June 17, 2008
J. MICHAEL NEUHART, PLAINTIFF-APPELLANT,
TRUST COMPANY OF NEW JERSEY, NORTH FORK BANCORPORATION, INC., AND ALAN WILZIG, DEFENDANTS-RESPONDENTS, AND WILSHIRE ENTERPRISES, INC., FORMERLY KNOWN AS WILSHIRE OIL COMPANY OF TEXAS, INC., DEFENDANTS.
On appeal from the Superior Court of New Jersey, Law Division, Morris County, Docket No. L-380-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted February 27, 2008
Before Judges Axelrad, Sapp-Peterson and Messano.
Plaintiff J. Michael Neuhart appeals from two orders, one dated May 3, 2007, and a second dated June 5, 2007, that together dismissed his complaint with prejudice for failure to comply with the applicable statute of limitations. Plaintiff contends that the judge erred in finding the complaint was untimely because the statute was tolled by: 1) defendants' intentional concealment of facts that delayed the filing of the complaint; 2) defendants' continued actions that independently gave rise to separate recurring causes of action; and 3) defendants' "continuing" course of conduct that made his complaint timely filed. We have considered these contentions in light of the record and applicable legal standards. We affirm.
Plaintiff filed a four-count complaint on February 3, 2005, against defendants Trust Company of New Jersey (TCNJ), his former employer, and Alan Wilzig, the former chairman, president and chief executive officer (CEO) of TCNJ.*fn1 Plaintiff alleged that: defendants failed to properly classify him as an employee (count one); defendants failed to honor the terms of his severance package "as embodied orally, by past practice, or in their respective [h]andbooks" (count two); Wilzig was personally liable for failing to pay the appropriate severance amount (count three); and defendants failed to provide him with payments and credits under their ERISA plan (count four).*fn2 The matter was removed to federal court based upon the allegations in count four; however, pursuant to a stipulation executed by all parties on May 24, 2005, the complaint was remanded back to the Superior Court with the parties agreeing that count four of the complaint would be amended to substitute "Stock Option Plan" for any reference to an "ERISA Plan."
Upon remand, defendants filed a motion to dismiss arguing that plaintiff's claims were time-barred under the statute of limitations. Noting that the complaint alleged plaintiff was "hired" by defendants on November 7, 1995, the judge dismissed count one because it was "barred on its face" by the six-year statute of limitations applicable to contract claims. N.J.S.A. 2A:14-1. Plaintiff was granted leave to file an amended complaint, which was ostensibly the same as his original one with the exception of a more detailed predicate statement of common facts and a modified first count. Of particular relevance to the issues raised on appeal, plaintiff contended that he "discovered on or about October 6, 1999 that he had been misclassified" as a consultant instead of an employee of defendants.
On October 20, 2006, defendants moved for summary judgment reasserting the statute of limitations defense. Pursuant to Lopez v. Swyer, 62 N.J. 267 (1973), on February 6, 7, and 8, 2007, the motion judge held a plenary hearing to determine whether plaintiff's complaint was timely filed by application of the discovery rule.
Plaintiff testified that in the fall of 1995, he met with Michael Marinelli, TCNJ's chief financial officer, to discuss a position within the bank's real estate department. Following that initial interview, plaintiff met with Siggi Wilzig, then chairman, president and CEO of TCNJ, and negotiated his compensation package.*fn3 Plaintiff acknowledged that although he wanted to be an employee of TCNJ, Siggi told him he "could not have [plaintiff] as . . . an employee," and therefore plaintiff accepted a position as a consultant, or "independent contractor." Plaintiff was to be paid a base salary of $85,000 plus other compensation, including bonuses and "2500 [stock] options immediately" and "every year" thereafter. The agreement plaintiff reached with Siggi was never reduced to writing, and on November 7, 1995, plaintiff started working at TCNJ with full knowledge that he was not an employee, but rather a consultant.
Plaintiff did not receive any stock options upon joining TCNJ and when he raised the issue shortly after his start date, Siggi told him "don't worry about it." In late 1995 or early 1996, plaintiff discovered through conversations with Marinelli and others at the bank that he was ineligible for stock options under TCNJ's then-current stock option plan because he was not an employee.
