312 F.Supp.2d 238 (2004) | Cited 4 times | D. Connecticut | March 29, 2004


The plaintiffs, Richard J. Sartor and his wife, Diana Sartor, broughtthis diversity action against the Town of Manchester alleging breach ofcontract (counts one and two) and tortious breach of contract (countsthree and four) in connection with Mr. Sartor's retirement from hisposition as Town Manager.1 The plaintiffs seek declaratory andinjunctive relief,2 as well as compensatory and punitive damages.Pending is the plaintiffs' Motion for Summary Judgment [Doc. #7].

I. Facts3

Richard J. Sartor ("Sartor") was employed by the Town of Manchester("Town") for over twenty-one years. He started as the Town's Deputy Chiefof Police and later became its Town Manager. He held the position of TownManager for approximately twelve years. In accordance withPage 2the terms of the Town Charter, Sartor worked throughout his tenureas Town Manager without a contract and at the pleasure of the Town'sgoverning body, its Board of Directors ("Board"). Board members areelected biennially, in November, by Town voters.

Some time prior to 2001, Sartor and his wife began consideringretirement and a permanent move to their summer home in Rhode Island.When the Sartors received an offer to purchase their Manchester home inthe spring of 2001, they decided to consider the option of retirement inRhode Island more seriously. The Sartors subsequently entered into acontract to sell their Manchester home. The parties dispute whether theSartors then took steps to purchase a condominium in Manchester to liveduring the remainder of Sartor's tenure as Town Manager.

Sartor subsequently consulted with the Mayor and other members of theBoard concerning retirement options, and a severance agreement("Agreement") was generated as a result of those discussions. Sartoragreed to the terms of the Agreement and it was brought to the Board forits consideration. Section 6 of the proposed agreement provided thatSartor's unused accrued sick and vacation time would be considered aswages for the purpose of calculating his pension benefits after heretired. This amount — in excess of $80,000 — would havethe effect of increasing his annual pension payments.

On July 19, 2001, the Agreement was placed on the agenda of the Boardmeeting, which Sartor attended. After debate, the Board approved theAgreement by a vote of five to three, with Democrats and Republicansvoting along party lines. The Republican members of the Board votedagainst the Agreement because they disagreed with the enhanced pensionbenefits Sartor was to receive as part of his severance package. Afterthe Board approved the Agreement, both the MayorPage 3and Sartor signed the Agreement. Sartor then tendered hisresignation, to be effective November 1, 2001.

In response to criticism from the Republican members of the Board thatthe Agreement violated state law, the Town attorney sent the matter forreview to an outside pension counsel, Attorney Bruce Earth ("Barth").Earth furnished an opinion to the Town which stated that the Agreementappeared to be legal and fair, but that Item 6 of the Agreement could beinterpreted as inconsistent with section 11-39 of the Town's pensionordinances. Section 11-39 of the Town's pension ordinances provided thatan employee's pension shall be based on the employee's wages or salaryand not any "maintenance or other special payments or remuneration"provided to the employee. Barth maintained that the Pension Board couldinterpret the leave payments as being "special payments" under section11-39, rather than wages or salary, notwithstanding the language of theAgreement. Accordingly, Barth suggested that the Board pass an ordinancewhich would specifically provide that those payments were Sartor's salaryor wages. In accordance with this recommendation of counsel, an ordinancewas prepared, a public hearing was held on August 28, 2001, and thematter was scheduled for a vote at a meeting of the Board on September13, 2001.

At the September 13 meeting, the Board did not vote on the ordinance,and instead, a substitute motion was made to rescind Sartor's severanceagreement. The motion was approved unanimously. The Board rescindedSartor's severance agreement, but accepted Sartor's letter of resignationand agreed that Sartor was eligible to apply and receive "a normalretirement pension in accordance with the terms of the Town'sSupplemental Pension Ordinance as well as the same retirement benefitsand payouts of unused accrued sick, vacation and annual leave time"afforded toPage 4other Town department heads.

