SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-2030-15T4

MICHAEL D. KIEFFER, Individually 

and Derivatively on behalf of

DIGITAL PRODUCTION, INC.,

Plaintiff-Respondent,

v.

CHARLES A. BUDD and

DIGITAL PRODUCTION, INC.,

Defendants-Appellants.

_________________________________

Submitted March 8, 2017 – Decided

Before Judges Fuentes, Simonelli and Gooden 

Brown. 

On appeal from the Superior Court of New 

Jersey, Chancery Division, Gloucester County, 

Docket No. C-0006-12.

Hagner & Zohlman, LLC, attorneys for 

appellants (Thomas J. Hagner, of counsel and 

on the briefs).

Fox Rothschild LLP, attorneys for respondent 

(R. James Kravitz, of counsel and on the 

brief).

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

This opinion shall not "constitute precedent or be binding upon any court." 

Although it is posted on the internet, this opinion is binding only on the 

parties in the case and its use in other cases is limited. R.1:36-3.

August 24, 2017
2 A-2030-15T4

PER CURIAM 

In this minority shareholder oppression and breach of 

contract matter, defendants Charles A. Budd and Digital 

Production, Inc. (DPI),

1 appeal from the September 16, 2015 

Chancery Division order for judgment entered in favor of plaintiff 

Michael D. Kieffer. Defendants also appeal from the December 31, 

2015 order denying their motion for a new trial, and from the 

December 31, 2015 final judgment. We affirm.

We derive the following facts from the evidence presented at 

the two-day bench trial before Judge Anne McDonnell. DPI is a 

closely held family business engaged in providing graphic 

solutions to retailers and manufacturers. Budd is DPI's founder 

and president and was its sole shareholder until October 22, 2010. 

On June 4, 2010, DPI and plaintiff executed an employment 

agreement whereby DPI would employ plaintiff as vice-president 

once he became a shareholder and owned at least twelve shares of 

DPI's common stock, and pay him an annual salary of $100,000, 

"payable in accordance with [DPI's] normal payroll practices for 

its employees." Once plaintiff purchased the shares, DPI would 

pay him "an annual salary in the amount corresponding with the 

level of [DPI's] gross sales achieved by [DPI] during its fiscal 

 

1 We shall sometimes refer to Budd and DPI collectively as 

defendants.
3 A-2030-15T4

year (as reported on [DPI's] compiled financial statements based 

on the accrual method of accounting)[.]" Specifically, DPI would 

pay plaintiff an annual salary of $110,000 if its gross sales were 

between $1.5 million and $2,999,999 during its fiscal year. DPI 

could change plaintiff's salary upon prior notice. The employment 

agreement also required DPI to pay plaintiff a $7500 signing bonus, 

payable in three installments of $2500 on the first day of July, 

August, and September 2010. 

After signing the employment agreement, plaintiff received 

the following payments from DPI:

June 15, 2010: $3076

June 24, 2010: $3100

July 10, 2010: $2500

August 13, 2010 $1506

August 18, 2010 $2,866.84

September 19, 2010: $727.38

October 22, 2010 $5000

DPI's general ledger contained separate entries for net payroll. 

The general ledger did not list any of the above payments as 

payroll or salary payments, and there are no payroll records for 

the period June 4, 2010 to October 22, 2010. In addition, the 

payments do not reflect any pay period, and are not consistent 

with a $100,000 annual salary. Notably, DPI's 2010 federal tax 

return for the fiscal year beginning April 2, 2010 and ending 

March 31, 2011, did not list plaintiff as an officer or shareholder 

of DPI. Plaintiff testified that the above payments were for 
4 A-2030-15T4

independent contracting work he performed for DPI prior to 

purchasing the shares and commencing employment as DPI's vicepresident on October 22, 2010.

Also on June 4, 2010, DPI, Budd, and plaintiff executed a 

stock purchase agreement, whereby Budd agreed to sell twelve of 

his 100 shares of DPI's common stock to plaintiff for $13,016 per 

share for a total of $156,192. On October 22, 2010, plaintiff 

purchased the twelve shares for that amount, deriving the money 

from a mortgage on his home. That same day, DPI, Budd, and 

plaintiff executed a stock restriction agreement, and DPI's Board 

of Directors (Board) issued a resolution electing plaintiff to the 

Board and appointing him DPI's vice-president effective that day. 

