injury, and that the third count of the plaintiff's complaint for promissory estoppel is legally sufficient.
III
Count two of the amended complaint alleges negligent misrepresentation based on the defendant's failure to employ the plaintiff. The second count alleges the "defendant knew, or in the exercise of reasonable care should have known that it was false, since Defendant never intended to employ plaintiff in a position for which it believed she was not qualified . . ." The plaintiff also alleges that the "defendant negligently made said misrepresentations to Plaintiff in order to induce plaintiff to leave her employment at IBASE and to come to work for Defendant under the false assumption and promise that Plaintiff's employment would be full-time and for a length of time as described above."
The Connecticut Supreme Court has adopted Restatement (Second) Torts § 552 (1979) as articulating the governing principles of negligent misrepresentation: "One who, in the course of his business, profession or employment . . . supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information." See D'Ulisse-Cupo v. Board of Directors of Notre Dame High School, supra, 202 Conn. 218; Williams Ford, Inc. v. Hartford Courant Co., supra, 232 Conn. 578. Unlike an action for promissory estoppel, the plaintiff "need not prove that the representations made by the defendant[s] were promissory, but only that they contained false information." Daley v. Aetna Life Casualty Co., 249 Conn. 766, 793, 734 A.2d 112 (1999). "[T]he case law in numerous jurisdictions suggests that courts liberally construe the pleadings in a way so as to sustain such a claim, particularly where the allegations in a complaint indicate, on their face, that an employer failed to exercise reasonable care in making representations to an employee on which the employee relied to his detriment." D'Ulisse-Cupo v. Board of Directors of Notre Dame High School, supra, 202 Conn. 219-20.
Here, the defendant allegedly failed to exercise due care by falsely communicating to the plaintiff that she was qualified for the position and that they would employ her. If the defendant had made clear representations to the plaintiff regarding her qualifications and its intent not to employ her, she could have made a more informed decision whether to accept defendant's offer. By its misrepresentations, the defendant deprived the plaintiff of the opportunity to do so. See Comeaux v. Brown Williamson Tobacco Co., supra, 915 F.2d 1271. As stated supra in part II, whether the plaintiff's reliance on the defendant's offer of employment was unreasonable is a question of fact. Construing the complaint in favor of the plaintiff, the court finds that the plaintiff's reliance was reasonable.
Moreover, the plaintiff's negligence in relying on the defendant's offer of employment does not necessarily bar her action for misrepresentation. Although the Restatement provides that "[t]he recipient of a negligent misrepresentation is barred from recovery for pecuniary loss suffered in reliance upon it if he is negligent in so relying"; Restatement (Second) Torts § 552A; the Connecticut Supreme Court has held that the doctrine of comparative negligence applies to commercial losses caused by negligent misrepresentation. Williams Ford, Inc. v. Hartford Courant Co., supra, 232 Conn. 586. Thus, recovery by the plaintiff is not necessarily barred because the trier of fact would weigh the employee's negligence in relying on the defendant's offer of at-will employment against the defendant's negligence in making the offer. See General Statutes § 52-572h; cf 57B Am.Jur.2d, Negligence § 1175 (comparative fault statute is applicable even where negligence is based on a violation of statute and is negligence per se).
This court holds that the second count of the complaint sufficiently states a claim of negligent misrepresentation.
IV
Count one of the amended complaint alleges intentional misrepresentation based on the defendant's failure to employ the plaintiff. The plaintiff alleges that the defendant intentionally misrepresented that it would employ her in accordance with the terms of the verbal and written employment offer. Specifically, the complaint alleges that the defendant committed fraud by offering her a position when it "never intended to employ Plaintiff in a position for which it believed she was not qualified." . . ." The plaintiff claims damages including, but not limited to, lost earnings, lost benefits, damage to her professional representation [sic], emotional distress, attorneys fees and costs.
The essential elements of an action for fraud are: "(1) false representation made as a statement of fact; (2) it was untrue and known to be untrue by the party making it; (3) it was made to induce the other party to act upon it; and (4) the other party acted upon that false representation to his detriment." (Internal quotation marks omitted.) Leonard v. Commissioner of Revenue Services, 264 Conn. 286, 296, 822 A.2d 1184 (2003); Suffield Development Associates Ltd. Partnership v. National Loan Investors, L.P., 260 Conn. 766, 777, 802 A.2d 44 (2002); Barbara Weisman, Trustee v. Kaspar, 233 Conn. 531, 539, 661 A.2d 530 (1995). "[A] promise to do an act in the future, when coupled with a present intent not to fulfill the promise, is a false representation." Paiva v. Vanech Heights Construction Co., 159 Conn. 512, 515, 271 A.2d 69 (1970). Here, the plaintiff alleges that the defendant knowingly made false misrepresentations regarding the plaintiff's future employment and qualifications. The plaintiff also alleges that the defendant made the representations in order to induce the plaintiff's reliance and in fact, induced the plaintiff to resign from her former employment.
