text:
    P. Gary Stern v. Connecticut Medical Examining Board et al.
    (13272)
    Peters, C. J., Callahan, Glass, Covello and Hull, Js.

      Argued June 9
    decision released August 2, 1988

      Stuart D. Rosen, with whom were Leonard M. Bieringer and, on the brief, Steven M. Basche, for the appellant (plaintiff).

      Paul J. Lahey, assistant attorney general, with whom, on the brief, were Joseph I. Lieberman, attorney general, Robert E. Walsh and Richard J. Lynch, assistant attorneys general, and Sheldon M. Kivell, legal intern, for the appellees (defendants).
   Peters, C. J.

The sole question in this case is whether an administrative agency has jurisdiction to revoke the license of a Connecticut physician even though the license expired by lapse of time prior to the initiation of revocation proceedings. The plaintiff, P. Gary Stern, M.D., appeals from the judgment of the trial court upholding the decision of the Connecticut medical examining board (board) revoking his license to practice medicine. We find error.

I

The facts of this case are not disputed. In late 1979 and early 1980, the plaintiff was the subject of several overlapping investigations into alleged professional misconduct. The department of consumer protection pursued charges that the plaintiff had excessively prescribed controlled substances and had failed to maintain proper records. As a result, the plaintiff surrendered his Connecticut controlled substance registration. A second inquiry was conducted at Mount Sinai Hospital to determine whether the plaintiff’s affiliation with that hospital should be terminated. This investigation resulted in the plaintiff’s forfeiture of staff privileges. The Hartford County Medical Society began its own investigation of the plaintiff’s fitness to practice medicine. Finally, the department of health services (department), acting on a complaint, launched an investigation. It is from the department’s investigation that the charges in this case originated.

Since 1980, the plaintiff has ceased to be licensed to practice medicine in this state. His license expired, by its own terms, on January 31, 1980, and the plaintiff did not apply for its renewal. In April and May of 1980, settlement negotiations took place between a department agent and the plaintiff’s attorney, in an effort to fashion a consent decree to accompany revocation or suspension of the plaintiff’s license. These negotiations proved to be unsuccessful. On July 22,1980, the plaintiff, through his attorney, returned his license to the board, explaining that he was voluntarily surrendering any right to practice in Connecticut and that he was no longer a resident of the state. He now resides in Florida and has established a medical practice there.

In the summer of 1981, the board notified the plaintiff’s attorney that the department, which acts as the prosecuting authority in physician disciplinary cases, had decided to issue a statement of charges against the plaintiff. In response by letter, the plaintiffs attorney questioned the authority of the board or the department to proceed against a physician who, by expiration or surrender, no longer held a valid license to practice in this state.

In November, 1983, the department filed a forty-four count statement of charges against the plaintiff. Two principal forms of misconduct were alleged. The plaintiff was first accused of excessively and improperly prescribing controlled substances and of failing to maintain proper records of dispensed controlled substances. In addition, the plaintiff was accused of sexual misconduct in having intercourse with, and taking nude photographs of, his female patients. In its prayer for relief, the department requested that the board “find for any or all of the above reasons, that P. Gary Stern is unable to practice medicine with reasonable skill and/or safety and that the Board revoke the license of P. Gary Stern to practice medicine.” (Emphasis added.)

A notice of hearing was issued by the board in November, 1983. After receiving actual notice in Florida, the plaintiff hired new counsel in Hartford. His counsel promptly asked a department attorney for a continuance. The hearing nevertheless was held as scheduled on November 30, 1983. The plaintiffs new counsel appeared at the hearing without filing or renewing with the board any oral or written motion for a continuance. Instead, counsel filed a motion to dismiss on two grounds: (1) lack of jurisdiction; and (2) laches. The board reserved decision on the motion. The department then presented eight witnesses to prove its charges against the plaintiff. Each witness was vigorously cross-examined by plaintiffs counsel. The plaintiff did not appear or testify on his own behalf. At the close of the hearing, plaintiffs counsel did not move for a continuance and did not indicate any interest in calling any defense witnesses. The hearing was adjourned without objection.

The board found all of the charges proven, except for eight counts involving two female patients who did not testify. The board also denied the plaintiff’s motion to dismiss for lack of jurisdiction, concluding that the surrender of his license had been done with intent to evade disciplinary action and therefore was not binding on the board. The board did not consider the effect, if any, on its jurisdiction of the expiration of the plaintiff’s license for lapse of time. The defense of laches was denied because, in the board’s judgment, the plaintiff had not been prejudiced by the department’s delay in filing charges.

In his administrative appeal to the Superior Court, the plaintiff did not contest the board’s findings of misconduct. He instead reiterated his claim that the board lacked jurisdiction to revoke a medical license that, by automatic expiration or voluntary surrender, had ceased to exist prior to the filing of charges. He further claimed that the board’s action was barred by laches and that the board had denied him due process of law by virtue of inadequately short notice of the hearing date. The trial court denied the appeal on all three grounds.

On appeal to this court, the plaintiff renews the jurisdictional and due process claims that the trial court rejected. We conclude that, under the facts and circumstances of this case, the board lacked jurisdiction to revoke the plaintiff’s license. Accordingly, we do not address his alternative claim of a due process violation.

II

The plaintiff’s jurisdictional claim arises from a juxtaposition of two related statutes involving the board’s disciplinary authority. General Statutes (Rev. to 1983) § 20-13c provides that “[t]he board is authorized to restrict, suspend or revoke the license ... of a physician in accordance with section 19a-17, when the board finds that such physician is unable to practice medicine with reasonable skill or safety . . . .” The term “physician” is defined in General Statutes (Rev. to 1983) § 20-13a (5) as “a person licensed pursuant to [chapter 370] . . . .” Having allowed his license to expire prior to the filing of disciplinary charges in this case, the plaintiff maintains that he was not a “physician” within the scope of the board’s disciplinary jurisdiction. The board, on the other hand, argues that, for jurisdiction to attach, the practitioner need only commit acts of alleged misconduct during his or her licensure. It is not necessary, according to the board, that the practitioner hold a license when actual charges are filed. In its view, the plaintiff’s position would eviscerate the regulatory power of the board in contravention of legislative intent.

Our task is to determine whether the statutory jurisdiction of the board extends to the revocation of a license that expired by lapse of time prior to the commencement of formal proceedings. An administrative agency, as a tribunal of limited jurisdiction, must act strictly within its statutory authority. Castro v. Viera, 207 Conn. 420, 428, 541 A.2d 1216 (1988); Waterbury v. Commission on Human Rights & Opportunities, 160 Conn. 226, 230, 278 A.2d 771 (1971). In exercising its disciplinary jurisdiction, the medical examining board “possesses no inherent power. Its authority is found in a legislative grant, beyond the terms and necessary implications of which it cannot lawfully function.” Adam v. Connecticut Medical Examining Board, 137 Conn. 535, 537-38, 79 A.2d 350 (1951); General Statutes § 19a-10. Absent a grant of authority, any sanction meted out by the board is “necessarily void.” Newington v. Mazzoccoli, 133 Conn. 146, 156, 48 A.2d 729 (1946). If the sanction was within the limits prescribed by law, however, it may be challenged only for an abuse of discretion in its imposition. Paley v. Connecticut Medical Examining Board, 142 Conn. 522, 529, 115 A.2d 448 (1955).

The board derives its authority from three principal statutes: §§ 19a-17, 20-8a and 20-13c. While none of these statutes expressly resolves the question that we confront in this case, all three confer authority upon the board to revoke licenses. Our first order of business, then, is to reconcile these interrelated provisions in order to achieve a sensible overall interpretation that is faithful to the intent of the legislature. Obuchowski v. Dental Commission, 149 Conn. 257, 266, 178 A.2d 537 (1962).

Subsection (a) (1) of General Statutes § 19a-17 gives the board the authority to “[rjevoke a practitioner’s license.” (Emphasis added.) The term “practitioner” is not defined by the statute. From the context of the statute, however, it is obvious that § 19a-17 is designed to be an omnibus charter of available disciplinary sanctions for many professional boards and commissions. It is therefore not surprising that § 19a-17 employs the general term “practitioner” to describe the class of persons subject to its terms. The terms of § 19a-17 define the outer limit of the disciplinary jurisdiction of boards and commissions within the department of health services. Whether separate provisions that govern specific professions narrow the scope of § 19a-17 must be determined on a case-by-case basis.

General Statutes § 20-8a implements the general mandate of § 19a-17 for the profession of medicine and surgery. Subsection (e) of § 20-8a provides that the “board shall (1) hear and decide matters concerning suspension or revocation of licensure, (2) adjudicate complaints against practitioners and (3) impose sanctions where appropriate.” Rather than conferring new powers or limiting ones already conferred, § 20-8a creates an administrative agency for the supervision of physicians and vests that agency with authority to impose the disciplinary actions set forth in § 19a-17.

Finally, General Statutes § 20-13c authorizes the board to “restrict, suspend or revoke the license . . . of a physician” for any of seven specified reasons. This section was enacted in 1976 as part of an overhaul of the licensure regulation of Connecticut physicians. Prior to 1976, physicians were subject to license regulation under General Statutes (Rev. to 1975) § 20-45, a general provision that applies to “any licensed or registered practitioner of the healing arts in this state.” With the passage of Public Acts 1976, No. 76-276, however, the legislature established new rules for use in licensure proceedings exclusively against physicians. At the very least, the legislature’s judgment that physicians are to be evaluated under a separate licensure regime causes us to pay particular heed to its detailed provisions. See State v. Champagne, 206 Conn. 421, 435-36, 538 A.2d 193 (1988).

In light of this statutory scheme, we conclude that the board had no jurisdiction to revoke the plaintiff’s license in this case. Central to our conclusion is the narrow scope of the department’s prayer for relief, which requested only the revocation of the plaintiff’s license.

In an ordinary civil case, the general rule is that a prayer for relief must articulate with specificity the form of relief that is sought. Francis T. Zappone Co. v. Mark, 197 Conn. 264, 269-70, 497 A.2d 32 (1985); Leone v. Knighton, 196 Conn. 494, 497-98, 493 A.2d 887 (1985); Hydro-Hercules Corporation v. Gary Excavating, Inc., 166 Conn. 647, 655, 353 A.2d 714 (1974). A party who fails to comply with this rule runs the risk of being denied recovery.

