Opinion ID: 3014383
Heading Depth: 2
Heading Rank: 1

Heading: 2d 1056, 1058 (N.J. Super. Ct. App.

Text: Local 759, 461 U.S. 757, 766 (1983) Div. 1994). (citing Hurd v. Hodge, 334 U.S. 24, 34-35 (1948)). “A promise is unenforceable if Here, the defendants argue that the interest in its enforcement is enforcement of the Employment Contract outweighed in the circumstances by a a n d c o m pe n s a t io n o f F i e ld s public policy harmed by enforcement of notwithstanding his alleged behavior the agreement.” Town of Newton v. violates the clear public policy against Rumery, 480 U.S. 386, 392 (1987). “Such sexual harassment of both the United a public policy, however, must be well- States, as embodied in Title VII of the defined and dominant, and is to be Civil Rights Act of 1964, 42 U.S.C. § ascertained ‘by reference to the laws and 2000e-2(a)(1), and the state of New Jersey, legal precedents and not from general as embodied in the New Jersey Law Against Discrimination, N.J. Stat. Ann. § 10:5-12. The defendants cite Stroehmann 6 Fields has requested that the sections of Bakeries, Inc. v. Local 776, 969 F.2d 1436 defendants’ brief arguing these points be (3d Cir. 1992), in which this Court held stricken because they misrepresent facts that an arbitrator’s order to reinstate an contained in the record. Specifically, employee accused of sexual harassment, Fields argues that in these sections without a determina tion tha t the defendants, rather than acknowledging that harassment did not occur, violated public Fields faced allegations of sexual policy. “There is a well-defined and harassment, instead use language that dominant public policy concerning sexual assumes Fields did, in fact, commit acts of harassment in the workplace which can be sexual harassment. He contends that this ascertained by reference to law and legal is a deliberate attempt to mislead the court. precedent.” Id. at 1441. However, defendants’ statement of facts However, Stroehmann is clearly clearly states that acts of sexual distinguishable from the case at hand. harassment were merely alleged. Anyone Unlike the arbitrator’s order there, the reading the brief as a whole would E m p l o ym e n t C o n t r a c t d o e s n o t understand that the acts were alleged and “undermine[] the employer’s ability to not proven. We see no reason to strike. 9 fulfill its obligation to prevent and Fields relies on Aramony v. United sanction sexual harassment in the Way Replacement Benefit Plan, 191 F.3d workplace.” Id. at 1442. Enforcement of 140 (3d Cir. 1999), and we find it to be the Contract does not require TPC to hire more persuasive considering the fact or reinstate someone who may have pattern before us. United Way terminated engaged in acts of sexual harassment, Aramony, its CEO, after discovering that which may violate the policy against he had engaged in fraud. Id. at 143. After “perpetuating a hostile and offensive work his conviction, United Way chose to deny environment.” Id. at 1443. Nor does the him the pension benefits he was due under Contract impinge on TPC’s ability to the organization’s retirement plan. Id. police the work environment and to Aramony filed suit to regain them. Id. On prevent sexual discrimination. Rather, it appeal, we affirmed the trial court’s ruling requires TPC to pay certain sums if they that Aramony was entitled to the benefits terminated Fields, ostensibly for any because the retirement benefit plan reason, including improper and offensive contained no felony forfeiture provision. conduct. Had TPC intended to avoid this Id. at 149-150. “The signed plan simply result, they could have bargained for a does not include a felony forfeiture limiting provision in the contract. But the exception to its otherwise sweeping nonabsence of such a provision, owing to forfeiture clause. There is no basis upon TPC’s failure, does not “perpetuate a which to read one into the contract.” Id. hostile and offensive work environment.” Here, Fields’s Employment Id. The principles of public policy simply Contract, like the documentation in do not reach that far. 7 Aramony, does not include any conduct- related exception to its non-forfeiture clause. TPC asks us to save it from its 7 Our decision in Stroehmann is own failure to include such a forfeiture distinguishable for two additional reasons. clause. Doing so would essentially force First, Stroehmann involved the review of us to read clauses thought desirable from a an arbitrator’s exercise of discretion, rather policy standpoint into every employment than the application of a straightforward contract. This we cannot do. Employers contract clause. Second, the Stroehmann may legitimately offer compensation and court, while holding that reinstatement was benefits that can be taken away only for violative of public policy, specifically specific reasons, or that cannot be taken noted that the arbitrator could have away at all, in order to lure or reward concluded that a lesser punishment than employees. The absence of a forfeiture termination was appropriate. Similarly, clause here suggests that this may well here, TPC could have retained the benefits have been what was intended. As long as it was due under the Employment Contract by continuing Fields’s employment and taking less drastic steps to remedy whatever problem was found to exist. 