Opinion
No. FST CV 07-4011910 S
October 2, 2009
MEMORANDUM OF DECISION
The plaintiff, Turn of River Fire Department, Inc. (TOR), a volunteer fire company located in the Turn of River section of Stamford, Connecticut, sued three defendants: The City of Stamford, its Mayor, Dannel F. Malloy and its Director of Public Safety, Health and Welfare, William S. Callion, Jr., for various forms of legal relief including money damages essentially arising out of the City's December 4, 2007 termination of its Management Agreement with TOR.
The operative complaint is the three-count Revised Second Amended Complaint dated January 26, 2009 (#175.00) claiming; injunction, breach of contract and specific performance. This three-count complaint contains sixty-five separate numbered paragraphs one of which contains fifteen lettered sub-paragraphs. The plaintiff's Claims for Relief seeks four remedies. (1) "As to the First Count, a permanent injunction, restraining and enjoining the defendants from continuing to implement the plan to reorganize the City's fire services, and commanding the defendants to restore the status quo by providing TRFD with not less than 17 paid firefighters (including a Fire Marshal) under the command, control and management of TRFD." (2) "As to the Second Count, damages." (3) "As to the Third Count, a decree compelling the City to perform its obligations under the Management Agreement to provide TRFD with not less than 17 paid firefighters (including a Fire Marshal) under the command, control and management of TRFD" and (4) "A permanent injunction, without bond, enjoining and restraining the defendants from unilaterally cancelling the Management Agreement and/or ordering the reinstatement of same." The plaintiff made these claims more specific in Plaintiff's Post-Trial Brief dated May 29, 2009 (#184.10) in which the following five specific remedies were claimed.
Accordingly, TOR respectfully requests judgment in the case, awarding it money damages in the total amount of $2,140,009.00 ($1,852,337 for paid personnel and $287,762 for operating costs), plus prejudgment interest and taxable costs of suit. TOR also claims equitable relief restraining and enjoining the defendants, CITY OF STAMFORD (the "City"), DANNEL F. MALLOY ("Mayor Malloy") and WILLIAM S. CALLION, JR. ("Director Callion") (collectively, the "Defendants"), from continuing to implement the plan to reorganize the City's fire services within TOR's fire service district or fire stations; commanding the City to provide TOR with and/or funding for not less than 17 paid firefighters (including a Fire Marshal) under the command, control and management of TOR; and restoring and specifically enforcing the Management Agreement.
The three defendants all were represented by the Stamford Corporation Counsel who filed an Answer and nine Special Defenses dated February 10, 2009 (#180.00). The nine special defenses combined contain twenty-nine separate numbered paragraphs. Each Special Defense appears to be addressed to the enforceability of the Management Agreement and in some respects are duplicative of other Special Defenses. The nine Special Defenses are as follows: (1) The Management Agreement contains provisions for alternate dispute resolution, (2) It is against public policy to mandate that the City provide funds to a non-governmental organization on an ongoing (perpetual) basis, (3) It would be a violation of labor law and/or a violation of collective bargaining agreement and/or contrary to public policy if the City were to provide paid firefighters who were not members of Stamford Fire and Rescue and were not represented by the union, (4) It is against public policy to compel the City to perform in accordance with the Management Agreement purporting to be perpetual in nature absent consent of both parties, (5) The Stamford Charter forbids expenditures for any purpose beyond the level of the annual appropriation for such purpose, such that there is an implied provision in every contract that the City's obligations are subject to the availability of appropriated funds, (6) It is a matter of public policy, law and equity that the City cannot be compelled to continue to rely on services of an agent or representative in perpetuity, (7) By giving priority to its own interests, TOR effectively repudiated the Management Agreement, (8) Laches and, (9) TOR engaged in mediation in bad faith, has unclean hands and thus cannot seek equitable relief.
The defendants also filed a single-count Counterclaim in thirteen numbered paragraphs alleging a variety of facts, among them is TOR's pattern of conduct claiming that TOR's conduct constitutes a repudiation of TOR's obligations to the City and/or otherwise justifies the City's termination of the Management Agreement. The Counterclaim seeks a declaratory relief, damages and "such other relief as the Court deems appropriate." The City's Claim for Declaratory Relief contains ten numbered paragraphs all of which seek to confirm the City's December 4, 2007 termination of the Management Agreement. Those ten paragraphs of Declaratory Relief request: "The Management Agreement between the City of Stamford and Turn of River Fire Department has been terminated." The City had the inherent power to terminate the Management Agreement once the City has determined that it is no longer in the City's best interest to continue the relationship. The City had the inherent power to terminate the Management Agreement as the City cannot be compelled to rely on the services of an agent/representative/manager in perpetuity with respect to a governmental function. "It is contrary to public policy to bind the City under the terms of the Management Agreement in perpetuity in absence of consent of Plaintiff." TOR's insistence that the City subordinate the City's interest to those of TOR constituted a repudiation of the Management Agreement. The only remedy available to TOR if the City is found to have breached the Management Agreement would be a claim for damages. "The termination of the Management Agreement by the City of Stamford was justified by financial exigencies existing at the time of the termination." "The termination of the Management Agreement by the City of Stamford was not wrongful" and "The City's termination of the Management Agreement is not a matter that the City can be compelled to submit to arbitration under that Management Agreement." The tenth claim for Declatory Relief states: "If the Court determines that the Management Agreement is still valid and in effect, Turn of River Fire Department's conduct toward City employees assigned to Plaintiff's fire station justifies the City's refusal to allow Plaintiff to act as the City's representative for purposes of collective bargaining."