In the administrative context, a proper claim for relief serves the equally vital function of establishing the jurisdictional authority of the tribunal. Unlike the general jurisdiction of the Superior Court; Carten v. Carten, 153 Conn. 603, 612, 219 A.2d 711 (1966); the jurisdiction of an administrative body is not to be presumed and must be established affirmatively by the notice of hearing and statement of charges in any given case. Just recently, we held that the existence of an employee-employer relationship is a jurisdictional fact that must be shown in order to proceed with a claim for workers’ compensation benefits. Castro v. Viera, supra, 427-35. Similarly, the death of a decedent is a jurisdictional prerequisite to the administration of an estate in probate proceedings. Ruick v. Twarkins, 171 Conn. 149, 153, 367 A.2d 1380 (1976). These cases stand for the principle that certain jurisdictional facts are essential to establish the statutory jurisdiction of tribunals of limited authority. The existence of these facts “is fundamental to the power to entertain and adjudicate a proceeding on the merits. In short, such facts condition the power to act.” Castro v. Viera, supra, 434.

The critical jurisdictional fact in the present case was the licensure status of the plaintiff at the commencement of the proceedings. The authority of the board is contingent upon a showing that a respondent is a “physician” subject to its disciplinary power. General Statutes § 20-13c. According to § 20~13a (5), a “physician” is any “person licensed pursuant to [chapter 370].” In its statement of charges, the department did not specify any intention to pursue its options under § 19a-17 for a censure, letter of reprimand or civil penalty. Nor did the department include in its prayer for relief a general request for any administrative action that, in the board’s discretion, might be appropriate in this case. Having committed itself to seeking only a license revocation, the department disabled itself from invoking other sanctions theoretically authorized by § 19a-17 as a basis for board jurisdiction. In short, we conclude that the narrowly drawn prayer for relief rendered the case subject to dismissal for lack of jurisdiction.

Our conclusion is analogous to the holdings of courts in other states that have dismissed complaints against judges who no longer hold office when formal proceedings are initiated. In In re Fienberg, 139 Vt. 511, 512, 430 A.2d 1282 (1981), a state judge was retired by operation of law shortly before formal disciplinary accusations about his judicial conduct were made. The Vermont Supreme Court dismissed the complaint for lack of jurisdiction. Facing a similar jurisdictional problem, the New Jersey Supreme Court concluded that the accused, having resigned from his judgeship, was before the court only in his capacity as a member of the bar, but not as a judge. In re De Lucia, 76 N.J. 329, 336, 387 A.2d 362 (1978). The court in In re De Lucia thus recognized that a judge, by virtue of his or her continuing status as a member of the bar, cannot evade disciplinary supervision in toto.

Arguably, the board in this case might have had similar continuing jurisdiction to levy a monetary fine on the plaintiff pursuant to § 19a-17, which authorizes the assessment of a civil penalty of up to $1000 on any “practitioner.” The plaintiff, while no longer a “physician” within the meaning of § 20-13a (5), might still have been subject to nonlicensure sanctions applicable to a “practitioner.” But see Mangels v. Commissioner of Motor Vehicles, 40 Conn. Sup. 226, 228-30, 487 A.2d 1121 (1984) (concluding that the commissioner of motor vehicles lacked jurisdiction to levy a fine against a former licensee even though the misconduct underlying the fine took place during the period of licensure). Given the limited form of relief sought in this case, however, we do not reach the merits of this question.

Our conclusion that the board lacked the power to revoke a physician’s expired license does not strip the board of the powers it needs to protect the public from renegade medical practitioners. At the outset, we doubt that most physicians would consciously elect the forfeiture of their entire Connecticut practices merely to evade licensure overview in this state. More important, the board is authorized, by its own regulations, to deny relicensure to a former licensee if “the candidate had been the subject of complaints, investigations or disciplinary actions as a licensed professional.” Regs., Conn. State Agencies § 19a-14-2 (4). The board “must” take this factor into consideration before granting relicensure, according to this regulation. A further regulation provides that “[n]o license shall be issued if there is a complaint awaiting adjudication against the applicant . . . with the Department of Health Services until such a time as it is resolved in favor of the candidate.” Regs., Conn. State Agencies § 19a-14-4. In addition, the department has “discretion” to deny relicensure if the candidate is deemed not to meet this standard. Regs., Conn. State Agencies § 19a-14-3.

To fulfill the mandate of these regulations, the department has broad authority to conduct whatever investigations may be necessary to gather and preserve evidence of misconduct for eventual use against a former licensee who applies for relicensure. General Statutes § 19a-14 (a) (11) empowers the department to “[cjonduct any necessary investigation and follow-up in connection with complaints regarding persons subject to regulation or licensing by the department.” (Emphasis added.) In addition, § 19a-14 (a) (12) authorizes the department to “[pjerform any other function necessary to the effective operation of a board . . . and not specifically vested by statute in the board . . . .” Nothing in the language of these provisions limits the department’s investigatory power to current license holders. To the contrary, § 19a-14 (a) (11) plainly applies to all “persons subject to regulation or licensing.” A former licensee who retains the option of applying for relicensure continues to be “subject to” the regulatory authority of the department, particularly if complaints have been filed against him or her. These provisions confer sufficient regulatory authority upon the department and the board to enable them to carry out their respective functions despite our conclusion in this case.

There is error, the judgment is set aside and the case is remanded with direction to sustain the appeal.

In this opinion the other justices concurred.

       General Statutes (Rev. to 1983) § 19a-88 (b) provides that “[ejach person holding a license to practice medicine . . . shall, annually, during the month of his birth, register with the department of health services . . . . ” Subsection (f) provides that the license of “[a]ny person who fails to comply with the provisions of this section . . . shall become void” upon the expiration of a ninety day renewal period.

       Because we conclude that the license expired by operation of law, we need not consider what effect, if any, the surrender of the license might have had on the jurisdiction of the board. We note, however, that the power of a physician unilaterally to surrender a medical license is an unsettled point of law. The plaintiff argues that Gavlas v. State Department of Health, 108 Conn. 86, 142 A.2d 388 (1928), held that the surrender of a license to an appropriate agency is tantamount to a revocation and therefore divests the board of jurisdiction in this case. As the defendant correctly notes, however, Gavias did not involve the problem of a surrender in the face of imminent disciplinary charges. Courts in other jurisdictions have held, under varying circumstances, that licensees are not entitled to surrender their licenses as of right, during the pendency of disciplinary proceedings, in order to thwart agency jurisdiction. See, e.g., Boedy v. Department of Professional Regulation, 433 So. 2d 544 (Fla. App. 1983); Cross v. Colorado State Board of Dental Examiners, 37 Colo. App. 504, 508, 552 P.2d 38 (1976); Cal Pacific Collections, Inc. v. Powers, 70 Cal. 2d 135, 139-40, 449 P.2d 225, 74 Cal. Rptr. 289 (1969). In addition, it may be significant that no statute in Connecticut expressly permits or prevents a physician from surrendering his or her license. This lack of statutory direction is quite evident in light of the specific provision terminating a physician’s license, by operation of law, if a timely renewal is not sought. See footnote 1, supra.

       “[General Statutes (Rev. to 1983)]. Sec. 19a-17. (Formerly Sec. 19-4s). DISCIPLINARY ACTION BY DEPARTMENT, BOARDS AND COMMISSIONS, (a) Each board or commission established under chapters 369 to 375, inclusive, 378 to 381, inclusive, and 383 to 388, inclusive, and the department of health services with respect to professions under its jurisdiction which have no board or commission may take any of the following actions, singly or in combination, upon finding the existence of good cause:
      “(1) Revoke a practitioner’s license.”

       “[General Statutes] Sec. 20-8a. Connecticut medical examining board, (a) There shall be within the department of health services a Connecticut medical examining board. Said board shall consist of nine members appointed by the governor, subject to the provisions of section 4-9a, as follows: Four physicians practicing in the state; one physician who shall be a full-time member of the faculty of The University of Connecticut School of Medicine; one physician who shall be a full-time chief of staff in a general-care hospital in the state; and three public members. No professional member of said board shall be an elected or appointed officer of a professional society or association relating to his profession at the time of his appointment or have been such an officer during the year immediately preceding such appointment or serve for more than two full consecutive terms which commence after July 1, 1980. Professional members shall be practitioners in good professional standing and residents of this state.
      “(b) All vacancies shall be filled by the governor for the remainder of the term vacated. Successors and appointments to fill a vacancy shall fulfill the same qualifications as the member succeeded or replaced.
      “(c) The office of the board shall be in Hartford, in facilities to be provided by the department.
      “(d) The board shall adopt and may amend a seal.
      “(e) The governor shall appoint a chairperson from among such members. Said board shall meet at least once during each calendar quarter and at such other times as the chairman deems necessary. Special meetings shall be held on the request of a majority of the board after notice in accordance with the provisions of section 1-21. Members shall not be compensated for their services but shall be reimbursed for necessary expenses incurred in the performance of their duties. Any member who fails to attend three consecutive meetings or who fails to attend fifty percent of all meetings held during any calendar year shall be deemed to have resigned from office. Minutes of all meetings shall be recorded by the board. No member shall participate in the affairs of the board during the pendency of any disciplinary proceedings by the board against such member. Said board shall (1) hear and decide matters concerning suspension or revocation of licensure, (2) adjudicate complaints against practitioners and (3) impose sanctions where appropriate.”

       “[General Statutes] Sec. 20-13c. restriction, suspension or revocation of physician’s right to practice, grounds. The board is authorized to restrict, suspend or revoke the license or limit the right to practice of a physician in accordance with section 19a-17, when the board finds that such physician is unable to practice medicine with reasonable skill or safety for any of the following reasons: (1) Physical illness or loss of motor skill, including but not limited to deterioration through the aging process; (2) emotional disorder or mental illness; (3) abuse or excessive use of drugs, including alcohol, narcotics or chemicals; (4) illegal, incompetent or negligent conduct in the practice of medicine; (5) possession, use, prescription for use, or distribution of controlled substances or legend drugs, except for therapeutic or other medically proper purposes; (6) misrepresentation or concealment of a material fact in the obtaining or reinstatement of a license to practice medicine; or (7) violation of any provision of this chapter or any regulation established hereunder.”


source: Caselaw Access Project

author: Glass, J.

license: Public Domain

text:
    Harbor Insurance Company v. John Groppo, Commissioner of Revenue Services
    (13306)
    Peters, C. J., Healey, Shea, Glass and Covello, Js.
    Argued May 11
    decision released August 9, 1988

      Ann M. Bogorowski, with whom, on the brief, was Charles F. Corcoran III, for the appellant (plaintiff).

      CarlF. Yeich, assistant attorney general, with whom, on the brief, were Joseph I. Lieberman, attorney general, and John G. Haines, assistant attorney general, for the appellee (defendant).
   Glass, J.