10 the enforcement of the promise itself is not careful look at defendants’ argument is violative of public policy, we will not deny necessary. the parties the bargained-for relief. The Every contract in New Jersey does fact that it could be said to have public contain an implied covenant of good faith policy implications is not enough. We find and fair dealing. See R.J. Gaydos Ins. the payment of the bargained-for Agency, Inc. v. Nat’l Consumer Ins. Co., compensation does not violate public 773 A.2d 1132, 1145 (N.J. 2001); Wilson policy. v. Amerada Hess Corp., 773 A.2d 1121, It should also be noted at this 1126 (N.J. 2001); Sons of Thunder, Inc. v. juncture that even were we inclined to look Borden, Inc., 690 A.2d 575, 587 (N.J. with disfavor on the rights of a harassing 1997); Pickett v. Lloyd’s, 621 A.2d 445, executive to continue to rece ive 450 (N.J. 199 3); Onderdonk v. compensation in this situation, there has Presbyterian Homes, 425 A.2d 1057, 1063 been no finding that Fields was in fact (N.J. 1981); Bak-A-Lum Corp. v. Alcoa guilty of harassment. Clearly, any Bldg. Prods., Inc., 351 A.2d 349, 352 (N.J. consideration of TPC’s claim that it was 1976); Association Group Life, Inc. v. entitled not to compensate Fields because Catholic War Veterans, 293 A.2d 382, 384 of his conduct would have to be based on (N.J. 1972); Palisades Properties, Inc. v. a finding that his behavior did rise to a Brunetti, 207 A.2d 522 (N.J. 1965). We level that had policy and contract have previously noted the New Jersey implications. And, defendants have made courts’ adherence to this view. See no claim that they need an opportunity to Emerson Radio Corp. v. Orion Sales Inc, prove that Fields did behave in such a 253 F.3d 159, 170 (3d Cir. 2001) (stating manner, apparently resting on the principle that New Jersey courts recognize an that the allegations to that effect supported implied covenant of good faith and fair a denial of compensation. dealing). Under the implied covenant of good faith and fair dealing, neither party Defendants’ other argument is that, shall do anything which will have the based on the allegations, Fields breached effect of destroying or injuring the right of the Employment Contract, giving TPC the the other party to receive the fruits of the right to discontinue payment of the contract. R.J. Gaydos Ins. Agency, 773 contractual benefits. The District Court A.2d at 1146; 13 Williston on Contracts § dismissed this line of reasoning out of 38:15 (4th ed. 2000). hand, concluding that TPC “was not deprived of the fruits of the Employment In addition, every employee owes a Agreement,” and that “the implied duty duty of loyalty to their employer. Cameco, defendants posit is trumped by the Inc. v. Gedicke, 724 A.2d 783, 789 (N.J. language of the parties’ agreement.” 1999). The duty of loyalty “consists of However, while we agree with the District certain very basic and common sense Court’s ultimate conclusion, a more obligations.” Lamorte Burns & Co. v. 11 Walters, 770 A.2d 1158, 1168 (N.J. 2001). the Vice President of TPC, and that he did This duty usually arises in situations where so until the day that he was terminated, by an employee has assisted a competitor of which time he had been named President the employer or engaged in self-dealing. of the company. He cites authority for the See Cameco, 724 A.2d at 789. However, proposition that courts are obligated to it is also phrased more generally. “An enforce contracts as they are made by the employee must not while employed act parties and not to create additional terms contrary to the employer’s interest.” out of thin air. See, e.g., Marchak v. Lamorte Burns & Co., 770 A.2d at 1168. Claridge Commons, Inc., 633 A.2d 531 (N.J. 1993). However, “[i]mplied covenants are as effective components of Defendants argue that Fields an agreement as those covenants that are breached the implied covenant of good express,” and “a party’s performance faith and fair dealing inherent in the under a contract may breach [an] implied Employment Contract and the duty of covenant even though that performance loyalty inherent in his relationship with does not violate a pertinent express term.” TPC, based on the employees’ allegations Wilson, 773 A.2d at 1126. See also of sexual harassment. These allegations, Emerson, 253 F.3d at 170 (stating that they contend, destroyed TPC’s ability to New Jersey law holds that a party to a reap to the benefits to which it was entitled contract can breach the implied duty of under the Employment Contract - namely, good faith even if that party abides by the Fields’s services for ten years - by making express and unambiguous terms of that it impossible for them to continue to contract); Sons of Thunder, 690 A.2d at employ him. In light of his breach and 588 (noting favorably that other courts failure of performance, they maintain that have stated that a party can violate the they have the right to not perform their implied covenant of good faith and fair part. 8 dealing without violating an express term Fields argues that the only of the contract). affirmative obligation that he had under Further, an employee may violate the agreement was to perform the duties of the implied covenant of good faith and fair dealing even while performing his or her listed job duties to perfection. And we can 8 TPC has also framed this argument as imagine circumstances in which an Fields having, by his conduct, “voluntarily employee who has committed acts of terminated” his position, relieving TPC of sexual harassment could be deemed to the responsibility to compensate him under have breached this implied covenant. the specific term of the Contract that so However, while the “principle of fair provides. However, the pleadings did not dealing pervades all of [New Jersey] rely on this theory and we find it contract law . . . [t]hat principle will not unnecessary to engage in this analysis. 