Plaintiff testified that from 1996 through 1998, he raised the issue of his missing stock options with Siggi at least twice a year and was told each time by Siggi that he would "take care of it." Although Marinelli and others reiterated that plaintiff was ineligible to receive options because he was not an employee, plaintiff testified that these other people also told him that if Siggi said he would do something, he would do it. Plaintiff claimed that he believed Siggi would resolve the issue favorably.
On June 28, 1999, plaintiff provided a memo to Siggi that set forth his request for increases in compensation and addressed his concerns regarding the 1995-1998 stock options. He wrote, "[W]hen I first joined you in 1995 I was insured (sic) of annual options starting at 2,500 shares and increasing each year." In October 1999, defendants reclassified plaintiff as an employee of TCNJ retroactive to January 1, 1999, and provided him with additional compensation, including stock options for 1998 and 1999.
The memo setting forth the new compensation terms was denominated an "Employment Agreement" by its author, Robert McCarthy, TCNJ's vice-president of human resources, and requested plaintiff's countersignature to indicate his acceptance. The memo failed to address stock options for years prior to 1998, however, and when plaintiff brought this omission to Siggi's attention, he was told not to worry and that this "other stuff" would be dealt with "later." Plaintiff refused to sign the agreement without the inclusion of stock options for the earlier years because by its terms, the agreement was intended to supersede any and all prior agreements.
Plaintiff continued to raise the issue of the missing stock options with Siggi, Alan, Marinelli, and McCarthy. Plaintiff testified that while he was often told not to worry about it, sometime between 1999 and 2004, Alan reiterated that he was ineligible for the options because he had not been an employee until 1999.
Siggi died after a lengthy illness in January 2003 and Alan succeeded his father as chairman, president and CEO of TCNJ. In March 2004, plaintiff drafted a memo to McCarthy stating, "Since my hire in November 1995, you and I have discussed at length that I always was and am legally and ethically a full time employee rather than a consultant . . . . In light of the pending sale of [TCNJ] I am formally requesting that my status as an employee be corrected to November 1995 and that all employee benefits be retroactively granted to me."
Plaintiff again raised the issue of stock options in an e-mail exchange with Alan in April 2004. In response, Alan wrote, "I will bring to the Board any specific request you have. As you already made mention of to me a few days ago, they can't recreate five year old options." The sale of TCNJ to North Fork took place on May 15, 2004, and plaintiff was offered a severance package which he rejected because it required him to sign a general release that he believed would waive any claim to the pre-1998 stock options.
Plaintiff introduced Alan's deposition testimony at the plenary hearing. In that testimony, Alan noted that his father believed he had overpaid plaintiff in base salary and that he had no intention in the first two years to give plaintiff stock options, bonuses, or raises that plaintiff might have received had he started at a lower salary. Alan never conveyed to plaintiff that this had been his father's position, and plaintiff testified that he was unaware of Siggi's intransigence regarding the issue until he heard Alan's deposition testimony on October 4, 2006.
In a written opinion, the motion judge held that plaintiff "knew or should have known of the alleged claims well before February 3, 1999. Moreover, the plaintiff was not tricked or lulled into inaction in any manner sufficient to excuse the operation of the statute [of limitations]." More specifically, the judge noted that plaintiff became aware that he had not received the promised stock options within a few days of commencing work at TCNJ and did not receive them thereafter despite repeated requests made to Siggi. The judge further observed that defendants told plaintiff that he was ineligible for the stock options because he was not an employee of TCNJ, a status that plaintiff knew of and accepted when he began work at the bank.
Although he conceded that plaintiff may have been lulled into believing that Siggi would initially "take care of" the stock options, the judge noted that "after 3.5 years . . . it should have become plain to [plaintiff] that [Siggi] was not going to authorize" the stock options. The judge found that plaintiff had "slept on his rights," making a "voluntary choice to negotiate a resolution" rather than bring a lawsuit. Finding that the discovery rule did not apply, by order dated May 3, 2007, the judge dismissed counts one and four with prejudice because they were "time-barred," but permitted plaintiff "to proceed on [c]ounts  [t]wo and [t]hree."
Following that decision, defendants moved for clarification of the order as to the two remaining counts of the complaint, or alternatively for reconsideration. On June 5, 2007, the judge issued a supplemental order and opinion dismissing counts two and three of the amended complaint. He concluded that since those two counts asserted claims regarding the severance agreement that plaintiff refused to accept, and since plaintiff's refusal was based upon his belief of entitlement to the pre-1998 stock options, and not upon "any claim of fraud, duress, unconscionable or otherwise improper conduct" by defendants, counts two and three should also be dismissed. He entered an order dated June 5, 2007, dismissing those claims with prejudice. This appeal ensued.