The sole issue on this appeal is whether General Statutes § 12-210 (a), as applied to the plaintiff, Harbor Insurance Company (Harbor), violates the equal protection clauses of the United States and Connecticut constitutions. Harbor claims that a tax imposed upon it by the defendant, commissioner of revenue services (commissioner), pursuant to § 12-210 (a), denied it equal protection of the laws because: (1) § 12-210 (a) is not rationally related to its revenue raising purpose; (2) Harbor was treated differently than similarly situated insurers; and (3) § 12-210 (a) is constitutionally invalid as a privilege tax.

The parties stipulated to the following facts: Harbor is a California corporation with its principal place of business in Los Angeles, and is authorized to do business in Connecticut. Harbor was admitted as a licensed insurer in Connecticut on April 16, 1982. Prior to becoming a licensed insurer, Harbor had been an authorized surplus line carrier in Connecticut, having been placed on Connecticut’s approved list by the Connecticut insurance department on June 3,1970. All of the insurance business in Connecticut that was written by Harbor from 1977 through April 16,1982, was surplus line business and had been legally written through licensed surplus line brokers in Connecticut. From June 3, 1970, until Harbor was licensed on April 16, 1982, excess line brokers licensed by the insurance commissioner pursuant to General Statutes § 38-78 had been authorized by the insurance commissioner to procure insurance from Harbor for insureds located in Connecticut. Pursuant to General Statutes § 38-84, a tax of 4 percent of the gross premiums on said business was required to be paid to the state of Connecticut by the surplus line brokers who had handled the placement of Harbor’s surplus line policies. Harbor was not required to pay any tax to the state of Connecticut from 1977 through April 16,1982, for any policies procured by such licensed excess brokers.

Subsequent to Harbor’s being licensed by the insurance commissioner on April 16, 1982, the defendant commissioner, pursuant to § 12-210 (a), assessed a gross premium tax of 2.35 percent on Harbor’s surplus line business in Connecticut for the five years preceding April 16, 1982. A company newly admitted as a licensed insurer in Connecticut that had done no prior business in Connecticut would not be assessed any tax under § 12-210 (a) upon its admission, and would be subject only to a $150 filing fee after its admission as a licensed insurer in Connecticut.

Harbor challenged the assessment of the tax, but it was affirmed by the commissioner on May 17, 1986. Harbor filed an appeal in the Superior Court, claiming that the tax assessment was improper and should be set aside. The trial court rendered judgment upholding the tax assessment and dismissing Harbor’s appeal. On October 30, 1987, Harbor filed an appeal in the Appellate Court, and on December 3, 1987, pursuant to Practice Book § 4023, the appeal was transferred to this court. We find no error.

At the outset, we note the following principles of constitutional equal protection analysis: “When a statute is challenged on equal protection grounds, whether under the United States constitution or the Connecticut constitution, the reviewing court must first determine the standard by which the challenged statute’s constitutional validity will be determined. If, in distinguishing between classes, the statute either intrudes on the exercise of a fundamental right or burdens a suspect class of persons, the court will apply a strict scrutiny standard wherein the state must demonstrate that the challenged statute is necessary to the achievement of a compelling state interest. In re Griffiths, 413 U.S. 717, 721, 93 S. Ct. 2851, 37 L. Ed. 2d 910 (1973); San Antonio Independent School District v. Rodriguez, 411 U.S. 1, 30, 93 S. Ct. 1278, 36 L. Ed. 2d 16, reh. denied, 411 U.S. 959, 93 S. Ct. 1919, 36 L. Ed. 2d 418 (1973); Eisenstadt v. Baird, 405 U.S. 438, 447, 92 S. Ct. 1029, 31 L. Ed. 2d 349 (1972); Harper v. Virginia State Board of Elections, 383 U.S. 663, 667, 86 S. Ct. 1079, 16 L. Ed. 2d 169 (1966). If the statute does not touch upon either a fundamental right or a suspect class, its classification need only be rationally related to some legitimate government purpose in order to withstand an equal protection challenge. Trimble v. Gordon, 430 U.S. 762, 767, 97 S. Ct. 1459, 52 L. Ed. 2d 31 (1977); Massachusetts Board of Retirement v. Murgia, 427 U.S. 307, 312, 96 S. Ct. 2562, 49 L. Ed. 2d 520 (1976). . . .

“Under the rational basis test, ‘[t]he court’s function ... is to decide whether the purpose of the legislation is a legitimate one and whether the particular enactment is designed to accomplish that purpose in a fair and reasonable way.’ Pierce v. Albanese, 144 Conn. 241, 249, 129 A.2d 606, appeal dismissed, 355 U.S. 15, 78 S. Ct. 36, 2 L. Ed. 2d 21 (1957); see New Orleans v. Dukes, 427 U.S. 297, 303, 96 S. Ct. 2513, 49 L. Ed. 2d 511 (1976); McGowan v. Maryland, 366 U.S. 420, 425, 81 S. Ct. 1101, 6 L. Ed. 2d 393 (1961); Caldor’s, Inc. v. Bedding Barn, Inc., 177 Conn. 304, 315, 417 A.2d 343 (1979). For our purposes here the test is the same under both the federal and state constitutions. Caldor’s, Inc. v. Bedding Barn, Inc., supra, 314; Horton v. Meskill, 172 Conn. 615, 639, 376 A.2d 359 (1977).” Ryszkiewicz v. New Britain, 193 Conn. 589, 596-99, 479 A.2d 793 (1984).

Moreover, there is “the established principle that those who challenge the constitutionality of a state statute bear the heavy burden of demonstrating beyond a reasonable doubt that the presumption of its validity has been overcome. See, e.g., Kellems v. Brown, 163 Conn. 478, 486, 313 A.2d 53 (1972), appeal dismissed, 409 U.S. 1099, 93 S. Ct. 911, 34 L. Ed. 2d 678 (1973); Adams v. Rubinow, 157 Conn. 150, 152-53, 251 A.2d 49 (1968). A party challenging a tax statute on the grounds of equal protection bears an even greater burden because ‘[a]s this court emphasized in Kellems v. Brown, supra, 487, quoting Madden v. Kentucky, 309 U.S. 83, 88, 60 S. Ct. 406, 84 L. Ed. 590 [1940], “ ‘in taxation, even more than in other fields, legislatures possess the greatest freedom in classification. Since the members of a legislature necessarily enjoy a familiarity with local conditions which [the United States Supreme] Court cannot have, the presumption of constitutionality can be overcome only by the most explicit demonstration that a classification is a hostile and oppressive discrimination against particular persons and classes. The burden is on the one attacking the legislative arrangement to negative every conceivable basis which might support it/ ” ' Miller v. Heffernan, [173 Conn. 506, 509-10, 378 A.2d 572 (1977), appeal dismissed, 434 U.S. 1057, 98 S. Ct. 1226, 55 L. Ed. 2d 758 (1978)]. Nonetheless, even for the purposes of taxation, the legislature does not have an unlimited power to create classifications. The classifications that it selects cannot be arbitrary but ‘ “must rest upon some ground of difference having a fair and substantial relation to the object of the legislation.” ’ (Citations omitted.) Allied Stores v. Bowers, 358 U.S. 522, 527, 79 S. Ct. 437, 3 L. Ed. 2d 480 (1959); see United Illuminating Co. v. New Haven, 179 Conn. 627, 636-37, 427 A.2d 830 (1980); Kellems v. Brown, supra, 490. Recognizing that any plan of taxation necessarily has some discriminatory impact; San Antonio Independent School District v. Rodriguez, [supra, 41]; United Illuminating Co. v. New Haven, supra, 641; we have previously stated the operative test for the validity of a tax statute to be the following: ‘ “As long as some conceivable rational basis for the difference exists, ‘a classification is not offensive merely because it is not made with mathematical nicety.’ ” ’ (Emphasis in original.) (Citations omitted.) United Illuminating Co. v. New Haven, supra, 640-41.” Gunther v. Dubno, 195 Conn. 284, 291-92, 487 A.2d 1080 (1985).

We find that § 12-210 is rationally related to its legitimate purpose of raising revenue. Section 12-210 is designed to tax insurers on business previously written on Connecticut property or risks, once they submit to the jurisdiction of the state and choose to become licensed. In construing an analogous tax, the United States Supreme Court recently stated that a legitimate goal of taxation is to “compensate the state for revenue lost when residents purchase out-of-state goods for use within the State.” D. H. Holmes Co. v. McNamara, 486 U.S. 24, 108 S. Ct. 1619, 1624, 100 L. Ed. 2d 21 (1988).

Harbor asserts that the tax is arbitrary and irrational, and relies on cases in which a court has determined that a taxing scheme violates the equal protection clause. See Metropolitan Life Ins. Co. v. Ward, 470 U.S. 869, 105 S. Ct. 1676, 84 L. Ed. 2d 751, reh. denied, 471 U.S. 1120, 105 S. Ct. 2370, 86 L. Ed. 2d 269 (1985); Penn Mutual Life Ins. Co. v. Department of Licensing & Regulation, 162 Mich. App. 123, 412 N.W.2d 668 (1987), appeal denied, 429 Mich. 871 (1987); State v. American Bankers Ins. Co., 374 N.W.2d 609 (S.D. 1985). These cases, however, generally involve taxes that burden interstate commerce by the preferential treatment of a domestic insurer or business.

In Ward, the United States Supreme Court invalidated an Alabama statute that taxed domestic insurers’ gross premiums at 1 percent, and foreign insurers’ premiums at 3 to 4 percent, absent capital investment in Alabama. No amount of capital investment under Alabama’s statutory scheme could reduce a foreign insurer’s tax burden to that of a domestic insurer. In Penn Mutual Life Ins. Co., the Michigan Court of Appeals invalidated a Michigan statute that imposed a 2 to 3 percent tax on admitted foreign insurers depending on the type, of insurance sold, while imposing a less burdensome 2.35 percent income tax on domestic insurers. Finally, in American Bankers Ins. Co., the South Dakota Supreme Court held that a South Dakota tax statute violated the equal protection clause because the tax imposed a higher rate on excess line insurers than it did on domestic insurers. These cases are distinguishable from the present case because they involve the question of a discriminatory tax rate between domestic and foreign insurers. There is no claim before this court that the rate at which Harbor’s tax liability was assessed was in any way constitutionally impermissible.

