Court Opinion

ID: 4176664
Source: CourtListenerOpinion
Date Created: 2017-06-12 13:12:23.659751+00
Date Added: 2024-06-11T14:38:49.991870
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE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.

                                       SUPERIOR COURT OF NEW JERSEY
                                       APPELLATE DIVISION
                                       DOCKET NO. A-1475-14T1

JOHN M. HAMMER,

        Plaintiff-Appellant/
        Cross-Respondent,

v.

HAIR SYSTEMS INC., a corporation
of the State of New Jersey,
WILLIAM E. COVEY and MARJORIE M.
COVEY, and WILLIAM E. COVEY, JR.,

        Defendants-Respondents/
        Cross-Appellants.

              Argued April 5, 2017 – Decided June 9, 2017

              Before Judges Alvarez, Manahan, and Lisa.

              On appeal from the Superior Court of New
              Jersey, Law Division, Monmouth County, Docket
              No. L-1464-03.

              Bruce D. Greenberg argued the cause for
              appellant/cross-respondent   (Lite   DePalma
              Greenberg, LLC, attorneys; Mr. Greenberg, of
              counsel and on the briefs; Danielle Y.
              Alvarez, on the briefs).

              William D. Wallach argued the cause for
              respondents/cross-appellants   (McCarter   &
              English, LLP, attorneys; Mr. Wallach, of
              counsel and on the briefs; Brian W. Carroll,
              on the briefs).
PER CURIAM

     This matter began in 2003 with the filing of plaintiff John

M. Hammer's complaint.      The years of litigation which followed

include our 2009 decision on a leave-granted appeal of partial

summary judgment awarded to Hammer.1

     Eventually, the Honorable Paul A. Kapalko, J.S.C., conducted

a bench trial over the course of sixteen days, and rendered a

thoughtful,   detailed,    and   cogent   137-page    decision,     later

supplemented with a twenty-two-page opinion on one of two remaining

unresolved issues.      On September 23, 2013, the judge rendered a

final   thirteen-page    decision   resolving   the   remaining    issue,

counsel fees. To say the matter was vigorously and fully litigated

is an understatement.      The parties now appeal and cross-appeal.

With the exception of the counsel fee awards, we affirm based on

the judge's nuanced and careful consideration in this case, in

which oppressed minority shareholder claims, among other causes

of action, were alleged.      We affirm the award of fees to Hammer

but vacate the award to defendants.

     We summarize the relevant testimony.       Defendant Hair Systems,

Inc. (HSI), is a closely held family-owned corporation engaged in

the business of developing, manufacturing, and packaging hair care

1
  Hammer v. Hair Sys., Inc., Nos. A-2791-07, A-1893-08 (App. Div.
June 18, 2009).

                                    2                             A-1475-14T1
products.    William E. Covey, Sr. (Covey), now deceased, was the

Chairman    of   the   Board;    his    wife    defendant     Marjorie     Covey

(Marjorie)2 was the Executive Vice-President and Treasurer.                Their

son William E. Covey, Jr. (William), was the President and Chief

Operating Officer.     Mabel Covey (Mabel), William's wife, was HSI's

Chief Technical Officer/Vice-President of Science and Technology.

Sharon Griffith (Griffith), Covey and Marjorie's daughter, was the

Corporate Secretary and Accounting Manager.               A third child, Anne

Covey (Anne), and her husband served as outside counsel.                   Aftab

Shah (Shah) and Deborah Shah (Deborah) were the Director of

Manufacturing and Director of Customer Service, respectively, and

close friends of the Coveys.           The Covey family controlled the

majority of the shares of HSI.

     Hammer, after a long and successful career in the hair care

industry, retired from full-time employment in 1997 and thereafter

maintained a consultancy business.         At Covey's suggestion, Hammer

joined HSI's Board of Advisors in 1998.               He had access to all of

HSI's financial records while working on a report titled "Hair

Systems, Inc. State of the Company."           In the report, he identified

the corporation's need to transition from a "family culture to an

organizational    culture"      in   addition    to    addressing   cash     flow

2
  We refer to some family members by their first names solely to
avoid confusion.

                                       3                                 A-1475-14T1
problems.    Hammer testified, however, that when he prepared his

report he was not aware of the host of personal expenses which the

company paid on behalf of the Coveys and the Shahs, ranging from

construction work on their homes to child care.

      When Covey was diagnosed with multiple myeloma in 2000, he

engaged Hammer in a full-time management position, and Hammer and

his wife moved from California to New Jersey.                      The judge found

Hammer and HSI then entered into a five-year employment contract

in   which   he   was   employed    as       Chief   Executive      Officer     (CEO)

commencing October 29, 2001.         The parties agreed that during the

initial year of employment, payment of $125,000 of Hammer's salary

would   be   deferred,     to   earn         interest       at   6.5%   per     year.

Additionally, Hammer received 200 shares of HSI's common stock,

representing two percent of the company's value, as a signing

bonus, and had an option to purchase additional stock pursuant to

the company's incentive performance stock option program.

      Hammer's time with the company did not go smoothly.                     He made

unpopular    recommendations       regarding         both    the    positions      and

supervision hierarchy of the Covey and Shah families.                    During an

April 9, 2002 performance review conducted by Covey, although

Hammer was generally rated excellent, Covey noted that Hammer's

behavior required modification, that he needed to "slow down [the]

                                         4                                    A-1475-14T1
pace of organizational changes" and that he had a "tendency to

intimidate staff" with his "tone of voice, body language, etc."

       At the start of his employment, Hammer received an employee

handbook that outlined HSI's anti-harassment policies, including

this   definition      of    sexual     harassment:     "commentary     about    an

individual's body," and "unnecessary touching, including patting,

pinching, or repeated brushing against another's body."                         The

handbook stated that such conduct would result in disciplinary

action up to termination.

       By the spring of 2002, as thoroughly detailed in the trial

judge's     opinion,        employees    began    to   complain    that      Hammer

inappropriately touched them and made sexual comments to them.

The company, in an effort to address the                    problems, actually

conducted     a    sexual       harassment       training    in   which      Hammer

participated.      Afterwards, Hammer was heard to say that if he had

to keep his hands to himself, he "might as well move back to the

desert."

