April 7, 2009
FRIEDMAN SIEGELBAUM, LLP, PLAINTIFF-RESPONDENT,
JOHN J. PRIBISH, DEFENDANT-APPELLANT.
On appeal from Superior Court of New Jersey, Law Division, Essex County, Docket No. L-5850-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued December 2, 2008
Before Judges Fuentes, Gilroy and Chambers.
Plaintiff Friedman Siegelbaum, LLP, commenced this action in the Law Division against defendant John J. Pribish alleging:
(1) breach of the covenant of good faith and fair dealing; (2) breach of fiduciary duty; (3) tortious interference with a contractual relationship; and (4) conversion*fn1 regarding the accounts receivable of Krista Cicalese and Spencer Gaines.*fn2 The matter came for adjudication before the trial court by way of a bench trial conducted between October 22, 2007 and November 5, 2007. The court found in favor of plaintiff, awarding it $84,850.08 in damages.*fn3
Defendant now appeals arguing that the trial court committed reversible error when it found that: (1) he breached a fiduciary duty to plaintiff; (2) his conduct violated an implied covenant of good faith and dealing; (3) he tortiously interfered with plaintiff's contractual relationship with two former clients; and (4) he converted property belonging to plaintiff.
We reject these arguments and affirm. We derive the following facts from the evidence presented at trial.
Marc Friedman and Joseph Siegelbaum founded the law firm Friedman Siegelbaum in 1977. They were the firm's only equity partners. Before joining the firm, defendant had a private law practice with Adrienne Rogove and several other attorneys. Based on the needs of his growing clients, defendant left his private practice and entered into negotiations to join plaintiff as a contract partner. These negotiations led to a Letter Agreement dated August 24, 1999.
The pertinent portions of this Agreement read as follows:
This Letter Agreement confirms the terms and the arrangement pursuant to which you will join our firm as a contract partner.
1. Effective November 1, 1999 . . . you [defendant] shall become a contract partner of our firm [plaintiff].
2. This Agreement shall continue in effect until the first to occur of your death, disability . . . or upon six (6) months written notice from the [plaintiff] firm or you [defendant].
3. Your compensation shall be determined and paid as follows:
(a) For matters generated by clients for which you are the originating attorney, you shall receive 30% of the gross legal fees when collected.
(b) For legal services which you render to other firm clients, you shall receive, as additional compensation, 30% of the time billed by you on a monthly basis.
4. You will receive an annual draw payable on the first and fifteenth of each month, of One Hundred Eighty Thousand ($180,000)
Dollars to be credited against the compensation due to you pursuant to paragraph 3(a) hereof. At the end of each three (3) month period, an accounting of the activity during such period shall be prepared and, (a) in the event that additional compensation is due to you, based upon the difference between the compensation due to you pursuant to paragraph 3(a) and the draw paid to you during such period, the amount of such additional compensation will be paid to you; or (b) in the event that your activity during such three (3) month period results in the compensation due to you during such three (3) month period pursuant to paragraph 3(a) hereof, being less than the draw paid to you during such period, the amount of the shortfall shall be applied against further additional compensation due to you. (Emphasis added.)
The Agreement also required plaintiff to hire Rogove as an associate in the firm, and concluded by expressing the expectation that the parties were "sincerely looking forward to a long, and prosperous relationship." Defendant began working at the firm on November 1, 1999.
Early in the spring of 2000, Siegelbaum, on behalf of plaintiff, began looking for additional office space in New York. In the process of ascertaining the availability of office space at the firm of Goodwin Procter ("GP"), Siegelbaum began exploring a possible merger between the two firms. Given the sensitive nature of the discussions, plaintiff entered into a confidentiality agreement with GP. Despite these measures, GP breached the agreement and allowed the possibility of a merger to become public knowledge.
Other than Siegelbaum and Friedman, no attorney at the firm had knowledge of the possible merger. In fact, Siegelbaum assured the firm's management committee that any discussions of a merger would be posed to the committee before negotiations proceeded. At the time GP breached the confidentiality agreement, the merger discussions had not reached the point of "hard negotiations."
Both sides to this litigation agree that news of the possible merger created chaos at the firm, and consequently expedited the merger process. According to Friedman, "[b]ecause of this [premature] disclosure and because of the disarray that resulted and because people were scrambling around to figure out what was happening[,] [i]t really became necessary to bring certainty to the situation as quickly as possible. . . ."