Termination of plaintiff's employment with DPI was one of the 

events that triggered the application of the stock restriction 

agreement. If plaintiff's employment was terminated other than 

for cause during the first twelve months of his employment, DPI 

had to purchase, and plaintiff had to sell, all of his shares of 

stock at $13,016 per share for a total of $156,192, payable in one 

lump sum no later than sixty days after termination. If 

termination occurred after the first twelve months, the purchase 

price would be the stock's fair market value. 

DPI's payroll records reveal that on November 12, 2010, 

plaintiff received his first paycheck in the gross amount of 
5 A-2030-15T4

$3,846.16 (amounting to $100,000 annually) for the bi-weekly pay 

period beginning October 23, 2010, and ending November 5, 2010. 

Plaintiff continued receiving $3,846.16 bi-weekly until April 11, 

2011, when the Board issued a resolution, which plaintiff signed,

reducing his and Budd's salaries to $1000 bi-weekly, and 

authorizing the treasurer to make loans to them so they could pay 

their personal expenses until business improved. 

Plaintiff testified that Budd said the salary reduction was 

temporary and necessary to induce the bank to purchase DPI's 

receivables. Budd testified that DPI had a $250,000 loss as of 

March 31, 2011, sales were not good, and plaintiff's salary 

reduction, as well as the layoff of two employees (his son Brian

and girlfriend Julie Pfeiffer) was necessary to reduce payroll 

because DPI lacked a sufficient cash flow. Budd also testified 

it would not have been responsible to allow DPI to continue to pay 

plaintiff's original salary.

In addition to his $1000 bi-weekly salary, plaintiff received 

five checks in the amount of $1500 each, for a total of $7500. 

Four of the checks bore the notation "Loan," while one bore the 

notation "Employee Advance." According to plaintiff, there was 

no loan agreement and he considered these payments to be salary, 

not loans. Budd testified the payments were loans.
6 A-2030-15T4

Plaintiff testified that Budd eventually told him the bank 

was not purchasing DPI's receivables and DPI lacked funds to 

reinstate plaintiff's salary. Plaintiff thereafter discovered 

that Budd had been defalcating corporate funds during the time he 

claimed DPI lacked funds to pay plaintiff's salary. Specifically,

Budd used DPI's funds to finance a business known as Born to Wrap 

Graphics, LLC (BTWG), which Brian managed, and pay for trips to 

Cancun, Las Vegas, and Boca Raton and Pfeiffer's gym membership

fees and automobile insurance. Budd also used DPI's funds to pay 

for his grandchild's childcare costs, carpeting in his home, coffee 

at Starbucks, Broadway theatre tickets, and purchases at Barnes 

and Noble. Defendants produced no documents evidencing a business 

purpose for any of these expenditures. Plaintiff also learned 

that Brian's girlfriend, who was the mother of Budd's grandchild,

was on DPI's payroll. 

On August 11, 2011, plaintiff resigned after an argument with 

Budd about his salary. Brian replaced plaintiff at a salary of 

$2000 bi-weekly beginning September 16, 2011, which increased to

$2500 bi-weekly beginning November 25, 2011. 

Plaintiff, as a minority shareholder, demanded copies of 

certain DPI financial records. In response, Budd demanded 

redemption of plaintiff's shares of stock for $50,000, payable 

over five years. Plaintiff rejected the offer and filed a 
7 A-2030-15T4

complaint, alleging minority shareholder oppression and breach of 

contract, among other things. Defendants counterclaimed, alleging 

breach of contract, specific performance of the stock restriction 

agreement, breach of the employment agreement, and fraud, among 

other things. 

An issue at trial was the commencement date of plaintiff's 

employment, which effected the purchase price for his shares of 

stock. Plaintiff asserted his employment with DPI commenced on 

October 22, 2010, when he purchased the shares and was appointed

DPI's vice-president. Plaintiff averred that because his 

employment terminated on August 11, 2011, less than twelve months 

after it commenced, he was entitled to $13,016 per share for a 

total of $156,192. Defendants asserted that plaintiff's 

employment commenced on June 4, 2010, the day he signed the 

employment agreement, and ended more than twelve months later, 

thus entitling him to only the fair market value of his shares. 

As evidence of the commencement date, defendants pointed to the 

payments plaintiff received from DPI after plaintiff signed the 

employment agreement.