       Among the examples of objectionable conduct the trial judge

enumerated    in   his      decision,     described    by   witnesses   he   found

credible, were Hammer touching women on the neck, shoulders, and

back, and giving massages.            Hammer commented to one employee that

she should participate in a "weigh in[,]" complained about another

                                           5                              A-1475-14T1
who was taking time off for a religious holiday, and referred to

those of her faith as "you people."

     Ultimately, HSI retained outside counsel, Frank M. Ciuffani,

Esquire, to conduct an investigation, completed in 2002.    Ciuffani

reported that although some of the employees he interviewed did

not describe any misconduct in their interactions with Hammer,

multiple workers described incidents in which Hammer made sexual

comments and weight-related remarks, and touched them without

their consent.

     When Hammer was interviewed by Ciuffani, he stated that he

was very "touchy" with employees, and that he "could have" made

comments about sex to female employees.       Until his interview,

Hammer was unaware of the investigation.

     During the trial, Hammer challenged the validity and timing

of the harassment investigation, attributing it to the Coveys'

desire to terminate his employment.       In addition to Ciuffani's

testimony, both sides presented experts who essentially evaluated

the merits and fairness of Ciuffani's investigation.

     The   judge,   however,   credited     the    conclusions     and

recommendations reached in the investigation.     In partial reliance

on the report, the judge found that although Hammer entered into

a five-year contract with HSI, and was not an employee at will,

his termination was warranted and was not retaliatory nor an

                                6                             A-1475-14T1
instance of conduct towards him by majority shareholders that made

him an oppressed shareholder.

     Hammer raises the following points for our consideration:

          POINT I
          The Law Division Applied the Wrong Legal
          Standard    in   Reviewing    the    Majority
          Shareholders' Decision to Fire Hammer.

          POINT II
          The Law Division Made a Legal Error in Holding
          that the Individual Defendants Could Not be
          Sued for Tortious Interference with Hammer's
          Contract With HSI.

          POINT III
          The Law Division Wrongly Denied Hammer's Right
          to Purchase Shares of HSI Under the Parties'
          Incentive Stock Option Agreement, Thereby
          Permitting Defendants to Benefit from Their
          Unlawful Withholding of Hammer's Deferred
          Compensation.

          POINT IV
          The Trial Judge Miscalculated the "Fair Value"
          of Hammer's Minority Ownership Interest in HSI
          by Disallowing Certain Add-Backs.

          POINT V
          The Trial Judge Erred in Denying Some of
          Hammer's   Counsel  Fees   and in Granting
          Defendants Any Counsel Fees.

               A.   Hammer's Counsel Fees.
               B.   Defendants' Counsel Fees.

     Defendants raise the following in their cross-appeal:

          POINT I
          The Trial Court Erred In Finding Plaintiff To
          Be An Oppressed Minority Shareholder And In
          Awarding Plaintiff Exorbitant Attorneys' Fees
          And Prejudgment Interest.

                                7                            A-1475-14T1
          A.   The   Trial  Court   Erred   In Finding
               Plaintiff Was An     Oppressed Minority
               Shareholder.

          b.   The Attorneys' Fees Awarded To Plaintiff
               Were Grossly Excessive In Light of
               Plaintiff's Limited Recovery.

          C.   Prejudgment Interest Was Not Warranted.

          POINT II
          Plaintiff's Claims Should Be Denied on Appeal
          Consistent with Well-Established Standards of
          Review and Pertinent Case Law.

          A.   The Trial Court Properly Dismissed
               Plaintiff's Wrongful Termination Claims.

                    i.   Wrongful   Termination   Claim
                    Against Hair Systems Inc.
                    ii. Tortious Interference Claim
                    Against Individual Defendants.

          B.   The Trial Court Properly Dismissed
               Plaintiff's Stock Option Claim.

          C.   The   Trial  Court   Properly   Rejected
               Plaintiff's Further Adjustments to the
               Value of His 2% Stock Interest.

                               I.

     The final determinations of a trial court sitting in a non-

jury case are subject to limited appellate review, and we leave

them undisturbed if there is substantial evidence to support them.

Seidman v. Clifton Sav. Bank, 205 N.J. 150, 169 (2011).         The

factual findings and legal conclusions of the trial judge should

not be disturbed unless they are "so manifestly unsupported by or

inconsistent with the competent, relevant and reasonably credible

                                8                          A-1475-14T1
evidence as to offend the interests of justice."            Rova Farms

Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974).

Deference to a court's factual findings "is especially appropriate

'when the evidence is largely testimonial and involves questions

of credibility.'"     Cesare v. Cesare, 154 N.J. 394, 412 (1998)

(quoting In re Return of Weapons to J.W.D., 149 N.J. 108, 117

(1997)).     Our review of questions of law is plenary.     Johnson v.

Roselle EZ Quick LLC, 226 N.J. 370, 386 (2016).

                                  II.

                                   A.

     We first address Hammer's contention that his termination was

improperly    orchestrated   by   the   majority   shareholders.        See

N.J.S.A. 14A:12-7(1)(c).     We include in the discussion defendants'

contention that although Hammer was a minority shareholder, he did

not fall within the purview of the statute because he was well

aware of company practices as a result of the report he prepared

for HSI before his employment began.

     N.J.S.A. 14A:12-7(1)(c) provides that minority shareholders

of a corporation with fewer than twenty-five shareholders may

bring an action when the corporation's directors

           have   acted   fraudulently    or   illegally,
           mismanaged the corporation, or abused their
           authority as officers or directors or have
           acted oppressively or unfairly toward one or
           more minority shareholders in their capacities

                                   9                               A-1475-14T1
             as shareholders,         directors,         officers,   or
             employees.

If a court determines that a person is an oppressed minority

shareholder (OMS), it may in its discretion impose equitable

remedies, including the appointment of a custodian or sale of

stock.     Ibid.   The statute reflects the legislature's recognition

that minority shareholders in close corporations are uniquely

vulnerable because they may be "frozen out" of the decision making

process and cannot readily sell their shares when they disagree

with the majority's actions.           Brenner v. Berkowitz, 134 N.J. 488,

505 (1993); Exadaktilos v. Cinnaminson Realty Co., Inc., 167 N.J.

