Title: Andrea E. Cipala v. Lincoln Technical Institute et als.

State: new-jersey

Issuer: New Jersey Supreme Court

Document:

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized). In 1996, Andrea E. Cipala began working as an Admission Representative for the Cittone Institute, which is owned by Lincoln Technical Institute (LTI). As part of her benefits package, Cipala was told that she would receive long-term disability insurance and was given a disability plan booklet. On July 20, 1999, Cipala injured her left knee on the job. She left work on disability and underwent knee surgery in August 1999. Thereafter, Cipala sought long-term disability benefits from LTI under its long-term disability plan. LTI claimed that she was not covered by the policy. Cipala filed an action against LTI, alleging breach of her employment contract and violation of the New Jersey Law Against Discrimination (LAD). A jury trial followed, limited to the question of liability. After presentation of the evidence, the trial court dismissed the LAD claim. The jury then found LTI had breached its contract with Cipala by failing to provide long-term disability benefits pursuant to LTI s insurance plan. Cipala filed a summary judgment motion, seeking compensation in the amount of her accumulated benefits from the onset of her disability, and an order requiring LTI to purchase an annuity for her to ensure payment of the full entitlement period under the plan. In the alternative, Cipala requested a lump sum payment equal to the present value of the monetary benefits she could receive until age sixty-five. Cipala also sought counsel fees. LTI conceded that the disability-benefits plan entitled Cipala to $1869.08 per month until she reached sixty-five, as long as she survived and remained disabled. LTI also stipulated to the amount of past due benefits. LTI objected to any lump sum payment for future benefits or the purchase of an annuity because Cipala might overcome her disability or die prematurely. LTI argued that Cipala was only entitled to a judgment for specific performance of the obligation to pay future benefits. LTI also objected to an award of counsel fees because Cipala failed to establish any statutory basis, court rule, or legal precedent permitting such an award in a breach of contract action. The trial court denied Cipala s request for an annuity or lump sum damages of future benefits and counsel fees, but ordered LTI to fund a trust for payment of future benefits. A later order outlined the details for funding the trust, including, among other things; that any funds remaining in the trust on termination would revert to LTI. Cipala appealed the denial of lump sum damages, the dismissal of her LAD claim, and the denial of counsel fees. LTI cross-appealed on this issue of its requirement to fund a trust for contingent future benefits. The Appellate Division affirmed the judgment for specific performance and rejected Cipala s present value damage claims. The panel denied Cipala s demand for counsel fees because the action was not based on a liability or indemnity policy. The appellate panel noted its inability to review the LAD claim because the dismissal of that claim was not confirmed by an order and Cipala did not provide a transcript of the ruling. On the cross-appeal, the Appellate Division reversed, concluding that the trust device went beyond the remedies provided for in case law. The Supreme Court granted certification. HELD: Cipala is entitled to a judgment for specific performance but she may not recover lump sum damages for the present value of future disability payments because her disability was not shown to be permanent. Under the circumstances of this case, the imposition of a trust device is an appropriate remedy. 1. On the record before the Court, Cipala failed to prove permanent disability. Because LTI is only obligated to pay during Cipala s disability, she is entitled only to a judgment for specific performance and may not recover the present value of future payments. Cipala s benefits will end if she recovers from her disabilities or dies before reaching age sixty-five. Because Cipala has not demonstrated that her disability is permanent, she has not fulfilled the condition precedent entitling her to a lump sum payment. (Pp. 5-9) 2. In the typical case in which a third-party insurer is involved, the remedy of specific performance is adequate. When an insurance carrier is not involved, the remedy of acquiring a comparable insurance or annuity is also appropriate. When those remedies are not feasible because a substitute insurance policy or an annuity is impractical, as here, the trial court may employ other non-traditional remedies to achieve the goal of placing Cipala in the position she would have been in if the contract had been performed. The trial court struck a fair balance by imposing a trust to be funded over the course of four years. Even if the imposition of the trust places Cipala in a better position than if a third-party insurer were involved, that does not alter the analysis. The trust device gives Cipala no more than she would have received if the contract had not been breached. (Pp. 9-12) 3. The trust imposes an additional burden on LTI. However, in light of LTI s breach of contract, and the fact that LTI will receive any remaining corpus of the trust, the Court does not find the trust unfair or unduly burdensome. Thus, under the special circumstances found here, the imposition of a trust device on the breaching employer to take the place of a third-party insurer is an appropriate remedy. (Pp. 12-13) 4. Cipala s deficiency in failing to submit either a final order dismissing her LAD claim or a transcript of the trial proceedings prohibits review of her LAD claim. Therefore, the Court affirms the Appellate Division s decision on this issue. (Pp. 13-14) 5. Under the American Rule, the prevailing litigant is ordinarily not entitled to collect reasonable attorney s fees from the loser. There is no justification to reach a different result in this case. Thus, Cipala may not recover counsel fees from LTI. (Pp. 14-15) Judgment of the Appellate Division is AFFIRMED IN PART and REVERSED IN PART and the judgment of the Law Division is REINSTATED. CHIEF JUSTICE PORITZ and JUSTICES LONG, VERNIERO, LaVECCHIA, ZAZZALI and ALBIN join in JUSTICE WALLACE S opinion. Plaintiff-Appellant, v. LINCOLN TECHNICAL INSTITUTE, Defendant-Respondent, and THE CITTONE INSTITUTE and STONINGTON PARTNERS, Defendants. Argued October 20, 2003 Decided March 16, 2004 On certification to the Superior Court, Appellate Division, whose opinion is reported at 354 N.J. Super. 