Although plaintiff's case information statement lists both the May 3 and June 5, 2007, orders as the subject of appeal, his appendix did not include the second order or the judge's brief letter opinion in support of his ruling. Defendants argue, therefore, that plaintiff has abandoned his claims regarding the dismissal of counts two and three.
In his reply brief, plaintiff argues that he has "not abandoned claims associated with the misclassification [of his employment status], as these claims are inextricably intertwined with the stock option claim." Plaintiff continues that "claims for the severance benefits were timely" because he was unaware until May 2004 when he was asked to execute a release in conjunction with the severance agreement that the "severance calculation did not include the outstanding benefits owed to him," despite the fact that it utilized his November 1995 start date as a basis for the calculation. Therefore, he argues those claims were not barred by the statute of limitations.
Despite the inclusion of the dates of both orders in the notice of appeal and case information statement, we are troubled by plaintiff's failure to include the June order in his appendix and the complete lack of discussion of that order in his original brief. It was only defendants' inclusion of the order and the judge's short supplemental opinion in their brief and appendix that has provided us with the full picture of the ruling below. Even in his reply brief, plaintiff only argues that he has not abandoned the claims "associated with his misclassification."
Rule 2:6-1 requires the appellant's brief to include "the judgment, order or determination appealed from or sought to be reviewed or enforced." R. 2:6-1(a)(1)(C). We have refused to review on appeal issues addressed by those parts of a trial record not included in the appendix. Community Hosp. v. Blume Goldfaden, 381 N.J. Super. 119, 127 (App. Div. 2005); see also Pressler, Current N.J. Court Rules, comment 1 on R. 2:6-1(a) (2008)(noting appellate review may be declined if parts of the record are not included in the appendix).
Furthermore, Rule 2:6-2(a)(3) requires the appellant's brief to contain "a concise procedural history" that includes "reference to the judgment [or] order . . . sought to be reviewed or enforced." Rule 2:6-2(a)(5) requires the appellant's legal argument to include those "points to be argued." Plaintiff's sole reference to the June 2007 order in his brief was that the judge "dismiss[ed] the remaining counts on June 5, 2007." The citation to his appendix that followed was inaccurate, and plaintiff's brief contained no argument on the subject. An issue that is not briefed is deemed waived upon appeal. Finderne Heights Condominium Ass'n v. Rabinowitz, 390 N.J. Super. 154, 166 (App. Div. 2007). Pressler, supra, comment 4 on R. 2:6-2.
We must conclude, therefore, that plaintiff's appeal is indeed limited to the dismissal of counts one and four only, and that he has abandoned any appeal from the dismissal of any independent claim for compensation under the severance agreement per se. Count one of the amended complaint alleges plaintiff was misclassified as a non-employee; count four contends he was "intentionally misclassified" as a consultant thus making him ineligible for the stock option plan at TCNJ. Plaintiff's argument is limited solely to the claim that the intentional misclassification of his employment status gave rise to a cause of action for all alleged benefits he would have received had he been classified as an employee since 1995 when he began work at the bank. We note only in passing that the judge's supplemental decision correctly concluded that plaintiff's refusal to accept the severance package was not the result of "any claim of fraud, duress, unconscionable or otherwise improper conduct" by defendants, and plaintiff has indeed made no such claim other than his general assertion that he should have been considered an employee of TCNJ as of his 1995 start date.
We therefore affirm the dismissal of counts two and three of the amended complaint with prejudice. We turn to the issues presented by way of the findings and conclusions made by the motion judge after the plenary hearing held on the discovery rule's application.
We begin by noting that our review of the motion judge's fact-finding is limited. Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 483-84 (1974). "The general rule is that findings by the trial court are binding on appeal when supported by adequate, substantial, credible evidence." Cesare v. Cesare, 154 N.J. 394, 411-12 (1998). Indeed, we do not disturb the "factual findings and legal conclusions of the trial judge unless . . . they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice." Fagliarone v. Twp. of No. Bergen, 78 N.J. Super. 154, 155 (App. Div.), certif. denied, 40 N.J. 221 (1963).