In further support of its argument that § 12-210 is not rationally related to its revenue raising purpose, Harbor argues that recent United States Supreme Court cases have adopted a “heightened” rational basis test, which, if applied in this case, would result in a finding of no rational basis for the tax. Harbor relies on Metropolitan Life Ins. Co. v. Ward, supra, Cleburne v. Cleburne Living Center, 473 U.S. 432, 105 S. Ct. 3249, 87 L. Ed. 2d 313 (1985), and Coburn v. Agustin, 627 F. Sup. 983 (D. Kan. 1985), for this assertion. As noted in Coburn v. Agustin, supra, 990, the United States Supreme Court, however, “has not officially articulated a new [rational basis] test,” and we decline to follow the lead of the District Court of Appeals in applying such a test until it is formally adopted by the United States Supreme Court.

Next, Harbor argues that the distinction drawn between it and insurers that did not have a surplus line business in Connnecticut prior to becoming licensed in Connecticut is discriminatory, because similarily situated insurers are treated differently. Section 12-210 (a), however, requires only insurers that previously have been permitted to insure certain property and risks in Connecticut, upon becoming licensed in this state, to pay a tax on the business that they have previously conducted. The two classes of insurers simply are not similar: one has written business in this state and has enjoyed the benefits of writing such business, the other has not written any business in this state and has received no Connecticut business benefits. Moreover, Harbor has not referred us to any case holding unconstitutional, on an equal protection analysis, a state taxing scheme recognizing this argument.

Harbor suggests that for the purposes of an equal protection analysis, the relevant comparison is between all newly admitted insurers, irrespective of whether any members of the class have previously insured risks in Connecticut, because § 12-210 (a) becomes effective upon admission in the state as a licensed insurer, rather than prior to becoming licensed. We find this distinction unavailing. The state has no means to collect any taxes from an excess line insurer until it submits to the jurisdiction of the state.

In support of its argument, Harbor also relies on recent United States Supreme Court cases in which that court invalidated statutes drawing distinctions on the basis of past relationships or activities. For example, in Williams v. Vermont, 472 U.S. 14, 105 S. Ct. 2465, 86 L. Ed. 2d 11 (1985), the court invalidated a Vermont use tax collected by Vermont when cars were registered in the state. The tax was not imposed if the car was purchased in Vermont and a sales tax was paid. The tax was also reduced by the amount of any sales or use tax paid to another state if that state afforded a similar credit. The credit was only available if the registrant was a Vermont resident at the time he paid the taxes. The court held that there was no relevant distinction between motor vehicle registrants who purchased their cars out-of-state while they were Vermont residents, and those who established residence in Vermont after buying a car elsewhere. Id., 24-25.

We find that the past relationship noted in Williams is distinguishable from the past relationship Harbor has with Connecticut. In Williams, state residents received a benefit that was unavailable to other state residents who had purchased a car out-of-state prior to establishing residence. In the present case, Harbor is required to pay a tax, upon admission as a licensed insurer, not only because it was previously a nonresident but because it previously received earnings attributable to insurance premiums previously recovered from within this state.

Finally, Harbor argues that even if the tax is construed to be a privilege tax, it is unconstitutional on equal protection grounds. This claim is premised upon our concluding either that Harbor is similarly situated with newly admitted insurers who have never conducted business in Connecticut, or that § 12-210 (a) is not rationally related to the value of the privilege granted. Harbor’s arguments are no different from those we have rejected above and we need not address them further.

There is no error.

In this opinion the other justices concurred.

       “[General Statutes] Sec. 12-210. tax on net direct premiums of nonresident and foreign companies, (a) Each newly licensed insurance company incorporated by or organized under the laws of any other state or foreign government shall pay to the commissioner of revenue services, within forty-five days of the effective date of such company’s initial license to transact business in this state, a tax on the net direct premiums received by such company in the next five preceding calendar years from policies written on property or risks located or resident in this state, except ocean marine insurance, at the rate in effect for each such calendar year.”

       Surplus or excess line insurance is insurance on property or risks that standard line insurers licensed in this state have chosen not to insure because they are especially risky or expensive. A surplus line insurer is not licensed in the jurisdiction in which the risk is located, but is eligible by law to insure risks under certain conditions.

       “[General Statutes] Sec. 38-78. excess line broker’s license, regulations re unauthorized iinsurers. (a) Notwithstanding the provisions of section 38-70, the commissioner may issue an excess line broker’s license to any person, firm, association or corporation who or which is domiciled and maintains an office in this state and is licensed as an insurance agent or insurance broker under section 38-72, authorizing such licensee to procure, from insurers not authorized to transact business in this state, subject to the restrictions herein provided, policies of insurance against loss from any contingency as provided by the insurance laws of this state, except any insurance coverage which can be placed through a residual market mechanism, as defined in subsection (x) of section 38-501.
      “(b) The commissioner may by regulation: (1) Establish such proper standards as he may deem necessary to guide excess line brokers procuring any such policy of insurance, as is permitted under subsection (a) of this section, from any such unauthorized insurer; (2) require any unauthorized insurer from which any excess line broker has procured or intends to procure any policy of insurance, as is permitted under subsection (a) of this section, to file with him such evidence and in such form as he may prescribe so as to enable him to establish the financial stability, qualifications and general suitability of such unauthorized insurer to issue any policy of insurance through any excess line broker, under this section; and (3) establish such reasonable filing fees as may be necessary to defray the cost to him of examining evidence filed with him by an unauthorized insurer either voluntarily or pursuant to the provisions of this section.
      “(c) The commissioner, after reasonable notice to and hearing of any holder of such a license, may suspend or revoke such license for cause shown. In addition to or in lieu of such suspension or revocation the commissioner may impose a fine not to exceed one thousand dollars. Such hearings may be held by the commissioner or any person designated by the commissioner. Whenever a person other than the commissioner acts as the hearing officer, he shall submit to the commissioner a memorandum of his findings and recommendations upon which the commissioner may base his decision. Any person aggrieved by the action of the commissioner in revoking, suspending, or refusing to grant or reissue a license or in imposing a fine may appeal therefrom in accordance with the provisions of section 4-183, except venue for such appeal shall be in the judicial district of Hartford-New Britain. Appeals under this section shall be privileged in respect to the order of trial assignment.”

       Were we to apply a heightened rational basis test, we conclude nonetheless that General Statutes § 12-210 (a) withstands constitutional scrutiny. Harbor argues that a heightened rational basis analysis would entail an examination of the actual relationship between the legislative goals and means by considering the “practical operation” of the challenged statute. In this vein, Harbor argues that the long run effect of § 12-210 (a) will be to decrease revenues by creating a disincentive for excess line insurers to become admitted in Connecticut. Harbor has set forth no facts indicating that the statute will have this effect. We also note, however, that if Harbor’s hypothesis is correct, the state has a legitimate goal in preserving the surplus line insurance market, and this would allow us to uphold the statute.


author: Hull, J.

text:
    Cherie Paranteau et al. v. Frederick DeVita
    (13260)
    Peters, C. J., Callahan, Glass, Covello and Hull, Js.
    Argued May 5
    decision released August 9, 1988

      Thomas F. Brown, for the appellant (defendant).

      Patty Jenkins Pittman, for the appellees (plaintiffs).
   Hull, J.

The defendant brings this appeal following a grant of certification from an order of the Appellate Court dismissing his appeal to that court as untimely. We granted certification limited to the following question: “Did the Appellate Court err in concluding that the trial court, in an action brought under CUTPA [Connecticut Unfair Trade Practices Act, General Statutes §§ 42-110a to 42-110q], had rendered a final judgment before its determination of the issue of attorney’s fees?” A proper analysis, however, requires that we expand the scope of our inquiry beyond claims brought under CUTPA to include any claim where a judgment on the merits is rendered prior to an award of attorney’s fees. See Nardini v. Manson, 207 Conn. 118, 119-20, 540 A.2d 69 (1988); State v. Torrence, 196 Conn. 430, 434-35, 493 A.2d 865 (1985). Thus, the revised first issue in this appeal is as follows: whether a judgment on the merits is final for purposes of appeal where the amount of attorney’s fees to be awarded remains to be decided. Furthermore, because it is inescapably intertwined with the first issue, we address a second limited issue: whether a trial court’s supplemental postjudgment order determining the amount of attorney’s fees to be awarded is separately appealable as a final judgment. Both are issues of first impression for this court.

The relevant facts are not in dispute. The plaintiff tenants, Cherie Paranteau and Michael Warren, brought suit in several counts against the defendant landlord, Frederick DeVita, alleging, inter alia, a CUTPA violation by the defendant. On May 27, 1987, the trial court, Ramsey, J., by way of written decision, rendered a judgment on the merits in favor of the plaintiffs on all counts, including the alleged violation of CUTPA by the defendant. General Statutes § 42-110g (d) grants a trial court the authority to award reasonable attorney’s fees to the prevailing plaintiff(s) on a CUTPA claim. In its decision, the trial court stated that “[a] hearing may be scheduled by the Clerk to determine plaintiff’s counsel fees.” We construe this statement as implicitly granting attorney’s fees but delaying the determination of their amount. A hearing was subsequently held on June 18, 1987, and the plaintiffs were awarded attorney’s fees in the amount of $2580.

On June 26, 1987, the defendant filed an appeal to the Appellate Court. The defendant’s preliminary statement of issues for presentation on appeal indicated that he was appealing not only the trial court’s May 27, 1987 judgment on the merits, but also the subsequent award of attorney’s fees to the plaintiffs at the June 18, 1987 hearing. On July 1,1987, the plaintiffs timely filed with the Appellate Court a motion to dismiss the defendant’s appeal on the ground that it was filed more than twenty days after the May 27,1987 judgment on the merits in violation of Practice Book § 4009. On July 23, 1987, the Appellate Court granted the plaintiffs’ motion and dismissed the defendant’s appeal in toto without opinion. The defendant now seeks review in this court of the Appellate Court’s dismissal, as untimely filed, of his appeal of the trial court’s judgment on the merits and postjudgment award of attorney’s fees. We find error only as to the dismissal of that portion of the defendant’s appeal challenging the trial court’s postjudgment order determining the amount of attorney’s fees to be awarded, and remand that issue to the Appellate Court for further proceedings.

I

Normally, the jurisdiction of this court is limited to appeals taken from final judgments. General Statutes § 52-263; Practice Book § 4000. Absent the timely filing of a motion for extension of time under Practice Book § 4040, the party appealing must file his appeal within twenty days of the issuance of notice of the rendition of the judgment. Practice Book § 4009. If an appeal is not timely filed, it may be dismissed if the appellee files a motion to dismiss within ten days of the filing of the appeal. Practice Book § 4056; Da Costa v. Gregory, 168 Conn. 665, 337 A.2d 539 (1975).

