November 30, 2007
LA WANDA PIPKIN, PLAINTIFF-RESPONDENT,
CHILDREN'S CENTER OF MONMOUTH COUNTY, INC., DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Special Civil Part, Small Claims, Monmouth County, SC-4626-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted October 11, 2007
Before Judges Sapp-Peterson and Messano.
Defendant Children's Center of Monmouth County appeals from the entry of judgment in favor of plaintiff LaWanda Pipkin. Following a bench trial, the trial judge found that the $2,353 longevity bonus reflected in plaintiff's 2006-2007 employment contract was the result of a unilateral mistake. Additionally, the judge concluded that because there was no evidence that plaintiff had agreed to accept a lesser amount, the contract could not be reformed. The judge entered judgment in favor of plaintiff for $2,353, plus costs. We now reverse.
The evidence presented at trial was largely undisputed. Defendant is a private school for special needs children with over 400 employees, including 237 teachers' assistants. All of defendant's employees enter into annual employment contracts from July 1 through June 30 for twelve-month employees, and from September 1 through June 30 for ten-month employees. In addition, according to defendant's Coordinator of Personnel and Human Resources (HR), Diana Derasmo (Derasmo), defendant pays teachers and teachers' assistants annual longevity bonuses to encourage employees to remain employed with the school. Teachers' assistants who have been employed by defendant for less than two years are paid $235 in longevity pay.
On October 31, 2005, defendant hired plaintiff as a "teacher aide." Because she began work in the middle of the 2005-2006 school year, plaintiff's first employment contract was for eight months, with a salary of $13,089.87. In addition to her salary, Paragraph 8 of the contract provided:
8. In addition to the contracted amount specified above, the EMPLOYER agrees to pay the EMPLOYEE a longevity payment of $235.00. The longevity payment will be paid in a separate check in December of the contract year. The EMPLOYEE must be employed on the date of payment in order to receive the longevity payment. (Third emphasis added).
Plaintiff received her first $235 longevity bonus approximately two months later.
On July 1, 2006, plaintiff signed a renewal contact for the 2006-2007 school year. Paragraph 8 of the renewal contract read as follows:
8. In addition to the contracted amount specified above, the EMPLOYER agrees to pay the EMPLOYEE a longevity payment of $2,353.00. The longevity payment will be paid in a separate check in December of the contract year. The EMPLOYEE must be employed on the date of payment in order to receive the longevity payment. (Third emphasis added).
Plaintiff testified that shortly after she received her 2006-2007 contract, she had a question about her "days" that she raised with Derasmo, who, according to plaintiff, was dismissive towards her. Specifically, plaintiff was told that she had two days to fix her problem with her "days," so she assumed defendant also had two days to fix the longevity bonus reflected in the contract. When the days turned into months and nothing happened, she assumed the amount was correct. However, during cross-examination, plaintiff acknowledged that she discussed longevity bonuses with her co-workers and that "[s]ome people said three [hundred], some said two [hundred] seventy five, some said it goes up every year." She also testified that she understood that teachers' assistants did not receive over $2,000 in longevity pay but "[o]nce [Derasmo] was short with [her] about the days, it was kind of anger. [She] just didn't want to talk about any more of the contract."
On December 8, 2006, defendant handed out the longevity bonus checks. Plaintiff's check was for $235. She immediately notified HR that this amount did not correspond with the $2,353 longevity bonus stated in her contract. When defendant refused to pay that amount, plaintiff commenced this action in the Small Claims section of the Special Civil Part to recover her claimed damages.
The trial judge determined that the $2,353 longevity bonus in plaintiff's 2006-2007 contract was not a mutual mistake but, rather, defendant's unilateral mistake attributable solely to defendant's negligence. As such, the judge concluded the contract could not be reformed because there was no evidence that plaintiff had agreed to accept less than the amount set forth in the contract. The court entered judgment in favor of plaintiff for $2,353, plus costs. Defendant's timely appeal followed.
On appeal, defendant first argues that enforcement of the contract as actually made would be unconscionable. Second, defendant contends the trial court erred in concluding that there "[was] no other agreement by the plaintiff to accept a lesser amount either orally or in writing."
As to the second argument, we agree with the trial judge that the record does not reflect plaintiff's agreement to accept the lesser amount based upon either the 2005-2006 contract or defendant's pattern of practice related to longevity bonuses for teachers' assistants. It is undisputed that defendant only entered into a one-year contract with plaintiff and that the contract did not advise plaintiff that the dollar amount set forth in Paragraph 8 was a fixed amount, or that defendant intended that amount to govern any future longevity bonuses. Likewise, while defendant's witnesses testified that teachers' assistants with "zero to two years" of employment with defendant received $235 yearly longevity bonuses, and defendant produced documentary evidence to corroborate this testimony, nothing in the record reveals that defendant conveyed this practice to plaintiff formally or informally. Hence, neither plaintiff's 2005-2006 contract nor defendant's pattern of practice can be the basis for establishing plaintiff's agreement to accept a $235 longevity bonus for the 2006-2007 school year.