Under the terms of the formal merger agreement, GP would acquire plaintiff's technology department and plaintiff would cease practicing law at the end of May 2000. Of the attorneys in the firm, "some 30 or 40" who practiced in different areas were offered positions at GP. These lawyers included many of the firm's seventeen (non-equity) partners, six of whom accepted positions. Defendant was not extended an offer to join GP.
After the merger was announced, Siegelbaum and Friedman did not hold a meeting or have any formal discussion with the contract partners about how to collect the accounts receivables or the procedures to be used for the winding down of business. According to defendant, he and other attorneys in the firm were highly critical of the way Siegelbaum and Friedman, (as the two equity partners) had mishandled the merger. These attorneys perceived the merger as a "clandestine maneuver," designed to benefit the equity partners at the expense of all of the other attorneys in the firm. As a result, defendant characterized matters at the firm as a departure from "business as usual."
Plaintiff ceased operating as a law firm on May 31, 2000. As of that date, plaintiff had paid defendant approximately $68,000 more in draw than plaintiff had collected from his clients. After separating from plaintiff, defendant joined the firm of Saul Ewing, LLP as an equity partner.
As plaintiff's managing partner, Siegelbaum was responsible for the firm's accounts receivable. Defendant was solely responsible for managing the "relationships" with Gaines and Cicalese, two of the clients that he brought to the firm. With respect to these two clients, defendant had the ultimate responsibility for the accounts receivables. This included reviewing the clients' bills, presenting the bills to the clients, writing off inappropriate charges, and if the firm was initially unable to do so, collecting on the bills from the clients.
At the time plaintiff ceased operating as a law firm, both Gaines and Cicalese had accounts receivable outstanding. Lucille Steinberg was employed by plaintiff to assist in collecting accounts receivables.
A. The Gaines Account
Gaines is a long-time friend of defendant. Before joining plaintiff's firm, defendant had represented Gaines in his capacity as co-executor of an estate. He continued to represent Gaines after commencing employment with plaintiff. On May 31, 2008, the date plaintiff officially merged with GP, Gaines had an outstanding accounts receivable of $9,447.30.
Despite this outstanding balance, on July 17, 2000, defendant executed two releases to Gaines absolving him of the debt to plaintiff and defendant. The first one released plaintiff's claims against Gaines for the sum of $8,315.78. The record shows, however, that plaintiff did not receive this money from Gaines, nor did Siegelbaum or Friedman authorize defendant to grant Gaines this release. At trial, defendant testified that the Surrogate's Court instructed the attorneys for the estate to "sign releases in exchange for payment." He executed the release to Gaines "in the promise and expectation that the money would be forthcoming."
The second release, also dated July 17, 2000, released Gaines from his obligations to defendant for work performed prior to joining plaintiff's firm. This release was for a greater amount than the prior release. Defendant personally received payment from Gaines in consideration for this release.
Unaware of defendant's activities, plaintiff began making various attempts to collect on the outstanding account, including sending letters and faxes addressed directly to Gaines. Meanwhile, in an effort to ostensibly assist plaintiff in the collection on the Gaines account, defendant provided Steinberg with a contact person who could assist her in this endeavor. Upon receipt of these communications, Gaines' representatives responded by producing the release granted by defendant on plaintiff's behalf.
When asked at trial why a lawsuit was not filed against Gaines to recover the receivable, plaintiff explained that "[i]t [was not] feasible to pursue someone out-of-state for $9,400. [Plaintiff] would have burned up more in fees than . . . they would have collected back from Mr. Gaines."
B. The Cicalese Account
Cicalese was also a client whom defendant brought with him when he joined the plaintiff firm as a contract partner. As of the date plaintiff ceased to exist, Cicalese had an outstanding accounts receivable with plaintiff of $75,168.83. In June and July of 2000, defendant went into practice with Rogove and continued to represent Cicalese. He completed additional work on the Cicalese account after he joined Saul Ewing. The case terminated at the end of 2000. Cicalese's proceeds from the lawsuit were distributed to her accountant, John Huber. According to defendant:
[a]t th[at] time, there were accounts receivable owed to: (1) [me] personally for fees incurred for services performed prior to . . . joining [p]laintiff; (2) [p]laintiff for services rendered between November 2, 1999 and May 31, 2000; (3) [me] personally for fees incurred for services performed between June 2, 2000 through July 31, 2000; and (4) Saul Ewing for fees incurred for services rendered after August 1, 2000.