To these nine Special Defenses and the one-count Counterclaim TOR filed a Reply and Matters in Avoidance dated February 12, 2009 (#182.00). Since the nine Special Defenses filed by the City in the main contain more than one numbered paragraph, the plaintiff's Reply also contains a multiple paragraph response. In essence the plaintiff denies each and every Special Defense without conceding the validity of any of the claims raised by these Special Defenses.
In addition, TOR filed a Matter in Avoidance addressed to the City's Sixth Special Defense, the City's Sixth special Defense "As a matter of public policy, law and equity, Defendant, City of Stamford cannot be compelled to continue to rely on the services of an agent or representative (especially with respect to collective bargaining obligations), in perpetuity, when the agent/representative no longer is willing or able to act in accordance with the principal's interests and wishes but instead has indicated that its own interest will be given priority." To this Sixth Special Defense, TOR has filed a two-paragraph Matter in Avoidance essentially alleging that the City targeted the volunteer fire departments for layoffs, even though that would necessarily increase overtime costs and even though there were excess paid firefighters who could have been laid off.
The City's Ninth Special Defense contains eight sub-paragraphs the last of which states: "Such bad faith, in turn, deprives Plaintiff of the ability to claim that it is seeking equitable relief with clean hands." To this Ninth Special Defense, TOR has filed an eight-paragraph Matter in Avoidance. One of the objections alleged by the City in its Ninth Special Defense was TOR's June 8, 2008 membership vote rejecting an agreement reached by mediation between the representatives of the parties pursuant to the Management Agreement. The Matter of Avoidance explains in detail the circumstances surrounding the vote of TOR's membership.
To the two Matters of Avoidance to the Sixth Special Defense and Ninth Special Defense, the City filed a response dated May 12, 2009 pleading (#183.00) denying the affirmative allegations in avoidance of the defendants' pleadings. As to the Counterclaim TOR filed an Answer addressed to each of the thirteen paragraphs. TOR filed no Special Defenses or other pleadings addressed to the Counterclaim. Therefore, the pleadings were closed on May 12, 2009.
This case was commenced by an application for a temporary injunction to prevent the layoff of paid firefighters assigned to TOR in the Turn of River section of Stamford. A temporary ex parte injunction was entered by Judge Downey on June 22, 2007 (#101.00) and an Order to Show Cause was issued setting forth a hearing date of July 9, 2007 (#102.00). After an evidentiary hearing, Judge Karazin filed a Memorandum of Decision on the Motion for Temporary Injunction dated July 30, 2007 (#119.00). Judge Karazin's Order in the Memorandum of Decision stated: "Accordingly, the court continues the injunction set in place by Judge Downey and orders pursuant to the agreement Exhibit 3 paragraph 8 and following, mediation which if unsuccessful, is to be submitted to binding arbitration. The terms of the agreement are to be complied with concerning these issues: A dispute resolution process is to be completed by September 17, 2007." The City took an appeal from Judge Karazin's decision (#124.00) and later withdrew that appeal on March 28, 2008 (#152.00). The temporary injunction prevented the layoff of any of the seventeen paid firefighters assigned to TOR. This court dissolved the injunction during the trial phase of this case on January 5, 2009 in pleading #170.00, since there was no longer a threat of layoffs of the paid firefighters and the seventeen paid firefighters were no longer assigned to TOR. After July 30, 2007 the parties engaged in mediation pursuant to the March 10, 2000 Management Agreement. An agreement was reached subject to the approval of the TOR membership and the appropriate Boards of the City of Stamford. The membership of TOR voted not to approve the terms of the mediation on June 8, 2008. Neither party has requested binding arbitration pursuant to the Management Agreement.
This matter was assigned to this court for trial. A number of pretrial motions were heard and decided by this court including the plaintiff's Motion for Contempt dated December 7, 2007 (#140.00), plaintiff's Motion for Contempt dated June 26, 2008 (#163.00) and defendants' Motion to Strike dated March 6, 2008 (#151.00). The parties agreed to consolidate this instant case with the pending lawsuit entitled Turn of River Fire Department, Inc. and Matthew Maounis v. City of Stamford and Dannel F. Malloy, FST CV 07-4014450 S.
In that companion lawsuit the plaintiff filed a one-count verified complaint dated May 6, 2008 seeking a declaratory judgment, a writ of mandamus and injunction, all of these claims seeking essentially the same remedy that; "The defendants must continue to raise and pay over to The Turn of River Fire Department, Inc., tax money sufficient to sustain the company." The plaintiffs in that case were represented by the same counsel that represents TOR in this instant case. The two named defendants were represented by the same City of Stamford Corporation Counsel. The plaintiffs sought two remedies in that May 6, 2008 case; an award to TOR of $287,762 for the 2008-2009 fiscal year "operating budget" already approved and allocated by the City to TOR and equitable relief precluding the City and the Mayor from diverting tax dollars paid by the plaintiff, Matthew Maounis, for fire protection services to the Stamford Fire and Rescue Fire Department. To this May 6, 2008 complaint the City filed eight Special Defenses. To the Third and Seventh Special Defenses, the plaintiffs filed Matters of Avoidance. The pleadings were closed and trial commenced on both docket numbers, FST CV 07-4011910 S and FST CV 08-4014450 S. The parties agreed that all testimony, exhibits and briefs would be applicable to both cases, both cases would be tried simultaneously as consolidated matters and separate Memoranda of Decision would be issued by this court in each of the two docket numbers.
