On appeal from the Superior Court of New Jersey, Law Division, Camden County, L-8555- 98 and L-1293-99 (consolidated).
Before Judges Stern, Coburn and Alley.
The opinion of the court was delivered by: Alley, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted December 3, 3002
Defendant, FMS Financial Corporation (FMS), appeals from two amended final judgments entered on July 6, 2001, after summary judgment had been awarded to plaintiffs. The orders required FMS to transfer 11,583 shares of its common stock to plaintiff Brick, and to pay $116,022.99 to plaintiff Schor, pursuant to rights to purchase FMS stock that the trial court had determined that they respectively had held under defendant's stock option plan. Plaintiffs also were awarded interest, and counsel fees were awarded pursuant to R. 4:58-1, the offer of judgment rule.
Plaintiffs, William T. Schor and Steven R. Brick, each served as directors of Land Financial Services (LFS) starting in November 1987. Schor remained a director of LFS through August 1990, and Brick did so through February 1991. At relevant times, FMS owned Farmers and Mechanics Bank (Bank) and LFS was a subsidiary of the Bank. On November 15, 1988, FMS adopted a stock option agreement for non-incentive stock options known as the "1988 Stock Option and Incentive Plan" (Plan).
Schor and Brick did not attempt to exercise their options until May 18, 1998, and October 14, 1998, respectively. FMS rejected these requests.
FMS took the position that plaintiffs had been required to exercise their stock options within ninety days after leaving the LMS Board. Although paragraph four of the Plan states,
"[t]his Option may not be exercisable for more than ten (10) years from the date of grant of this Option[,]" paragraph three of Section 5 of the Plan states in part that "[s]uch Options may be exercised only while the Optionee is a Director of the Corporation or within 90 days after termination of the Optionee's status as a Director." Under paragraph 2(g) of the Plan, "Corporation" is defined as "FMS Financial Corporation, a holding company of the Bank." From 1991, FMS business records reflected the understanding that Schor's and Brick's respective options had expired ninety days after their resignations as LMS Directors. Schor and Brick apparently never saw the Plan until they tried to exercise their options.
After litigation was commenced, Schor was awarded $158,783 in arbitration under R. 4:21A on December 3, 2000. FMS filed a notice of rejection and a demand for trial de novo on December 22, 2000. The notice was not actually received by Schor's counsel until January 15, 2001, after a certified mail delivery attempt on December 26, 2000, failed because that attorney had elected to close his office that day, which was neither a weekend nor a legal holiday. Schor filed a motion to vacate the FMS request for trial de novo and to enter judgment in accordance with the arbitration award on February 14, 2001, which was denied on March 2, 2001. Schor's motion for summary judgment was granted on April 24, 2001 as to the issue of liability, and judgment in favor of Schor was entered on May 11, 2001, for the sum of $202,479.82, representing the sum of $166,022.99 plus interest of $36,456.83. An amended order was entered on July 6, 2001, in favor of Schor for $14,007.87 in counsel fees, bringing the total to $218,663.27.
With respect to the claims of the other plaintiff, Brick served an offer of judgment on FMS for the transfer of 11,583 shares of stock on January 19, 2001, which FMS did not accept. Brick then moved for summary judgment against FMS, and the motion was granted on February 16, 2001. The court directed that FMS transfer 11,583 shares of its stock to Brick, and on July 6, 2001, entered amended judgment that also awarded Brick $15,798.02 for counsel fees; $3,474.90 for dividends which should have been paid from October 14, 1998, the date he attempted to exercise his option; and $379.42 in pre-judgment interest.
We first address the substantive dispute in this case, which centers on Paragraph 5 of the Plan and specifically the effect of its definition of the word "Corporation" as FMS. The trial court granted summary judgment to both plaintiffs, perceiving no ambiguity and no need to look to extrinsic evidence. Plaintiffs contend that because "Corporation" is defined as FMS and not LMS, the limitation of the right to exercise the options to a period of ninety days after their status as directors ended is inapplicable to them, inasmuch as they were not directors of FMS, but of LMS. FMS contends, however, that the term "Corporation" includes each of the companies that were part of the Plan, not merely FMS, and that to read it otherwise would destroy the intent of the Plan and create ambiguity because of inconsistencies it would create. It argues ...