Also at issue was the amount of plaintiff's salary. Plaintiff 

asserted that because DPI's gross sales exceeded $1.5 million 

during the fiscal year ending March 31, 2011, his salary should 

have been $110,000. A court-appointed expert rendered a report 
8 A-2030-15T4

and testified that DPI had gross sales of approximately $1.7 

million for the fiscal year ending March 31, 2011. The expert 

concluded that plaintiff was entitled to an annual salary of 

$110,000, and DPI's financial statements should have listed a 

liability in the amount of $10,000 for deferred salary, as 

plaintiff was not paid in accordance with the employment agreement. 

Defendants did not challenge the expert's report or testimony, or 

produce evidence that DPI's revenues were less than $1.5 million 

for the fiscal year ending March 31, 2011. 

In a comprehensive written opinion, dated September 16, 2015, 

Judge McDonnell found credible plaintiff's testimony that Budd 

said plaintiff's salary reduction was necessary to induce the bank 

to purchase DPI's receivable. The judge emphasized that "if [Budd] 

had told [plaintiff] the truth, i.e. that it was not in the 

interest of DPI to pay [plaintiff's] salary, [plaintiff] would not 

have stayed an additional four months." 

Judge McDonnell determined that during the time of 

plaintiff's salary reduction, Budd used large amounts of DPI's 

funds to finance BTWG, pay his grandchild's daycare expenses, 

Pfeiffer's gym membership, and Budd's trips, and Brian's 

girlfriend, who was on DPI's payroll in a clerical position. The 

judge found that Budd did not tell plaintiff DPI was paying these 

expenses.
9 A-2030-15T4

Judge McDonnell found that plaintiff was an oppressed 

shareholder. She determined that "DPI, at Budd's direction and 

without [p]laintiff's knowledge, spent substantial sums to support 

Brian and his family. This depleted DPI's funds that would 

otherwise have been available to fund activities to increase 

DPI['s] sales and productivity in the print and newly-established 

digital POP display market." The judge concluded as follows:

Here, the lack of transparency in payments 

made by DPI to and on behalf of Brian and his 

family and BTWG, the total amount of money 

diverted from DPI, and the simultaneous [twothird] reduction of [p]laintiff's salary are 

persuasive in determining that [Budd's] 

conduct was oppressive.

. . . .

Plaintiff has proved [he] was affected by the 

diversion of money from DPI to [Budd's] 

family. He lost his substantial salary at the 

same time money was flowing out of DPI for day 

care and BTWG expenses. Plaintiff had no 

voice in the amount or to whom DPI's funds 

were being paid. . . . Plaintiff has proved 

that DPI payments to [Budd's] family members 

affected DPI's ability to pay his salary.

Judge McDonnell found that defendants breached the stock 

restriction agreement. She acknowledged the parties had signed 

the employment agreement on June 4, 2010, but found there were no

documents for the year 2010 confirming when plaintiff began 

receiving his $100,000 salary. The judge determined that 

plaintiff's employment officially commenced on October 22, 2010,
10 A-2030-15T4

when he purchased the shares, and his pre-employment services to 

DPI were as an independent contractor. The judge also determined 

that the reduction of plaintiff's salary in April 2011 constituted 

a constructive termination. Thus, the judge concluded that 

plaintiff was entitled to $156,192 for his shares. The judge gave 

plaintiff the option of selling his shares for $47,000, which the 

court-appointed expert had determined was the stock's fair market 

value as of March 31, 2012, or compelling DPI to purchase them for 

$156,192. Plaintiff chose the latter remedy.

Judge McDonnell found that defendants had breached the 

employment agreement by failing to pay plaintiff $110,000 in 

salary. The judge determined that plaintiff was entitled to a 

salary of $110,000, effective April 1, 2011, and awarded him 

$29,461.44 for unpaid salary from April 1, 2011 through August 5, 

2011. The judge reduced this amount by the amount of loans made 

to plaintiff, and awarded him a net of $22,141.44 for unpaid 

salary. The judge dismissed defendants' counterclaim with 

prejudice.

Judge McDonnell memorialized her decision in a September 16, 

2015 order for judgment. Defendants subsequently filed a motion 

for a new trial, and plaintiff filed a cross-motion to enter 

judgment. In a December 31, 2015 order, the judge denied 

defendants' motion for a new trial for the reasons expressed in 
11 A-2030-15T4

her September 16, 2015 written opinion. In a December 31, 2015 

final judgment, the judge entered judgment in plaintiff's favor 

in the amount of $178,333.44 plus pre-judgment interest.