The defendant’s appeal was filed within twenty days after the order determining the amount of attorney’s fees to be awarded the plaintiffs, but more than twenty days after the trial court’s judgment on the merits. The defendant contends that the determination of attorney’s fees pursuant to the plaintiffs’ CUTPA claim was an “integral part” of the case and that judgment on the merits was not final and appealable until the amount was decided. Under this analysis, no final judgment on the merits was rendered until the June 18,1987 order determining the amount of attorney’s fees to be awarded and, thus, the defendant’s June 26, 1987 appeal on the merits was timely filed within the twenty day appeal period. The plaintiffs, on the other hand, maintain that the May 27, 1987 decision on the merits constituted a final judgment for purposes of appeal. They argue that the supplemental postjudgment order regarding attorney’s fees was merely collateral to the main cause of action and did not affect the finality of the May 27, 1987 judgment on the merits. Under this view, the defendant’s June 26, 1987 appeal as to the merits was untimely, and therefore properly dismissed by the Appellate Court, since it was not filed within twenty days of the May 27,1987 decision on the merits.

Thus, the first question presented by this appeal is the effect of the June 18, 1987 order regarding the amount of attorney’s fees on the finality, for purposes of appeal, of the May 27,1987 judgment on the merits.

Although there are no reported decisions in Connecticut addressing this precise issue, the federal courts have examined this problem in some depth. Among the United States Courts of Appeals there has been a conflict of authority. The minority view favors analyzing each case individually to determine whether attorney’s fees were “collateral” to the main cause of action, in which case they would not preclude the finality and appealability of a judgment on the merits, or whether the fees were an “integral part” of the merits of the case, thus requiring their determination before judgment could be deemed final for purposes of appeal. See, e.g., McQurter v. Atlanta, 724 F.2d 881 (11th Cir. 1984); Holmes v. J. Ray McDermott & Co., 682 F.2d 1143 (5th Cir. 1982). A majority of the Courts of Appeals, however, have adopted a bright-line approach which obviates the need for individual case review through the implementation of a uniform rule stating that an unresolved issue of attorney’s fees does not prevent judgment on the merits from being final and immediately appealable. See, e.g., Morgan v. Union Metal Mfg., 757 F.2d 792 (6th Cir. 1985); Cox v. Flood, 683 F.2d 330 (10th Cir. 1982); Obin v. District No. 9, 651 F.2d 574 (8th Cir. 1981).

This federal conflict of authority was recently resolved when the United States Supreme Court, in the case of Budinich v. Becton Dickinson & Co., 486 U.S. 196, 108 S. Ct. 1717, 100 L. Ed. 2d 178 (1988), embraced the majority rule in favor of a bright-line approach. In Budinich, the petitioner brought an employment compensation action, which was removed from Colorado state court to the federal District Court of Appeals on the basis of diversity jurisdiction. A jury awarded the petitioner a verdict of $5000 and judgment was rendered on March 26, 1984. The petitioner timely filed new trial motions and a motion for attorney’s fees under Colorado law. On May 14, 1984, the District Court denied the new trial motions, found the petitioner was entitled to attorney’s fees, but requested further briefing before determining their amount. On August 1, 1984, the District Court entered its final order concerning the attorney’s fees. Id., 1719.

On August 29, 1984, the petitioner filed notice of appeal to the Court of Appeals for the Tenth Circuit, covering all of the District Court’s posttrial orders. The respondent filed a motion to dismiss the appeal, arguing that the judgment was final and immediately appealable because the order denying the new trial motions was entered on May 14,1984, and that notice of appeal was not filed within thirty days of that order as required by the Federal Rules of Appellate Procedure. The Court of Appeals granted the motion to dismiss as to all issues except the award of attorney’s fees. Id.

On appeal to the United States Supreme Court, the petitioner in Budinich asserted, as does the defendant in the present case, that the District Court’s decision on the merits was not final and appealable until the question of attorney’s fees was resolved, and that the time for appeal should run from the District Court’s August 1, 1984 final order regarding attorney’s fees, thus rendering his August 29,1984 appeal timely. The United States Supreme Court rejected the petitioner’s argument, holding that an “unresolved issue of attorney’s fees for the litigation in question does not prevent judgment on the merits from being final.” Id., 1721-22. In so deciding, the Budinich court emphasized that the time of appealability, because of its jurisdictional consequences, should above all be clear, and that courts and litigants were best served by a bright-line rule that a decision on the merits is a final judgment for purposes of appeal even though the recoverability or amount of attorney’s fees for the litigation remains to be determined. Id., 1722. This ruling is in keeping with previous United States Supreme Court decisions that, although not directly ruling on the issue, have been interpreted by the lower federal courts as standing for the proposition that a judgment on the merits is final for purposes of appeal notwithstanding that a claim for attorney’s fees is unresolved. See White v. New Hampshire Department of Employment Security, 455 U.S. 445, 102 S. Ct. 1162, 71 L. Ed. 2d 325 (1982); Sprague v. Ticonic National Bank, 307 U.S. 161, 59 S. Ct. 777, 83 L. Ed. 1184 (1939).

From the standpoint of efficient judicial administration, we conclude that a bright-line rule is far superior to the case-by-case approach. We agree with the United States Supreme Court that, because it has jurisdictional consequences, the time of appealability should above all be clear. Budinich v. Becton Dickinson & Co., supra. A bright-line rule provides notice that decisions on the merits and those on attorney’s fees will be treated separately, giving clear guidance as to when an appeal on the merits must be taken. We do not believe the timeliness of an appeal should be based upon retrospective, technical considerations of whether a particular supplemental postjudgment claim for attorney’s fees was collateral to, or an integral part of, the judgment on the merits. Such a case-by-case approach promotes, rather than eliminates, uncertainty as to when an appeal on the merits must be taken.

Thus, we hold that a judgment on the merits is final for purposes of appeal even though the recoverability or amount of attorney’s fees for the litigation remains to be determined. Accordingly, that portion of the defendant’s June 26,1987 appeal challenging the trial court’s May 27,1987 judgment on the merits was properly dismissed by the Appellate Court as untimely filed in violation of Practice Book § 4009, and we find no error.

II

The issue of appealability of the judgment on the merits having been resolved, there remains to be decided the separate question of the timeliness of the defendant’s appeal of the trial court’s supplemental postjudgment order determining the amount of attorney’s fees to be awarded the plaintiffs under their CUTPA claim. We conclude that such an order may raise a collateral and independent claim that is separately appealable as a final judgment. Morgan v. Union Metal Mfg., supra, 794-95; Local Union 75 v. Madison Industries, Inc., 733 F.2d 656, 658-59 (9th Cir. 1984); Obin v. District No. 9, supra, 584. Thus, that portion of the defendant’s June 26,1987 appeal challenging the fee award was timely filed and improperly dismissed by the Appellate Court and we remand for further proceedings. Practice Book § 4009.

We are aware that the rules we have today adopted may, in some cases, lead to “piecemeal” appeals of judgments on the merits and awards of attorney’s fees. The problem of fragmented appeals, however, may be averted if trial judges delay rendering judgment on the merits until the fee issue is resolved and dispose of both the merits and attorney’s fees in a single judgment. Obin v. District No. 9, supra. If for some reason the question of attorney’s fees must be decided after the entry of judgment on the merits, we suggest that the trial court insist upon the prompt filing and disposition of fee requests so that any pending appeal on the merits of the action may be amended to include any prospective appeal from a supplemental postjudgment award of attorney’s fees. Practice Book § 4006.

Accordingly, we reverse in part the judgment of dismissal of the Appellate Court and remand the case to that court for further proceedings.

In this opinion the other justices concurred.

       Practice Book § 4138 provides in pertinent part: “The issues which the appellant may present [to' the Supreme Court on certification] are limited to those raised in the petition for certification . . . except where the issues are further limited by the order granting certification.” This court may, however, suspend the requirements of § 4138 when the dictates of justice necessitate a more expansive review. Practice Book § 4187; Nardini v. Manson, 207 Conn. 118, 119-20, 540 A.2d 69 (1988); State v. Hodge, 201 Conn. 379, 382-83, 517 A.2d 621 (1986); State v. Torrence, 196 Conn. 430, 433-34, 493 A.2d 865 (1985); Greenwood v. Greenwood, 191 Conn. 309, 315, 464 A.2d 771 (1983).

       General Statutes § 42-110g (d) provides: “In any action brought by a person under this section, the court may award, to the plaintiff, in addition to the relief provided in this section, costs and reasonable attorneys’ fees based on the work reasonably performed by an attorney and not on the amount of recovery. In a class action in which there is no monetary recovery, but other relief is granted on behalf of a class, the court may award, to the plaintiff, in addition to other relief provided in this section, costs and reasonable attorneys’ fees. In any action brought under this section, the court may, in its discretion, order, in addition to damages or in lieu of damages, injunctive or other equitable relief.”

       The defendant’s appeal was dismissed by the Appellate Court before briefs were filed by either party.

       Practice Book § 4009 provides in relevant part: “The party appealing shall, within twenty days, except where a different period is provided by statute, from the issuance of notice of the rendition of the judgment or decision from which the appeal is taken file an appeal in the manner prescribed by Sec. 4012 . . . .”

       Under limited circumstances, General Statutes § 52-265a permits a direct appeal to the Supreme Court absent a final judgment. See Fernandez v. Fernandez, 208 Conn. 329, 545 A.2d 1036 (1988).

       The defendant did not file a motion to extend the time for filing his appeal pursuant to Practice Book § 4040.

       In further support of his position, the defendant directs us to Judge Ramsey’s comment of the June 18, 1987 hearing that the time for appeal would commence to run from that date (June 18, 1987). A trial judge’s statement, however, that he is rendering a final appealable judgment does not necessarily make it so. Doublewal Corporation v. Toffolon, 195 Conn. 384, 393, 488 A.2d 444 (1985).

       Colorado Revised Statutes § 8-4-114 (1986) provides: “employee may recover attorney fee. Whenever it is necessary for an employee to commence a civil action for the recovery or collection of wages and penalties due as provided by sections 8-4-104 and 8-4-105, the judgment in such action shall include a reasonable attorney fee in favor of the winning party, to be taxed as part of the costs of the action.”

