United States District Court, D. Connecticut
RULING ON THE PARTIES’ CROSS-MOTIONS FOR SUMMARY JUDGMENT
Victor A. Bolden United States District Judge
This case arises out of the dissolution of a business relationship between Learning Care Group, Inc. (“LCG”), Carlene and David Armetta, and Aspira Marketing Direct, LLC (“Aspira”). Aspira is a limited liability corporation owned by the Armettas. The parties filed three Complaints arising out of this business dispute, which were consolidated into the current action.
The parties have cross-moved for summary judgment seeking to dispose of all claims in the case. LCG seeks summary dismissal of Count Three of Mrs. Armetta’s Complaint, a claim for wrongful discharge and her only remaining affirmative claim in the case. LCG’s Am. Mot. for Summ. J. as to Ms. Armetta, ECF No. 109 [hereinafter LCG’s First Motion]. LCG also seeks summary judgment on all four counts of the Complaint filed by Mr. Armetta and Aspira, which allege claims of unjust enrichment, quantum meruit, common law fraud, and negligent misrepresentation. Am. Compl., ECF No. 99; LCG’s Mot for Summ. J. as to Mr. Armetta and Aspira, ECF No. 105 [hereinafter LCG’s Second Motion].
Mr. and Mrs. Armetta and Aspira collectively seek summary judgment on all of their affirmative claims against LCG as well as on all of LCG’s claims against them. Mot. for Summ. J. by Mr. and Mrs. Armetta and Aspira as to LCG, ECF No. 107 [hereinafter The Armettas’ Motion]. LCG asserts claims of breach of fiduciary duty and constructive fraud against Mrs. Armetta; claims of aiding and abetting a breach of fiduciary duty and a violation of the Connecticut Unfair Trade Practices Act (“CUTPA”), Conn. Gen. Stat. §42-110a et seq., against Mr. Armetta and Aspira; and claims of unjust enrichment and conversion against Mr. and Mrs. Armetta and Aspira. LCG’s Compl., ECF No. 1.
For the reasons that follow, LCG’s First Motion, ECF No. 109, is GRANTED, and Mrs. Armetta’s wrongful termination claim is dismissed. LCG’s Second Motion, ECF No. 105, is DENIED, and the Armettas’ Motion, ECF No. 107, is DENIED, leaving for trial Mr. Armetta’s and Aspira’s claims for unjust enrichment, quantum meruit, negligent misrepresentation, and fraud as well as LCG’s claims for breach of fiduciary duty, constructive fraud, aiding and abetting a breach of fiduciary duty, CUTPA, unjust enrichment, and conversion.
I. STATEMENT OF FACTS
LCG, a Michigan corporation, owns and operates childcare centers. LCG’s First Local Rule 56(a)1 Stmt. ¶1, ECF No. 104. Mr. and Mrs. Armetta are a married couple who live in Stamford, Connecticut and co-own Aspira. Id. ¶¶2-3; LCG’s Second Local Rule 56(a)1 Stmt. ¶2, ECF No. 106. The Armettas and Aspira are in the business of providing various types of marketing services, including direct mail. Direct mail marketing involves sending out mail to prospective customers, often in a targeted way. See LCG’s Ex. 3, DeWalt Dep. 45:9-46:4, ECF No. 117 at 64-65.
LCG and Aspira initiated their business relationship in February 2009, when they entered into a contract under which Aspira agreed to provide marketing and relationship management services, as an independent contractor, to LCG. The Armettas’ Ex. 2, Independent Contractor Agreement, ECF No. 108-2; The Armettas’ Local Rule 56(a)1 Stmt. ¶2, ECF No. 108; LCG’s 56(a)2 Stmt. ¶2, ECF No. 117. Under this contract, Mrs. Armetta provided a range of services to LCG, including building and operating a call center and creating a direct mail marketing program. The Armettas’ Local Rule 56(a)1 Stmt. ¶5, ECF No. 108. At this early stage of the relationship, Mr. Armetta did not provide any services to LCG In August 2009, Stacy DeWalt, LCG’s Chief Marketing Officer, told Mrs. Armetta that LCG needed a new print vendor to design and print a direct mail marketing piece. The Armettas’ 56(a)1 Stmt. ¶6, ECF No. 108. Ms. DeWalt and Mrs. Armetta directed Mr. Armetta to locate a print vendor to work on the project. Id. ¶8. Mr. Armetta suggested that LCG use the print vendor Vertis Communications (“Vertis”) and contacted Kevin Overlock at Vertis about the work. Id. ¶¶9-10. Mr. Armetta had a longstanding business relationship with Mr. Overlock. Id. ¶9.