247 (2002). Mandy R. Steele argued the cause for appellant. Steven Backfisch argued the cause for respondent (Lindabury, McCormick & Estabrook, attorneys). JUSTICE WALLACE delivered the opinion of the Court. In this appeal, we consider whether the creation of a trust fund is an appropriate remedy for an employee when there has been a wrongful breach of a disability contract by her employer. In a bifurcated trial, after the trial court dismissed plaintiff s claim under the New Jersey Law Against Discrimination (LAD), N.J.S.A. 10:5-1 to 49, the jury found that defendant had breached the contract. The trial court denied plaintiff s request for a lump sum payment, awarded her the amount of the past due monthly payments up to the time of judgment, and ordered defendant to pay plaintiff $1,869.08 each month until plaintiff was no longer disabled, reached the age of sixty-five, or died. Subsequently, the court ordered defendant to fund a trust in the amount of $250,000 to ensure the monthly payments would be made over the required period and denied plaintiff s request for attorney s fees. On appeal, the Appellate Division affirmed in part and reversed the imposition of the trust fund. Cipala v. Lincoln Technical Inst., 354 N.J. Super. 247 (2002). We granted certification, 175 N.J. 548 (2003), and now affirm in part, reverse in part, and reinstate the judgment of the Law Division. We hold that the trial court properly denied a lump sum recovery, and that under the circumstances here, the imposition of a trust device was an appropriate remedy. [Ibid.] One of the primary authorities relied on in Stopford was Pierce v. Tennessee Coal, Iron & R.R. Co., 173 U.S. 1, 19 S. Ct. 335, 43 L. Ed. 591 (1899). In Pierce, the plaintiff sought recovery because of the defendant s breach of its promise to pay wages to the plaintiff during his disability. 173 U.S. at 9, 19 S. Ct. at 338, 43 L. Ed. at 595. The plaintiff s proof of permanent disability was central to the Court s holding: If these facts were proved . . . the case would stand thus: The defendant committed an absolute breach of the contract, at a time when the plaintiff was entitled to require performance. The plaintiff was not bound to wait to see if the defendant would change its decision, and take him back into its service; or to resort to successive actions for damages from time to time or to leave the whole of his damages to be recovered by his personal representative after his death. But he had the right to elect to treat the contract as absolutely and finally broken by the defendant; to maintain this action, once for all, as for a total breach of the entire contract; and to recover all that he would have received in the future, as well as in the past, if the contract had been kept. In so doing, he would simply recover the value of the contract to him at the time of the breach, including all the damages, past or future, resulting from the total breach of the contract. [Id. at 15-16, 19 S. Ct. at 341, 43 L. Ed. at 597 (emphasis added).] Here, the Appellate Division panel emphasized that the critical factor in Pierce was that plaintiff proved his permanent inability to work, thus fulfilling the condition precedent that was consideration for his receipt of pension benefits. Cipala, supra, 354 N.J. Super. at 253. The panel concluded that unlike the plaintiff in Pierce, Cipala failed to prove permanent disability. Ibid. Because defendant is obligated to pay only during plaintiff s disability, the panel reasoned that plaintiff is entitled merely to a judgment for specific performance and may not recover the present value of future payments. Id. at 253-54. We are in complete accord with the view expressed by the Appellate Division regarding that issue. The crucial factor present here and not present in Stopford, is that plaintiff s benefits will end if she recovers from her disabilities or dies before reaching age sixty-five. Plaintiff failed to show that her disability is permanent. Thus, she has not fulfilled the condition precedent that would entitle her to a lump sum payment. Because future damages cannot be determined with reasonable certainty, plaintiff s efforts to obtain a judgment in the amount of future damages must fail. See, e.g., Finley v. St. Johns s Mercy Med. Ctr., 958 S.W.2d 593, 595-96 (Mo. Ct. App. 1998) (concluding future damages incalculable when duration of plaintiff s disability unknown). Plaintiff seeks to overcome that hurdle by arguing that she is permanently disabled. She asserts that on January 24, 2000, the Social Security Administration found her disabled effective July 26, 1999. However, there is no evidence of permanent disability in this record. Consequently, because the issue of plaintiff s total and permanent disability was not litigated and is not in the record, we will not consider her assertions on appeal. See State v. Harvey, 151 N.J. 117, 201-02 (1997). We hold that plaintiff is entitled to a judgment for specific performance, but she may not recover lump sum damages for the present value of future disability payments because her disability was not shown to be permanent. ANDREA E. CIPALA, Plaintiff-Appellant, v. LINCOLN TECHNICAL INSTITUTE, Defendant-Respondent, and THE CITTONE INSTITUTE and STONINGTON PARTNERS, Defendants. DECIDED March 16, 2004 Chief Justice Poritz PRESIDING OPINION BY Justice Wallace CONCURRING/DISSENTING OPINIONS BY DISSENTING OPINION BY