       Jurisdiction of the United States Courts of Appeals is limited to “all final decisions of the district courts.” 28 U.S.C. § 1291 (1988 Sup.). Notice of appeal must be filed within thirty days of the rendering of the judgment appealed from. Fed. R. App. P. 4 (a) (1). This thirty day appeal period running from the rendering of final judgment may be tolled, however, as it was in Budinich, v. Becton Dickinson & Co., 486 U.S. 196, 108 S. Ct. 1717, 1719, 100 L. Ed. 2d 178 (1988), by the filing of a new trial motion pursuant to Rule 4 (a) (4) of the Federal Rules of Appellate Procedure. In such case, the appeal period runs from “the entry of the order denying a new trial. ...” Fed. R. App. P. 4 (a) (4). As a result, the respondent contended in Budinieh that the time for appeal on the merits commenced to run from the District Court’s May 14, 1984 order denying a new trial, rather than from the March 26, 1984 decision on the merits.

       The defendant argues that our decision should not be applied retroactively to bar this appeal since he had no precedent to guide him on this matter. Absent overriding needs of public policy, however, we have previously expressed our unwillingness to apply rulings of this court pertaining to jurisdiction prospectively only. Neyland v. Board of Education, 195 Conn. 174, 182-83, 487 A.2d 181 (1985). We find no such exceptional circumstances in the present case to warrant a departure from this position.

       A supplemental postjudgment award of attorney’s fees becomes final and appealable, however, not when there is a finding of liability for such fees, but when the amount of fees are conclusively determined. A finding as to liability only, prior to a determination on the issue of damages, is not a final judgment from which an appeal lies. Stroiney v. Crescent Lake Tax District, 197 Conn. 82, 84, 495 A.2d 1063 (1985). Furthermore, a timely appeal from a supplemental postjudgment award of attorney’s fees may challenge not only the amount awarded, but the underlying recoverability of such fees as well.


text:
    Robert S. Weiss and Associates, Inc. v. Michael E. Wiederlight et al.
    (13201)
    Peters, C. J., Healey, Callahan, Glass and Hull, Js.
    Argued May 31
    decision released August 9, 1988

      Jay H. Sandak, with whom, on the brief, was Catherine C. Ziehl, for the appellant-appellee (plaintiff).

      David L. Fineberg, with whom were Wesley W. Horton and, on the brief, Paul J. Pacifico, for the appellee-appellant (named defendant).

      Thomas E. Minogue, Jr., with whom was Kimberly A. Grillo, for the appellee-appellant (defendant Insurance Associates of Connecticut, Inc.).
   Glass, J.

The plaintiff, Robert S. Weiss and Associates, Inc., instituted an action against Michael E. Wiederlight for breach of a restrictive covenant of employment and theft of trade secrets. In an amended complaint, the plaintiff added Insurance Associates of Connecticut, Inc. (IAC), as a defendant, alleging interference with a business enterprise and theft of trade secrets with Wiederlight acting as its agent. The trial court ruled in favor of the plaintiff on the issues of breach of the restrictive covenant and interference with a business enterprise and awarded damages, but found that the plaintiff had failed to sustain its burden of proof on the issue of theft of trade secrets. The plaintiff appealed to the Appellate Court and the appeal was transferred to this court pursuant to Practice Book § 4023.

On appeal, the plaintiff claims that the trial court erred: (1) in failing to conclude that the plaintiffs customer lists and related insurance information constituted trade secrets and that Wiederlight had committed a theft of trade secrets; (2) in failing to award damages beyond the 1983-1984 period for Wiederlight’s solicitation of the plaintiffs accounts in breach of the covenant; and (3) in failing to award damages for other accounts written in the area restricted by the covenant after the court found that the covenant was valid and that Wiederlight had breached it. The defendants on cross appeal argue that the trial court erred in finding that the restrictive covenant was reasonable and valid and in finding that IAC tortiously interfered with the plaintiffs contract.

The facts may be summarized as follows. The plaintiff is an independent insurance agency in Stamford, that was doing business throughout Fairfield County and in New York at the time of the events underlying this case. In April, 1975, the plaintiff hired Wiederlight to sell commercial insurance under a four year contract of employment. Wiederlight previously had worked in sales with Liberty Mutual Insurance Company (Liberty) in New York for ten years. His written employment agreement at Liberty contained a restrictive covenant not to compete with Liberty for eighteen months after termination of employment.

Wiederlight’s 1975 employment agreement with the plaintiff prohibited him from engaging in the commercial insurance business within Stamford and a fifteen mile radius for two years after his employment terminated. In April, 1979, the plaintiff’s principal, Robert S. Weiss, and Wiederlight entered into a new four year employment agreement. Wiederlight expressed dissatisfaction with certain provisions of the 1979 contract, which reduced his status and commission rates and omitted a buy-in option that was set forth in the 1975 agreement. When the 1979 agreement was negotiated, Wiederlight’s sole source of income was derived from his employment with Weiss. Wiederlight signed the agreement after he had read it and discussed it with his wife. He understood all the terms and conditions and voluntarily entered into the agreement.

The 1979 employment agreement contained three paragraphs pertinent to this case. Paragraph seven identified the agency’s business records, including those produced by Wiederlight, as its exclusive property, and forbade Wiederlight from removing such records on termination of his employment. Paragraphs nine and ten barred Wiederlight, for two years from the date the agreement terminated, from soliciting accounts held by the plaintiff at the time the employment agreement terminated, and from working within Stamford and within ten miles from the outer borders of Stamford.

In March, 1983, Weiss told Wiederlight that his employment agreement would not be renewed upon expiration. Immediately thereafter, Wiederlight was hired by IAC, then located in Southport, and began to solicit and sell commercial insurance policies to customers he had dealt with while working for Weiss. Before hiring Wiederlight, the principals of IAC had reviewed his employment agreement with Weiss and were aware of the terms of the restrictive covenant.

During his employment at IAC from April, 1983, to March, 1985, Wiederlight sold insurance to a number of accounts that belonged to the plaintiff when Wiederlight’s employment there ceased. Wiederlight also sold commercial insurance to other customers within the restricted Stamford area. The commissions generated by Wiederlight during his employment at IAC inured to the financial benefit of his employer. The principals of IAC encouraged and induced Wiederlight to sell insurance to customers of the plaintiff and others in the Stamford area despite their knowledge of the restrictive covenant in Wiederlight’s 1979 employment agreement with Weiss.

I

We first consider the defendants’ claim on cross appeal that the trial court erred in concluding that the restrictive covenant in Wiederlight’s 1979 employment agreement was reasonable and therefore valid. We find no error in the trial court’s conclusion.

The defendants’ first claim is that the trial court’s conclusion was erroneous because it applied the wrong criteria to evaluate the reasonableness of the restrictive covenant. We disagree. Scott v. General Iron & Welding Co., 171 Conn. 132, 368 A.2d 111 (1976), sets forth the criteria relevant to an evaluation of the reasonableness of a covenant not to compete ancillary to an employment agreement. Although the trial court stated that it relied upon Mattis v. Lally, 138 Conn. 51, 54, 82 A.2d 155 (1951), which involved a covenant ancillary to the sale of a business, this fact does not establish that it erred in finding that the restrictive covenant was reasonable. If the trial court’s memorandum does not state a proper basis for its results, its judgment may be sustained if there are proper grounds to support it. Barra v. Ridgefield Card & Gift Gallery, Ltd., 194 Conn. 400, 404-405, 480 A.2d 552 (1984); Herman v. Division of Special Revenue, 193 Conn. 379, 387, 477 A.2d 119 (1984); Favorite v. Miller, 176 Conn. 310, 317, 407 A.2d 974 (1978).

The defendants next claim that the trial court erred in upholding the covenant because: (1) it contained time and geographic constraints that were unreasonable; (2) it unreasonably restrained Wiederlight from any employment in the commercial insurance business; (3) it unfairly protected the plaintiffs interests and interfered with the public’s interest in open competition; and (4) it never became operative under the terms of the contract. We are unpersuaded.

Paragraph nine of the employment agreement barred Wiederlight from selling, soliciting or otherwise engaging in commercial insurance for himself or any other firm in Stamford or within a ten mile radius, excluding Long Island, New York, and areas north of Stamford, for two years following termination of the agreement. Paragraph ten prohibited him from soliciting or selling commercial insurance to customers of the plaintiff, existing when Wiederlight’s employment terminated, for two years following termination.

The trial court’s conclusion that this restrictive covenant was reasonable is consistent with other cases where we have held that time and geographic restrictions in a covenant not to compete are valid if they are reasonably limited and fairly protect the interests of both parties. See Scott v. General Iron & Welding Co., supra, 138, 140 (upholding five year statewide covenant barring employee from working as manager in competing business); see also Torrington Creamery, Inc. v. Davenport, 126 Conn. 515, 520, 12 A.2d 780 (1940) (upholding two year restriction applicable to specific and limited geographic area); Roessler v. Burwell, 119 Conn. 289, 295, 176 A. 126 (1934) (covenant restricting delicatessen products salesman from soliciting employer’s customers in specific locality upheld); cf. Samuel Stores, Inc. v. Abrams, 94 Conn. 248, 255, 108 A. 541 (1919) (invalidating covenant barring salesman for five years from selling clothes in any city where former employer operates).

In the present case, the two year limitation fairly protected the plaintiff’s interests in the commercial insurance business in the Stamford area while ensuring that Wiederlight could return to commercial insurance in that area within a definite period of time. See Scott v. General Iron & Welding Co., supra, 140. In addition, the restricted geographical area was narrowly tailored to the plaintiff’s business situation in the Stamford area. The provision of paragraph nine allowing Wiederlight to work in areas north of Stamford and in Long Island, New York, demonstrated the plaintiff’s caution in avoiding an overly broad geographic restriction.

Further, we are not persuaded by the defendants’ theory that paragraph ten is unreasonable because it lacks a geographic limitation. Paragraph ten barred Wiederlight from soliciting the plaintiff’s accounts that existed when Wiederlight left. Upon the termination of the agreement, the clause fixed the geographical scope of the covenant to a definite and limited area. Cf. May v. Young, 125 Conn. 1, 8, 2 A.2d 385 (1938) (restraint may reasonably cover actual clients or customers of employer whose business with them is subject to injury by employee); see Tuttle v. Riggs-Warfield-Roloson, Inc., 251 Md. 45, 49, 246 A.2d 588 (1967) (agreement between insurance agency and employee barring employee from soliciting any of employer’s clients for two years valid); Uniform Rental Div., Inc. v. Moreno, 83 App. Div. 2d 629, 441 N.Y.S.2d 538 (1981) (upholding covenant barring salesman from soliciting any customers of employer for two years). Such a restriction was reasonable in view of the plaintiffs business situation, and by its own terms did not protect the employer in areas where it did not do business. Scott v. General Iron & Welding Co., supra, 138.