Both before and after plaintiff ceased operations, defendant assured Siegelbaum that he would assist him in collecting on the Cicalese account. A letter written by defendant on April 16, 2001, to Siegelbaum reflects this agreement to cooperate in collection. The letter reads, in pertinent part: "should there be any monies that were paid to me by a draw, etc., that have not been repaid, then my only obligation is to collect those monies from my clients and turn over that portion to the law firm representing payment of the aforesaid draw. . . ." (emphasis added).
The record shows, however, that at the same time defendant made these representations to plaintiff, he was collecting money directly from Cicalese. On March 2, 2001, Cicalese issued a check made payable to defendant personally for $10,000; defendant signed this check over to the Saul Ewing firm. On May 15, 2001, defendant received a second check from Cicalese again made payable to him personally for $10,000; defendant again signed this check over to Saul Ewing. Lastly, on June 23, 2001, Cicalese made a final payment to defendant in the amount of $44,313. The check contained the words "paid in full;" defendant signed the check over to Saul Ewing.
When asked to explain why all three checks were made out to defendant, Cicalese responded that she "always made [her] checks out to [defendant]. . . . [H]e was my attorney, I paid my attorney." She further testified that after meeting with defendant on June 23, 2001, she wrote the third check as full satisfaction of her debt based on defendant's representation of the total amount due, "for [her] four-year trial." She understood that this payment also satisfied any obligation she owed to plaintiff.
Defendant contended that these payments were solely for the services rendered to Cicalese by the Saul Ewing firm. He sent her two letters dated March 7, 2001 and June 28, 2001, acknowledging receipt of her checks representing "a payment on account of the outstanding legal fees due to Saul Ewing LLP for services rendered." Cicalese did not challenge the accuracy of the statements contained in these letters. Specifically, Cicalese did not have any recollection of the receipt of these letters; and there was no written response from her acknowledging that these payments and checks were intended to satisfy solely any receivables due to Saul Ewing. The record contains no invoice or statement or services rendered to Cicalese from the Saul Ewing firm for these sums.
Siegelbaum met with defendant late in 2001 to seek his opinion regarding which clients' accounts were worth pursuing. On January 7, 2002, defendant sent Siegelbaum a letter advising him on the various accounts and raising the following issues:
With respect to the last category of bills, namely those bills which should be pursued, there are two issues. First, to what extent should the firm . . . be allowed to retain those dollars. In this regard, the information that I have been provided by (as to the balance on my draw account) shows an outstanding balance of approximately $68,008.23. For purposes of this discussion, I accept the aforesaid number as being accurate. That means upon collecting the outstanding receivables, the sum of $68,008.23 would be retained by [the firm], and hence, it would be essentially reimbursed for all monies paid for on my behalf and/or to me by way of a draw. . . . Therefore, I would propose that all of the reasonable and necessary costs and the sum of $68,008.23 be retained by [the firm] upon collecting the outstanding receivables and the balance to be retained by me. (emphasis added).
Defendant never informed plaintiff that he had already received money from Cicalese or that he did not intend to turn those funds over to plaintiff. Unaware of the payments to defendant, plaintiff contacted Cicalese in an attempt to settle her accounts amicably. After those attempts failed, plaintiff filed a fee arbitration petition against Cicalese. The arbitration panel declined jurisdiction finding the "matter not suited for the fee arbitration committee." Plaintiff thereafter filed suit against Cicalese in the Law Division; the action was abandoned after plaintiff received a fax from Cicalese's attorneys on January 27, 2003 containing copies of the three checks given to defendant. Siegelbaum explained that:
[a]fter much reflection I thought it was the wrong thing to do to proceed against Ms. Cicalese, because Ms. Cicalese paid an amount of money to satisfy all of her outstanding receivables to four firms, and to ask [her] to pay us further, when, in fact, [defendant] is the one who received the . . . check from her, and decided where to direct it would have been the wrong thing to do.
Plaintiff's action in the Law Division, against defendant alleged: (1) breach of the covenant of good faith and fair dealing; (2) breach of fiduciary duty; (3) tortious interference with a contractual relationship; and (4) conversion. After a seven-day bench trial, the court found defendant liable on each count. With respect to the Cicalese receivable, the court enter judgment in favor of plaintiff in the amount of $84,850.08 representing the amounts owed plaintiff on the Gains and Cicalese receivables.
