## Facts

- Wall Systems, Inc. employed William Pompa from approximately 1995; he became head of its exterior insulation finish systems division and handled estimating, bidding, subcontractor arrangements, supervision, and payment logistics.
- After a change in ownership and a reduction in his compensation, Pompa began performing side work and also worked for a competitor while still employed by Wall Systems.
- Wall Systems alleged Pompa breached his common-law duty of loyalty by performing work for himself during work hours and by taking kickbacks from subcontractors connected to Wall Systems projects.
- The trial court found Pompa worked simultaneously for Wall Systems and a competitor and accepted three kickbacks from a subcontractor in connection with his Wall Systems work.
- Wall Systems sued seeking recovery tied to Pompa’s disloyal conduct, including compensation earned during the period and amounts related to the kickbacks.
- The trial court imposed a constructive trust on a joint bank account held by William Pompa and his wife, Jill Pompa, despite no proof she participated in wrongdoing.

## Issues

1. After an employee’s breach of the common-law duty of loyalty is proven, must a court order total forfeiture of the employee’s compensation from the employer and a competitor, or does the court have equitable discretion to limit monetary relief?
2. Whether the trial court’s $43,200 damages award was supported by the evidence.
3. Whether a constructive trust may be imposed on a joint account held with a non-wrongdoing spouse absent proof the spouse participated in the misconduct or that wrongful proceeds were deposited into the account.

## Decision

- The Supreme Court affirmed the judgment in part and reversed in part.
- It affirmed the finding that Pompa breached his duty of loyalty.
- It affirmed the $43,200 damages award (plus statutory interest and attorney’s fees), holding it had sufficient evidentiary support.
- It affirmed the trial court’s refusal to order additional monetary relief such as complete forfeiture/disgorgement of all compensation, holding the trial court acted within its equitable discretion.
- It reversed the constructive trust imposed on the joint bank account, concluding it was not warranted on the evidence presented.

## Legal Principles

- An employee who breaches the common-law duty of loyalty may be subject to monetary remedies that can include compensatory damages and equitable relief such as forfeiture or disgorgement.
- The selection and scope of monetary remedies for breach of loyalty are equitable and discretionary; full forfeiture of all compensation during the period of disloyalty is not mandatory as a matter of law.
- Constructive trust relief requires an evidentiary basis tying the specific property to the wrongdoing (including a showing that the property contains or represents wrongful gains).
- Imposing a constructive trust on property jointly held with a non-wrongdoing spouse requires more than joint ownership; absent proof of the spouse’s participation or traceable wrongful proceeds in the property, the remedy is improper.

## Conclusion

The court upheld a limited damages award for an employee’s breach of loyalty and confirmed that forfeiture and disgorgement remain discretionary equitable remedies, not automatic consequences of disloyalty, while rejecting a constructive trust on a joint account where neither the spouse’s involvement nor a traceable connection between the account and wrongful proceeds was proven.


Wall Systems, Inc. v. Pompa, 154 A.3d 989 (Conn. 2017)