Super. 141, 152-53 (Law Div. 1979), aff'd, 173 N.J. Super. 559,

certif. denied, 85 N.J. 112 (1980).

     Oppression in the context of an OMS action does not always

require illegality or fraud by majority shareholders or directors.

Brenner, supra, 134 N.J. at 506-07. Instead, oppression is defined

as   the    frustration   of   a      minority      shareholder's     reasonable

expectations.        Ibid.        A    court      must    first   determine    the

shareholders'      expectations       of    the   corporation.       Exadaktilos,

supra, 167 N.J. Super. at 155. "Armed with this information, the

court can then decide whether the controlling shareholders have

acted in a fashion that is contrary to this understanding."                   Ibid.

                                           10                             A-1475-14T1
       The complaining shareholder has the burden to demonstrate a

nexus between the alleged oppressive conduct and his or her

interest in the corporation.          Brenner, supra, 134 N.J. at 508.      In

determining that nexus, "[t]he court has discretion to determine

which factors are pertinent to its evaluation of the quality and

nature of the misconduct."       Ibid.      Both monetary and non-monetary

harm to a minority shareholder should be considered.             Id. at 509.

For example, the court should consider how the shareholder's

position within the corporation may have been affected by the

complained-of actions.        Ibid.

       A minority shareholder's expectations must also be balanced

against the corporation's ability to exercise its judgment to run

its business efficiently.        Muellenberg v. Bikon Corp., 143 N.J.
168,   179   (1996).   Mere    disagreement      or   discord   between   the

shareholders is not sufficient to support a remedy under the

statute.     Brenner, supra, 134 N.J. at 506.

                                       B.

       On appeal, Hammer is not challenging the Law Division's

finding that the harassment complaints were made.               His position

is that it was a mistake for the court to conclude that he could

have been legitimately terminated for that reason.

       Termination   of   a   minority      shareholder's   employment    may

constitute oppression under N.J.S.A. 14A:12-7(1)(c), because a

                                       11                            A-1475-14T1
person who acquires a minority share in a closely-held corporation

often does so "for the assurance of employment in the business in

a managerial position."       Muellenberg, supra, 143 N.J. at 180-81.

Such a person thus has a reasonable expectation that they will

enjoy "the security of long-term employment and the prospect of

financial return in the form of salary," and will have "a voice

in the operation and management of the business and the formulation

of its plans for future development."       Id. at 181.         Where these

expectations are frustrated by majority shareholders or directors,

a court may find that oppression has occurred.           Musto v. Vidas,

281 N.J. Super. 548, 556-58 (App. Div. 1995), certif. denied, 143
N.J. 328 (1996).

       In this case, we agree with the trial court that Hammer's

conduct in the workplace warranted termination.     This was the case

regardless of whether defendants may have also wanted to terminate

his employment for reasons related to his proposals to move the

company away from its family management style.     We also agree with

the judge that a minority shareholder's termination for good cause

does    not   violate   any   reasonable   expectation     of     continued

employment, nor does it constitute oppression within the meaning

of the statute.

       In Exadaktilos, for example, the plaintiff shareholder's

termination for cause did not render him an OMS.         Supra, 167 N.J.
12                               A-1475-14T1
Super. at 155-56.       In that case, the plaintiff failed to get along

with other employees; caused the loss of key personnel; quit on

multiple      occasions    without     reason   or    notice;     and    "was   not

compatible with the other principals."              Id. at 155.    Accordingly,

the court found that his termination was due to "his unsatisfactory

performance" and that he had thwarted his own expectations of

employment "through no fault of [the] defendants."                  Id. at 155-

56.

       In this case, Hammer thwarted HSI's            attempts to modify his

conduct in the workplace.        He was given HSI's employee handbook,

which warned that employees faced immediate termination if, after

investigation, complaints of sexual harassment were substantiated.

He acknowledged in writing that he understood the handbook, and

knew   that    sexual     harassment    included      "unnecessary       touching,

including      patting,    pinching,     or     repeated   brushing        against

another's      body,"     commenting     on     a    co-worker's        body,   and

inappropriate jokes.        Therefore, even if defendants incidentally

benefitted from the firing, Hammer could not reasonably expect his

improper behavior, about which he was warned, and which warnings

he ignored, would not result in termination.                    That he was a

shareholder did not immunize the corporation either from the effect

on its employees of sexual harassment, nor from potential corporate

liability.

                                       13                                  A-1475-14T1
     Substantial      evidence    and    precedent     support      the   court's

rejection   of    Hammer's   arguments       about   the   timing    of   Covey's

decision to terminate his employment, and the method by which the

investigation into his behavior was conducted.              He was terminated

for good cause, which made the decision lawful.                     The judge's

findings were not "so manifestly unsupported by or inconsistent

with the competent, relevant and reasonably credible evidence as

to offend the interests of justice."             Rova Farms Resort, supra,

65 N.J. at 484.

                                        C.

     The trial judge found that certain actions taken by HSI's

directors, after Hammer was hired, constituted oppression under

N.J.S.A. 14A:12-7(1)(c), including their use of corporate money

to pay for:      outside child care services; preparation of personal

tax returns; estate planning services; other personal services for

family   members;      personal    credit       card   charges;      charitable

contributions; personal insurance policies; and contracting and

utility work at William's home.              The court also found that the

payment to Marjorie after her husband's death of his salary, as

well as her salary, was unjustified.            Furthermore, HSI's failure

to pay a dividend for 2002 was "not effectively explained."

Finally, HSI's directors failed to "fairly consider" many of

Hammer's proposed changes to HSI's organization and operation.

                                    14                                    A-1475-14T1
This "refusal of family members to accommodate practical and

responsible    management      policies"    ran    contrary     to     Hammer's

reasonable expectations since he believed he had been hired to

transform HSI into a less insular and family-oriented company.