Nonetheless, because we are satisfied that plaintiff's conduct was improper and unconscionable, defendant is entitled to have Paragraph 8 of the 2006-2007 contract reformed to reflect $235 as the correct longevity bonus.
The deference a reviewing court generally accords to a trial judge's findings of fact does not extend to legal conclusions, which are reviewed de novo. J.N.S. v. D.B.S., 302 N.J. Super. 525, 530 (App. Div. 1997). See also Manalapan Realty, L.P. v. Township Comm. of Manalapan, 140 N.J. 366, 378 (1995) ("A trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference."). In this case, we disagree with the trial judge's conclusion that the contract could not be reformed.
Reformation is the means by which a contract may be made to conform to the intention of the parties. Smith v. Motor Club of America Ins. Co., 54 N.J. Super. 37, 44 (Ch. Div.), aff'd, 56 N.J. Super. 203 (App. Div. 1959). Reformation most typically occurs when there has been a mutual mistake between contracting parties. As the trial judge correctly found, reformation is not available where there has been a unilateral mistake attributable solely to one contracting party's negligence. Millhurst Milling & Drying Co. v. Automobile Ins. Co., 31 N.J. Super. 424, 434 (App. Div. 1954) (holding a contract will not be reformed where the mistake is caused solely by "the complaining party's negligence.") However, contract reformation may be granted where there has been a unilateral mistake if the complaining party, by clear and convincing evidence, proves that its unilateral mistake was accompanied by fraud or unconscionable conduct on the part of the other party. St. Pius X House of Retreats, Salvatorian Fathers v. Diocese of Camden, 88 N.J. 571, 577 (1982). See also Stamen v. Metro. Life Ins. Co., 41 N.J. Super. 135, 140 (App. Div. 1956).
In Stamen, supra, the insurer issued a policy to the plaintiff which was later changed and reissued. In reissuing the policy, the insurer made a clerical error that resulted in the plaintiff being entitled to monthly disability income, although he had never paid premiums for this type coverage. When the plaintiff became disabled, he commenced an action to recover monthly disability income. The insurer counterclaimed, seeking reformation. The trial court entered judgment in favor of the plaintiff and dismissed the insurer's counterclaim. On appeal, exercising our authority to make new or amended findings of fact, Fagliarone v. North Bergen Twp., 78 N.J. Super. 154, 155 (App. Div. 1963), we found that the insurer had clearly and convincingly established a case for reformation based upon mutual mistake "or at least mistake on the part of [the insurer] accompanied by the inequitable conduct of [the] plaintiff." Stamen, supra, 41 N.J. Super. at 141, 144. Our decision was influenced by the fact that the plaintiff, in successive written applications for changes in his policy, at no time requested that monthly disability income be added and the fact that the plaintiff remained silent about the insurer's mistake for many years. Ibid.
Here, under cross-examination, plaintiff acknowledged she understood that teachers' assistants did not receive over $2,000 as a longevity bonus. However, because she was upset with how she was treated, she "just didn't want to talk about any more of the contract." The trial judge, relying upon a federal Tenth Circuit Court of Appeals decision, Evens v. Hartford Life Ins. Co., 704 F.2d 1177, 1180 (10th Cir. 1983), concluded that "'No reformation may be had unless there was a prior agreement to which the contract as written can be reformed.'" While it is undisputed that no such prior agreement existed and that the mistake was not mutual, the trial judge failed to consider unilateral mistake accompanied by inequitable conduct as an additional basis for reformation. Heake v. Atlantic Gas. Ins. Co., 15 N.J. 475, 481 (1954).
In our view, the evidence clearly and convincingly demonstrated that defendant's unilateral mistake was accompanied by plaintiff's inequitable conduct. Plaintiff knew the $2,353 longevity bonus figure inserted in her 2006-2007 contract was an error, but by her silence, she sought to benefit from defendant's obvious mistake. Stamen, supra, 41 N.J. Super. at 145 (quoting Columbian Nat'l Life Ins. Co. v. Black, 35 F.2d 571, 574 (10th Cir. 1929)). Under these circumstances, enforcement of the contract would be unconscionable and defendant is entitled to reformation of the contract to reflect the correct longevity bonus of $235.
Reversed. We do not retain jurisdiction.
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