LCG hired Vertis for this initial direct mail marketing project. The Armettas’ Local Rule 56(a)1 Stmt. ¶¶10-11, ECF No. 108. After this initial project, LCG continued soliciting direct mail marketing projects from Vertis. Id. ¶13; see also The Armettas’ Ex. 5, D. Armetta Dep. 75:23-76:16, ECF No. 108-3 at 30-31. Mr. Armetta contends that he played a significant role in completing all of these projects with Vertis, including designing the direct mail pieces, designing and testing the mailing strategy, arranging for and purchasing mailing lists, generally overseeing the operations of the direct mail marketing program, and negotiating the pricing and production of the project on Vertis’s behalf. The Armettas’ Local Rule 56(a)1 Stmt. ¶12, ECF No. 108; see also The Armettas’ Ex. 6, D. Armetta Aff. ¶, ECF No. 108-3 at 55. LCG believes that Mr. Armetta overstates his role. LCG’s Local Rule 56(a)2 Stmt. ¶12, ECF No. 117.
In September 2009, Vertis and Aspira signed a contract to govern the terms of their business with LCG. LCG’s Ex. F, Broker Agreement between Aspira and Vertis, ECF No. 106 at 64. Consistent with the terms of that contract, when Vertis completed work for LCG, it invoiced LCG directly. Id.; The Armettas’ Local Rule 56(a)1 Stmt. ¶20, ECF No. 108. Vertis also paid Aspira a “broker’s commission” from money it received from LCG, which was due fifteen days after LCG paid Vertis in full for each invoice. LCG’s Local Rule 56(a)2 Stmt. ¶9, ECF No. 106; The Armettas’ Local Rule 56(a)1 Stmt. ¶20, ECF No. 108; LCG’s Ex. F, Broker Agreement between Aspira and Vertis, ECF No. 106 at 64.
The Vertis-Aspira agreement specifically provided that “[n]o Broker Commission shall be due… until Vertis receives full payment for the invoice for that Brokered Job.” LCG’s Ex. F, Broker Agreement between Aspira and Vertis, ECF No. 106 at 64. Aspira calculated and invoiced Vertis for its broker’s commission, based on the volume of printing Vertis had performed for LCG. LCG’s Ex. G, D. Armetta Dep. 26:12-23, ECF No. 106 at 75. Generally, Vertis’s invoices to LCG did not explicitly itemize the amount of this broker’s fee. See e.g., The Armettas’ Ex. 28, Vertis Invoice dated 1/31/12, ECF No. 108-5 at 9. But Mr. Armetta testified that he told Ms. DeWalt about the broker’s commission in July or August of 2009. The Armettas’ Ex. 5, D. Armetta Dep. 43:4-45:9, 50:3-51:23, ECF No. 108-3 at 14-16, 21-22.
In addition to the broker’s fee, Mr. Armetta contends that he invoiced LCG directly for the services he provided in support of Vertis’s work for LCG; in other words, his fees were included in the invoices from Aspira that Mrs. Armetta had been sending to LCG for her independent consulting work. The Armettas’ Local Rule 56(a)1 Stmt. ¶¶14, 16, 20, ECF No. 108; see also e.g., The Armettas’ Ex. 5, D. Armetta Dep.52:13-25, ECF No. 108-3 at 23. Mr. Armetta argues that, in essence, he worked directly for LCG and that Ms. DeWalt knew about his work and how he was compensated, including the broker’s fee. The Armettas’ Local Rule 56(a)1 Stmt. ¶¶14-15, 17, ECF No. 108. Mr. Armetta and Aspira also have engaged an expert who has opined that Ms. DeWalt would have known that a broker’s fee was the standard method of compensating a print broker, like Aspira, in its arrangement with Vertis. Id. ¶22
LCG disputes Mr. Armetta’s personal involvement in their dealings with Vertis and contends that Aspira, and not Mr. Armetta individually, was the party with whom it did business. LCG’s Local Rule 56(a)2 Stmt. ¶¶13-16, 20, ECF No. 117. It also denies that Ms. DeWalt knew about Mr. Armetta’s involvement in the dealings with Vertis or how Mr. Armetta was compensated. Id. ¶¶17, 30. In particular, it denies knowledge of the broker’s fee and contends that this broker’s fee did not compensate Aspira for any services it was actively rendering to LCG. Id. ¶¶16-17, 30. LCG also denies that the broker’s fee was a standard way of compensating a print broker, like Aspira. Id. ¶¶22-23.