12 alter the terms of a written agreement.” words, if TPC should fire him, it must still Rudbart v. North Jersey District Water pay him. There is no differentiation Supply Comm’n, 605 A.2d 681, 692 (N.J. between termination with cause and 1992). “The implied duty of good faith termination without cause; Fields’s and fair dealing does not operate to alter benefits are to continue in any event. the clear terms of an agreement and may Thus, under the express terms of the not be invoked to preclude a party from agreement, Fields has a right to benefits exercising its express rights under such an even in the event that he is terminated for agreement.” Fleming Cos., Inc. v. cause. Thriftway Medford Lakes, Inc., 913 F. Defendants’ argument urges us to Supp. 837, 846 (D.N.J. 1995) (citing treat Fields’s alleged behavior - behavior Glenfed Fin. Corp. v. Penick Corp., 647 that could give rise to termination for A.2d 852, 858 (N.J. Super. Ct. App. Div. cause - as a breach of the implied covenant 1994)). So, where the terms of a contract of good faith and fair dealing. However, are not specific, the implied covenant of whether he breached this covenant, giving good faith and fair dealing may fill in the rise to a clear right to terminate him, is not gaps where necessary to give efficacy to the issue. The fact remains that even if he the contract as written. But where the committed the alleged acts and the terms of the parties’ contract are clear, the termination was justified, the express implied covenant of good faith and fair terms state that if he is terminated, benefits dealing will not override the contract’s will continue. We cannot read the implied express language. covenant of good faith and fair dealing to Here, the Employment Contract essentially alter the terms of the Contract, specifically provides: enabling TPC to discontinue Fields’s benefits in the event that he was This Contract shall be non-terminable by terminated for cause. Because TPC did Thompson [Printing Company]. In the not include a proviso that it would not event Thompson [Printing Company] shall have to continue Fields’s benefits in the terminate the employment of Jerry event he was terminated even for cause, [Fields], all of the benefits as contained we will not read that language into the herein shall continue in accordance with Contract. the terms and provisions of this Agreement. Defendants argue that the New Jersey courts have relieved an employer of the duty of strict performance of an This provision not only prohibits TPC employment contract when the employee from terminating the Contract but it has engaged in misconduct, relying on provides further that if it should McGarry v. St. Anthony of Padua Roman “terminate” Fields’s “em ployment,” Catholic Church, 704 A.2d 1353 (N.J. Fields’s benefits will continue. In other Super. Ct. App. Div. 1997). There, 13 McGarry had entered into an employment For one thing, the court clearly viewed the contract with St. Anthony’s. Id. at 1354. criminal nature of McGarry’s acts to be The contract required the church to give critical to its analysis. Furthermore, the McGarry notice of termination at least 30 issue in McGarry was whether the days in advance of termination and to termination was justified based on breach continue to pay him during the 30-day of an implied covenant. Id. The court period if it did not wish him to work held that is was. Id. Here, the issue is not during that period. Id. at 1355. Three whether termination was appropriate or months after starting work, McGarry was called for, but rather, if termination occurs, arrested in the parking lot of the church for what happens to Fields’s benefits. Unlike receiving shipments of illegal steroids and McGarry, here the Contract speaks he admitted that he had been using the specifically to that issue. Thus, we will church property to receive other affirm the District Court’s conclusion that shipments. Id. Upon learning of the TPC’s failure to pay the required arrest, the church terminated M cGarry, compensation constituted a breach of the instructed him to stay off church grounds employment agreement and its obligations and refused to pay him, even under the 30- under ERISA, and that Fields is entitled to day notice requirement. Id. McGarry filed all of the compensation and benefits that suit, contending that he had been he was due under the plain meaning of the wrongfully terminated and argued that he Contract. 