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Ricci v. Corporate Express of the East

September 28, 2001


On appeal from Superior Court of New Jersey, Chancery Division, Camden County, C-00023-98.

Before Judges Havey, Coburn and Weissbard.

The opinion of the court was delivered by: Coburn, J.A.D.


Argued September 10, 2001

Plaintiff Louis Ricci sold his business to defendant Corporate Express of the East, Inc. ("CEE"), became its employee, and was subsequently discharged. Three written contracts govern the transaction: a stock purchase agreement, a two-year employment agreement, and a non-competition agreement.

Plaintiff sued in the Chancery Division, seeking, in part, an injunction against CEE's enforcement of the restrictive covenants contained in the non-competition agreement. He also sought damages for breach of the other two agreements and later asserted a claim under the Law Against Discrimination, N.J.S.A. 10:5-1 to -41 (the LAD). CEE denied liability and asked for attorney's fees and costs. More than five months after CEE filed its answer, plaintiff moved unsuccessfully for transfer of the case to the Law Division. A year and a half later, CEE moved for summary judgment. Plaintiff responded, in part, by agreeing to voluntarily dismiss his LAD claim and his challenge to the validity of the non-competition agreement; however, he also moved for summary judgment on the contract claims relating to the sale of the business and his employment. The trial judge entered judgment for CEE. Within twenty days, CEE applied for attorney's fees and costs under fee-shifting provisions in two of the agreements and under the LAD. The trial judge entered an order granting CEE the entire amount requested, $103,332 in attorney's fees plus $9,442.67 in costs.

Plaintiff's appeal warrants a full discussion of three of his points: (1) that he, rather than CEE, was entitled to summary judgment on his claim alleging breach of the employment agreement; (2) that CEE's attorney's fee application was untimely; and (3) that the amount of the fee award was unjustified. We reverse the summary judgment granted to CEE and remand for entry of summary judgment on liability for plaintiff on the cause of action for breach of the employment contract. We take that course because plaintiff was discharged without cause and is thus entitled to the severance pay and benefits called for in that circumstance by the agreement. Although the fee application was technically untimely, the trial judge did not abuse his discretion in considering it on the merits; however, he did err in granting CEE the full amount requested. Therefore, we reverse that order, as well. With respect to these matters, we remand for further proceedings.*fn1


On August 9, 1996, plaintiff and his associates sold all their stock in Holly Property Management, Inc., to defendant for $1,350,000. Under the stock purchase agreement, if defendant's gross revenues reached certain levels during the following year from its newly acquired customers, the plaintiff and his associates could receive additional consideration ranging from $150,000 to $250,000.

At the same time, plaintiff and defendant also entered into employment and non-competition agreements. Under both agreements, the losing party in any litigation is required to pay the other party's reasonable attorney's fees and costs. The employment agreement gave plaintiff an annual salary of $110,000 plus benefits for two years unless terminated for cause.

Section 6 of the agreement defined termination for cause in the following manner:

(a) The Company may terminate the Agreement at any time for Cause (as hereinafter defined) effective immediately upon written notice to Employee. Such notice shall specify that a termination is being made for Cause and shall state the basis therefor. In such event, Employee shall have and shall accrue no additional rights or benefits pursuant to the terms of this Agreement from the date of such termination. For purposes of this Agreement, termination for "Cause" shall be defined as termination because of:

(i) The continued failure by Employee to substantially perform his duties hereunder for a period of fifteen days after the Chief Executive Officer of the Company has made a written demand for performance that specifically identifies the manner in which he believes that Employee has not substantially performed his duties.

(ii) The commission by Employee of a willful act of dishonesty or misconduct that is injurious to the Company or gross negligence ...

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