The defendants assert that the scope of prohibited employment failed to protect Wiederlight’s interests, especially since Wiederlight did nothing to cause the severance of his employment. It is true that in Scott v. General Iron & Welding Co., supra, 140, we noted that the employee’s interests were in part protected because the covenant only prohibited him from working as a manager but not as an employee. See also May v. Young, supra, 5. The extensive time and geographical restrictions in Scott, however, are not present here. Although the covenant precluded Wiederlight from any employment in a commercial insurance business, the restriction only operated for two years and only applied to the greater Stamford area. Moreover, the reasonableness of a restrictive covenant of employment does not turn on whether the employee subject to the covenant left his position voluntarily or was dismissed by the employer. Cf. Torrington Creamery, Inc. v. Davenport, supra, 520 (employer under no obligation to offer to keep employee as condition to enforcing covenant); Kroeger v. Stop & Shop Cos., 13 Mass. App. 310, 320, 432 N.E.2d 566, appeal denied, 386 Mass. 1102, 440 N.E.2d 1175 (1982) (termination of employment •at initiative of employer does not itself render non-competition provision invalid). Similarly, we disagree with the defendants’ theory that, because paragraph ten protects the plaintiff’s interest in customers, the only result of paragraph nine was to prevent Wiederlight from working in the Stamford area. The fact that an employer seeks to protect his interest in potential new customers in a reasonably limited market area as well as his existing customers at the time the employee leaves does not render the covenant unreasonable. See Torrington Creamery, Inc. v. Davenport, supra, 518-20.

The defendants further contend that the plaintiff’s self-interest in protecting the Stamford commercial insurance market is outweighed by the public’s interest in competitive insurance pricing and competition within the market place. We have stated that “[w]hen the character of the business and the nature of the employment are such that the employer requires protection for his established business against competitive activities by one who has become familiar with it through employment therein, restrictions are valid when they appear to be reasonably necessary for the fair protection of the employer’s business or rights .... Especially if the employment involves . . . [the employee’s] contacts and associations with clients or customers it is appropriate to restrain the use, when the service is ended, of the knowledge and acquaintance, so acquired, to injure or appropriate the business which the party was employed to maintain and enlarge.” May v. Young, supra, 6-7.

In the present case, Wiederlight’s position as a commercial insurance salesman required him to maintain extensive contacts and associations with the plaintiff’s customers. The trial court’s conclusion that the covenant was reasonable was consistent with evidence that the plaintiff sought to protect information regarding current and potential customers in the Stamford area. Moreover, the defendants offer no explanation for their summary suggestion that the covenant impairs the public’s interest in competitive insurance pricing. There is nothing in the findings to suggest that enforcement of the restrictive covenant in paragraph nine will interfere with the public’s legitimate interest in open competition. See Torrington Creamery, Inc. v. Davenport, supra, 519, 520 (where provision excluded defendant from engaging in milk and dairy products distribution business for two years, nothing to indicate public interest prejudiced).

The defendants finally argue that the restrictive covenant in the 1979 agreement never became operative because Wiederlight’s employment agreement was not “terminated” as required by the covenant. They assert that the meaning of “termination” is derived from paragraph six of the agreement, which states that the agreement shall “not be terminated except by mutual [consent] of both parties or for cause.” Since Wiederlight’s agreement lapsed at the end of the four year term, they argue that the agreement was not “terminated” and therefore the restrictions in paragraphs nine and ten could not operate.

The trial court found that the contract was unambiguous and rejected the defendant’s contention that the word “termination” in paragraphs nine and ten only meant termination by mutual consent or for cause. “ ‘The intention of the parties is to be ascertained from the language used in the contract and that language must be given its common meaning and usage where it can be sensibly applied to the subject matter of the contracts.’ Anderson v. Pension & Retirement Board, 167 Conn. 352, 355 A.2d 283 [1974].” Williams v. Vista Vestra, Inc., 178 Conn. 323, 330, 422 A.2d 274 (1979). The word terminate “means to ‘come to a limit in time; to end.’ ” Merchants Bank & Trust Co. v. New Canaan Historical Society, 133 Conn. 706, 714, 54 A.2d 696 (1947), citing Webster’s New International Dictionary (2d Ed.). Because the ordinary meaning of “termination” may include lapse or expiration, the trial court was correct in ruling that the covenant became operative when Wiederlight’s contract expired.

II

The defendant IAC claims in its cross appeal that the trial court’s judgment for the plaintiff on the claim of tortious interference with contractual relations should be reversed because the plaintiff failed properly to plead or prove that IAC acted wrongfully or improperly. &We agree.

The third count of the plaintiff’s amended complaint alleged that IAC “knew or in the exercise of reasonable care should have known” of the restrictive covenant in the Wiederlight-Weiss agreement and that, “[djespite this knowledge either actual or constructive,” IAC encouraged Wiederlight to sell insurance in violation of the agreement to IAC’s financial benefit. The third count concluded that IAC’s activities “constituted an interference with a contractual relationship.”

“ ‘This court has long recognized a cause of action for tortious interference with contract rights or other business relations. (Citations omitted.) Blake v. Levy, 191 Conn. 257, 260, 464 A.2d 52 (1983).’ ” Solomon v. Aberman, 196 Conn. 359, 364, 493 A.2d 193 (1985). Nevertheless, “not every act that disturbs a contract or business expectancy is actionable. Jones v. O’Connell, [189 Conn. 648, 660-61, 458 A.2d 355 (1983)].” Blake v.Levy, supra, 260-61. “ ‘[F]or a plaintiff successfully to prosecute such an action it must prove that the defendant’s conduct was in fact tortious. This element may be satisfied by proof that the defendant was guilty of fraud, misrepresentation, intimidation or molestation ... or that the defendant acted maliciously.’ (Citations omitted.)” Id., 261, quoting Kecko Piping Co. v. Monroe, 172 Conn. 197, 201-202, 374 A.2d 179 (1977). “[A]n action for intentional interference with business relations . . . requires the plaintiff to plead and prove at least some improper motive or improper means. . . . ‘[A] claim is made out [only] when interference resulting in injury to another is wrongful by some measure beyond the fact of the interference itself.’ ” (Citations omitted.) Blake v. Levy, supra, 262; Kakadelis v. DeFabritis, 191 Conn. 276, 279-80, 464 A.2d 57 (1983); see also Sportsmen’s Boating Corporation v. Hensley, 192 Conn. 747, 753, 755, 474 A.2d 780 (1984) (liability in tort imposed only if defendant acted maliciously).

The plaintiff’s complaint omits the necessary allegation of improper motive or means. The assertion that IAC “encouraged” Wiederlight to sell commercial insurance in the restricted area when it knew or should have known of the covenant’s terms does not fairly imply that IAC acted with “fraud, misrepresentation, intimidation or molestation” or that it acted with malice. Blake v. Levy, supra, 261. Construing the allegations most favorably to the pleader; O’Connor v. Dory Corporation, 174 Conn. 65, 68-69, 381 A.2d 559 (1977); the most the complaint alleges is that IAC knew of the covenant’s terms when it hired Wiederlight. We have stated in an analogous situation, “[t]o raise an allegation of wilful conduct, the plaintiff must clearly plead that the [harm] was caused by the wilful or malicious conduct of the defendants.” Warner v. Leslie-Elliott Constructors, Inc., 194 Conn. 129, 139, 479 A.2d 231 (1984). Moreover, we cannot look beyond the complaint for facts not alleged. Cavallo v. Derby Savings Bank, 188 Conn. 281, 285-86, 449 A.2d 986 (1982).

Because the plaintiffs complaint failed to plead allegations essential to an action for tortious interference with a contractual relationship, the trial court erred in awarding the plaintiff a recovery on that basis. “ ‘It is fundamental in our law that the right of a plaintiff to recover is limited to the allegations of his complaint. Nash Engineering Co. v. Norwalk, 137 Conn. 235, 239, 75 A.2d 496 [1950].’ ” Matthews v. F.M.C. Corporation, 190 Conn. 700, 705, 462 A.2d 376 (1983); Malone v. Steinberg, 138 Conn. 718, 721, 89 A.2d 213 (1952).

Ill

The plaintiff claims that the trial court erred in concluding that the plaintiff’s customer list and related information pertaining to insurance accounts were not trade secrets. The alleged trade secrets included monthly production reports, containing a number of items relating to a particular agent’s accounts, expiration lists, indicating the date on which accounts expired, and “prospect” cards, containing data gathered by the plaintiff’s sales force concerning potential customers. We disagree with the plaintiff’s claim.

“ ‘A trade secret may consist of any formula, pattern, device or compilation of information which is used in one’s business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it. It may be a formula for a chemical compound ... or a list of customers.’ Restatement, 4 Torts § 757, comment b; Allen Mfg. Co. v. Loika, [145 Conn. 509, 516, 144 A.2d 306 (1958)].” Town & Country House & Homes Service, Inc. v. Evans, 150 Conn. 314, 318, 189 A.2d 390 (1963). Although it is not essential that the proprietor have exclusive possession of the information, “a substantial element of secrecy must exist, to the extent that there would be difficulty in acquiring the information except by the use of improper means.” Id., 319. Depending on the nature of the business, a customer list may be a trade secret, and an employee may be restrained from using the list if he acquired it in confidence from his employer. There is no trade secret, however, if the customers’ names can readily be ascertained through ordinary business channels or reference resources. Id., 319-20. The factors used to determine whether given information is a trade secret include the extent to which the information is known outside the business and by employees and others involved in the business, the measures taken by the employer to guard the secrecy of the information, the information’s value to the employer and to competitors, the resources the employer expends in developing the information, and the ease or difficulty with which the information could be properly acquired or duplicated by others. Id., 319; 4 Restatement, Torts § 757, comment b.

The trial court found that during his employment with the plaintiff, Wiederlight was allowed to keep production reports that were issued to him each month. The reports provided Wiederlight with all the information necessary to solicit the insurance business of customers listed in the reports. The court also found that Wiederlight developed and serviced the customers listed in the reports, and that Wiederlight’s personal relationship with each customer allowed him access to their insurance needs. Wiederlight was the only agent his customers dealt with at the plaintiff insurance agency.

