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Depalma v. Building Inspection Underwriters

April 15, 2002


On appeal from Superior Court of New Jersey, Law Division, Camden County, L-3980-97.

Before Judges King, Wecker and Winkelstein.

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


Argued December 12, 2001

This appeal requires us to determine the applicable limit on punitive damages awarded for a violation of the Family Leave Act, N.J.S.A. 34:11B-1 to -16 (the Act). Defendant Building Inspection Underwriters (BIU) appeals from a judgment entered after a jury verdict for plaintiff Michael DePalma. Plaintiff cross-appeals from that portion of the final judgment that reduced the jury's $400,000 punitive damages award to $10,000, the maximum allowed under the Family Leave Act, N.J.S.A. 34:11B- 11.

In affirming the judgment in its entirety, we hold that the proofs and burdens applicable to an action brought under the Family Leave Act follow the pattern applicable to a claim under the Law Against Discrimination; there was no error or abuse of discretion in excluding defendant's proffered expert on administrative regulations applicable to plaintiff's employment as a plumbing inspector for an on-site inspection agency licensed under the Uniform Construction Code; the credible evidence was sufficient to sustain the jury's verdict; the punitive damages award is governed by the $10,000 limit set forth in the Family Leave Act and not the higher limit of the Punitive Damages Act, N.J.S.A. 2A:15-5.9 to -5.17; and the award of counsel fees based on the "lodestar" was a reasonable exercise of judicial discretion.

Here is the procedural history. Plaintiffs Michael DePalma and Donna DePalma*fn1 filed a complaint against BIU in May 1997, alleging that BIU fired Michael DePalma because he had taken twenty-one days off and then sought additional leave to care for his severely injured son, and that his firing violated the Family Leave Act.*fn2 Plaintiff sought compensatory and punitive damages and attorneys' fees.

After a trial in Camden County before Judge Snyder and a jury in May 1999, the jury found that BIU had terminated plaintiff in violation of the Family Leave Act and awarded plaintiff $40,000 in economic damages and $100,000 in non- economic damages. The jury also awarded $400,000 in punitive damages. The judge granted plaintiff fourteen days to file an application for counsel fees. On May 20, 1999, the judge signed a partial judgment, awarding plaintiff $140,000 in compensatory damages, $15,359.30 in prejudgment interest, and $400,000 in punitive damages.

After raising the issue sua sponte and giving counsel an opportunity to brief the issue, the judge concluded at a hearing on July 9, 1999 that the Family Leave Act limited plaintiff's punitive damages to $10,000 and molded that portion of the jury verdict accordingly. The judge also denied BIU's motion for a new trial or for judgment notwithstanding the verdict.

On August 9, 1999, Judge Snyder issued an order memorializing his decisions denying BIU's motion for a new trial, judgment notwithstanding the verdict, or remittitur; denied plaintiff's motion to restore the $400,000 punitive damages award; and permitted plaintiff to submit a fee application within thirty days.

BIU filed its notice of appeal from the partial judgment on August 25, 1999. On October 21, 1999, we denied plaintiff's request to dismiss the appeal as interlocutory and instead remanded the matter to the trial court to decide plaintiff's fee request within forty-five days. Plaintiff's fee application was submitted on the forty-fifth day, and on December 21, 1999, Judge Snyder issued his final judgment, awarding plaintiff $68,848.25 in counsel fees and $948.16 in litigation costs. Judgment was entered in the total amount of $235,155.71, representing $140,000 compensatory damages, $15,359.30 pre-judgment interest, $10,000 punitive damages, plus counsel fees and costs.

Judge Snyder rejected BIU's motion for reconsideration of the fee award, and BIU thereafter filed an amended notice of appeal respecting that award. Plaintiff filed a notice of cross- appeal on January 13, 2000.

A brief description of the nature of BIU's business is essential background to this case. The Uniform Construction Code (the Code) adopted by the Department of Community Affairs (DCA) includes requirements to be met before newly constructed housing can be occupied. Separate sub-codes govern requirements in the areas of building, plumbing, electrical and fire. Newly constructed housing requires a certificate of occupancy (CO), which in turn requires that a licensed sub-code inspector must inspect and certify that the construction meets the requirements of each sub-code. See generally N.J.A.C. 5:23-2.16 to -4.15.

BIU is an independent "on-site inspection and plan review agency" approved to perform code inspections for municipalities which do not employ their own licensed municipal inspectors. BIU's inspectors thus perform the roles of sub-code officials for those municipalities. See N.J.S.A. 52:27D-124. Cherry Hill was one of the municipalities with which BIU had a contract to perform such services.

Paul Carrafa was BIU's first employee. He began in April 1987 and left BIU in September 1997, having been its president since 1994 or 1995. Michael Schaffer was BIU's New Jersey "state manager," who oversaw BIU's inspections process in New Jersey and supervised BIU's licensed code inspectors, including DePalma.

The jury heard the following evidence. From 1974 through 1990, DePalma operated his own private plumbing business, engaging primarily in residential work. He was licensed as a plumbing inspector and sub-code official in New Jersey and therefore could perform inspections under the plumbing sub-code.

DePalma was first hired by BIU in 1990 as a plumbing sub- code inspector. When he was hired, he told Carrafa that he worked for Sears part-time as a plumber and also did some private plumbing work; Carrafa expressed no concern about DePalma's outside work. DePalma thereafter worked in BIU's Cherry Hill office, and Carrafa considered him a good inspector.