The trial commenced in January 2009 and concluded after twenty-two days of evidence and argument on June 5, 2009. On June 24, 2009 the court issued a two-page Memorandum of Decision in Turn of River Fire Department, Inc. and Matthew Maounis v. City of Stamford and Dannel F. Malloy, docket number FST CV 08-4014450 S (#133.00). The court found the issues for the defendant, Dannel F. Malloy, on the claims made by the plaintiff TOR and Matthew Maounis. The court denied Matthew Maounis' declaratory judgment as against the City of Stamford. The court entered the following judgment in favor of TOR against the City of Stamford. "A Judgment will enter in favor of Turn of River Fire Department, Inc., as against the City of Stamford in the amount of $287,762, in the form of an injunction, that the City of Stamford must raise and pay over to Turn of River Fire Department, Inc. said sum of $287,762 on or before June 30, 2009." The court ended its two-page June 24, 2009 Memorandum of Decision with the following sentence "This Memorandum of Decision will be articulated at a later date by the undersigned in a written Memorandum of Decision in excess of twenty-five pages. This Memorandum of Decision dated June 24, 2009 is a final judgment. It is not an interlocutory judgment. P. B. § 61-1." On August 11, 2009 this court in docket number FST CV 08-4014450 S filed a fifty-seven-page articulated Memorandum of Decision (#140.10) restating the same orders set forth in the two-page June 24, 2009 Memorandum of Decision (#133.00).
Although this instant case started out as one-count complaint for injunctive relief to prevent the layoff of seventeen paid firefighters assigned to TOR, it is now become two separate lawsuits that total four counts in the plaintiff's complaints, a one-count counterclaim, seventeen Special Defenses and four Matters of Avoidance, essentially all revolving around a determination of the validity of a Management Agreement entered into by the parties on March 10, 2000. In response to this court's June 24, 2009 decision in FST CV 08-4014450S, the City took an appeal (#132.00). The City filed a Motion for Stay of Execution (#136.00) causing various pleadings to be filed by both parties and a hearing to be held September 8, 2009. The court's fifty-seven-page articulated Memorandum of Decision was met with a Motion to Reargue and/or Correct itemizing eleven separate issues. A hearing has not been scheduled on this Motion to Reargue and/or Correct. At all times during the post-June 24, 2009 decision both parties were aware that this court intended to render a decision in this instant case on the underlying Management Agreement as close to the 120th day as possible. In that time the parties would be able to digest the effect of this court's June 24, 2009 Memorandum of Decision in the companion case and confer with each other. The court informed the parties after the June 24, 2009 decision that they should engage in settlement discussions and/or mediation in an attempt to resolve the disputes between the parties. The court noted that the Management Agreement contained a binding arbitration provision that neither party has taken advantage of. The court has not been informed as to whether the parties have entered into further alternate dispute resolution and/or settlement discussions.
The court makes the following findings of facts and legal conclusions.
When boiled down, the essence of all these pleadings is a contract dispute over the validity of the March 10, 2000 Memorandum of Agreement, Ex. 3. The Memorandum of Agreement was entered into between Turn of River Fire Department, Inc. (referred to in Exhibit 3 as the "Company"), and the City of Stamford ("City"). TOR is a private non-profit volunteer fire company incorporated in the State of Connecticut that owns and possesses two fire stations and various fire apparatus and vehicles that it uses to provide fire protection and emergency services within the Turn of River area of the City of Stamford. The City of Stamford is a municipality within the State of Connecticut, which pursuant to its City Charter provides fire protection and emergency services in the downtown area of the City of Stamford through its Stamford Fire and Rescue Department. At its inception TOR was an entirely volunteer fire company and all its fire protection and emergency services were performed by volunteers. TOR had no paid personnel. Later TOR hired its own paid firefighters. In the 1940s the Borough of Stamford merged with the Town of Stamford into one municipality known as the City of Stamford. The City then adopted a charter that provided for two separately funded levels of fire protection and emergency services; volunteer and paid. The volunteer fire protection and emergency services are provided by five volunteer companies of which TOR is one. The paid firefighters are known as the Stamford Fire and Rescue Department. As of April 1999 TOR had sixteen paid firefighters working at its two fire stations and one paid fire marshal.