A. LCG Hires Mrs. Armetta
In late 2009, to cut costs, Ms. DeWalt asked Mrs. Armetta whether she would be interested in working at LCG full-time. The Armettas’ Local Rule 56(a)1 Stmt. ¶26, ECF No. 108. LCG believed that it could pay Mrs. Armetta less if it employed her directly, as opposed to as an independent contractor. Id. ¶28. Ms. DeWalt indicated that if Mrs. Armetta accepted the offer, LCG intended to continue working with Mr. Armetta. Id. ¶27. Mrs. Armetta testified that LCG’s commitment to retaining Mr. Armetta after she was hired was crucial to her willingness to work at LCG. LCG’s Ex. 10, C. Armetta Dep. 168:17-169:2, ECF No. 117 at 140-41 (“why would I join you if I am doing very well working for your company… and [Ms. Dewalt] said to me, ‘I will keep you whole… I want David to stay on board with us and to be retained.’”).
The Armettas also contend that when Ms. DeWalt was discussing the possibility of hiring Mrs. Armetta, she told them that Mr. Armetta’s compensation would remain the same. The Armettas’ Local Rule 56(a)1 Stmt. ¶29, ECF No. 108. They also believe that Ms. DeWalt told them that Mr. Armetta’s continued relationship with LCG would not be a conflict of interest, even taking into account Aspira’s broker’s fee. Id. ¶30. LCG denies that Ms. DeWalt knew about the broker’s fee or that she made any representations about Mr. Armetta’s compensation. LCG’s Local Rule 56(a)2 Stmt. ¶¶29-30, ECF No. 117.
Mrs. Armetta testified that she discussed whether LCG’s continued work with Aspira would present a conflict of interest with Ms. DeWalt in mid-January 2010. The Armettas’ Ex C, C. Armetta Dep. 167:20-169:22, ECF No. 108-2 at 63-65. LCG’s Employee Code prohibits conflicts of interest, unless they are approved by the company. See The Armettas’ Local Rule 56(a)1 Stmt. ¶31, ECF No. 108. “Any request for approval must be in writing to the Executive Officer.” The Armettas’ Ex. 12, LCG’s Employee Handbook, ECF No. 108-2 at 47. The code provides that if an employee becomes aware of a possible conflict of interest, he must inform the Ethics Compliance Officer or an Ethics Compliance Committee Member. Id. The code also prohibits an employee or any member of his or her immediate family from directly having a financial interest in a competitor, customer, or supplier if that employee or his subordinates deal with that customer or supplier in the course of his job, unless such relationships are approved by the Ethics Compliance Officer in advance. The Armettas’ Ex. 12, LCG’s Employee Handbook, ECF No. 108-2 at 48. Mrs. Armetta signed a document acknowledging that she received LCG’s employee handbook containing the conflict of interest policy. LCG’s Ex. 3, C. Armetta’s Dep. 196:18-25, ECF No. 108-2 at 75.
Mrs. Armetta began work as an LCG employee in January 2010. See LCG’s Local Rule 56(a)1 Stmt. ¶2, ECF No. 104. In early February 2010, Ms. DeWalt told Mrs. Armetta that she had spoken to Scott Smith, LCG’s Ethics Compliance Officer, “in regard to continuing to contract David/Aspira” and that they planned to follow up with LCG’s Chief Executive Officer (“C.E.O.”) that week. The Armettas’ Local Rule 56(a)1 Stmt. ¶36, ECF No. 108. That follow-up conversation with the C.E.O. never took place, and no employee ever followed up with the Armettas about this possible conflict. Id. ¶¶39-40. Instead, Ms. DeWalt continued to solicit business on LCG’s behalf from Mr. Armetta. Id. ¶¶41, 43.
