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Cappiello v. Ragen Precision Industries Inc.

Decided: January 10, 1984.

ALEXANDER A. CAPPIELLO AND PAULINE CAPPIELLO, HIS WIFE, PLAINTIFFS-RESPONDENTS,
v.
RAGEN PRECISION INDUSTRIES, INC., EUGENE LOPATA AND GEORGE VAN DE WEGH, INDIVIDUALLY, JOINTLY AND SEVERALLY, DEFENDANTS-APPELLANTS



On appeal from the Superior Court of New Jersey, Law Division, Bergen County.

Michels, King and Dreier. The opinion of the court was delivered by Dreier, J.A.D.

Dreier

Defendants appeal from a judgment entered upon a jury verdict in favor of plaintiff finding plaintiff's employment to have been terminated "maliciously and wrongfully so as to deprive him of a financial benefit." The decision implicates questions of the damages, if any, that are awardable depending upon our characterization of the case as one of breach of contract, abusive discharge of an employee at will, malicious interference with the employee's contract rights or some combination of those theories.

Alexander A. Cappiello (plaintiff) was an employee at will of defendant, Ragen Precision Industries, Inc. (Ragen). At the time of his firing his immediate superior was defendant George Van de Wegh, and the corporate president was defendant Eugene Lopata. Plaintiff was a commission salesman and alleges he was terminated as a result of an agreement between the individual defendants to appropriate his right to accrued commissions, as well as a substantial commission about to be paid as a result of his efforts to sell Ragen's data retrieval system to the Superior Court of New Jersey. Other commissions are in dispute, but it is clear from the jury's verdict that it accepted in toto plaintiff's allegations concerning the commissions owed to him. The evidence as to some of them will be discussed later, but the total jury award was $117,188.01. In addition, the jury awarded plaintiff punitive damages in the amount of $25,000, and additionally awarded plaintiff's wife, Pauline Cappiello, $10,000 per quod damages for loss of consortium and $10,000 in punitive damages. The award is against all defendants, and the individuals were found to have maliciously conspired to discharge the plaintiff. An additional individual defendant, the chairman of the board, was exonerated.

I

Any discussion of the legal consequences of firing an employee at will in this State must start with an analysis of Pierce v. Ortho Pharmaceutical Corp., 84 N.J. 58 (1980). In that case the Supreme Court determined "[t]hat the common law of New Jersey should limit the right of an employer to fire an employee at will." Id. at 71. An employee at will "has a cause of action for wrongful discharge when the discharge is contrary to a clear mandate of public policy . . . Absent legislation, the judiciary must define the cause of action in case-by-case determinations. . . [U]nless an employee at will identifies a specific expression of public policy, he may be discharged with or without cause." Id. at 72. The Court specifically noted that the action may be maintained in contract or tort or both, but in either case the employee must show that he was fired for refusing to perform an act that is "a violation of a clear mandate of public policy," and, insofar as the action is maintained in tort, punitive damages can be awarded "to deter improper conduct in an appropriate case, . . . [which] remedy is not available under the law of contracts." Id. at 72-73. The Court was specific, however, in noting that "[o]ur holding should not be construed to preclude employees from alleging a breach of the express terms of an employment agreement." Id. at 73.

Thus the Supreme Court differentiated between the action for breach of the employment agreement and an action for abusive discharge by reason of an employee's refusal to follow the dictates of the corporation when such directive would violate "a clear mandate of public policy." Only within a narrow area may this abusive discharge action provide the basis both of compensatory and punitive damages, and outside such an area "the court can grant a motion to dismiss or for summary judgment." Ibid.

It is not disputed that, although plaintiff's employment was at will, he had an agreement with Ragen for the payment of commissions. Therefore, a breach of this agreement may be

separately recognized as a basis for compensatory damages, even under Pierce, notwithstanding that plaintiff's discharge must be upheld if he does not meet the Pierce abusive discharge test. The problem lies with the award of punitive damages. They are unavailable unless the Pierce rationale can be invoked or another basis found, such as the malicious interference with contractual advantage alleged by plaintiff.

The jury interrogatories firmly establish that plaintiff was terminated maliciously and wrongfully to deprive him of his commissions, and that this deprivation was the responsibility of the individual defendants. Although the trial court in the jury interrogatory unfortunately used the language "guilty of maliciously conspiring to discharge the plaintiff," from its context in the interrogatories and the whole of the court's charge it is clear that the court was referring merely to the general conduct and inquiring into which, if any, of the individuals had engaged in the action of depriving plaintiff of his commissions -- rather than raising the tort of conspiracy as a separate basis of recovery. The judge in explaining this question noted the three individuals named and explained that two additional defendants had been excluded because they "had no part in any malicious act" and were "not responsible in any part for the discharge and no longer are in the case as individual defendants." The specific references in this explanation to the interrogatory question immediately preceding (concerning the malicious termination of plaintiff's employment so as to deprive him of his commissions), and the language of the question following (requesting that if the jury found "the plaintiff was terminated wrongfully and maliciously so as to interfere with an ...


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