     On appeal, defendants do not deny the expenditures and other

actions the court found to be oppressive.               Instead, they argue

that because Hammer performed consultant work for HSI prior to

being hired as CEO, and had access to HSI's financial documents,

he was aware of the directors' use of corporate money for personal

expenses.     Thus they contend he could not have had a reasonable

expectation that corporate funds would not be used this way going

forward.

     "[O]ppression by shareholders is clearly shown when they have

awarded themselves excessive compensation, furnished inadequate

dividends,     or      misapplied    and    wasted      corporate       funds."

Muellenberg, supra, 143 N.J. at 180.              However, a court should

consider    "whether    the   minority    shareholder    was   aware    of   the

misconduct prior to filing suit but failed to act, and whether the

minority shareholder participated in the misconduct."                  Brenner,

supra, 134 N.J. at 509-10.          A minority shareholder may be found

to have waived the right to raise an OMS claim if he or she was

"well aware" of the majority's misuse of corporate money but did

not raise any objection or in fact benefitted from an improper

                                     15                                 A-1475-14T1
practice.   Belfer v. Merling, 322 N.J. Super. 124, 138-39 (App.

Div.), certif. denied, 162 N.J. 196 (1999).

     Hammer testified that while acting as a consultant, he was

unaware of the specific personal uses to which HSI's funds were

being put, and that he only noted general "cash flow" issues when

reviewing HSI's records for his consulting report.

     The court found that any misappropriation of funds that

occurred before Hammer became a shareholder could not be considered

"oppression" for purposes of his OMS claim.            Indeed, the judge

stated that Hammer knew, as demonstrated in the report he authored,

of HSI's pervasive "family culture" and the resulting financial

consequences.      Hammer   had    urged    updates   to   record    keeping

methodology.    He tried to alter HSI's organizational structure to

remove conflicts of interest, thus further indicating that he knew

about defendants' practices, and expected defendants to change

them.   However, the court went on to find that Hammer's report,

which stressed the need for HSI to eliminate informalities in its

financial practices, also established that defendants were aware

that Hammer expected this type of change to occur once he was

hired and acquired an ownership interest.

     Substantial   evidence   in    the    record   supports   the   judge's

findings. It is undisputed that HSI's directors diverted corporate

funds for personal use, that Hammer identified the problem this

                                    16                               A-1475-14T1
created when he acted as HSI's consultant and afterwards, and that

the diversion of funds for the benefit of the Covey and Shah

families to the corporation's detriment continued after Hammer

became a shareholder. By contrast, there is no evidence to support

defendants' assertion that Hammer waived his right to raise an OMS

claim because he acquiesced in their behavior.         Hammer began

attempting to make changes to HSI almost immediately after becoming

CEO, to the extent that Covey, during his performance review,

instructed him to temper his efforts. Hammer reasonably expected

his recommendations as CEO to be considered and implemented, but

they were not.    Therefore, the court's rejection of defendants'

waiver argument was appropriately based on the record.

       We agree that Hammer was an OMS in light of defendants'

business practices based on substantial credible evidence.        The

conclusion the judge reached, in light of this record, does not

offend the interests of justice.     See Seidman, supra, 205 N.J. at

169.

                               III.

                                A.

       Hammer contends that the court erred in granting summary

judgment dismissing his claim against the individual defendants

for tortious interference with his employment contract.    He argues

that these defendants, although shareholders and officers of HSI,

                               17                            A-1475-14T1
were distinct from the corporation and subject to individual

liability.   The dismissed defendants include Covey and Marjorie.

     "A ruling on summary judgment is reviewed de novo."     Davis

v. Brickman Landscaping, LTD., 219 N.J. 395, 405 (2014) (citing

Manahawkin Convalescent v. O'Neil, 217 N.J. 99, 115 (2014)). Thus,

appellate review requires application of the same standard which

governs the trial court. Ibid. (citing Murray v. Plainfield Rescue

Squad, 210 N.J. 581, 584 (2012)).

     A motion for summary judgment should be granted when there

are no genuine issues of material fact in dispute and the moving

party is entitled to judgment as a matter of law.      R. 4:46-2;

Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995).

Facts are to be viewed in a light most favorable to the non-moving

party.   Brill, supra, 142 N.J. at 540.

     The tort of interference with a business relationship or

contract involves four elements:

          (1) a protected interest; (2) malice — that
          is,   defendant's  intentional  interference
          without justification; (3) a reasonable
          likelihood that the interference caused the
          loss of the prospective gain; and (4)
          resulting damages.

          [DiMaria Constr., Inc. v. Interarch, 351 N.J.
          Super. 558, 567 (App. Div. 2001), aff'd, 172
N.J. 182 (2002).]

                               18                          A-1475-14T1
A claim of tortious interference "will only lie against defendants

who are not parties to the contract."         Id. at 568.   This is because

"[u]nder New Jersey law, a tort remedy does not arise from a

contractual   relationship   unless     the    breaching    party   owes    an

independent duty imposed by law."          Saltiel v. GSI Consultants,

Inc., 170 N.J. 297, 316 (2002).         Instead, "the actions of the

parties to a contract are judged under contract law."               Printing

Mart-Morristown v. Sharp Elecs. Corp., 116 N.J. 739, 760-61 (1989).

     In Printing Mart, the Court held that where a party to a

contract is a corporation, employees of that corporation "can be

answerable for interfering with their employer's . . . contractual

relationship"    with   another   party,   because    they   are    not,    as

individuals, parties to any contract that the corporation enters.

Id. at 761.     Since that case, "a clear-cut consensus has emerged

that if an employee . . . is acting on behalf of his or her

employer . . . then no action for tortious interference will lie."

DiMaria, supra, 351 N.J. Super. at 568.              By contrast, if an

employee acts outside the scope of his or her employment, a

tortious interference claim may be brought.           Id. at 568-69.        An

employee's conduct "falls outside the scope of the privilege if

he or she 'acts for personal motives, out of malice, beyond his

[or her] authority, or otherwise not in good faith in the corporate

                                   19                                A-1475-14T1
interest.'"   Ibid. (quoting Varrallo v. Hammond Inc., 94 F.3d 842,

849 n.11 (3d Cir. 1996)).

                                   B.