The court also heard conflicting testimony regarding the extent to which the plaintiff sought to keep secret the various sources of information. Weiss testified that information on customer accounts was provided to the plaintiff’s employees only on a “need to know” basis. He also testified that the plaintiff’s comptroller had exclusive control over the expiration lists, which were kept in a locked cabinet. In addition, paragraph seven of the 1979 agreement established the plaintiff’s proprietary interest in the business records, although it did not refer to them as trade secrets. Weiss, however, testified that summaries of the insurance policy accounts containing data on coverage, premiums, and expiration dates were kept in open and unlocked files. He also testified that Wiederlight acquired the information on the accounts he sold while working for the plaintiff by calling on the accounts himself. There was also testimony that the prospect list and vital account data could be obtained independently simply by using telephone directories or making personal contact.

We hold that the trial court was not clearly erroneous in concluding that the customer list and related insurance information were not trade secrets. Pandolphe’s Auto Parts, Inc. v. Manchester, 181 Conn. 217, 221-22, 435 A.2d 24 (1980).

IV

Finally, we address the plaintiffs claims on the issue of damages. The trial court concluded that the plaintiff had sustained the burden of proof of damages for net profits lost in 1983 and 1984 through Wiederlight’s sales to the plaintiff’s accounts in breach of the restrictive covenant. In assessing damages, the court used certain tables, supplied by the plaintiff, that provided data on the accounts. The information included the account’s name, the year the plaintiff obtained the account, and the claimed actual and projected losses for the years 1983 through 1991. To arrive at the damage figure, the trial court reduced the total amount of losses for the years 1983 and 1984 by 44 percent. The reduction included 27 percent for Weiderlight’s salary compensation, 11 percent for the plaintiff’s average annual loss of customers, and a 6 percent overhead factor. The court, however, found that there was no credible evidence that the plaintiff’s customers would have renewed their accounts after 1984, and denied damages for the period following 1984. The plaintiff argues that because the trial court awarded damages for Wiederlight’s sales to its accounts in 1983-1984 based on the plaintiff’s tables, it implicitly accepted that loss of renewals in future years was compensable, and therefore could not logically deny damages for the years following 1984. We are unpersuaded.

The trial court has broad discretion in determining whether damages are appropriate. Buckman v. People Express, Inc., 205 Conn. 166, 175, 530 A.2d 596 (1987). Its decision will not be disturbed on appeal absent a clear abuse of discretion. Id. To recover damages, the plaintiff must offer evidence sufficient to prove the claimed loss. Waterbury Petroleum Products, Inc. v. Canaan Oil & Fuel Co., 193 Conn. 208, 226 n.22, 477 A.2d 988 (1984). Moreover, lost profits cannot be recovered unless it is reasonably certain that they resulted from the breach. Burr v. Lichtenheim, 190 Conn. 351, 360, 460 A.2d 1290 (1983). The amount of lost profits may be determined by approximation based on reasonable inferences and estimates. Id.

At trial, Weiss testified that the plaintiff annually lost 11.5 percent of its customers. Weiss also testified, however, that all of the plaintiff’s accounts that Wiederlight sold had been accounts he had produced while working at the agency. Wiederlight testified that many of the disputed customer accounts had contacted him and sought his services after learning that he had left the plaintiff. Although other agents were assigned to contact these customers after Wiederlight left, Weiss did not know the extent of the plaintiff’s subsequent contacts with the accounts.

On the basis of the evidence, the trial court could reasonably have found that the plaintiff failed to establish that it would have obtained renewals of the accounts after 1984. The trial court’s conclusion that the plaintiff failed to prove damages for lost profits for the period after 1984 was not a clear abuse of discretion. Buckman v. People Express, Inc., supra, 175.

The plaintiff also contests the trial court’s denial of damages for Wiederlight’s breach of that part of the covenant barring him from working in the Stamford area for two years after termination of employment with it. The trial court found that there was no evidence that the plaintiff would have written any of the accounts in the restricted area had Wiederlight not breached the covenant. It concluded that the plaintiffs damage claim was speculative.

At trial, the plaintiff introduced a list of customers in the Stamford area that Wiederlight successfully had solicited during the restricted period. The data, which was supplied to the plaintiff by IAC, gave each account’s name and date of inception, the total commission earned, the profit on the commission, and Wiederlight’s share in the commission.

The proper measure of damages for breach of a covenant not to compete is the nonbreaching party’s losses rather than the breaching party’s gains. Matter of Isbell, 27 Bankr. 926, 929-30 (W.D. Wis. 1983); Hyde v. C M Vending Co., Inc., 288 Ark. 218, 225, 703 S.W.2d 862 (1986); D. W. Trowbridge Ford, Inc. v. Galyen, 200 Neb. 103, 107, 262 N.W.2d 442 (1978); Vermont Electric Supply Co. v. Andrus, 135 Vt. 190, 192, 373 A.2d 531 (1977). The plaintiff seeks to establish its lost profits by reference to the undisputed fact that Wiederlight sold commercial insurance to customers in the restricted area during the covenant’s operation. To permit the plaintiff to recover damages merely by proving that the defendant breached the covenant, however, would ignore the well established rule that damages are essential to the plaintiff’s proof and must be shown with reasonable clarity. Milgrim v. Deluca, 195 Conn. 191, 199, 487 A.2d 522 (1985); Fuessenich v. DiNardo, 195 Conn. 144, 154, 487 A.2d 514 (1985); Conaway v. Prestia, 191 Conn. 484, 493-94, 464 A.2d 847 (1983). The trial court did not abuse its discretion in denying the plaintiff damages for Wiederlight’s breach of paragraph nine of the covenant. Buckman v. People Express, Inc., supra, 175.

There is no error in the plaintiff’s appeal. There is error in the defendants’ cross appeal, the judgment against IAC for tortious interference with contract is set aside and the case is remanded to the trial court with direction to render judgment in favor of the defendant IAC.

In this opinion the other justices concurred.

       The plaintiff claims that we should not consider the defendants’ attack on the validity of the restrictive covenant since they only seek to relitigate the facts. Our examination of the defendants’ argument, however, indicates that it raises questions of law and is not simply a wholesale challenge to the trial court’s findings resulting in an attempt to have this court retry issues of fact. Cf. Halperin v. Pine Plaza Corporation, 180 Conn. 85, 87, 428 A.2d 340 (1980).

       The five factors to be considered in evaluating the reasonableness of a restrictive covenant ancillary to an employment agreement are: (1) the length of time the restriction operates; (2) the geographical area covered; (3) the fairness of the protection accorded to the employer; (4) the extent of the restraint on the employee’s opportunity to pursue his occupation; and (5) the extent of interference with the public’s interests. Scott v. General Iron & Welding Co., 171 Conn. 132, 137, 368 A.2d 111 (1976); New Haven Tobacco Co. v. Perrelli, 11 Conn. App. 636, 638-39, 528 A.2d 865 (1987).

       Wiederlight also contends that the trial court’s decision should not stand because the court concluded that the covenant was reasonable with respect to geographic and time restrictions without addressing whether it reasonably protected Wiederlight’s occupational opportunities, whether it was reasonable in relation to the plaintiffs business interests, or whether it unduly interfered with the public’s interests. See Scott v. General Iron & Welding Co., 171 Conn. 132, 137, 368 A.2d 11 (1976).
      The trial court’s conclusion that the covenant was enforceable implies a conclusion as to the reasonableness of all aspects of the covenant. Moreover, “ ‘[w]e have frequently indicated that if an appellant requires amplification or clarification of the factual basis of a decision to present his claims of error he should seek a further articulation from the trial court.’ ” Griffin Hospital v. Commission on Hospitals & Health Care, 196 Conn. 451, 459, 493 A.2d 229 (1985), quoting Newington v. General Sanitation Service Co., 196 Conn. 81, 84, 491 A.2d 363 (1985); Practice Book § 4051. Wiederlight did not seek a further articulation of the factual basis for the trial court’s conclusion that the covenant was valid.

       We reject Wiederlight’s additional claim that there was no evidence at all to justify the restrictive covenant. There was ample evidence in the record by which the trial court could reasonably have concluded that the covenant was fair and did not unduly burden the defendant.

       The plaintiff asserts that IAC has waived any claim on cross appeal that the complaint was legally inadequate by failing to raise this issue prior to trial. We note, however, that “ ‘[i]t is incumbent on a plaintiff to allege some recognizable cause of action in his complaint. If he fails so to do, it is not the burden of the defendant to attempt to correct the deficiency, either by motion, [motion to strike] or otherwise.’ Stavnezer v. Sage-Allen & Co., 146 Conn. 460, 461, 152 A.2d 312 [1959], Thus, failure by the defendants to [move to strike] any portion of the amended complaint does not prevent them from claiming that the [plaintiff] had no cause of action and that a judgment in their favor was not warranted.” Brill v. Ulrey, 159 Conn. 371, 374, 269 A.2d 262 (1970).

       In support of the sufficiency of the complaint, the plaintiff relies on Solomon v. Aberman, 196 Conn. 359, 373, 493 A.2d 193 (1985), for the proposition that conscious interference with a contract for the purpose of financial gain constitutes an improper purpose. In Solomon, however, our review was limited to considering whether the trial court committed clear error in finding probable cause, for the purpose of issuing a prejudgment attachment, that the defendants had committed tortious interference with the plaintiffs contractual and beneficial relations. Id., 360, 364. We upheld the trial court’s finding of probable cause after noting that the court found that the defendant obtained an indirect financial benefit by improperly inducing the plaintiffs discharge from employment. Id., 374. In the present case, the plaintiffs complaint does not allege any affirmative conduct by I AC analogous to the improper conduct of the defendant in Solomon.

       The cases relied upon by the plaintiff are distinguishable. In holding that insurance company customer lists were trade secrets, these decisions noted that the employee had been given the information by the employer and had not developed it on his own. See Alexander & Alexander, Inc. v. Drayton, 378 F. Sup. 824, 832-33 (E.D. Pa.), aff’d, 505 F.2d 729 (3d Cir. 1974); American Republic Ins. Co. v. Union Fidelity Life Ins. Co., 295 F. Sup. 553, 555 (D. Or. 1968), aff’d, 470 F.2d 820 (9th Cir. 1972); United Ins. Co. of America v. Dienno, 248 F. Sup. 553, 555, 559 (E.D. Pa. 1965). In the present case, however, the trial court found that Wiederlight developed the customer list through his own efforts.

       For the year 1984, the court also excluded claims of losses pertaining to two accounts listed in the plaintiff’s tables.

       In a similar vein, the plaintiff argues that because the trial court applied the 11.5 percent annual customer “attrition” rate to the disputed accounts for 1983-1984, it was bound to assume that those accounts would have a longevity greater than two years. Simply because the court applied the average attrition rate to the disputed accounts for 1983-1984, however, did not require it to make a finding, in the absence of credible evidence, that the plaintiff would have renewed those accounts after 1984.