On the count alleging breach of the covenant of good faith and fair dealing, the court found the wording of the Agreement between plaintiff and defendant created a good faith obligation by defendant in matters affecting the firm's operations:
[A] fair and implicit reading of the [A]greement, consistent with the covenant of good faith and fair dealing [which] underline[s] the purpose and intent of the [A]greement places the obligation on [defendant] to continue to collect money from his originating clients on behalf of [plaintiff] for the work he . . . performed under that firm's auspices. The contract implies that [defendant] would not accept money from a client intended and designed to satisfy [plaintiff's] invoice without meeting his obligation to [plaintiff] . . . . [a]nd that if he failed to do so, he has, in fact, failed to comply with his duty of fair dealing to [plaintiff].
Defendant argued that the Agreement did not obligate him to collect receivables; even if it did, his duty was mitigated by plaintiff's failure to give him the six months notice of termination required by the Agreement. The court rejected this argument finding that, because the dissolution of plaintiff was not routine or expected, "[t]he defense of wrongful termination of the relationship cannot serve and does not serve as a justification to excuse or to ameliorate the implicit covenant of good faith and fair dealing in the agreement with [plaintiff]."
The court further found that the defense was "belatedly asserted," because defendant did not assert the defense of wrongful termination in his answer or counterclaim. The court thus concluded that defendant's actions with respect to both Gaines and Cicalese breached the covenant of good faith and fair dealing implied in every contractual relationship.
Plaintiff contended that, as a partner and agent of the firm, defendant "stood in a fiduciary relationship to the other partners." Defendant breached this duty through his handling of the Gaines and Cicalese accounts. Defendant argued that as a contract partner, (as opposed to an equity partner), he did not owe plaintiff a fiduciary duty.
Based on the evidence presented, the court found that defendant owed plaintiff a fiduciary obligation, explaining that "every partner stands in the fiduciary relationship to every other partner, and the relationship is one of trust and confidence . . . . [M]ore significantly, where the contracting party controls and . . . exclusively manages the partnership's interest, the partner is held to a very strict and high obligation to that partnership."
The court also found unpersuasive defendant's argument that plaintiff's dissolution "constituted a significant breach of a fiduciary duty that . . . would serve to . . . mitigate . . . the obligation owed on the part of [defendant] to [plaintiff] under the terms of his [A]greement." The court noted that a "partner is not relieved of the responsibilit[y] to act in good faith merely because the relationship between the parties had become strained or difficult." Thus, although the dissolution caused disarray and strained relationships between the partners, it "[could not] serve as a means to excuse the defendant's obligation under the terms of his [A]greement."
The trial court also found that defendant's conduct with respect to the Gaines and Cicalese receivables constituted tortious interference with the contractual relationship plaintiff enjoyed with each client. By granting Gaines a release on behalf of plaintiff without its knowledge, and on the same day receiving payment from Gaines, defendant tortiously interfered with the firm's contractual relationship with its client. In the court's view, it was clear from defendant's testimony that "he was not directed or authorized by either [Friedman], [Siegelbaum], or any other member of the firm to release [Gaines], his client, from his obligation."
As to Cicalese:
[t]he testimony and the documents demonstrate that [defendant] led Ms. Cicalese into believing that she had satisfied all of her legal bills, inclusive of . . . [plaintiff's] when she 'paid in full' with the last of a series of three checks made out to [defendant] in 2001.
Those checks were concealed, they were not provided to [plaintiff], and there were no corresponding invoices from Saul Ewing that matched and demonstrate a satisfaction of a Saul Ewing account with respect to the monies received from Ms. Cicalese.
Thus, "the firm's ability to collect from those clients was impeded and interfered with by failing to provide [plaintiff] with those facts that would have permitted it to move more efficiently and expeditiously to collect its bills against those clients."
On plaintiff's claim of conversion, the court found that when defendant received and cashed checks from Cicalese, he converted the Cicalese accounts receivable into a form of remuneration for himself. The same occurred when he signed the checks over to Saul Ewing. According to the court, defendant's obligation was to account for the monies received from Cicalese and turn them over to plaintiff.