     Here, the individual defendants, Covey and Marjorie were

directors,    majority     shareholders,   and     employees    of   HSI.

Defendant's employment contract was with HSI, a corporation. Thus,

under Printing Mart and its progeny, an action for tortious

interference with the employment contract could proceed against

the individuals only if the conduct alleged to be damaging fell

outside the scope of their employment.

     Sufficient evidence supports the court's determination that

in terminating Hammer's employment, the individual defendants were

acting in the interest of HSI, the corporate party to the contract.

The individual defendants, particularly Covey, held the highest

positions at HSI and had decision-making authority over Hammer's

continued employment as part of their duties as employees and

directors.

     Covey terminated Hammer's employment for cause, only after

an investigation by an outsider substantiated the complaints of

harassment made against the employee.         Although the individual

defendants    may   have    been   troubled   by    some   of   Hammer's

recommendations, there was no actual evidence tending to suggest

that they held personal malice against him, or that the decision

                                   20                            A-1475-14T1
to terminate his employment was made "without justification[.]"

DiMaria, supra, 351 N.J. Super. at 567-68.             Even viewing the facts

in the light most favorable to Hammer as the non-moving party, it

is clear that the individual defendants, to the extent they acted

to terminate Hammer, did so as corporate officers who were parties

to   a    contract.     Dismissal    of     his   claims   against      individual

defendants for tortious interference was therefore proper.

                                      IV.

                                       A.

         "When a trial court's decision turns on its construction of

a contract, appellate review of that determination is de novo."

Manahawkin Convalescent, supra, 217 N.J. at 115.                        No special

deference is given to the trial court's interpretation, and the

appellate court "look[s] at the contract with fresh eyes." Kieffer

v. Best Buy, 205 N.J. 213, 223 (2011).

         "[U]nambiguous contracts will be enforced as written unless

they are illegal or otherwise violate public policy."                    Leonard &

Butler, P.C. v. Harris, 279 N.J. Super. 659, 671 (App. Div.),

certif. denied, 141 N.J. 98 (1995).               If a contract's language is

plain, that language alone must determine the agreement's effect.

Manahawkin Convalescent, supra, 217 N.J. at 118.                 A contract "must

be construed as a whole," and a court should endeavor to construct

a    contract   in    the   manner   "most    equitable     to    the    parties."

                                      21                                   A-1475-14T1
Krosnowski v. Krosnowski, 22 N.J. 376, 387-88 (1956) (citation

omitted).   Further, every New Jersey contract "contains an implied

covenant of good faith and fair dealing," intended to ensure that

neither party does anything which destroys or injures the right

of the other party to receive the benefit of the contract.      Sons

of Thunder, Inc. v. Borden, Inc., 148 N.J. 396, 420 (1997).

However, this implied covenant cannot override an unambiguous,

express term in a contract, id. at 419, and a court must not

"'interfere to substitute a different and more liberal agreement'

than that which existed between the parties."     Gillman v. Bally

Mfg. Corp., 286 N.J. Super. 523, 528 (App. Div.) (quoting Fox v.

Haddon Twp., 137 N.J. Eq. 394, 398 (Ch. 1945)), certif. denied,

144 N.J. 174 (1996).

     The courts have enforced stock option contracts strictly.

Id. at 529. For example, in Gillman, the court enforced an express

term in a stock option contract delineating the time for the

exercise of an option.   Id. at 529-531.   The plaintiff's untimely

request to exercise his option resulted in the forfeiture of a

right to which he was otherwise entitled.    Nonetheless, we found

that despite the "harsh result[], a court must act only upon the

language of the written contract."   Id. at 528 (quoting Fredericks

v. Georgia-Pacific Corp., 331 F. Supp. 422, 427 (E.D.Pa. 1971)).

                                22                          A-1475-14T1
     Similarly, in Brunswick Hills Racquet Club, Inc. v. Route 18

Shopping Center Associates, 182 N.J. 210, 223 (2005), the plaintiff

did not abide by the strict terms governing exercise of its option

contract with the defendant to enter into a long-term lease for a

property it occupied.        Because the plaintiff failed to pay the

option price along with its request to exercise the option, as

expressly   required   by    the   contract,   the     Court    stated     that

ordinarily, it would "suffer the consequences of its default."

Ibid.    Only    because    the    defendant   acted    in     bad   faith    by

deliberately withholding information from the plaintiff about the

deficiency in its request for years until after the deadline

expired, despite the plaintiff's diligent efforts, did the Court

find that the plaintiff was entitled to specific performance of

the option contract.       Id. at 224-32.

                                     B.

     Hammer contends that the court erred in dismissing his breach

of stock option claim on partial summary judgment.               HSI's Stock

Option Program (SOP), granted Hammer the option to purchase up to

1350 shares of stock at a price of $267 per share.               On or after

November 1, 2001, Hammer could exercise his option to purchase up

to 270 shares.    Then, on or after each anniversary of that date,

he could exercise the option to buy up to an additional 270 shares,

until all of the 1350 shares had been bought.            The option could

                                     23                                A-1475-14T1
be exercised by giving written notice to the Secretary of HSI,

"accompanied by payment of the option price for the total number

of shares" Hammer wished to purchase.

     The SOP provided:

          The payment may be in any of the following
          forms: (a) cash, which may be evidenced by a
          check and includes cash received from a stock
          brokerage firm in a so-called "cashless
          exercise;" (b) . . . certificates representing
          shares of Common Stock of the Company . . .
          or (c) . . . any combination of cash and Common
          Stock of the Company . . .

The SOP further stated that Hammer's option would terminate thirty

days after the date on which his employment with HSI ended other

than by reason of disability or death.

     On November 1, 2002, within the thirty-day window after his

termination on October 18, Hammer wrote to HSI stating that he

wished to exercise his option to purchase the 270 shares of stock

available as of November 1, 2001. The letter stated that he wished

to use $72,090 of the $125,000 in deferred compensation held by

the company as payment for the shares.   On November 15, 2002, HSI

denied Hammer's request, stating that he had failed to comply with

the SOP's requirement that the request to purchase be accompanied

by cash or its equivalent.