Ms. DeWalt testified that she told Mrs. Armetta that she could not hire Mr. Armetta or Aspira directly, because it was a conflict of interest. The Armettas’ Ex. 1, DeWalt Dep. 51:12-22, 52:5-24, 53:19-54:6, ECF No. 108-1 at 8-11. Ms. DeWalt indicated that she alone could make the decision to hire Mr. Armetta and Aspira to avoid this problem. See Id. Ms. DeWalt does not recall Mr. Smith ever informing her that she was not permitted to use Mr. Armetta’s services after LCG hired Mrs. Armetta. The Armettas’ Local Rule 56(a)1 Stmt. ¶46, ECF No. 108. However, Mr. Smith testified that he told Ms. DeWalt that she could not do business with Mr. Armetta because such an arrangement would create a conflict of interest. Id. ¶47. Ultimately, Ms. DeWalt has testified that she did not believe that Mr. Armetta’s continued work for LCG constituted a conflict of interest. Id. ¶57.
In late February 2010, Ms. DeWalt suggested that Mr. Armetta be “rolled” into Vertis, or, in other words, that Vertis compensate him for his work for LCG. Id. ¶¶50-52. The parties agreed to this arrangement, and Vertis began compensating Mr. Armetta for his services. Id. ¶¶53-54. Mr. Armetta testified that, after LCG hired his wife, he continued to provide the same services he had provided to LCG previously. See The Armettas’ Ex. 6, D. Armetta Aff. ¶¶1, 6, 9, ECF No. 108-3 at 55-56. He also testified that, beginning in July and August of 2010 through the date of his wife’s termination, he was working hard and exclusively for LCG. The Armettas’ Ex. 5, D. Armetta Dep. 87:6-25, ECF No. 108-3 at 40. During this time, Aspira appears to have sent at least one bill to Vertis. LCG’s Ex. 5, Aspira Invoice dated 12/7/2012, ECF No. 117 at 116.
B. Replacing Vertis with FCL
The relationship between the Armettas, LCG, and Vertis continued in this manner until late 2012, when another company, Quad Graphics, acquired Vertis. The Armettas’ Local Rule 56(a)1 Stmt. ¶¶69-70, ECF No. 108. Concerned about the quality of Vertis’s services under its new management, LCG decided to initiate a transition to a new print vendor, FCL. Id. ¶¶71-73. In making this change, Ms. DeWalt directed Mrs. Armetta to ensure that “key members” of the LCG team at Vertis moved to FCL. Id. ¶72.
In accordance with Ms. DeWalt’s directive, Mr. Armetta and Mr. Overlock continued to work with LCG at FCL in the same roles they had at Vertis. Id. ¶¶77; The Armettas’ Ex. 8, Overlock Dep. 53:18-54:9, ECF No. 108-3 at 98-99. FCL’s fee arrangement, including Mr. Armetta’s compensation, was “virtually identical” to the one that had been in place with Vertis. The Armettas’ Local Rule 56(a)1 Stmt. ¶¶77, 82, ECF No. 108; see also LCG’s Ex. I, Flood Dep. 48:3-5, ECF No. 106 at 84. Aspira also continued to bill FCL for certain expenses associated with Mr. Armetta’s work for LCG, including the broker’s fee. See LCG’s Ex. 13, Aspira Invoices, ECF No. 117 at 150-155.
After the transition to FCL, LCG initiated an open bidding process to determine whether there was another vendor who could provide better quality and quantity for a lower price. The Armetta’s Local Rule 56(a)1 Stmt. ¶¶91-92, ECF No. 108. FCL participated in the process. Id. ¶93. Mrs. Armetta guided FCL through the bidding process and provided it with information about competing bids. Id. ¶¶80, 96. Mrs. Armetta contends that LCG expected her to “assist FCL through the process” and provide it with information, including other bids, so that FCL could provide the best bid possible. Id. ¶¶80, 96-98; see also LCG’s Ex. 9, C. Armetta Dep. 66:14-24, ECF No. 117 at 137 (“she [ ] left it up to me to negotiate and work with folks like this to try to get them the right proposal that she wanted. Anything financial she did work with [Mr. Overlock] or [Mr. Armetta] specifically on, but this is [Ms. DeWalt] being very comfortable with me working with the vendor… she was well aware of the fact that I would be sharing information and talking with them.”).