We begin our discussion by reaffirming basic principles governing our review of the trial court's decision. We "'do not disturb the factual findings and legal conclusions of the trial judge unless . . . they are convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice . . . .'" Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974) (quoting Fagliarone v. Twp. of No. Bergen, 78 N.J. Super. 154, 155 (App. Div. 1963)). That being said, however, a "trial [judge's] interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference." Manalapan Realty v. Manalapan Twp. Comm., 140 N.J. 366, 378 (1995).
The rationale underlying this limited scope of appellate review is that "a trial judge's findings are substantially influenced by his or her opportunity to hear and see the witnesses and to get a 'feel' for the case that the reviewing court cannot enjoy." Twp. of W. Windsor v. Nierenberg, 150 N.J. 111, 132 (1997). For this reason, credibility determinations are entitled to particular deference, id. at 132-33, but matters of law are reviewed de novo. Balsamides v. Protameen Chems., 160 N.J. 352, 372 (1999).
We first examine the trial court's findings and ruling with respect to defendant's fiduciary duty to plaintiff. "A fiduciary relationship arises between two persons when one person is under a duty to act for or give advice for the benefit of another on matters within the scope of their relationship." F.G. v. MacDonell, 150 N.J. 550, 563 (citing Restatement (Second) of Torts § 874 comment a (1979)). Accordingly, "[e]ach member of a partnership is in a fiduciary relation to the other partners." Restatement (Second) of Trusts § 2 comment b (1959). This obligates each partner to use reasonable skill and care and not "profit at the expense" of the partnership or other partners. Restatement (Second) of Trusts §§ 170 comment a 174 (1959). As such, a fiduciary who breaches his duties will be liable for the resulting harm. Restatement (Second) of Torts § 874.
Here, defendant seeks to define the existence and scope of a fiduciary duty by distinguishing between a partner and an employee, contending that as plaintiff's employee, he had no fiduciary duty to wind up partnership affairs upon dissolution, which includes collecting on accounts receivable. Defendant's argument is misplaced. Under Auxton Computer Enters., Inc. v. Parker, 174 N.J. Super. 418, 425 (App. Div. 1980), even employees have been held to owe fiduciary duties to their employers. The evidence here confirms that defendant was more than a simple employee; the Agreement provides, and defendant concedes, that he was at all times a "contract partner." As such, defendant maintained full control over his clients' accounts, which included both billing and collecting amounts due to plaintiff from Gaines and Cicalese.
As the trial court noted, "where the contracting party controls and he exclusively manages the partnership's interest, the partner is held to a very strict and high obligation to that partnership." Because defendant's employment capacity included managing plaintiff's interest in its accounts receivables, the trial court correctly found that defendant maintained a fiduciary relationship with plaintiff.
Defendant further argues that, even if he is a partner, "a terminated contract partner owes [no] fiduciary duty to a partnership consisting of only two equity partners" to wind up partnership affairs. As defendant concedes in the April 16, 2001 letter to Siegelbaum, however, he had a continued obligation to plaintiff after the firm ceased operations. Defendant also received more in draw than he was allotted under the Agreement. In the January 7, 2002 letter to Siegelbaum, defendant admitted that his draw had an outstanding balance of $68,008.23, though Siegelbaum later amended the deficit to only approximately $24,000. Nonetheless, while assuring plaintiff of his willingness to assist in collection of the Gaines and Cicalese receivables, defendant accepted money from both these clients, on his own behalf or that of the Saul Ewing firm, and failed to disclose or turn that money over to plaintiff or to undertake an effort to secure monies owed plaintiff.
Specifically, defendant received a check from Gaines on July 17, 2000 and the first check from Cicalese on March 2, 2001. Despite this, defendant reaffirmed his obligation to plaintiff to collect on his clients' accounts and turn those monies over to the firm in April 2001. The trial court found that the monies received from Cicalese should have been turned over to plaintiff in payment of her account with that firm.
Defendant's failure to do so and his failure to advise plaintiff of these payments violated his duty to his partners. As the court noted, the relationship between partners as fiduciaries is "one of trust and confidence calling for good faith[,] permitting of no secret advantages or benefits." The retention of these secret benefits breached defendant's continuing fiduciary obligation to plaintiff.
In the alternative, defendant asserts that any fiduciary duty he owed to plaintiff ceased when his relationship with his partners became adversarial. In support of this proposition, defendant cites Heller v. Hartz Mountain Indus., Inc., 270 N.J. Super. 143, 152 (Law Div. 1993) and Fravega v. Sec. Sav. & Loan Ass'n, 192 N.J. Super. 213, 223 (Ch. Div. 1983). Without expressing any opinion on the soundness of these two Law Division opinions, we reject this argument because the evidence does not support that defendant's relationship with plaintiff became adversarial. Although the premature announcement of the pending merger created a tumultuous atmosphere in the firm, defendant's continued relations with plaintiff were professional.