The Memorandum of Agreement executed by TOR and the City of Stamford addressed those seventeen paid personnel and the provision of fire protection and emergency services in the Turn of River area. The parties and the court have all referred to the Memorandum of Agreement as the Management Agreement. They are one and the same. Paragraph 1 of the Memorandum of Agreement states: "The City shall assign each of the seventeen (17) Career Fire Service Personnel who, prior to April 1, 1999, had been employed by the Company, to the Company. No further City employee shall be assigned to the Company without the Company's advance written approval and without possessing CT State Certified Fire Fighter I and MRT certifications at the time of such appointment." Paragraph 2 states: "During the term of this Agreement, the Company shall continue to maintain complete operational control and ownership over its fire stations and fire apparatus and the Company management shall retain complete authority over its response and chain of command responsibilities within the Company's fire service district, which authority shall include, but not be limited to, the authority to direct the Career Fire Service Personnel assigned to the Company." Paragraph 5 states: "The Company shall continue to retain the right and obligation to perform all fire marshal services required within the Company's fire district." Paragraph 6 states: "For the term of this Agreement, the City shall provide the Company with an annual budget allocation, to be determined through the regular budgetary process applicable to City departments, in an amount sufficient to pay the Company's cost for its operation as a volunteer fire company." Paragraph 7 states: "This Agreement shall continue indefinitely unless otherwise mutually agreed to by the parties." Paragraphs 8, 9, 10, 11 and 12 related to alternate dispute resolution mediation and arbitration. Although there was some evidentiary dispute concerning the effective date of this Agreement, all parties agreed that after April 1, 1999, the seventeen paid firefighters that had been employed by TOR were no longer employed by TOR but were employed by the City of Stamford and all seventeen paid firefighters including the one fire marshal were assigned by the City to TOR.
In May 16, 2007 the City announced a plan (Interim Fire Department Action Plan) to reorganize all fire services that called for the transferring of certain of the seventeen career fire service personnel of TOR and further provided that the direction and control of the transferred firefighters, the authority over their response, their chain of command responsibilities and their work rules, regular, overtime and private duty assignments and work schedules would be with the Stamford Fire and Rescue Department and not TOR. The reorganization plan called for the operational control and ownership of the transferred apparatus equipment to remain with the City. On May 17, 2007 the City threatened to layoff the paid firefighters assigned to TOR if TOR did not agree to the reorganization plan. TOR did not agree to the reorganization plan. On June 7, 2007 the City proposed laying off five firefighters assigned to TOR effective June 29, 2007. Under the collective bargaining agreement in effect in June 2007, some Stamford Fire and Rescue paid firefighters would have been laid off and only one TOR paid firefighter. No Stamford Fire and Rescue paid firefighters were proposed to be laid off. TOR commenced this injunction action to prevent those layoffs. The court entered a June 22, 2007 injunction preventing the layoffs.
On June 1, 2007 the City notified TOR by e-mail that: "The City of Stamford plans to terminate the 1999 Memorandum of Agreement between the City of Stamford and the Turn of River Fire Department effective December 4, 2007." On June 4, 2007 the City sent a letter to TOR stating: "Please be advised that the City has elected to terminate the 1999 Memorandum of Agreement between the City of Stamford and the Turn of River Fire Department, effective December 4, 2007." Two other Stamford volunteer fire departments, Belltown and Glenbrook (New Hope), had similar Management Agreements with the City executed in the 1999-2000 period. Those two Management Agreements gave either party the right to terminate the Management Agreement upon 180 days notice. TOR's agreement did not contain a 180 days clause. During its negotiation of the TOR Management Agreement in 1999 the City wanted a 180-day notice to terminate clause and TOR would not agree. The current paragraph 7 was agreed on. The Belltown and Glenbrook Management Agreements were terminated by the City by a June 4, 2007 notice effective December 4, 2007.
The City's fiscal year is July 1 through June 30. Although the plan of reorganization was to be imposed for the fiscal year commencing July 1, 2007 TOR was included within the regular 2007-08 budgetary process. Since the Management Agreement was entered into, TOR has received two monetary benefits from the City; the paid firefighters assigned to the two TOR fire stations were paid their salaries and benefits directly by the City and TOR received City funds in the form of an "operating budget." For the 2007-08 fiscal year TOR received its operating budget from the City consistent with previous operating budgets. In addition, the 2007-08 budget approved City payment of the salaries and benefits for the seventeen paid firefighters assigned to TOR in the sum of $1,852,337. TOR had requested $1,991,639. The City had approved $1,853,835 for the 2006-07 fiscal year for the salary and benefits of these seventeen paid firefighters. Despite the notice of cancellation of the Memorandum of Agreement the City still assigned all seventeen paid firefighters to TOR until June 30, 2008.
In March 2008 the Mayor submitted a proposed operating budget for the fiscal year 2008-09 for TOR for $40,000 for fuel only. TOR had requested $350,000 for its 2008-09 operating budget. The approved 2008-09 budget contained $287,762 for "Turn of River Area Fire Support" and $40,000 to TOR for fuel. The total of those two, $40,000 and $287,762, is $327,762 and was in the range of prior approved operating budgets the City had allocated to TOR in past years. TOR's approved operating budget for the previous fiscal year 2007-08 was $324,600. The $40,000 allocated to TOR was insufficient for TOR to pay its operating expenses for 2008-09. TOR had insufficient assets, income and income potential to meet its operating budget for 2008-09. As a result TOR closed one of its two fire stations and sold a fire truck. There is a good chance that TOR may go out of business and no longer be capable of providing fire protection and emergency services in the Turn of River area if the operating budgets are not approved and paid to TOR in the $320,000 range.