     Hammer sent a second letter stating that he had earned the

compensation by working for the year in which it was deferred, and

                               24                           A-1475-14T1
that it was due and owing to him, and income solely in the company's

control.     He asserted that this indebtedness was the equivalent

of cash for purposes of exercising his stock option.         HSI replied

on December 10, 2002, disagreeing that his deferred compensation

was due at that time.3

     Grant of partial summary judgment on this issue was thus

proper.     The SOP explicitly provided that Hammer was expected to

make his request "accompanied by payment of the option price."           He

did not do so.        The express terms of the SOP were clear and

unambiguous, and there is no evidence that defendants' response

to his request was made in bad faith, as the company disputed his

entitlement    to    the   funds.   Defendants   clearly   explained   the

deficiency     and    responded     promptly.     The   judge's    strict

construction of the purchase terms were was not error.

                                     V.

     The Supreme Court has described the valuation of a closely-

held corporation as "inherently fact-based[]" and "not an exact

science."    Balsamides v. Protameen Chems., Inc., 160 N.J. 352, 368

(1999).     Factual findings of a trial judge on the subject of a

corporation's value thus are shown "great deference," and should

not be disturbed unless they are clearly erroneous or demonstrate

3
     Ultimately, HSI did not pay Hammer this compensation until
July 28, 2009.

                                     25                           A-1475-14T1
an abuse of discretion.      Ibid. Further, "[d]eference should be

given to those findings of the trial judge that are substantially

influenced by his or her opportunity to hear and see witnesses and

to have the feel of the case."   Valdez v. Tri-State Furniture, 374
N.J. Super. 223, 231-32 (App. Div. 2005).

     "Valuing a closely-held corporation is a difficult task."

Torres v. Schripps, Inc., 342 N.J. Super. 419, 435 (App. Div.

2001) (citation omitted).     In determining fair value, "the judge

should consider 'proof of value by any techniques or methods which

are generally acceptable in the financial community and otherwise

admissible in court.'"    Id. at 434 (quoting Balsamides, supra, 160

N.J. at 375).    Valuation "depends upon the judgment and experience

of the appraiser and the completeness of the information upon

which his conclusions are based."     Bowen v. Bowen, 96 N.J. 36, 44

(1984).   Moreover, the court is not bound to accept a valuation

provided by any particular expert witness.       Torres, supra, 342

N.J. Super. at 431.

     Hammer argues that the court erred when calculating the fair

value of his share of HSI because the court should have allowed

an add-back to HSI's total value of a $630,238 "CEO expense" and

a $137,812 "royalty expense."      He contends these expenses were

non-recurring.

                                 26                          A-1475-14T1
     The findings of a court in a bench trial, however, are

"considered    binding     on   appeal     when      supported    by    adequate,

substantial and credible evidence" and when they are not "so wholly

insupportable as to result in a denial of justice."                    Rova Farms

Resort, supra, 65 N.J. at 483-84 (citation omitted).

     Hammer's expert witness Chris Campos asserted that his salary

and benefits should be "added back" into HSI's income for purposes

of determining the company's value, because these expenses were

non-recurring.   After Hammer's termination, HSI eliminated the CEO

position entirely.       However, the court agreed with defendants'

expert witness Gerald Shanker that to add back the figure was not

supported by the facts.

     Hammer's salary and benefits "were plainly recurring when

paid to him," and were not rendered a "non-recurring expense

retroactively" after he was fired and his position eliminated.

His hiring was not an "extraordinary event," and his functions and

duties were not outside the normal scope of a CEO position.                     For

these reasons, the judge disallowed an add-back to HSI's value of

$630,238    representing    amounts      paid   to    Hammer     as    salary   and

benefits.

     Hammer claimed that $137,812 should be added back to HSI's

value for the year 2002, representing royalty payments to product

manufacturers with which HSI did business in that year.                 The court

                                      27                                   A-1475-14T1
disagreed      that   these     payments     were   a     non-recurring        expense,

stating that Campos's conclusion on the subject was a net opinion.

The   court    instead     credited    Shanker's         characterization       of   the

payments as "normal business transactions" for a company like HSI

because, as Shanker noted, product manufacturers "often produce

products under license and receive a royalty therefore."                       Although

HSI may not have made royalty payments frequently, the payments

made in 2002 were "acceptable" and Hammer offered no evidence

challenging their validity.           As a result, the court disallowed the

add-back of this expense.

      The court's conclusion that neither of the disputed expenses

should be added back into HSI's fair value is supported by the

testimony of a credible expert witness.                     That the trial judge

agreed with defendants' expert, not Hammer's, does not render his

decision      an   abuse   of   discretion.         Rather,    by   the       standards

discussed      above,      great   deference        is     given    to    a     judge's

determination that one expert was more credible than another.                          In

light of the fact-sensitive nature of valuing a closely-held

corporation, the court's findings were supported by adequate,

substantial and credible evidence, and did not result in a denial

of justice.        Rova Farms Resort, supra, 65 N.J. at 483-84.

                                        28                                      A-1475-14T1
                                   VI.

                                    A.

       A trial judge's decision on an application for fees is

reviewed under an abuse of discretion standard.         United Hearts v.

Zahabian, 407 N.J. Super. 379, 390 (App. Div.) (citing Masone v.

Levine, 382 N.J. Super. 181, 193 (App. Div. 2005)), certif. denied,

200 N.J. 367 (2009).    "[F]ee determinations by trial courts will

be disturbed only on the rarest of occasions," Rendine v. Pantzer,

141 N.J. 292, 317 (1995), such as when an award "was not premised

upon   consideration   of   all   relevant   factors,   was   based   upon

consideration of irrelevant or inappropriate factors, or amounts

to a clear error in judgment."      Masone, supra, 382 N.J. Super. at

193.    This is because a trial court is "in the best position to

weigh the equities and arguments of the parties."               Packard-

Bamberger & Co., Inc. v. Collier, 167 N.J. 427, 447 (2001).

       As a result of the litigation, Hammer received $81,5944 for

his two percent interest in HSI, plus counsel fees, costs, and

expert fees totaling $758,956.29, in addition to $34,006.23 in

prejudgment interest.       The court granted defendants $186,276.27

in fees unrelated to Hammer's OMS claims, which is the only

decision with which we do not agree, and which we reverse.