We next address the question of defendant's breach of an implied covenant of good faith and fair dealing. Defendant argues that at all times relevant to this action he acted fairly and in good faith. Moreover, even if he did not, plaintiff's actions served to excuse his performance under the Agreement. We disagree.
"[E]very contract in New Jersey contains an implied covenant of good faith and fair dealing." Sons of Thunder v. Borden, Inc., 148 N.J. 396, 420 (1997). Specifically, "neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract. . . ." Palisades Props., Inc. v. Brunetti, 44 N.J. 117, 130 (1965) (quoting 5 Williston on Contracts § 670, pp. 159-160 (3d ed. 1961)). However, when one party commits a material breach of the contract, the non-breaching party is excused from future performance. Nolan v. Lee Ho, 120 N.J. 465, 472 (1990).
As previously discussed, defendant's actions undermined plaintiff's opportunities to collect on these accounts, and his actions breached his fiduciary duty to plaintiff. The court was not persuaded by defendant's arguments as to his good faith motive or willingness to assist plaintiff. Neither are we. The record reflects that defendant acted solely for personal gain, to the detriment of plaintiff. By clear conduct defendant breached the implied covenant of good faith and fair dealing implicitly embodied in the Agreement with plaintiff.
Alternatively, defendant contends that his duty to act in good faith was excused because plaintiff first breached the covenant when it "unilaterally procured its own dissolution by engaging in a clandestine merger with [GP] without notice to the firm's contract partners." Specifically, plaintiff violated that duty by failing to give him the six-months notice of termination required under the Agreement.
As a threshold issue, we note, as did the trial court, that defendant's defense of prior material breach was untimely because it was not raised in his answer to plaintiff's complaint. R. 4:6-2 (providing that every defense "shall be asserted in the answer"). In fact, defendant waited until trial to raise this issue.
Even overlooking this procedural irregularity, the defense lacks merit. It is undisputed that plaintiff failed to give defendant the six months notice of termination required under the Agreement. Nevertheless, it is far from clear whether plaintiff's dissolution and defendant's subsequent loss of employment constituted termination under the agreement. Even if it did, this act by plaintiff was not so material that it would excuse defendant's duty to act in good faith.
As the trial court explained, the dissolution of the firm was far from being a routine and expected termination. Although we disagree with the trial court's conclusion that the dissolution was not "one of [plaintiff's] own choosing", the record reflects that the court correctly held that "[t]he defense of wrongful termination of the relationship cannot serve and does not serve as a justification to excuse or ameliorate the implicit covenant of good faith and fair dealing in the [A]greement with [plaintiff]."
We also reject defendant's argument that he had no obligation under the Agreement to repay an overpayment of monthly draw accounts. Defendant was not found liable, however, for failure to repay the draw he received. Plaintiff's action is based on defendant's conduct that prevented the firm from collecting fees duly owed to it. He executed the Gaines release without authorization, thereby impeding plaintiff's collection in the Gaines account. If defendant had not released Gaines from his obligation to plaintiff, he may not have been found to have breached the implied covenant. Likewise, had defendant not accepted money from Cicalese in full satisfaction of her debt to plaintiff, he may not have been held liable.
Lastly, defendant argues that plaintiff failed to prove its damages resulting from this breach. According to defendant, "[p]laintiff offered no evidence to establish with reasonable certainty the shortfall between the draw that he received and his so-called fee obligations." He also challenges the $68,000 deficit in his draw, contending that it was only approximately $24,000.
As previously discussed, the court did not award plaintiff damages for defendant's failure to repay his draw. After finding him guilty on all counts in the complaint, the court awarded plaintiff $84,850.08, "the amount of the unpaid invoices from the two clients at issue". Even assuming, arguendo, that defendant was entitled to 30% of these receivables under the Agreement, that would only amount to $25,455.02. The record reflects that defendant's deficit is nearly equal to or exceeds that amount. In this light, the court's calculations are not "so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice. . . ." Rova Farms Resort, supra, 65 N.J. at 484 (internal quotations omitted).