9 was entitled to 30 days’ pay because the church had failed to follow the 30-day notice requirement. Id. at 1356. 9 TPC argues that it has no obligation to The New Jersey Superior Court pay Fields’s “Top Hat” retirement benefits found that “even where . . . the employee because it has no unencumbered assets, performs the duties contracted for and that, in the event that Fields contests satisfactorily, criminal activity by the its claim that it has no unencumbered employee can justify his discharge for assets, the case must be remanded to make breach of an employment contract.” Id. at such a determination. We find this 1357. As a result, St. Anthony’s “had position to be meritless. “Top Hat” plans good cause to terminate the employment are treated like unilateral contracts. contract by virtue of [McGarry’s] breach Goldstein v. Johnson & Johnson, 251 F.3d of the implied covenant of good faith and 433, 442 (3d Cir. 2001). According to fair dealing.” Id. Furthermore, McGarry “unilateral contract principles, once the was “not . . . allowed to recover employee performs, the offer becomes termination pay under the termination irrevocable, the contract is completed, and clause of the breached contract.” Id. at the employer is required to comply with its 1358. Howev er, Mc Garry is side of the bargain.” Kemmerer, 70 F.3d distinguishable from the instant situation. at 287. Thus, TPC became obligated to pay Fields retirement benefits on his first 14 C. Thompson’s Personal Liability its motion, and identifying those portions of ‘the pleadings, depositions, answers to Finally, we consider defendants’ interrogatories, and admissions on file, argument that the District Court erred together with the affidavits, if any,’ which when it imposed personal joint and several it believes demonstrate the absence of a liability on Thompson. The Court’s order genuine issue of material fact.” Celotex, stated: 477 U.S. at 323. In order to be entitled to Finally, because defendants have not judgment against Thompson, Fields had to argued what if any distinction should be aver, and demonstrate he could prove, drawn between defendant Thompson sufficient facts to support liability against Printing and defendant Gilbert M. Thompson under ERISA and under state Thompson with respect to their liability to law. Fields, the Order shall not differentiate So, while the District Court placed between them and they shall be jointly and the onus on the defendants to distinguish severally liable for the relief granted by the liability of TPC from Thompson, it was this Court’s Order of Partial Summary really Fields’s burden to not only plead, Judgment. but also to prove, that he was entitled to judgment as a matter of law against Thompson. Thompson was the CEO of As a preliminary matter, Fields TPC, and the corporate officer responsible contends that Thompson has waived this for terminating Fields and discontinuing issue through his failure to raise it at the his benefits. The pleadings allege trial level. However, while Thompson generally that he violated fiduciary duties clearly could have raised a genuine issue owed to Fields under ERISA, and that he of material fact to avoid personal liability, and TPC breached the Contract by refusing the threshold burden was on Fields, who to pay Fields salary and benefits after brought the claim against Thompson, to Fields’s termination. But, these pleadings plead and prove undisputed facts that fall short of alleging, let alone warranted an imposition of liability against establishing, a basis for personal liability Thompson personally as a matter of law. against a corporate officer, on any of the “A party seeking summary judgment claims at issue. always bears the initial responsibility of informing the district court of the basis for With regards to the ERISA claim, the parties have stipulated that Fields’s post-employment benefits plan is a “Top Hat” plan. “Top Hat” plans are “unique day of work under the Contract. Only animal[s] under ERISA’s provisions.” Fields’s voluntary termination could end Goldstein v. Johnson & Johnson, 251 F.3d that obligation. Whether or not TPC has 433, 442 (3d Cir. 2001). Because “these unencumbered assets has no bearing on the plans are intended to compensate only question of its duty to pay. 15 highly-paid executives, and . . . such Id. (citing Welch v. Bancorp Mgmt. employees are in a strong bargaining Advisor, Inc., 675 P.2d 172, 178 (Or. position relative to their employers,” they 1983)). are free from some of the requirements Thus, Thompson can be held personally that are imposed upon most ERISA plans liable only if Fields alleges and proves that in order to protect those employees Thompson was not acting with the intent covered by such plans. Id. Specifically, to benefit TPC when he refused to pay “Top Hat” plans are not subject to Fields the benefits and compensation that ERISA’s requirements for vesting and were due u nder the em ployment funding, see 29 U.S.C. §§ 1051(2); agreement. See also Law of Corp. 1081(a), and the administrators of these Officers and Dir., § 3:30 (2004) (“[A] plans are not subject to ERISA’s fiduciary corporate officer or director is not requirements. See 29 U.S.C. §§ 1051(2), personally liable for . . . inducing the 1081(a), 1101(a). Thus, Thompson did not breach