On June 28, 2008 effective July 1, 2008, the City acting by the Chief of the Stamford Fire and Rescue Department issued an administrative order removing the seventeen paid fire fighters from the TOR fire stations and creating two new temporary fire protection facilities located in the Turn of River area to be manned by paid firefighters. Since July 1, 2008 the seventeen paid firefighters have not been located at the two TOR fire stations and have not been under the command and control of TOR's volunteer officers. For the 2008-09 fiscal year the City only paid TOR $40,000 for fuel costs. The City did not pay any of the $287,762 to TOR. The $287,762 was used by the City to pay for the temporary fire services facilities it created in the Turn of River area. TOR has been providing fire protection and emergency services to its assigned area after July 1, 2008. The trial ended on June 5, 2009 and the court has no evidence of any financial facts thereafter.
That $287,762 is the sum that this court enjoined and required the City to pay to TOR in its June 24, 2009 Memorandum of Decision in the companion case. Although this court reviewed the Memorandum of Agreement in the companion case, the $287,762 award in the companion case was based on the City's budgetary impropriety and did not deal with the breach of contract claim.
"It is TOR's position that paragraph #7 of the Management Agreement did create, as a matter of law, perpetual or on-going rights on behalf of the plaintiff (or for so long as it continues to exist to provide fire fighting services in the Turn of River fire service district), and corresponding obligations on the part of the City. The paragraph #7 provision was specifically negotiated and demanded by TOR for that very reason. The City, after having entered into management agreements with Belltown and Glenbrook containing 180-day notice cancellation provision, conceded the point and executed the Management Agreement with paragraph #7 in tact. Accordingly, the Management Agreement cannot be unilaterally cancelled. 17B C.J.S. Contracts § 439." Plaintiff's Post-Trial Brief dated May 29, 2009, page 25 (#184.10).
One of the issues between the parties is the legal effect of paragraph 7 of the Management Agreement: "This Agreement shall continue indefinitely unless otherwise mutually agreed on by the parties." A unilateral termination of the Management Agreement is not permitted by its terms. The defendants have claimed in various Special Defenses that the Management Agreement cannot bind the City in perpetuity for personnel services with a non-governmental entity. Both post-trial briefs have assumed that paragraph 7 is an in perpetuity clause. This court is not so sure. "Nowhere in the provision appear any of the words customarily used to create a perpetual lease, such as "forever," "for all time" and "in perpetuity," words whose presence or absence in a lease is of considerable significance to a court in deciding whether a right of perpetual renewal was intended by the parties." Lonergan v. Connecticut Food Store, 168 Conn. 122, 126 (1975). ("shall automatically be extended for a period of one year and thence from year to year" does not create a perpetual lease.) In a statute of frauds case involving a brokerage service contract it was stated: "It is sometimes stated that a contract requiring continuing performance may be terminated at any time by either party upon the giving of reasonable notice and that, since such termination may take place within one year, the agreement is not within the statute . . . Where no limitation as to time is expressed in the contract and it is not for personal services and does not require the imposing of special confidence, or otherwise, by its inherent nature, does not imply a power of revocation, it cannot be regarded as terminable except by mutual consent, and it is presumably intended to be permanent and perpetual in the obligation it imposes." Burkle v. Superflow Mfg. Co., 137 Conn. 488, 496-97 (1951). "The contract is executory and bilateral, calling for continuing service as brokers by the plaintiffs and compensation for these services by the defendant. In such situations the great weight of authority is that it is presumed that the parties did not intend to bind themselves in perpetuity. 1 Willinston, Contracts (Rev. Ed) p. 101. It is presumed to be their intent, unless the contrary clearly appears, that they will continue to he bound only so long as they are mutually agreeable to be bound. It is therefore held that the contract is terminable at the will of either party and upon reasonable notice to the other." Burkle v. Superflow Mfg. Co., supra, 137 Conn. 499 (Dissent).
Restrictive covenants usually are perpetual. The law provides for relief in the form of litigation to declare those restrictions in perpetuity no longer effective. Such relief is sparingly granted. "It should be granted with caution and only when the motivating considerations are not only ample but so settled and lasting that it is manifest that the purpose of the original restriction has been permanently frustrated. The change must be so great or clearly to neutralize the benefits of the restrictions to the point of defeating the object and purpose of the covenant." Fidelity Title Trust Co. v. Lomas Nettleton, 125 Conn. 373, 376-77 (1919). This proposition may be applicable in determining under what circumstances the City has the right to terminate a perpetual contract.
The word "perpetual" or its like does not appear in paragraph 7. The word "indefinitely" does. Does "indefinitely" mean "perpetual?" The court could locate no Connecticut case on point. This question is a matter of common law. There was a personal service contract case lawsuit instituted by a private entity against a municipality in which the issue was whether the contract was for "an indefinite period" or "in perpetuity." That case fully relied on English common law on terminating of contracts of unspecified duration. Handy Cash v. Matjhabeng Munisipoliteit, In the High Court of South Africa, Orange Free State Provincial Division, Case No. 2869/203 (October 23, 2003, Ebrahim, J.).