Sartor left his employment as Town Manager in accordance with the termsof his resignation letter and moved to Rhode Island. Sartor did notreceive the benefits of the Agreement, including the enhanced pensionbenefit of Section 6. He and his wife subsequently brought this suit,alleging breach of contract and tortious breach of contract. They seekcompensatory and punitive damages, as well as a declaratory judgment thatthe actions of the Town rescinding the Agreement were invalid, legallyineffective, and ultra vires, and a permanent injunctioninvalidating the recission of the Agreement and ordering reinstatement ofthe Agreement.

The plaintiffs have moved for summary judgment, as to liability only,on counts one (breach of contract as to Sartor) and two (breach ofcontract as to Mrs. Sartor).4 The Town claims that several genuineissues of material fact exist that preclude summary judgment.

II. Summary Judgment Standard

In a motion for summary judgment, the burden is on the moving party toestablish that there are no genuine issues of material fact in disputeand that it is entitled to judgment as a matter of law. SeeFed.R.Civ.P. 56(c); Anderson v. Liberty Lobby, Inc.,477 U.S. 242, 256 (1986). A court must grant summary judgment "`if thepleadings, depositions, answers to interrogatories, and admissions onfile, together with affidavits, if any, show that there is no genuineissue as to any material fact. . . .'" Miner v. Glen Falls,999 F.2d 655, 661 (2d Cir. 1993) (citation omitted). A dispute regarding amaterial fact is genuine "`if the evidence is such that a reasonable jurycould return a verdict for thePage 5nonmoving party.'" Aldrich v. Randolph Cent. Sch. Dist.,963 F.2d 520, 523 (2d Cir.) (quoting Anderson, 477 U.S. at248), cert. denied, 506 U.S. 965 (1992). After discovery, ifthe nonmoving party "has failed to make a sufficient showing on anessential element of [its] case with respect to which [it] has the burdenof proof," then summary judgment is appropriate. Celotex Corp. v.Catrett, 477 U.S. 317, 323 (1986). The Court resolves "allambiguities and draw[s] all inferences in favor of the nonmoving party inorder to determine how a reasonable jury would decide."Aldrich, 963 F.2d at 523. Thus, "[o]nly when reasonable mindscould not differ as to the import of the evidence is summary judgmentproper." Bryant v. Maffucci, 923 F.2d 979, 982 (2d Cir.),cert. denied, 502 U.S. 849 (1991). See also SuburbanPropane v. Proctor Gas. Inc., 953 F.2d 780, 788 (2d Cir. 1992).

III. Discussion

As noted above, the Sartors have moved for summary judgment, as toliability only, on the breach of contract claims. The Town claims thatgenuine issues of material fact exist as to (1) whether the partiesintended the Agreement to be final or subject to conditions subsequent;(2) whether the Agreement is supported by adequate consideration; (3)whether the Agreement is void for illegality or impossibility; and (4)whether the Agreement is void for Sartor's breach of fiduciary duty heowed to the Town. The Court will examine each issue below.

A. Intent of the Parties

The elementary principles of contract interpretation under Connecticutlaw are well established: "(1) [t]he intention of the parties iscontrolling and must be gathered from the language of the [contract] inthe light of the circumstances surrounding the parties at the executionof the instrument; (2) the language must be given its ordinary meaningunless a technical or special meaning is clearly intended; (3)Page 6the [contract] must be construed as a whole and in such manner asto give effect to every provision, if reasonably possible."Peter-Michael, Inc. v. Sea Shell Assoc., 244 Conn. 269, 275,709 A.2d 558 (1998). "`[I]ntention is to be determined from the languageused, the circumstances, the motives of the parties and the purposeswhich they sought to accomplish.'" Id. at 276 (quotingKlein v. Chatfield, 166 Conn. 76, 80, 347 A.2d 58 (1974)). Adetermination of contractual intent generally presents a question offact, but where the language is clear and unambiguous, it becomes aquestion of law for the court. See id.; see alsoTallmadge Bros., Inc. v. Iroquois Gas Transmission System, L.P.,252 Conn. 479, 495, 746 A.2d 1277 (2000) ("[T]he interpretation andconstruction of a written contract present only questions of law, withinthe province of the court . . . so long as the contract is unambiguousand the intent of the parties can be determined from the agreement'sface. . . .").