of a corporate contract, provided have a fiduciary duty with respect to the officer or director acts in good faith Fields’s “Top Hat” plan, and may not be and for the benefit of the corporation.”); held personally liable for any violations of 3A W. Fletcher, Cyclopedia of the Law of ERISA with respect to that plan. Private Corporations § 1158.10 (2002). With respect to the breach of Fields has failed to make such an contract claim, New Jersey law provides allegation, let alone present proof of facts that “an officer who causes his corporation necessary to impose officer liability. to breach a contract for what he conceives Fields’s motion for summary judgment is to be in the best interest of the corporation not accompanied by any evidence that does not thereby incur personal liability.” could provide a basis for a finding that Zeiger v. Wilf, 755 A.2d 608, 622 (N.J. Thompson acted in bad faith. The Super. Ct. App. Div. 2000). In Zeiger, the Statement of Facts that Fields filed in New Jersey Superior Court cited with support of his motion for summary approval Oregon’s test for determining judgment contains facts about Fields’s whether an officer has acted in the best employment history with TPC, the interest of the corporation. Id. at 623. The company’s termination of Fields, and its test asks failure to pay him salary and benefits after that termination. However, nowhere does whether the agent acts within the scope of it state any facts that would support his authority, and with the intent to benefit Thompson’s being held personally liable. the principal. When this test is met an In fact, the only specific allegations agent is not liable to a third party for relating to Thompson were in connection intentional interference with contract even with the ERISA claim, dealt with above, if the agent acts with ‘mixed motives’ to and the minority oppression claim, which benefit himself or another principal as was withdrawn before this appeal. As a well. 16 result, the imposition of personal liability with the following statement: and judgment against Thompson was Plaintiff has requested attorney’s fees improper, and that portion of the District which are available pursuant to our Court’s opinion will be reversed. discretion under 29 U.S.C. § 1132(g)(1). We will deny that request. Colt has neither acted in bad faith, nor pressed a D. Cross-Appeal of Attorneys’ Fees clearly meritless position. On cross-appeal, Fields challenges the District Court’s decision not to grant him attorneys’ fees. ERISA provides that Id. We noted there that “the district court “the court in its discretion may allow considered factors one and five of the reasonable attorney’s fees and costs of Ursic catechism, but did so without action to either party.” 29 U.S.C. § analysis or articulation of its reasons. 1132(g)(1). We have set forth five policy Moreover, the district court’s opinion factors for a district court to consider in [was] silent with respect to the other Ursic determining whether to award fees: (1) the factors.” Id. at 1012. Thus, we were offending parties’ culpability or bad faith; hampered in our review function because (2) the ability of the offending parties to the district court failed to enunciate the satisfy an award of attorney’ fees; (3) the reasons for the conclusions it reached in deterrent effect of an award of attorneys’ denying . . . attorneys’ fees, and fees; (4) the benefit conferred upon additionally [had] utterly failed to members of the pension plan as a whole; recognize, analyze, explain or enunciate and (5) the relative merits of the parties’ conclusions concerning the other Ursic positions. Ursic v. Bethlehem Mines, 719 factors which it was required to consider. F.2d 670, 673 (3d Cir. 1983). In Anthuis v. Colt Indus. Operating Corp., 971 F.2d 999, 1011 (3d Cir. 1992), we reiterated Id. As a result, we remanded the issue to that “we regard our requirement that the district court for further consideration. district courts consider and analyze these factors as a mandatory requirement.” See Here, the District Court denied also McPherson v. Employees’ Pension Fields’s request for attorneys’ fees by Plan of Am. Re-Insurance Co., 33 F.3d stating: 253, 254 (3d Cir. 1994). We require such The statute provides that fees may be an analysis “in order that we may awarded to a prevailing litigant upon a intelligently review the judgments reached showing, inter alia, of culpability or bad by those courts.” Anthuis, 971 F.2d at faith of the party in violation of the statute. 1011. 29 U.S.C. § 1132(g)(1). Plaintiff’s In Anthuis, the district court had showing on this motion falls well short of denied a party’s request for attorney’s fees establishing this peculiarly fact-sensitive 17 element beyond any reasonable dispute. on which the district court relied when it exercised its discretion.” Id. Here, the District Court did err in not providing an Fields contends that this statement adequate basis for its reasoning under provides insufficient reasoning for the Ursic. Accordingly, we will vacate its court to have ruled on the issue of fees. ruling in this regard and remand this issue Inasmuch as it is nearly identical to the for further consideration. statement deemed insufficient in Anthuis,