4
 $60,000 towards the value of Hammer's share was voluntarily paid
by defendant prior to the trial date.

                                   29                             A-1475-14T1
                                 B.

      Because Hammer was declared an OMS, he sought reimbursement

of counsel fees and costs under the OMS statute's fee-shifting

provision.   N.J.S.A. 14A:12-7(8)(d) provides that if, as here, the

court finds that an action was maintainable under N.J.S.A. 14A:12-

7(1)(c), it may award reasonable fees and expenses of counsel to

a "selling shareholder," meaning a party receiving the fair value

of their stock in the close corporation as a remedy for oppression.

      Once it is determined that a plaintiff is a prevailing party

under a fee-shifting statute, the judge must compute a "lodestar"

amount for fees by multiplying the number of hours reasonably

expended on the litigation by a reasonable hourly rate.       R.M. v.

Supreme Court of N.J., 190 N.J. 1, 10 (2007).      This amount may

then be reduced or enhanced in the court's discretion.      Id. at 10-

11.   A court must analyze any relevant factors when determining

the final fee award, and must then state its reasons on the record.

Id. at 12.

      A reduction of a party's requested attorney fees may be

appropriate if

           the hours expended, taking into account the
           damages   prospectively    recoverable,    the
           interests to be vindicated, and the underlying
           statutory objectives, exceed those that
           competent counsel reasonably would have
           expended.

                                30                             A-1475-14T1
            [Rendine, supra, 141 N.J. at 336.]

A fee should also be reduced if "the level of success achieved in

the litigation is limited as compared to the relief sought."                 Id.

at 336.    "[W]hen a party has succeeded on only some of its claims

for relief, the trial court should reduce the lodestar to account

for the limited success."       Litton Indus., Inc. v. IMO Indus.,

Inc., 200 N.J. 372, 387 (2009) (citation omitted).                Such action

may be taken "even where the plaintiff's claims were interrelated,

nonfrivolous, and raised in good faith."          Rendine, supra, 141 N.J.

at 336 (quoting Hensley v. Eckerhart, 461 U.S. 424, 436, 103 S.

Ct. 1933, 1941, 76 L. Ed. 2d 40, 52 (1983)).

     The   courts   have   rejected    a   purely      mathematical   approach

comparing the total number of issues raised by a plaintiff with

those he or she actually prevailed upon.                New Jerseyans for a

Death Penalty Moratorium v. N.J. Dep't of Corr., 185 N.J. 137, 154

(2005).     However, "hours devoted to claims that are entirely

distinct from the relevant successful claims should be excluded"

from a fee award.   Singer v. State, 95 N.J. 487, 500, cert. denied,

469 U.S. 832, 105 S. Ct. 121, 83 L. Ed. 2d 64 (1984).                       If a

plaintiff's   unsuccessful    claims       are   not    fully   distinct,    and

instead are "related to the successful claims, either by a 'common

core of facts' or 'related legal theories,'" the court must analyze

"the significance of the overall relief obtained to determine

                                  31                                   A-1475-14T1
whether those hours devoted to the unsuccessful claims should be

compensated."     Ibid. (quoting Hensley, supra, 461 U.S. at 435, 103
S. Ct. at 1940-41, 76 L. Ed. 2d at 51-52).

       If the plaintiff obtained "excellent results" despite not

succeeding on every claim raised, his or her attorney "should be

duly     compensated   for   all   time   reasonably     expended    on   the

litigation."     Robb v. Ridgewood Bd. of Educ., 269 N.J. Super. 394,

405 (App. Div. 1993).          If, on the other hand, the plaintiff

obtained only "partial or limited success," the court "may reduce

the lodestar amount if it believes that amount is excessive in

relation to the plaintiff's relief."        Ibid.

       Ultimately, "there need not be proportionality between the

damages recovered and the attorney-fee award itself."               Furst v.

Einstein Moomjy, Inc., 182 N.J. 1, 23 (2004).            "Nonetheless, the

amount    a   plaintiff   recovers   in   damages   is   relevant    to   the

determination of whether the fees sought are reasonable."             Grubbs

v. Knoll, 376 N.J. Super. 420, 432 (App. Div. 2005).          Particularly

where the fees requested far exceed the damages recovered by the

prevailing party, "the trial court should consider the damages

sought and the damages actually recovered" when determining an

appropriate fee award.       Packard-Bamberger, supra, 167 N.J. at 446.

       A trial court must "evaluate carefully and critically the

aggregate hours and specific hourly rates advanced by counsel for

                                     32                              A-1475-14T1
the prevailing party to support the fee application."                       Rendine,

supra, 141 N.J. at 335.             An application for fees "should be

sufficiently detailed to allow a trial court to determine the

nature    of    the   work    performed    and    by    whom,   as   well    as   the

reasonableness of the hourly rate and the hours expended."                    Furst,

supra,    182    N.J.   at    25.   Where       "an    attorney's    time    .    .   .

substantially exceed[s] the result obtained for the client," an

attorney is particularly "obliged to document the effort" he or

she has undertaken.          Grubbs, supra, 376 N.J. Super. at 433.

                                          C.

     The trial judge here carefully reviewed Hammer's request for

$1,222,610.19 in attorney's fees.              Current counsel indicated which

charges related solely to successful OMS claims.                     However, some

charges were not so clearly designated, and required the judge's

close scrutiny.         After careful evaluation, he awarded Hammer a

total of $635,467.96 for counsel fees related to only the OMS

claims.    We see no abuse of discretion in the judge's analysis of

the materials and his discussion of the legal principles that

guided his examination.

     Hammer also sought a total of $181,491.84 for his expert fee

as well as $29,186.45 for litigation expenses.                   Because in the

trial judge's opinion Hammer did not adequately explain these

costs, he reduced the request by forty percent to $108,895.10 for

                                      33                                     A-1475-14T1
Campo's fee and by fifty percent to $14,593.23 for other fees.

Thus the total amount awarded for counsel fees, costs, and related

litigation     expenses      came    to    $758,956.29.           That      figure    is

disproportionate to Hammer's recovery which came to $81,594 —— the

fair value of his remaining interest in HSI and prejudgment

interest of $34,006.23.