"Contract language is unambiguous when it has a definite and precisemeaning, unattended by danger of misconception in the purport of the[contract] itself, and concerning which there is no reasonable basis fora difference of opinion." Brunoli v. Brunoli & Sons,993 F. Supp. 66, 73 (D. Conn. 1997) (quoting Care Travel Co. v. Pan Am.World Airways, 944 F.2d 983, 988 (2d Cir. 1991)). In contractactions involving the interpretation of contractual language, summaryjudgment is appropriate only when the language of a contract is whollyunambiguous when considered in light of the surrounding circumstances andundisputed evidence of intent. Orange Improvements P'ship v. Cardo,Inc., 984 F. Supp. 85, 89 (D. Conn. 1997) (citing Sharkey v.Ultramar Energy Ltd., 70 F.3d 226, 230 (2d Cir. 1995)). The movingparty has the burden of establishing that the language of the contract isnot susceptible to at least two fairly reasonable meanings. Seeid. If that party cannot establish unambiguous contractlanguage, a material issue exists as to the parties' intent and thenon-moving partyPage 7may introduce extrinsic evidence on that issue at trial.See id. (citing Wards Co. v. Stamford RidgewayAssocs., 761 F.2d 117, 120 (2d Cir. 1985)).

Here, the Town argues that it never intended the Agreement toconstitute a final, binding contract. Rather, the Town argues, theAgreement was merely a proposal, provisionally approved by the Board ofDirectors and subject to a condition subsequent — the passing of anordinance reconciling it with the relevant pension statutes. Thefollowing facts, argues the Town, demonstrate such: (1) neither the TownAttorney, nor the Town's pension counsel were involved in the discussionsculminating in the drafting of the Agreement; (2) Sartor drafted theagreement by himself; (3) the Agreement conflicted with the pensionordinances; and (4) the Agreement expressly indicated that the Town'spension ordinances applied "as modified." According to the Town, thosefacts demonstrate that the Agreement was not a final contract, but onesubject to a condition subsequent — the legislative amendment ofthe pension ordinances in order to provide for the classification ofSartor's leave payments as "wages."

The Court concludes, however, that no genuine issues of material factexist as to whether the Agreement was intended by the parties to be finaland unconditional. As noted above, "[w]hether the written contract wasactually the final repository of the oral agreements and dealings betweenthe parties depends on their intention, evidence as to which is sought inthe conduct and language of the parties and the surroundingcircumstances." Associated Catalog Merchandisers, Inc. v.Chagnon, 210 Conn. 734, 739, 557 A.2d 525 (1989) (internal quotationmarks omitted). Here, none of the evidence set forth by the Town createsa genuine issue of material fact as to whether the Agreement was final orsubject to the legislative amendment of the pension ordinances. Rather,the undisputed evidence indicates that the Town and Sartor intended theAgreement to constitute the final repository of theirPage 8negotiations regarding his severance and that after theAgreement was made final, the Town changed its mind, inquired intowhether the Agreement should have been made subject to the passing of anordinance, and rescinded the Agreement. It was only after the Agreementhad been approved by the Board and executed by the parties that questionswere raised concerning whether the Agreement would violate the pensionordinances.5 The evidence noted by the defendant does not reveal anyfactual dispute as to the intent of the parties at the time the Agreementwas signed. Nor does the record suggest that the parties intended theAgreement as a proposal or as subject to the Town's amendment ormodification of the pension ordinances. To allow subsequent events, suchas the Board's change of heart, to upset the Agreement is inconsistentwith basic contract law. "The courts do not unmake bargains unwiselymade." See Osborne v. Locke Steel Chain Co., 153 Conn. 527,218 A.2d 526, 530 (1966).

The Court also finds that the Agreement was not ambiguous as to anyissue. The Agreement clearly states that Sartor's leave payments would beclassified as "wages," rather than special payments or remuneration.

