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Mercury Staffing, Inc. v. Newark Extended Care Facility


October 12, 2007


On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, L-6921-04.

Per curiam.


Argued September 17, 2007

Before Judges Weissbard and S.L. Reisner.

Defendant Newark Extended Care Facility, Inc., appeals from a trial court judgment dated June 19, 2006, awarding plaintiff Mercury Staffing, Inc. $94,662.50 based on plaintiff's breach of contract claim. We affirm.


These are the most pertinent facts. Mercury Staffing, Inc. (Mercury) is a nursing staffing agency that provides nurses, on a temporary basis, to nursing homes and other health care facilities. Mercury recruits nurses and enters into agreements with them to either act as Mercury's employees or as independent contractors. However, regardless of Mercury's contractual relationship with the nurses, Mercury enters into separate contracts with its clients to send nurses to work at the clients' facilities. On March 13, 2002, Mercury entered into a contract (staffing contract) to provide nurses to defendant Newark Extended Care Facility, Inc. (NECF). At some point, NECF hired eight nurses whom Mercury had sent to NECF as temporary staff and refused Mercury's demand for a commission under the staffing contract. This lawsuit followed.

Certain terms of the contract and the parties' performance under the contract were at issue in the trial. Based on the following contract language, Mercury contended that NECF had agreed not to "poach" or hire away as NECF employees the nurses Mercury sent to work there:

The client engages the company on a non-exclusive basis to provide the services of Registered Nurses (RN), Licensed Practical Nurses (LPN), and Nurses Aides for temporary services. All such staff are and shall remain independent contractors or employees of the company, and shall not be employed by the client.

Mercury also contended, based on paragraph seven of the contract, that if NECF hired any Mercury nurses, NECF would pay Mercury a commission consisting of twenty-five percent of the nurses' annualized compensation:

Employees will not be hired directly by the client before completion of one year of employment by the company at the client.

Fees for employees recruited by the client after one year will be as follows: Nurse: 25% of annual salary.

According to Mercury's president, Sandik Patel, this commission provision was standard in the industry. Patel testified that the agreement was drafted with his input and that the term "employee" meant "everybody who works for Mercury," regardless of whether Mercury paid the nurse as an independent contractor or as an employee. He also testified that "recruited" meant "adding to their staff. Anybody who worked for Mercury . . . at the client location, if they're hired directly and add[ed] to their staff, that's what recruiting means." He also testified that "employee" meant any "nurse that we placed at Newark."

NECF's administrator, Samuel Paneth, called as Mercury's witness, testified on direct examination, that he did not negotiate the contract. He clarified that he did not "negotiate the details, but before I sign . . . I, of course, look it over." On cross-examination, he contended that before he signed the contract, he spoke to Rajah Byas, the Mercury employee who signed the contract, and was told that the contract would not preclude NECF from hiring Mercury nurses as long as "they come by themselves on their own" rather than being solicited by NECF. He contended that NECF hired the nurses because the nurses "came to us" and asked to be hired.

However, on questioning by the court, Paneth admitted knowing that the contract stated that Mercury staff "shall not be hired by the client," and that they "will not be hired directly by the client before completion of one year employment by the company at the client." He further admitted that he had agreements with a lot of staffing agencies and he conceded that "usually those agreements contain provisions that prevent you from hiring the employees or the people who came from the agency on to your staff." He was also asked whether he understood that paragraph seven of the contract concerning commissions meant "that it was not something you were permitted to do, to hire [Mercury's] people, right?" He responded "Right."

The agreement also provided that it would continue for a one-year period "unless extended by either party on mutually agreed terms." The undisputed evidence at trial established that the parties continued to perform under the contract after the one-year period expired on March 5, 2003, until at least the middle of 2005. That is, NECF continued to ask Mercury to provide nurses; Mercury provided the nurses; and NECF paid Mercury the contract rate for their services.

According to Patel, in January 2004, Paneth attempted to negotiate with Patel an agreement to enable NECF to permanently hire some Mercury nurses at a lower commission rate than that provided in the contract.*fn1 They were unable to agree on a lower rate. However, later in 2004, NECF did hire a total of seven nurses whom Mercury had previously sent to work at NECF and who, according to Patel, were still working for Mercury at the time NECF hired them.*fn2 For example, based on its invoices to NECF, Patel determined that a nurse named Adien "worked here with Mercury Staffing till May 2 [2005] and she started working [at NECF] on May 3." There was similar testimony as to each of the nurses NECF hired.

Mercury sent NECF invoices for the commissions it claimed NECF owed under the contract for hiring those nurses. The invoices were admitted in evidence, and Patel testified specifically as to how the invoice amounts were calculated for each nurse.

NECF refused to pay any commission. Despite this disagreement, the parties otherwise continued to perform under the contract until the "middle of 2005." NECF continued to request nurses from Mercury, and Mercury continued to provide the requested temporary staff.

Following the close of testimony at the trial, the judge issued an oral opinion denying NECF's motion for judgment except as to one nurse, and granting Mercury's motion for judgment as to the other nurses. He granted defendant's motion for judgment as to one of the nurses, Ms. Downie, based on her testimony that she did not fill out any paperwork for Mercury, and that she only performed "casual work" for Mercury on a few occasions as a favor to a friend.

The judge then construed the contract between the parties. He concluded that "[t]he conduct of the parties extended the contract" such that it was in effect when NECF hired the Mercury nurses. He also reasoned that the issue of whether the nurses were independent contractors or employees of Mercury was "a red herring." He found that the intention of the parties was that Mercury would supply nurses and would receive a commission out of the fees NECF paid for the nurses' services. He construed paragraph seven of the contract as prohibiting NECF from hiring Mercury's staff within one year of employment by the company at the client, and as also requiring NECF to pay "a commission of 25% of the annual pay" if it hired a nurse before the year was up. He concluded that there was "no issue of fact for the jury to determine in this case" as to the parties' intention regarding the contract or as to the nurses' annual compensation from Mercury, upon which Mercury's commission would be based. He therefore awarded plaintiff a $15,600 commission for each of "the [six] remaining nurses in the case."


On this appeal, NECF contends that the trial court erred in denying defendant's motion for a directed verdict, that the trial judge erred in making credibility determinations in deciding the motions, that it erred in calculating damages, and that the trial court improperly barred defendant from pursuing its defense that Mercury had not fulfilled its obligations under the contract.

Having reviewed the entire record, we conclude that these contentions are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E). We add the following comments.

In this case, the trial judge construed the contract in accordance with its obvious intent and with common sense, and in accordance with the testimony. "Reasonable minds" could not differ as to the proper construction of this contract. See Cameco v. Gedicke, 299 N.J. Super. 203, 212 (App. Div. 1997) (quoting Dolson v. Anastasia, 55 N.J. 2, 5-6 (1969)), aff'd as modified 157 N.J. 504 (1999)). The contract prohibited NECF from hiring nurses who worked for Mercury and whom Mercury sent to NECF pursuant to the staffing contract. We agree with the trial judge that the nurses' legal relationship with Mercury as employees or independent contractors is irrelevant to NECF's obligations to Mercury under the staffing contract.

We also find no merit in defendant's argument that once a nurse stopped working for Mercury and started working for NECF, the Mercury-NECF contract no longer applied to her. The clear purpose of the contract was to require NECF to pay Mercury a commission in that exact situation. Moreover, most of the nurses actually listed Mercury as their current employer on their applications for employment with NECF.

We find no error in the judge's damage calculations which were supported by plaintiff's invoices and Patel's testimony.


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