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Almog v. Israel Travel Advisory Service

February 25, 1997

SHALOM ALMOG AND IRIT ALMOG, PLAINTIFFS-RESPONDENTS/CROSS-APPELLANTS,
v.
ISRAEL TRAVEL ADVISORY SERVICE, INC., A NEW JERSEY CORPORATION; CELIA SHAR AND MARILYN ZIEMKE, DEFENDANTS-APPELLANTS/CROSS-RESPONDENTS, AND BEN AMI GELLER, DEFENDANT-RESPONDENT/CROSS-APPELLANT, AND ISRAEL RODRIGUE AND ABIR TRAVEL & TOURS LTD., A CORPORATION OF THE STATE OF ISRAEL, DEFENDANTS.



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

Approved for Publication February 27, 1997.

Before Judges Pressler, Humphreys and Wecker. The opinion of the court was delivered by Pressler, P.j.a.d.

The opinion of the court was delivered by: Pressler

The opinion of the court was delivered by

PRESSLER, P.J.A.D.

Following the five-week trial of this defamation action, the jury returned compensatory damage verdicts against defendants Israel Travel Advisory Service, Inc. (ITAS) and its owners, Celia Shar and her daughter Marilyn Ziemke, all New Jersey residents, in favor of plaintiffs Shalom Almog and his wife Irit Almog and in favor of defendant/cross-claimant Ben Ami Geller, all Israeli citizens. More specifically, the jury awarded Shalom Almog $525,000 for injury to reputation, $775,000 for loss of income, and $24,000 on a book account claim for a total of $1,324,000. It awarded Irit Almog $200,000 for her per quod claim and Geller $40,000 for loss of reputation. The jury also determined that both Shalom Almog (plaintiff or Almog) and Geller were entitled to punitive damages, and, following a second trial on that issue, the same jury awarded punitive damages to Almog of $4,500,000 and punitive damages of $1,000,000 to Geller. The jury found no cause for action on defendants' counterclaim against plaintiff. Defendants appeal. Plaintiffs and Geller cross-appeal. We affirm the jury's verdicts in all respects.

This action has a tortuous procedural and factual history. For purposes of addressing the issues raised on this appeal, the following brief factual recitation suffices. The jury could have found from the evidence that defendants Shar and Ziemke, New Jersey residents living and working in Livingston, are in the business of organizing tours to Israel for American travellers. During the period in controversy, the business was highly successful, ITAS sending between 3,000 and 3,500 tourists to Israel annually at a net profit of $500 each. The evidence adduced at the punitive damage hearing supports the finding that in more recent years and at the time of trial, the business was even more financially successful.

ITAS' modus operandi was to arrange for the international flights for its groups through its American agent but to turn all the Israeli arrangements//--hotels, meals, sightseeing, entertainment, transportation, and the like//--to a licensed Israeli land tour operator. The groups would then be conducted by a licensed Israeli tour guide acting as an independent contractor under arrangement with the land tour operator. In 1984, the Israeli land tour operator with whom ITAS dealt was Trans Global Travel. Geller, who worked as a guide with Trans Global, frequently guided ITAS groups. ITAS' financial arrangement with Trans Global, apparently typical of the Israeli tourist industry, was that Trans Global billed ITAS its actual costs incurred in its arrangements for the groups plus a flat fee per tourist, an arrangement referred to as "net-net cost plus handling fee." The handling fee at that time was $60 per tourist, and the land tour operator shared it with the American travel agency with whom ITAS worked.

Sometime in 1984 Geller solicited Almog, then a colonel in the Israeli Defense Forces, to enter the travel business upon his retirement from the army and introduced him to Shar and Ziemke. In August 1985, when Almog retired from the army, Trans Global had split into two entities, TGT Travel Ltd. and Transglobal Travel Ltd. Geller and ITAS both elected to stay with TGT, and Almog joined them as a TGT employee, assigned exclusively to the ITAS account. A close working relationship developed between Almog and Geller. A close working relationship also developed between Almog and Shar and Ziemke, who were extremely pleased with his performance. By January 1986, defendants had increased TGT's handling fee to $85. In June of that year, as the result of agreements between TGT and Transglobal, ITAS, Geller and Almog all moved to Transglobal. Because of Almog's and Geller's importance to the ITAS account, Almog was given a minority ownership interest in Transglobal and Geller received, in addition to his salary from Transglobal, $10 out of every handling fee. In March 1988, Almog persuaded ITAS to move its business to another land tour operator, Abir Travel & Tours, Ltd., owned by defaulting defendant Israel Rodrigue. Geller moved to Abir as well and continued to receive $10 of the handling fee. Abir received the same. Almog received the balance of $65, if defendants' testimony were accepted that the handling fee remained at $85, or the balance of $80, if Almog's testimony that it had been increased to $100 were credited. In any event, Almog testified and the jury was free to believe that by September 1988, Almog's income was $190,000 annually.