B. Consideration

"[C]onsideration has been defined as a benefit to the party promising,or a loss or detriment to the party to whom the promise is made."Finlay v. Swirsky, 103 Conn. 624, 131 A. 420, 423 (1925). Anexchange of promises is sufficient consideration to support a contract.See Osborne, 218 A.2d at 531. See also Town of Trumbull v.State of Connecticut, 206 Conn. 65. 73. 537 A.2d 431 (1988).Page 9

The Town argues that there are genuine issues of material fact as towhether the contract is supported by consideration. It argues that Sartorhas not set forth evidence of a benefit that the Town received inexchange for his generous severance package, and that his promise toresign cannot constitute consideration because he was an "at will"employee. The Town cites a Fifth Circuit case in support of its argument,Sheline v. Dun & Bradstreet Corp., 948 F.2d 174 (5th Cir.1991). In Sheline, the Fifth Circuit held that an employee'spromise to resign voluntarily and forego any claims against his employerconstituted "little (if any)" consideration for the employee's severanceagreement because he was an "at will" employee. 948 F.2d at 178 (citingMartin v. Credit Protection Ass'n, Inc., 793 S.W.2d 667, 670(Tex. 1990) ("continuation of an employment at-will relationship does notconstitute independent valuable consideration to support the covenant[not to compete]")). However, Sartor's promises are distinguishable fromthe illusory promise made by the plaintiff in Sheline based onan unenforceable covenant not to compete. Moreover, unlike Texas,Connecticut recognizes that continued employment is adequateconsideration to support non-compete covenants with at-will employees.See Weseley Software Development Corp. v. Burdette,977 F. Supp. 137, 144 (D. Conn. 1997); Newlnno, Inc. v. PeregrimDevelopment Inc., 2002 WL 31875450 at *9 (Conn. Super. Ct. Dec. 3,2002); Russo Assocs., Inc. v. Cachina, 1995 WL 94589 at *3(Conn. Super. Ct. Mar. 1, 1995) (citing Osborne v. Locke SteelChain Co., 153 Conn. 527, 531, 218 A.2d 526 (1966); Iseli Co.v. Connecticut Light & Power Co., 211 Conn. 133, 136,558 A.2d 966 (1989)); Daniel V. Keane Agency. Inc. v. H.A. Butterworth,Jr., 1995 WL 93387 at *7 (Conn. Super. Ct. Feb. 22, 1995); VanDyck Printing Co. v. DiNicola, 43 Conn. Sup. 191, 196, 648 A.2d 898(1993), aff'd, 231 Conn. 272, 648 A.2d 877 (1994).Page 10

The Court concludes that there are no genuine issues of material factas to whether the contract is supported by consideration. Sartor promisedto retire in exchange for the benefits the Town promised to give himunder the Agreement. In addition, Sartor promised to remain as TownManager until October 31, which would provide the Town with a period tofind his replacement. As noted above, an exchange of promises issufficient consideration to support a contract and courts do notgenerally inquire into the adequacy of consideration. SeeOsborne, 218 A.2d at 531. Accordingly, the Court findssufficient consideration for the Agreement.

C. Illegality

Under the doctrine of illegality, a party to an unlawful bargain cannotrecover damages for its breach. See Restatement of Contracts§ 598. The Town argues that the Agreement violates Conn. Gen. Stat.§ 7-450a(b), which provides that no ordinance or act altering thepension system shall be enacted unless the Town seeks and receives anactuarial assessment.6

The Court concludes, however, that Conn. Gen. Stat. § 7-450a,"Actuarial evaluation ofPage 11municipal pension systems," does not apply to the undisputed factsof this case, where the Town entered into an Agreement with an individualemployee. The legislative history of § 7-450a reveals that the mainpurpose behind mandating actuarial studies is to ensure thatmunicipalities have adequate knowledge as to the future cost of theirpension plans. Conn. Gen. Assembly House Proceedings 1977, Volume 20,Part 10, pp. 4233-4249. § 7-450a was a response to situations incities "where serious deficits have suddenly cropped up and peoplehaven't expected until they were all of a sudden confronting them and oneof the major sources of these unprojected deficits was an inadequatelyanalyzed actuarial plan for retirement plans." Id. at 4238(statement of Rep. Goodwin).7 In addition, the legislature appearedto be concerned with the increase in collective bargaining, with itsconsequent impact on municipal budgets. Id. at 4238, 4246.The legislature intended that such actuarial studies would be requiredonly where proposed changes in pension plans affected a number ofparticipants or could have a material effect on the funding of theplans.8 There is no indication in the legislative debate thatmunicipalities would be required to have an actuarial assessmentperformed in every instance where a municipality entered into individualagreements with employees. There is also no mention of severanceagreements in the legislative debate. Instead, the focus of the debatewas centered on material impacts on municipalities' pension funds. Thus,the legislative history of § 7-450a does not indicate that the Townwas required to perform an actuarial assessment before entering into thePage 12Agreement with Sartor.9