See Restatement (Second), Torts § 545A. The Restatement formulation of the law of fraud, which has never been adopted by a Connecticut Appellate Court, does require that reliance on a fraudulent misrepresentation be "justifiable." Restatement (Second), Torts § 537. "Reliance upon a fraudulent misrepresentation is not justifiable unless the matter is material"; Restatement (Second), Torts § 538(1); and "[t]he matter is material if (a) a reasonable man would attach importance to its existence or nonexistence in determining his choice of action in the transaction in question or (b) the maker of the representation knows or has reason to know that its recipient regards or is likely to regard the matter as important in determining his choice of action, although a reasonable man would not so regard it." Restatement (Second), Torts § 538(2). Here, the complaint sufficiently alleges that the promise of employment was material and, therefore, justifiable.
As discussed supra, some jurisdictions do not recognize a cause of action for breach of a promise of at-will employment. Those jurisdictions that recognize the cause of action do so principally on the basis that reliance on such a promise is deemed unreasonable as a matter of law. However, "reasonable reliance" is not an element of fraud. See Presta v. Monnier, 145 Conn. 694, 700-01, 146 A.2d 404 (1958); Clark v. Haggard, CT Page 6861 141 Conn. 668, 673, 109 A.2d 358 (1954); Ford v. Dubiske Co., Inc., 105 Conn. 572, 577, 136 A. 560 (1927); Gallon v. Burns, 92 Conn. 39, 42, 101 A. 504 (1917); O'Neill v. Conway, 88 Conn. 651, 654-55, 92 A. 425 (1914).
In the oft-quoted words of Judge Zephaniah Swift over 190 years ago, "I apprehend no authority can be found to warrant the doctrine, that a man must use due diligence to prevent being defrauded, otherwise he shall be entitled to no remedy. The truth is, redress is most commonly wanted for injuries arising from frauds, which might have been prevented by due diligence." Sherwood v. Salmon, 5 Day (Conn.) 439, 448 (1813).
Further, permitting an employer to benefit from perpetrating fraud upon an employee contravenes public policy, an exception to the doctrine of employment at-will. The Supreme Court has recognized that "[n]o one shall be permitted to profit by his own fraud, or to take advantage of his own wrong, or to found any claim upon his own iniquity, or to acquire property by his own crime. These maxims are dictated by public policy, [and] have their foundation in universal law administered in all civilized countries . . ." (Internal quotation marks omitted.) Thompson v. Orcutt, 257 Conn. 301, 316, 316, 777 A.2d 670 (2001) (applying doctrine of unclean hands on public policy grounds to prevent a plaintiff that committed fraud from retaining interest in mortgage); Gray v. Graham, 87 Conn. 601, 606, 89 A. 262 (1914) (fraud on a corporation is against public policy); Board of Education v. Local 566, Council 4, AFSCME, 43 Conn. App. 499, 504, 683 A.2d 1036 (1996), appeal denied, 239 Conn. 957, 688 A.2d 327 (1997) (requiring the plaintiff to reinstate the grievant convicted of fraudulently diverting union funds to his own use is contrary to public policy); State v. Council 4, AFSCME, 27 Conn. App. 635, 641, 608 A.2d 718 (1992) ("trial court properly found that the arbitration award contravened Connecticut's public policy of not countenancing the knowing misappropriation of state moneys by state officials or employees"); Schmidt v. Yardney Electric Corp., 4 Conn. App. 69, 74-75, 492 A.2d 512 (1985) (dismissal of an employee for reporting fraud contravenes public policy). In Sheets v. Teddy's Frosted Foods, Inc., 179 Conn. 471, 474, 480, 427 A.2d 385 (1980), the Supreme Court determined that even an at-will employee could not be discharged in contravention of a clear mandate of public policy. See also Parsons v. United Technologies Corp., 243 Conn. 66, 76-77, 700 A.2d 655 (1997). Accordingly, the doctrine of employment-at will does not require the court to strike the count of the plaintiff's complaint alleging fraud.
The motion to strike is denied.
BY THE COURT
Bruce L. Levin Judge of the Superior Court CT Page 6862