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Sullivan v. Aslanides

January 6, 2005


On appeal from Superior Court of New Jersey, Law Division, Bergen County, L-6157-01.

Before Judges Wefing, Payne and C.S. Fisher.

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


Argued October 6, 2004

Plaintiff has appealed from trial court orders granting summary judgment to defendants on the ground that the complaint was barred by the statute of limitations and imposing sanctions for a discovery violation.*fn1 After reviewing the record in light of the contentions advanced on appeal, we reverse the grant of summary judgment and affirm the imposition of sanctions.


Plaintiff Sullivan is a cardiologist who maintained his office in Rutherford. He opened his office in 1974 and practiced by himself for a number of years. In 1988 he decided to hire an associate physician to assist him in the practice. To that end, he retained defendant Peter Aslanides, Esq., a partner in the law firm of McCarter & English, to draft an employment agreement, which was, in addition to its other terms, to set forth the performance requirements for the associate physician to become a shareholder in the firm. Aslanides and defendant Stephen M. Vajtay, Jr., Esq., another attorney at the firm, prepared such an agreement.

Plaintiff hired Stanley A. Szwed, M.D., as an associate physician, and in July 1988 the two men executed the employment agreement defendants had prepared. The agreement included the following language in paragraph 7(e):

Upon the Employee's acquisition of the interest [i.e., becoming a shareholder], the base salary of the Employee and Dr. Gregory Sullivan shall be $250,000 per annum. Additionally, after all expenses of the Practice are paid, each such party shall be entitled to a bonus which shall equal the portion of the Practice's excess profits for the year proportional to each doctor's proportionate share of total billings.

Szwed met all of the performance objectives contained in this agreement and in 1992 became a 49% shareholder in the professional corporation. In September 1992 Sullivan and Szwed executed a Memo of Understanding, which stated in part,"'Core' expenses regarding the Garfield/Rutherford offices will be shared."*fn2 Defendants were not involved in the preparation of this Memo of Understanding.

In 1994 Szwed withdrew as a shareholder, and in November 1994 he filed suit, alleging that he was due additional monies. Szwed included among his allegations that he had been charged a disproportionate share of the expenses of the practice and thus had received less in distribution than he should have.

During the time that Sullivan and Szwed practiced together, Sullivan's wife, Gene Sullivan, served as the firm's bookkeeper and treasurer, and she computed the compensation due to both men. During the course of the litigation, she explained the methodology she employed. She would attribute a portion of the total gross revenues of the practice to each doctor in accordance with their respective proportionate share of the business. From that proportionate share of gross revenue, she would deduct the doctor's salary and one-half of all of the expenses of the practice and treat the balance remaining as that doctor's respective share of the excess profits. She testified that she understood both the employment agreement and the Memo of Understanding to call for Sullivan and Szwed to share equally in the expenses of the practice.

During the course of the trial, Szwed presented an accounting expert who testified that Szwed did not receive his correct share of the profits of the practice. This expert testified about several different methods of calculating compensation, but he did not testify that a particular one was correct. For example, he prepared calculations that allocated expenses based upon stock ownership as well as calculations allocating expenses based upon Gene Sullivan's patient attribution and Szwed's patient attribution. The trial judge rejected his testimony as confusing and unpersuasive. Judgment was entered, finding that Sullivan had prevailed upon all claims except for $8,828.82 conceded to be due to Szwed. The judgment also awarded Sullivan, in accordance with the employment agreement, $119,500.62 for counsel fees and expenses.

Szwed appealed,and this court reversed, finding that the methodology employed by Gene Sullivan to compute distributive profits was clearly not in accord with 7(e) of the employment agreement. Szwed v. Sullivan, No. A-2859-98 (App. Div. March 17, ...

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