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Cipala v. Lincoln Technical Institute

September 26, 2002

ANDREA E. CIPALA, PLAINTIFF-APPELLANT/ CROSS-RESPONDENT,
v.
LINCOLN TECHNICAL INSTITUTE, *FN1 DEFENDANT-RESPONDENT/ CROSS-APPELLANT, AND THE CITTONE INSTITUTE AND STONINGTON PARTNERS, *FN2 DEFENDANTS.



On appeal from Superior Court of New Jersey, Law Division, Middlesex County, L-11376-99. Mandy R. Steele argued the cause for appellant/cross-respondent.

Before Judges Stern, Coburn and Collester.

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

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued September 10, 2002

Plaintiff, Andrea E. Cipala, sued defendant Lincoln Technical Institute ("Lincoln") in the Law Division for breach of her employment contract and for violation of the Law Against Discrimination, N.J.S.A. 10:5-1 to -49 ("LAD"). The judge dismissed the LAD action, and the jury found Lincoln liable for breach of contract in that it wrongly failed to include plaintiff in its disability insurance plan, thereby denying her benefits when she became disabled.

After the liability determination, the issue of remedies was submitted to the judge on plaintiff's motion for summary judgment. Lincoln conceded that under the plan plaintiff was entitled to a monthly income of $1,869.08 until age sixty-five so long as she remained disabled. Plaintiff asked for the accumulated benefits from the onset of her disability, a lump sum representing the present value of the monetary benefits she could receive up to age sixty-five, and counsel fees. The parties agreed on the amount of past benefits, but Lincoln contended that plaintiff was only entitled to a judgment of specific performance of the obligation to pay future benefits. The judge rejected plaintiff's requests for counsel fees and a lump sum representing the present value of future benefits, but ordered Lincoln to fund a trust to be administered by an "institutional trustee."

Plaintiff appeals, complaining of the dismissal of her LAD claim and the denial of counsel fees; but her primary contention is that the judge erred in denying her request for lump sum damages. Lincoln cross-appeals, contending only that the judge erred in requiring it to fund the contingent future benefits by creation of a trust.

The main question we must resolve is the nature of the judicial remedies available to an employee for anticipatory breach of an employment contract that required inclusion of the employee in the employer's disability-income insurance plan. We will discuss the issues in this order: plaintiff's lump sum damage claim; denial of counsel fees; dismissal of the LAD claim; and the court's power to create a trust in these circumstances. Since we agree with Lincoln and disagree with plaintiff, a remand will be required for modification of the judgment.

I.

The material facts on plaintiff's damage claim are undisputed. No evidence or stipulation was submitted describing the nature of plaintiff's disability or whether it would permanently prevent her from working. Nonetheless, at least for purposes of this appeal, Lincoln concedes that it breached the employment agreement and that plaintiff was entitled to disability payments of $1,869.08 in the past and to a continuation of those payments until she becomes sixty-five, dies, or is no longer disabled.

Funding of the trust would require four annual payments of $68,500, the first one being due on October 1, 2001, for a total of $274,000. Those payments include annual commissions of $2,000, payable to the institutional trustee, Commerce Bank, National Association. After four years, Lincoln would be required to pay the trustee $2,000 per year until the trust terminated, at which time the balance of the trust would be returned to Lincoln.

II.

Plaintiff's claim for the present value of the promised disability payments to age sixty-five is based on the concept of anticipatory breach of contract. A breach of that nature occurs when a party renounces or repudiates a contract by unequivocally indicating that it will not perform when performance is due. It gives rise to a claim for specific performance, or for damages for total breach; i.e., for damages based on the injured party's remaining rights to performance under the contract. Stopford v. Boonton Molding Co., 56 N.J. 169, 188 (1970). In Stopford, an employee's vested contractual right to a lifetime pension was breached when defendant announced that it was terminating the pension plan. Id. at 181. The Court explained plaintiff's remedies in this manner:

When defendant-company terminated the pension plan and advised plaintiff that he would receive no further retirement benefits, its action amounted to a renunciation -- a total anticipatory breach of its agreement to pay plaintiff $296.17 monthly during his lifetime. When that occurred, plaintiff had a choice of remedies. He could elect to sue for the accumulated unpaid benefits from October 1, 4 1966 to the date of trial and for a judgment of specific performance of the obligation to pay the benefits until his death. Or he could treat the breach as total and seek recovery of ...


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