In the summer of 1988, relations between Almog and Geller became strained after Geller accused Almog of becoming too self-important. In October 1988, Rodrigue told Geller that Almog was holding back from ITAS by charging for services not actually rendered the touring groups and by not remitting certain rebates. In that month, Geller and Rodrigue went to Livingston with documents they thought demonstrated those charges. The jury was free to conclude from the evidence that not only were these relatively minor matters, involving the cost of box lunches, the use of hostesses, the quality of buses engaged, and a small hotel prepayment discount, but also that Almog's Disposition of these matters was perfectly proper and in accord with industry standards and practices. In any event, and without inquiring of Almog at all, Shar and Ziemke immediately determined to fire him. They prepared and signed a letter addressed "To Whom it May Concern," advising that Almog no longer represented ITAS in any way and that vendors and suppliers should deal only with Geller and Rodrigue. When Geller and Rodrigue returned to Israel and showed Almog the letter, Almog telephoned Ziemke and Shar to ask for a meeting. They berated him over the telephone, accused him of embezzling $150,000 and of camouflaging invoices, and called him "inept and schizophrenic." Almog immediately went to Livingston, and during the course of his meeting there with Shar and Ziemke, they also accused him of having fraudulently obtained from them $39,000 by way of two checks drawn to his order the previous summer.

The jury was free to find from the evidence that Almog returned to Israel to look for another job but was unable to find one either in the tourist industry or indeed in any other industry in Israel because of the savage campaign of slander and libel that Shar and Ziemke then maliciously undertook against him both in the United States and in Israel. It was not until 1990 that Almog was finally able to find work at a greatly reduced salary as a plant manager in the Dominican Republic. The jury was free to find that Shar and Ziemke had, falsely, repeatedly and to great effect, accused him of gross theft and of having an extramarital affair with his ex-wife. The jury could also have found that they published these stories to anyone who would listen, including Almog's former commanding officer, who advised him to leave Israel as his reputation and prospects were finished there. Both Almog and his wife gave testimony that the jury was free to credit respecting the substantial physical and emotional harm done to them as a result of defendants' actions.

Geller continued in defendants' good graces until August 1990. By that time, ITAS had returned its business to Transglobal, and Geller, by then acknowledged as a "top guide" in Israel, had followed. In the summer of 1990, Geller was hospitalized after suffering a stroke. When he was released from the hospital, he entered into an agreement with Transglobal, whereby Transglobal promised him twenty days of work each month until February 1991, when the arrangement would be reevaluated. Under the terms of that agreement, Geller was not required to work exclusively on ITAS tours and his per-tourist fee was increased to $15. The jury was free to find from the evidence that when Transglobal's principal, Benny Sivan, advised Shar and Ziemke of this agreement, they became enraged, vowed to "punish" Geller, called him a thief and refused to permit him to guide the tour scheduled for October. Sivan thereupon refused to handle that tour, and ITAS then severed its relationship with Transglobal. Thereafter Transglobal entered into a relationship with an American competitor of ITAS *fn1 and Geller continued to work both for Transglobal and other companies. At that point defendants mounted a retaliatory defamatory campaign against Geller, accusing him to all and sundry of having seduced the daughter of a major Israeli restaurant owner and causing him and his wife to be subject to criminal investigation by the Israeli tax authorities, by whom he was eventually exonerated after suffering both out-of-pocket losses, impairment of reputation, and emotional distress.

In summary, we are satisfied from our review of this record that the jury had an ample evidential basis from which to conclude that defendants Shar and Ziemke and their company took concerted, malicious and purposeful action over a significant period of time to destroy both Almog and Geller as respected members of their community, that they did so with total disregard of the truth or of the personal consequences to them and their families, and that in large measure they succeeded.

The Almogs instituted this action in October 1989 in the Law Division, Essex County, by filing a twenty-nine count verified complaint against ITAS, Shar, Ziemke, Geller, Rodrigue and Abir, asserting a variety of causes, including defamation, intentional infliction of emotional harm, breach of contract, tortious interference with contractual relations and prospective economic advantage, and book account debts. Defendants ITAS, Shar and Ziemke responded by filing an action in Israel against the plaintiff, seeking over half a million dollars in damages from him on theories of trade libel and misappropriation of funds, making sure, as the jury was free to find, that the details of their cause of action were reported in the Israeli press. Eventually, the contours of this litigation were drawn by Rodrigue and Abir defaulting, the trial court's denying defendants' motion for dismissal on the ground of forum non conveniens, the filing by defendants of an amended answer and counterclaim, Geller's filing of an amended answer and cross-claim charging ...


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