Plaintiff contends that the judge erred: (1) by finding that his claims accrued prior to February 3, 1999; (2) by not finding a new breach occurred with each promise by defendants to "take care of" plaintiff's stock options; and (3) by misapplying the continuing violation doctrine. Defendants counter that plaintiff knew shortly after he was hired in 1995 that he was not getting the stock options he claims Siggi promised him, that he thereafter "slept on his rights," as the judge found, and therefore his complaint filed in February 2005 was time-barred.
Plaintiff argues that defendants intentionally concealed the fact that they never intended to provide stock options for those years prior to 1998, and therefore his claim did not accrue until he received the October 6, 1999, "employment agreement" that for the first time in writing evidenced TCNJ's decision not to award him the options. In large part plaintiff relies upon Alan's testimony that Siggi told his son that he had no intention of giving plaintiff stock options during his first two years with TCNJ, despite Siggi's vague assurance to "take care of" the problem.
A cause of action is considered to have accrued when the facts that give rise to a right to judicial relief or redress occur. Cornblatt v. Barrow, 153 N.J. 218, 232-33 (1998). It is axiomatic that a cause of action for breach of contract accrues when the breach occurs. See 31 Williston on Contracts § 79:14 at 303-04 (Lord ed. 4th ed. 2004). Federal courts addressing claims of employee misclassification under ERISA have held that such claims accrue when plaintiff discovers the misclassification and the resulting denial of benefits. See Brennan v. Metro. Life Ins. Co., 275 F. Supp. 2d. 406, 409 (S.D.N.Y. 2003) (noting that "all of the district courts" that have considered claims of misclassification have held that the statute of limitations begins to run when the claimant first learns that he "is considered an independent contractor and is therefore not entitled to benefits").
The accrual date, however, may be tolled pursuant to the "discovery rule," which "provides that in an appropriate case a cause of action will be held not to accrue until the injured party discovers, or by an exercise of reasonable diligence and intelligence should have discovered, that he may have a basis for an actionable claim." Lopez, supra, 62 N.J. at 272. The discovery rule, however, "generally does not apply to contract actions." County of Morris v. Fauver, 153 N.J. 80, 110 (1998); but see Sodora v. Sodora, 338 N.J. Super. 308, 316 (Ch. Div. 2000)(applying the doctrine in a third-party beneficiary contract dispute).
The statute of limitations may also be tolled where defendants acted to intentionally conceal a cause of action from the plaintiff. "The doctrine of equitable tolling has traditionally been applied 'where the complainant has been induced or tricked by his adversary's misconduct into allowing the filing deadline to pass'." Price v. N.J. Mfrs. Ins. Co., 368 N.J. Super. 356, 362 (App. Div. 2004) (quoting Irwin v. Dep't of Veterans Affairs, 498 U.S. 89, 96, 111 S.Ct. 453, 458, 112 L.Ed. 2d 435, 444 (1990)), aff'd, 182 N.J. 519 (2005). However, the two doctrines have different focal points. As we explained,
The discovery rule avoids the mechanical application of a statute of limitations by postponing the accrual of a cause of action so long as a party is unaware either that he has been injured or that the injury was due to the fault or neglect of an identifiable person. Equitable tolling assumes the accrual of the action but intercepts and delays the bar of the statute of limitations because the plaintiff lacked vital information which was withheld by a defendant. [Villalobos v. Fava, 342 N.J. Super. 38, 45-46 (App. Div.), certif. denied, 170 N.J. 210 (2001).]
We concur with the motion judge's finding that plaintiff "was fully aware of the facts giving rise to a cause of action . . . well before February 3, 1999 and therefore the discovery rule [did] not toll the running of the limitations period." Plaintiff knew of his non-employee, consultant status at the time he was hired because Siggi told him that he could not be hired as an employee. Plaintiff discovered, just days after being hired, that he had not received the stock options that he claims were promised during negotiations and he knew in late 1995 or early 1996, that he could not receive those stock options because he was not an employee.
As the judge noted, there may have been a time when plaintiff reasonably believed that Siggi would correct the situation based upon his statements that he would "take care of it" and that plaintiff should not "worry about it." However, by his own admission, plaintiff did not understand Siggi's statements to be promises or guarantees of any action. Plaintiff's decision to try and resolve the issue without litigation, therefore, cannot have been the result of defendants' misconduct, and therefore the statute of limitations cannot be equitably tolled on that basis.