Both parties assumed that paragraph 7 was perpetual. Both parties tried this case based on paragraph 7 containing in perpetuity language. Neither party argued nor briefed whether the word "indefinitely" in paragraph 7 meant anything other than perpetual. This court therefore will not reach or further discuss that issue. New York Annual Conference v. Fisher, 182 Conn. 272, 285 (1980). The court assumes for the purpose of this Memorandum of Decision that paragraph 7 contains perpetual language and that the parties so intended.
The Second Count of the Complaint alleges breach of the Management Agreement and seeks money damages for the breach of contract.
The court finds that the City has not complied with the Memorandum of Agreement (Management Agreement), Exhibit 3 in the following respects:
(1) The city's unilateral termination effective December 4, 2007 is not authorized by the terms of the Management Agreement; (2) Paragraph 7 of the Management Agreement only permits the agreement to be terminated by the mutual agreement of the parties and TOR did not agree to the termination; (3) Paragraph 7 of the Management Agreement contains no termination date since "This Agreement shall continue indefinitely . . ."; (4) Although other Management Agreements entered into by the City in 1999-2000 with the two other volunteer fire departments contained a provision permitting termination by either party upon 180 days notice, the TOR Management Agreement contained no such provision; (5) The City's termination of three volunteer fire departments Management Agreements effective December 4, 2007 evidences the intent of the City to disregard paragraph 7 of the TOR Management Agreement; (6) The City did not assign any paid firefighters to TOR after July 1, 2008 as required by paragraph 1; (7) The City's reorganization plan was in conflict with paragraph 2 in that TOR would no longer "maintain complete operational control . . . over its fire stations and fire apparatus . . ."; (8) The City's reorganization plan was in conflict with paragraph 2 in that TOR would no longer "retain complete authority over its response and chain of command responsibilities . . ."; (9) The City's reorganization plan was in conflict with paragraph 2 in that TOR would no longer have "the authority to direct the Career Fire Service Personnel assigned to the Company . . ."; (10) The City's reorganization plan was in conflict with paragraph 5 in that TOR would no longer "retain the right and obligation to perform all fire marshal services required within the Company's fire district"; (11) The City's failure to appropriate the requested $287,762 for the TOR's operating budget for the 2008-09 fiscal year did not comply with paragraph 6 in that the City failed to provide the Company with the $287,762 that had been approved "through the regular budgetary process applicable to City departments"; (12) The City did not comply with paragraph 6; "No City official shall withhold or delay the payment of any budgeted appropriations made to the Company" by failing to pay to TOR the $287,762 for fiscal year 2008-09; (13) Although the City Charter and TOR Management Agreement provide no established level of funding, the City did not engage in a good faith budget process as to TOR's 2008-09 operating budget.
The court must declare the Management Agreement in full force and effect and must find that the City breached the Management Agreement unless the City is successful in one or more of its nine Special Defenses and Counterclaims. The court will now review those Special Defenses and Counterclaims.
First Special Defense: Both parties engaged in the dispute resolution proceedings established by paragraph 8 of the Management Agreement. Although the negotiating representatives of the parties reached an agreement with the assistance of the mediator in the late spring of 2008, that agreement was conditioned upon the approval by the general membership of TOR and the various Boards of the City of Stamford. TOR voted against the mediated agreement on June 8, 2008. The rejection was in good faith. Neither party, even though suggested by the court, elected to engage in further alternative dispute resolution pursuant to paragraph 9 of the Management Agreement: "If the parties are unable to resolve the dispute through mediation, either party may submit the dispute to binding arbitration as set forth below." This court has not been asked to enforce paragraph 9 although it may be possible for either party to elect binding arbitration under paragraph 9 after the issuance of this Memorandum of Decision.
The issues on the First Special Defense are found for the plaintiff.
Second Special Defense: The City appears to be claiming that a perpetual personnel service contract entered into by the City cannot be enforced. The City cites insufficient legal authority for that proposition. The parties have abided by the terms of the Management Agreement for ten years. Although it may be that a perpetual agreement may be terminated by the City under this argued legal theory, the City has failed to prove its right to so terminate based on the facts that existed as of December 4, 2007.
The issues on the Second Special Defense are found for the plaintiff.
Third Special Defense: The City claims that the enforcement of the Management Agreement would violate labor law and/or the November 30, 2007 collective bargaining agreement entered into between the City and Local 786, the Union of its paid firefighters. Ex. 26. There was a previous collective bargaining agreement that was negotiated and signed by the City, TOR and Local 786. That collective bargaining agreement ceded command and control of the paid firefighters assigned to TOR to the volunteer officers of TOR and was in effect until November 30, 2007. The November 30, 2007 collective bargaining agreement was not negotiated or signed by TOR and placed all paid firefighters including those assigned to TOR under the command and control of the Stamford Fire and Rescue Department of the City of Stamford. After November 30, 2007 the seventeen paid firefighters assigned to TOR were no longer under the command and control of the TOR volunteer officers as required by the Management Agreement.