LCG contends that Mrs. Armetta acted inappropriately during the bidding process and that she had a conflict of interest because she was receiving a commission from FCL in her capacity as Aspira’s co-owner. LCG’s Local Rule 56(a)2 Stmt. ¶¶96-98, ECF No. 117. That said, LCG also admits that none of its representatives ever told Mrs. Armetta that she could not share information with FCL regarding the bidding process. Id. ¶100. Nor did anyone from LCG provide guidance to Mrs. Armetta on what types of information were appropriate to share during the bidding process. Id. Ultimately, FCL provided the best bid and continued its business relationship with LCG. The Armettas’ Local Rule 56(a)1 Stmt. ¶99, ECF No. 108.
While employed at LCG, Mrs. Armetta had some authority to approve FCL and Vertis’s bills, but she testifies that she could not approve those in excess of $10, 000. The Armettas’ Ex. 7, C. Armetta Aff. ¶15, ECF No. 108-3 at 63; The Armettas’ Ex. 3, C. Armetta Dep. 191:15-192:10, ECF No. 108-2 at 70-71 (describing the nature of her authority and explaining that she reviewed bills to make sure they were accurate). She contends that this dollar amount limit precluded her from approving “virtually every invoice” from FCL. The Armettas’ Ex. 7, C. Armetta Aff. ¶15, ECF No. 108-3 at 63. Ms. DeWalt testified that she and Mrs. Armetta were both responsible for approving the print bills for LCG but that Ms. DeWalt had “final” approval authority. The Armettas’ Ex. 1, DeWalt Dep. 99:15-25, ECF No. 108-1 at 32. LCG’s Rule 30(b)(6) witness testified that he was not aware of any limitations on Mrs. Armetta’s abilities to approve invoices. The Armettas’ Ex. 4, Smith Dep. 27:17-22, ECF No. 108-3 at 9; Fed.R.Civ.P. 30(b)(6). In addition, some of FCL’s invoices were directly addressed to Mrs. Armetta. See e.g., LCG’s Ex. 17, Invoice dated Jan. 31 2013, ECF No. 117 at 185-86. Notably, FCL’s bills do not contain any reference to Aspira or any line items corresponding to the amounts owed to Aspira. See e.g., LCG’s Ex. 17, Invoices dated Jan. 3, 2013 and Jan. 31, 2013, ECF No. 117 at 184-86.
Mr. Armetta and Aspira contend that LCG was fully aware of Mr. Armetta’s role after Mrs. Armetta was hired. In particular, they note that Ms. DeWalt forwarded an email including Mr. Armetta to LCG’s C.E.O. and that Mr. Armetta was involved in meetings with LCG employees. The Armettas’ Local Rule 56(a)1 Stmt. ¶¶62-65, ECF No. 108. In addition, during this time, Mr. Armetta and LCG signed a non-disclosure agreement, in which Aspira promised to keep certain material received from LCG confidential. Id. ¶60; The Armettas’ Ex. 21, Non-Disclosure Letter Agreement, ECF No. 108-4 at 96. LCG does not deny that these events occurred but denies that they show that LCG was aware of Mr. Armetta’s continuing role. LCG’s Local Rule 56(a)2 Stmt. ¶¶60, 62-65, ECF No. 117.
C. Mrs. Armetta’s Compensation and Termination
As an employee at LCG, Mrs. Armetta began as Vice President of Integrating Marketing but also served as Interim Chief Marketing Office from January 24, 2013 to April 15, 2013. Id. ¶4-5. In her role at LCG, Mrs. Armetta was eligible for a bonus under the terms of the “LCG Support Central Fiscal Year 2013 Bonus Plan, Vice President Level.” Id. ¶6. Under the plan, bonuses were “typically distributed 60-90 days from the end of the fiscal year.” LCG’s Ex. A, LCG Fiscal Year 2013 Bonus ...