Defendant next challenges the trial court's judgment based on plaintiff's claim for tortious interference. To succeed in an action alleging "tortious interference with contractual relations, plaintiff must prove (1) actual interference with a contract; (2) that the interference was inflicted intentionally by a defendant who is not a party to the contract; (3) that the interference was without justification; and (4) that the interference caused damage." Russo v. Nagel, 358 N.J. Super. 254, 268 (App. Div. 2003) (citations omitted).
The interference becomes intentional if the defendant "'desires to bring it about or if he knows that the interference is certain or substantially certain to occur as a result of his action.'" Ibid. (quoting Restatement (Second) of Torts, § 766A comment e). Additionally, "the fact that a breaching party acted 'to advance [its] own interest and financial position' does not establish the necessary malice or wrongful conduct." Ibid. (internal citations omitted). Instead, "'malice is defined to mean that the harm was inflicted intentionally and without justification or excuse.'" Id. at 269 (quoting Printing Mart-Morristown v. Sharp Elecs. Corp., 116 N.J. 739, 751 (1989)).
Defendant argues that the trial court did not find, and the record does not support, that he acted with the requisite intent and malice. In particular, defendant notes that he provided plaintiff's bookkeeper with contact information for both Gaines and Cicalese.
With respect to the Gaines receivable, the court found that defendant intentionally interfered with plaintiff's contractual relationship when he "execut[ed] a release on behalf of the firm without the knowledge or authorization from [plaintiff], and signed a release on the same day and received payment from [Gaines] for his personal bills." At trial, defendant did not produce any evidence to show that the surrogate's court mandated that he sign the release. Even if it had, defendant's actions were not justified as he was not authorized to release Gaines from his obligations to plaintiff without plaintiff's consent.
Although defendant argues that plaintiff should be seeking these monies from Gaines, as long as defendant intentionally interfered with plaintiff's contractual relations with Gaines, he is liable for plaintiff's resulting damages. Restatement (Second) of Torts § 766A comment e (1979).
As to the Cicalese receivable, the court found that defendant led Cicalese into believing that she had satisfied all of her legal bills, inclusive of any owed to plaintiff. Defendant concealed the checks' existence from plaintiff, and was unable to produce documents to substantiate his claim that the checks only satisfied Cicalese's outstanding account at Saul Ewing. The court's credibility determinations in this respect are entitled to deference, and properly substantiate that defendant tortiously interfered with plaintiff's contractual relationship without justification or excuse. Twp. of W. Windsor, supra, 150 N.J. at 132.
Finally, we address defendant's challenge to the court's finding of conversion. Defendant argues that plaintiffs failed to identify what Cicalese owed the firm, and then link such property to him. We again disagree.
"Conversion is an intentional exercise of dominion or control over a chattel which so seriously interferes with the right of another to control it that the actor may justly be required to pay the other the full value of the chattel." Restatement (Second) of Torts § 222A (1965); see also Advanced Enters. Recycling, Inc. v. Bercaw, 376 N.J. Super. 153, 161-62 (App. Div. 2005), (citing Commercial Ins. Co. v. Apgar, 111 N.J. Super. 108, 114 (Law Div. 1970)).
A defendant's negligence will not suffice; conversion consists of "an affirmative act on the part of the defendant, as distinguished from a mere omission to act or to perform a duty." Restatement (Second) of Torts § 224 comment a (1965). However, "[c]onversion is not excused by care, good faith, or lack of knowledge. . . . A person who mistakenly believes that his or her conduct is legal may nonetheless commit conversion." 18 Am. Jur. 2d § 3 (2008).
To succeed on a claim of conversion, the money converted "must have belonged to the injured party." Commercial, supra, 111 N.J. Super. at 115. "Consequently, where there is no obligation to return identical money, but only a relationship of debtor and creditor, an action for conversion of the funds representing the indebtedness will not lie against the debtor." 18 Am. Jur. 2d Conversion § 8 (2008).
A defendant can be liable for conversion even if he was not obligated to deliver the identical property, Commercial, supra, 111 N.J. Super. at 115; when the plaintiff had the sole right to the remnants of the property the defendant withheld, the defendant will be liable to the plaintiff for the "full value of the chattel, at the time and place of the tort." Restatement (Second) of Torts § 222A comment c.
With these legal principles as backdrop, we affirm the court's findings and conclusions of law substantially for the reasons expressed by the trial court.