2 

On appeal, defendants contend the record does not support 

Judge McDonnell's finding that plaintiff's employment commenced 

on October 22, 2010, and he was constructively terminated in April 

2011. Defendants also contend that even if plaintiff was 

constructively terminated, it was no sooner than mid-August 2011. 

Defendants further contend the judge erred in finding DPI breached 

the employment agreement by not paying plaintiff $110,000 in 

salary; finding that plaintiff was an oppressed shareholder within 

the meaning of N.J.S.A. 14A:12-7; dismissing the counterclaim for 

fraud; not granting defendants' motion for a new trial; and not 

awarding defendants fees and costs pursuant to N.J.S.A. 14A:12-

7(10).

Our review of a trial court's fact-finding in a non-jury case 

is limited. Seidman v. Clifton Sav. Bank, S.L.A., 205 N.J. 150, 

169 (2011). "The general rule is that findings by the trial court 

are binding on appeal when supported by adequate, substantial, 

credible evidence. Deference is especially appropriate when the 

 

2 In a March 18, 2016 order, the judge corrected the final judgment 

to omit the award of pre-judgment interest and grant plaintiff 

post-judgment interest pursuant to Rule 4:42-11 as of October 15, 

2015.
12 A-2030-15T4

evidence is largely testimonial and involves questions of 

credibility." Ibid. (quoting Cesare v. Cesare, 154 N.J. 394, 411-

12 (1998)). We "should not disturb the factual findings and legal 

conclusions of the trial judge unless [we are] convinced that they 

are so manifestly unsupported by or inconsistent with the 

competent, relevant and reasonably credible evidence as to offend 

the interests of justice." Ibid. (quoting Cesare, supra, 154 N.J.

at 411-12). However, we owe no deference to a trial court's 

interpretation of the law, and review issues of law de novo. State 

v. Parker, 212 N.J. 269, 278 (2012); Mountain Hill, L.L.C. v. Twp. 

Comm. of Middletown, 403 N.J. Super. 146, 193 (App. Div. 2008), 

certif. denied, 199 N.J. 129 (2009). 

"[G]ranting or denying a motion for a new trial rests with 

the sound discretion of the trial court and should only be granted 

if, having given due regard to the opportunity of the [factfinder] 

to pass upon the credibility of the witnesses, it clearly and 

convincingly appears that there was a miscarriage of justice under 

the law." Borough of Saddle River v. 66 E. Allendale, LLC, 424 

N.J. Super. 516, 526 (App. Div.) (citations omitted), certif. 

granted, 211 N.J. 274 (2012). We will not reverse a trial court's 

decision to deny a motion for a new trial "unless it clearly 

appears that there was a miscarriage of justice under the law." 

R. 2:10-1.
13 A-2030-15T4

We have considered defendants' contentions in light of the 

record and applicable legal principles and conclude they are 

without sufficient merit to warrant discussion in a written 

opinion. R. 2:11-3(e)(1)(E). We affirm substantially for the 

reasons Judge McDonnell expressed in her written opinion. However, 

we make the following brief comments.

The record amply supports Judge McDonnell's finding that 

plaintiff's employment with DPI commenced on October 22, 2010. 

There is no evidence that the payments DPI made to plaintiff prior 

to October 22, 2010 were for the salary he was to be paid pursuant 

to the employment agreement. Rather, DPI's payroll records confirm 

that plaintiff began receiving his salary in accordance with the 

employment agreement as of October 23, 2010. Thus, even if 

plaintiff's seventy-percent salary reduction in April 2011 did not 

constitute a constructive termination, the termination of his

employment in August 2011 occurred less than twelve-months after 

his employment commenced, entitling him to $156,192 for his shares 

pursuant to the stock restriction agreement. Defendants' failure 

to pay plaintiff that amount constituted a breach of the stock 

restriction agreement.

The record also amply supports Judge McDonnell's finding that

plaintiff was entitled to a salary of $110,000 as of April 1, 

2011, pursuant to the employment agreement. The unchallenged
14 A-2030-15T4

expert evidence confirmed that DPI had gross sales over $1.5 

million in the fiscal year ending March 31, 2011, and plaintiff 

was entitled to be paid $110,000. Defendants produced no evidence 

to establish that DPI had accrual-based revenue of less than $1.5 

million, and do not contend that revenues were less than that 

amount. Defendants' failure to pay plaintiff a salary of $110,000

as of April 1, 2011 constituted a breach of the employment 

agreement.

Affirmed.