This Third Special Defense is addressed more to the relief requested than to the right of the City to terminate the Management Agreement. Although some of the terms of the Management Agreement may conflict with the November 30, 2007 collective bargaining agreement, not all terms do conflict. Local 786 was not made a party to this lawsuit nor did Local 786 intervene. The plaintiff amended its complaint removing any allegations addressed to declaring the November 30, 2007 collective bargaining agreement invalid by reason of its conflict with the Management Agreement. The City appears to have terminated the Management Agreement so it could enter into the November 30, 2007 collective bargaining agreement. The City may be faced with the enforcement of both agreements. The City has not provided sufficient authority that all of the terms of the Management Agreement conflict with the Connecticut MERS statutes or the November 30, 2007 collective bargaining agreement. Although the Union President did testify that evidence did not include any claimed conflict between the November 30, 2007 collective bargaining agreement and the Management Agreement. Therefore, that conflict was not before the court. In addition, neither party raised the issue of whether the terms of the Management Agreement were non-mandatory subjects of bargaining and thus not in violation of the Municipal Employees Relations Act and/or collective bargaining agreement. These issues were not fully presented to this court.
The issues on the Third Special Defense are found for the plaintiff.
Fourth Special Defense: This appears to raise the personnel service contract in perpetuity argument already dealt with in the Second Special Defense.
The issues in the Fourth Special Defense are found for the plaintiff.
Fifth Special Defense: The court agrees that the Charter as well as the Management Agreement requires the use of the regular budget allocation process. In this case the regular budget allocation process for the 2008-09 fiscal year was utilized and the $287,762 was authorized for the Turn of River Fire Services Area. This Fifth Special Defense relates only to the calculation of damages.
The issues on the Fifth Special Defense are found for the plaintiff.
Sixth Special Defense: This appears to raise the personnel service contract in perpetuity argument already dealt with in the Second Special Defense.
The issues on the Sixth Special Defense are found for the plaintiff.
Seventh Special Defense: The City is claiming that TOR was only acting in its own interests. In fact TOR's primary argument is that the City was seeking to assume the command and control of all paid firefighters in contravention of paragraph 2 of the Management Agreement, an agreement that both parties have been complying with for ten years. TOR also had the right to reject the mediation agreement. TOR had the right to seek court injunctive relief to prevent the sudden layoffs of its paid firefighters in 2007. The City has failed to sustain its burden of proof.
The issues on the Seventh Special Defense are found for the plaintiff.
Eighth Special Defense: The City has failed to prove the elements of laches. TOR attempted to be involved in the collective bargaining agreement in 2007. TOR negotiated and signed the previous collection bargaining agreement.
The issues on the Eighth Special Defense are found for the plaintiff.
Ninth Special Defense: The City has alleged various facts to support its claim that TOR acted in bad faith and cannot obtain equitable relief since TOR has unclean hands. The City in its May 28, 2009 Defendant's Trial Brief summed up these arguments as follows: "TOR and its members claim that they are `entitled' to whatever it is they believe they need, or whatever they demand, regardless of the value of that which is provided by the Company in return, and regardless of the financial concerns of the City. Reality is a bit less indulgent. When a non-profit corporation such as TOR, answerable to no one but its members (including Mr. Maounis), lays claim to public funding, then even in the absence of any explicit right to do so, public officials must have the ability — and at the appropriate time, the obligation — to say: enough. After TOR rejected the May 2007 reorganization plan, after it rejected and actively opposed the City's lawful/rightful attempt to lay off paid personnel, and after it rejected the mediated agreement unanimously — saying "enough" (through the budget process) was the only option left." The court finds that the TOR's membership had the right to reject the mediation agreement on June 8, 2008. Actions by the Union and the City's budgets proposal were change of circumstances that occurred after the mediated agreement and the June 8, 2008 vote. TOR was trying to retain command and control of the paid firefighters pursuant to the Management Agreement and require the minimal TOR layoff under the then existing collective bargaining agreement. The court finds that the City has not proven TOR's bad faith in rejecting the mediated agreement. TOR's actions and assertions in responding to the proposed layoffs and minimum staffing made between the parties and in testimony in this trial have not been proven by the City to be acts of bad faith sufficient to give the City the right to terminate.
The issues in the Ninth Special Defense are found for the plaintiff.
Counterclaim: Although the City's counterclaim contains ten subparagraphs in its Claim for Relief, in effect the City is requesting one order; that this court declare "The Management Agreement between the City of Stamford and Turn of River Fire Department has been terminated."
Each of the issues raised by the City in its nine Special Defenses is realleged in the counterclaim.
In addition, the City claims that TOR has a fiduciary duty to the City.
The City claims that the previous alleged bad faith acts of TOR in placing its own interests ahead of the general public and the City violates that fiduciary obligation. The City has not briefed that fiduciary argument. In any event the court has already concluded that the TOR had the right to enforce the terms of the Management Agreement that has all seventeen paid firefighters assigned to TOR under the command and control of the volunteer officers of TOR. The City has not offered either a factual or legal basis for this court to conclude that TOR has violated a fiduciary duty when it insists upon the performance of a contract entered into and complied with by both parties for ten years. Although the court has found that TOR engaged in acts that were "petty" in the companion case, the court also found that the paid firefighters also engaged in similar conduct. That conduct by TOR does not give the City the unilateral right to terminate the Management Agreement.
The City claims they had a budgetary crisis that prompted the termination of the Management Agreement. It further claims that the proposed reorganization plan and the termination of the Management Agreement would reduce overtime at the TOR fire stations. The defendants have failed to prove that the $545,000 fire department budget cutbacks that occurred for 2008-09 fiscal year were not routine governmental budget cutbacks of a small percentage (2.5%) of the budget but were of an emergency financial nature. A municipal tax increase of 2.5% cannot be an emergency financial crisis as a matter of law.