The Town has made no showing that the Agreement "alters" the pensionsystem. Sartor's agreement affected no other municipal employees as totheir benefits under the Town's pension plan. The Town of Manchesteritself also expressly reserves the right "to alter or vary the rate oramount of . . . benefits payable, or the method of computation of anypension payments at any time" under its pension ordinances. SeeManchester Code, Section 70-29.10 Accordingly, the Court finds thatenforcement of the Agreement would not be illegal.

D. Fiduciary Duty

The Town also argues that Sartor's failure to advise the town thatConnecticut state law required an actuarial assessment before enteringinto the Agreement constituted a breach of fiduciary duty and voids theAgreement. However, as noted above, the Court finds that the Town'sapproval of the Agreement did not alter the Town's pension system and didnot violate Conn. Gen. Stat. § 7-450a. Accordingly, even assumingwithout deciding that Sartor owed a fiduciary duty to the Town, the Courtfinds no breach.Page 13

IV. Conclusion

For the foregoing reasons, the plaintiffs' motion for summary judgment[Doc. #7] is GRANTED. A judgment of liability shall enter for theplaintiffs on counts one and two.


1. Jurisdiction is based upon diversity of the parties and an amountin controversy exceeding $75,000, pursuant to 28 U.S.C. § 1332(a)(1).Personal and subject matter jurisdiction are uncontested. Additionally,the parties do not dispute that Connecticut state law applies.

2. The request for declaratory and injunctive relief is set forth ascount five of the complaint.

3. The following facts are based on the parties' Local Rule 9(c)Statements and other summary judgment papers and are undisputed unlessotherwise indicated.

4. Count two is based on Mrs. Sartor's status as a third-partybeneficiary of the Agreement. The defendant does not appear to disputethat she is entitled to that status.

5. It appears that the execution of the Agreement was also witnessedand notarized.

6. Conn. Gen. Stat. § 7-450 provides: Any municipality or subdivision thereof may, by ordinance, establish pension and retirement systems for its officers and employees and their beneficiaries, or amend any special act concerning its pension or retirement system, toward the maintenance in sound condition of a retirement fund or funds, provided the rights or benefits granted to any individual under any municipal retirement or pension system shall not be diminished or eliminated The legislative body of any such municipality, by a two-thirds vote, may provide for pensions to persons, including survivors' benefits for widows of such persons, not included in such retirement or pension system. Conn. Gen. Stat. § 7-450a(b) provides: (b) No ordinance or act altering the pension or retirement system shall be enacted until the legislative body, as defined in subsection (3) of section 7-425, has requested and received a qualified cost estimate from such enrolled actuary.

7. Conn. Gen. Stat. § 7-450a(a) requires actuarial evaluationsof municipal pension funds every five years.

8. It is undisputed that Sartor's enhanced pension benefit had animmaterial effect upon the Town's pension fund. Although the Townmaintains that similar retirement agreements could have such an effect onthe pension fund if they entered into such agreements many times, that isnot before the Court.

9. The language of the statute itself also supports this analysis asit limits the requirement of actuarial assessments to"ordinance[s] or act[s] altering the pension orretirement system," Conn. Gen. Stat. § 7-450a(b) (emphasis added),which would have more general application and more significantconsequences than addressing an individual's participation andbenefits.

10. Plaintiffs have also presented evidence which has not beencontradicted by the defendant that an actuarial review had beenundertaken before the execution of the Agreement. See Sartor'sSupplemental Aff. dated August 30, 2002 and Sartor's Supplemental LocalRule 9(c)(1) Statement.

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