      Under the OMS statute, however, a proportionality analysis

is   not   applied    to   the   detriment        of   a    plaintiff    seeking     the

protection of the statute.           The trial judge considered this very

point, and noted that defendants' total award came to $202,594

including     his    deferred       compensation           payment,   the    fee      was

"approximately       seven   times     the       overall     recovery,"      and     thus

reasonable.    We are constrained to agree given the OMS statute and

the judge's careful and detailed review of the billing records.

He did not abuse his discretion.

                                          VII.

      Defendants also object to the prejudgment interest                      totaling

$34,006.23.    They assert Hammer caused "much of the delay in this

litigation."    Certainly, the number of years this matter has been

pending approaches on the Dickensian.                  But defendants themselves

caused significant delay by pursuing an interlocutory appeal of a

grant of partial summary judgment awarding Hammer $166,913.86,

                                          34                                   A-1475-14T1
including interest, in deferred compensation payable under the

terms of his employment contract.

     Under N.J.S.A. 14A:12-7(8)(d), the court may award interest

on a minority shareholder's interest representing the fair value

of his or her share in a closely-held corporation if, as here, he

or she is successful in an action under N.J.S.A. 14A:12-7(1)(c).

This interest "may be allowed at the rate and from the date

determined by the court to be equitable." N.J.S.A. 14A:12-7(8)(a).

     "Generally, the awarding of prejudgment interest is subject

to the trial judge's broad discretion in accordance with principles

of equity."     Musto v. Vidas, 333 N.J. Super. 52, 74 (App. Div.),

certif. denied, 165 N.J. 607 (2000).         An appellate court must

defer to the trial judge's discretion "unless it represents a

manifest denial of justice."      Ibid.

          The   primary   consideration   in   awarding
          prejudgment interest is that "the defendant
          has had the use, and the plaintiff has not,
          of the amount in question; and the interest
          factor simply covers the value of the sum
          awarded for the prejudgment period during
          which the defendant had the benefit of monies
          to which the plaintiff is found to have been
          earlier entitled."

          [Ibid. (quoting Rova Farms Resort, supra, 65
          N.J. at 506).]

     N.J.S.A.    14A:12-7(8)(d)   provides   that   if   the   successful

minority shareholder's refusal to accept an offer of payment was

                                  35                              A-1475-14T1
"arbitrary, vexatious, or otherwise not in good faith, no interest

shall be allowed."        Ibid.     However, in Musto, supra, 333 N.J.

Super. at 74, the court found that although the defendants made a

buyout offer for the plaintiff's stock that was greater than the

plaintiff's    ultimate    award,     this    "[did]      not   mean   that     [the]

plaintiff's     refusal    to   accept       such    an    offer    constitute[d]

unjustified delay."       Instead, the defendants were responsible for

much of the delay that extended the proceedings, because they

filed an interlocutory appeal.         Ibid.

     Like the trial judge, we do not agree that Hammer pursued

meritless claims requiring aggressive pursuit by defendants of

summary judgment applications and dismissals prior to trial.                       The

record is devoid of support of the notion that Hammer pursued the

complaint in bad faith.         Thus the trial court did not abuse its

discretion     in   awarding      prejudgment       interest     under     N.J.S.A.

14A:12-7(8)(d).

                                     VIII.

     On June 30, 2009, defendants filed an offer of judgment which

would have allowed Hammer to take judgment against them in the

amount    of   $51,150    including    costs        but   excluding      litigation

expenses, prejudgment interest and counsel fees.                   Hammer did not

accept.    Because Hammer ultimately received a net award for his

OMS claim of $21,594, a significantly lower amount than defendants

                                      36                                      A-1475-14T1
offered, defendants sought counsel fees and costs under the Offer

of Judgment Rule (OJR), Rule 4:58-3(c).

     The OJR provides that

           [i]f the offer of a party other than the
           claimant is not accepted, and the claimant
           obtains a monetary judgment . . . that is
           favorable to the offeror as defined by this
           rule, the offeror shall be allowed, in
           addition to costs of suit, the allowances as
           prescribed by R. 4:58-2 . . . .

           [R. 4:58-3(a).]

Rule 4:58-2(a) provides for an award of all reasonable litigation

expenses   incurred   following    the   rejection   of   the    offer,

prejudgment interest, and "a reasonable attorney's fee for such

subsequent services as are compelled by the non-acceptance."            A

determination in the claimant's favor that entitles an offering

party to such an allowance is "a money judgment . . . in an amount,

excluding allowable prejudgment interest and counsel fees, that

is 80% of the offer or less."      R. 4:58-3(b).     Under Rule 4:58-

3(c), no such allowances shall be granted if "(4) a fee allowance

would conflict with the policies underlying a fee-shifting statute

or rule of court."

     Here, the court eventually found that the value of Hammer's

two percent interest in HSI was $81,594, but defendants had already

paid $60,000 of that sum.    Hence the judge concluded that Hammer

received a net award on his OMS claim of only $21,594.          Because

                                  37                            A-1475-14T1
this amount was less than 80% of defendants' offer, the court

found that "[Hammer]'s failure to accept the offer of judgment

entitles the defendant[s] to an award of reasonable litigation

expenses and attorney's fees from June 30, 2009 through the entry

of final judgment."

     We    respectfully     disagree       with    the    trial     judge's

characterization of the full amount owed to Hammer on his OMS

claim as $21,594.      The $60,000 HSI earlier paid, we were advised

at oral argument, was payment on account of the stock.                   The

discrepancy in the figures was a dispute regarding valuation.

Because defendants prepaid a portion of the total finally assessed

against them is no reason to exclude that portion from the total

recovery Hammer actually obtained because of the litigation.               If

that amount is added back in, the total is $81,594, an amount

greater   than   the   figure   in   the   offer   of    judgment   notice.

Accordingly, we reverse on this point.

     Affirmed, except reversed as to the award of attorney fees

to defendants.

                                     38                             A-1475-14T1