Also, the doctrine of equitable tolling "requires the exercise of reasonable insight and diligence by a person seeking its protection." Id. at 52. The discovery rule imposes the same obligation upon a plaintiff. County of Morris, supra, 153 N.J. at 110. As the motion judge noted, defendant spent more than three years between his first day of work at TCNJ, and February 1999, six years before he commenced his suit, trying to have Siggi provide the stock options he believed he was entitled to. Yet, each time he was rebuffed. At the same time, he knew he was ineligible for the stock options because he was not an employee of TCNJ. Under these circumstances, we cannot conclude that he acted reasonably and with due diligence.
Plaintiff next contends that each time the stock options "were promised by Siggi " a new cause of action accrued because he never received the options. In particular, plaintiff asserts that "Siggi  promised 1995, 1996 and 1997 stock options on October 6, 1999."
This issue was not addressed in the judge's opinion, and it is not clear from the record presented that the argument was raised below. We are therefore reluctant to consider it at this time. See Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234-235 (1973) (noting that the appellate court need not address issues not properly raised below). However, based upon our own review of plaintiff's testimony at the Lopez hearing, it is clear that the argument lacks any evidential support.
Plaintiff testified that he raised the issue of the 1995-1997 stock options with Siggi after receiving the October 6, 1999, employment contract which omitted any reference to them. He claimed Siggi told him, "[D]on't worry about those options. I'll take care of it." However, plaintiff also testified that Siggi made no promises or guarantees whatsoever. We view the evidence as insufficient to create any obligation upon defendants in 1999 to provide 1995-1997 stock options. See Weichert Co. Realtors v. Ryan, 128 N.J. 427, 435 (1992) (noting that "[a] contract arises from offer and acceptance, and must be sufficiently definite that 'the performance to be rendered by each party can be ascertained with reasonable certainty'") (citation omitted). Accordingly, we find no basis to reverse on this theory either.
Lastly, plaintiff contends that defendants engaged in a "continuing violation" of his contractual rights and therefore his complaint was timely. Defendants respond that this theory is inapplicable to plaintiff's claims because they arise out of a single act, namely the alleged initial misclassification of plaintiff as a consultant.
Here, too, it is unclear from the record whether plaintiff raised this argument below and we hesitate to address it directly. Nieder, supra, 62 N.J. at 234-35. Nevertheless, we are confident based on the record that the doctrine does not apply to the facts of this case.
The continuing violation doctrine has been judicially-created "as an equitable exception to the statute of limitations" for claims arising under anti-discrimination and civil rights laws. Bolinger v. Bell Atl., 330 N.J. Super. 300, 306 (App. Div.), certif. denied, 165 N.J. 491 (2000). "Under [the] doctrine, a plaintiff may pursue a claim for discriminatory conduct if he or she can demonstrate that each asserted act by a defendant is part of a pattern and at least one of those acts occurred within the statutory limitations period." Shepherd v. Hunterdon Developmental Ctr., 174 N.J. 1, 6-7 (2002). The continuing violation doctrine will not apply, however, to claims based upon "temporally distinct," discrete acts. See Ledbetter v. GoodYear Tire & Rubber Co., __ U.S. __, 127 S.Ct. 2162, 2175-76, 167 L.Ed. 2d 982, 998-99 (2007) (refusing to toll the statute of limitations to permit claims for past gender discrimination finding that pay-setting decision was a discrete act despite continued receipt of paychecks during the statutory filing period).
Plaintiff claims that "defendants purposely refused to properly classify [him] as an employee until October 6, 1999," and continued to refuse to compensate plaintiff for that misclassification even after it was remedied in the October 6, 1999, agreement. He argues that this "pattern of wrongful conduct" continued until his severance on May 14, 2004."
Plaintiff cites no authority to support application of the doctrine in a contractual employment dispute. However, we note that in Schultz v. Texaco, Inc., 127 F. Supp. 2d 443, 447 (S.D.N.Y. 2000), the federal district court rejected the application of the continuing violation doctrine to claims for ERISA benefits made by allegedly misclassified employees beyond the statute of limitations because the employer's classification decision was a discrete, singular act. Although the alleged misclassification "continued to interfere with [the plaintiffs'] attainment of employment benefits," the court found that it failed to constitute a continuing violation. Ibid.
Here, plaintiff's claims similarly arise out of the allegation that he was misclassified as an independent contractor, something that he knew about in 1995. We find no basis to apply the continuing violation doctrine to the facts presented.