In June 1992, DePalma voluntarily left his job at BIU and moved with his wife to Florida. In late 1993, he decided to return to New Jersey, and Carrafa rehired him. DePalma returned to his position with BIU in January 1994, acting as the plumbing code inspector for Cherry Hill at an annual salary of $38,000. According to him, during the next two years everything went well on the job. He continued to do some minor plumbing work on the side, did not hide this work from his supervisors, and was never told he could not do outside work. He testified that he did not work for Sears during this period; he rejoined Sears only after BIU terminated his employment in 1996.

DePalma testified that his outside plumbing work after January 1994 consisted of small jobs for friends, which did not interfere with his duties at BIU, did not require permits or inspection under the Code, and did not violate any applicable regulations.*fn3

DePalma occasionally was asked to attend night-time municipal meetings in Berlin, New Jersey on BIU's behalf. He was told that either he would be compensated for the extra hours he spent in Berlin, or he would be allowed to work fewer hours on other duties. According to Carrafa, DePalma attended a few such meetings, after which he decided that attending the meetings was not part of his duties. DePalma testified that he never complained about working in Berlin, but conceded that he was unable for various reasons to attend all of the Berlin meetings to which he was initially assigned.

At some point during his second period of employment with BIU, DePalma decided to start a business of his own, Building Code Enforcement, Inc. (BCE), with a friend and partner, Ed O'Neill. DePalma testified that he did not believe owning and working with BCE would conflict with his duties at BIU because the new business was to perform home inspections only for resale properties, which would not require licensed inspections and would not compete with BIU's business. DePalma claimed that he told Carrafa about this proposed venture, and Carrafa approved it. According to both DePalma and O'Neill, O'Neill retained an attorney to prepare a certificate of incorporation for BCE and took the necessary steps to incorporate the business. BCE was incorporated in November 1995. According to both O'Neill and DePalma, although DePalma was named a director, vice president and secretary/treasurer, he had no input into the preparation of the incorporation papers, and he was not aware of their contents until trial.

BCE's certificate of incorporation filed November 9, 1995 was inconsistent with DePalma's and O'Neill's testimony, in that the stated purpose of the corporation included Code inspections for new construction.*fn4 The certificate made no reference to inspections for resales. DePalma conceded that performing Code inspections would be in direct competition with BIU's business, and that such competing activity would have warranted his termination from BIU. DePalma also admitted that BCE ultimately filed an application to become a licensed on-site agency, but did so only after he was fired. At that point he intended to compete with BIU.*fn5 O'Neill confirmed that the license application was filed after DePalma was fired. The license was issued effective June 1, 1996.

DePalma disputed Carrafa's claim that while employed at BIU, he tried to recruit Schaffer and other BIU employees to work for BCE; he claimed that BCE had no need for licensed inspectors at that time. Rather, DePalma pointed out that Schaffer himself did home resale inspections for another company, Accuspek, even while he was employed at BIU. Schaffer confirmed this fact.

On March 5, 1996, DePalma's twenty-seven-year-old son Michael was seriously injured in a car accident in Florida. DePalma and his wife immediately went to their son's hospital bedside. Before DePalma left, Schaffer told him to go to Florida and do what had to be done to take care of his son. DePalma remained in Florida with his son and his wife until March 18, when he returned to New Jersey.

Two days later, plaintiff was informed that Michael had taken a turn for the worse. He immediately returned to Florida, with BIU's permission, and remained there until Michael was discharged from the hospital on April 4. DePalma returned to work on Monday, April 8, while his wife again remained behind in Florida with their son. Up to that point, DePalma had been in Florida, away from his job at BIU, for a total of twenty-one work days. He used accumulated sick and vacation time and continued to be paid and receive all benefits during his absence.

On Wednesday, April 10, DePalma and Schaffer had lunch. According to DePalma, he asked Schaffer about his job status with BIU and was assured that it was fine. DePalma then asked Schaffer if he could take some four-day weekends so that he could spend time with his wife and son in Florida. According to DePalma, Schaffer responded that there was no problem, and he should do whatever was necessary. Further according to DePalma, Schaffer also assured him that he had a job with BIU for as long as he wanted one.

Although Schaffer confirmed at trial that he approved DePalma's request to take four-day weekends, he denied telling him that his job status was fine, or that he had a job with BIU for as long as he wanted one. According to Schaffer, he promptly told Carrafa about DePalma's request for long weekends, and Carrafa approved. Nevertheless, on Thursday, April 11, Carrafa told Schaffer to terminate DePalma. Schaffer called DePalma the following night, Friday, April 12, informed him of Carrafa's decision, and told him that he did not know why he was being terminated. DePalma testified that he was crushed. As a result of his termination, he lost not only his salary, but also his health benefits, his 401K and profit-sharing contributions from BIU, and the use of a company vehicle.

DePalma immediately resumed his plumbing job with Sears. He also worked as a part-time municipal plumbing inspector for three different townships for six or seven months, thirty to thirty- three hours weekly. Beginning in January 1997, he began full- time work as a plumbing and building inspector for three townships. His salaries in those positions totaled approximately $54,000, which exceeded ...

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