The City claims they have the right to terminate the agreement because the volunteers did not agree to live within the budget and incurred excessive overtime costs. The City has failed to sustain its burden of proof on this issue.
The issues on the Counterclaim are found for the plaintiff.
The court finds that the City's unilateral notice of termination effective December 4, 2007 did not terminate the Management Agreement. The court finds that the Management Agreement was and still is in full force and effect.
The court finds that the plaintiff has sustained its burden of proof that the actions of the City breached the March 2000 Management Agreement.
The court will now discuss the Second Count for breach of contact money damages. Paragraph 6 of the Management Agreement requires the City to "provide the Company with an annual budget allocation, to be determined through the regular budgetary process applicable to City departments." The City did allocate to TOR for the 2008-09 fiscal year commencing July 1, 2008 the sum of $40,000 plus $287,762 for fire protection services to the "Turn of River Fire Service Area" in the operating budget. The court finds that through the regular budgetary process for the 2008-09 fiscal year, the City allocated $327,762 for Turn of River fire protection and emergency services. As to the Second Count the court orders money damages as against the City in the amount of $287,762 in favor of TOR. The court will not award prejudgment interest.
TOR is claiming $1,852,337 as the costs that would have been incurred by the City had the seventeen paid firefighters been assigned to TOR for the 2008-09 fiscal year. None of those seventeen firefighters were paid by TOR after July 1, 2008. None of those seventeen firefighters were assigned by the City to the two TOR fire stations after July 1, 2008. TOR had no paid firefighters after July 1, 2008. TOR paid no firefighters after July 1, 2008. The City has paid the salary and benefits of those seventeen paid firefighters after July 1, 2008. The plaintiff has failed to sustain its burden of proof for the additional money damages of the $1,852,337 in the Second Count. The issues on the Second Count seeking money damages for breach of contract are found for the other two defendants, Dannel F. Malloy and William S. Callion, Jr.
As to the First Count the plaintiff is requesting as to the First Count "a permanent injunction, restraining and enjoining the defendants from continuing to implement the plan to reorganize the City's fire services, and commanding the defendants to restore the status quo by providing TRFD with not less than 17 paid firefighters (including a fire marshal) under the command, control and management of TRFD." TRFD is Turn of River Fire Department, Inc. (TOR). The City claims in its Second, Fourth and Sixth Special Defenses that the court has no authority to enter such an order for the provision of personnel services that would be permanent in nature. This court heard no evidence of events that occurred after June 5, 2009. The court notes that the Memorandum of Agreement states that in Paragraph 7 that it is perpetuity. The plaintiff's request for a permanent injunction request such relief in perpetuity. Tomasso Brothers, Inc. v. October Twenty-Four, Inc., 230 Conn. 641, 648 (1994). That relief in perpetuity cannot be granted by the court. The plaintiff's request for a permanent injunction as to the First Count is denied.
As to the Third Count the plaintiff requests "a decree compelling the City to perform its obligations under the Management Agreement to provide TRFD with not less than 17 paid firefighters (including a fire marshal) under the command, control and management of TRFD." In effect in the Third Count the plaintiff is asking for the similar relief of a permanent injunction in the form of an order of specific performance. In the Plaintiff's Post-Trial Brief (#184.10) the plaintiff is claiming what appears to be four forms of equitable relief: (1) an injunction restraining the defendants from continuing to implement the plan to reorganize the City's fire services within TOR's fire service district; (2) an injunction commanding the City to provide TOR with and/or funding for not less than seventeen paid firefighters; (3) an injunction that those seventeen paid firefighters be assigned to TOR under the command and control of TOR and (4) an order of specific performance ordering the restoration and enforcement of the Management Agreement. These four forms of relief request that this court order the provision of personnel services in perpetuity. This court will not enter an order of specific performance for personnel services in perpetuity. The court heard no evidence after the ending of this trial on June 5, 2009. It heard no evidence as to the 2009-10 budget or any financial facts after June 5, 2007.
The plaintiff is also requesting in its fourth Claim for Relief "a permanent injunction, without bond, enjoining and restraining the defendants from unilaterally cancelling the Management Agreement and/or ordering the reinstatement of same." The granting of such a permanent injunction would be to enforce a personnel service contract in perpetuity, which this court will not do. In addition, the court has found that the Management Agreement of March 11, 2000 is in full force and effect. The court expects both TOR and the City to abide by the terms of the Management Agreement. This request for a permanent injunction is denied.
ORDER
As to the First Count, the issues are found for all three defendants and the request for injunctive relief is denied.
As to the Second Count the court orders the City of Stamford to pay TOR money damages in the amount of $287,762. This sum is identical to the $287,762 ordered by the injunction in the case FST CV 08-40114450 S. No prejudgment interest is awarded. Only one payment of $287,762 is to be made by the City of Stamford pursuant to this order and/or the injunction in the previous case. The issues in the Second Count are found for the defendants, Dannel F. Malloy and William S. Callion, Jr.
As to the Third Count the court has already found that the Management Agreement has not been properly terminated and is currently in full force and effect. The issues in the Third Count are found for the three defendants.
The request for a permanent injunction is denied.