August 10, 2010
ELLIOT S. STOMEL, PLAINTIFF-RESPONDENT,
CITY OF CAMDEN, CAMDEN CITY COUNCIL AND GWENDOLYN FAISON, DEFENDANTS-APPELLANTS, AND MAYOR MILTON MILAN, DEFENDANT-RESPONDENT.
ELLIOT S. STOMEL, PLAINTIFF,
CITY OF CAMDEN, CAMDEN CITY COUNCIL AND GWENDOLYN FAISON, DEFENDANTS-RESPONDENTS, AND MAYOR MILTON MILAN, DEFENDANT-APPELLANT.
On appeal from Superior Court of New Jersey, Law Division, Camden County, Docket No. L-9164-99.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued February 3, 2010
Before Judges Cuff, Payne and Waugh.
Defendant City of Camden appeals a judgment in favor of plaintiff Elliot S. Stomel on claims that his termination as a part-time municipal public defender in Camden violated 42 U.S.C. § 1983 and the Conscientious Employee Protection Act (CEPA), N.J.S.A. 34:19-1 to -14. Defendant Milton Milan, formerly the mayor of Camden, appeals the denial of his motion for leave to file cross-claims against Camden with respect to the judgment previously entered on Stomel's § 1983 claim against him.*fn1 We affirm.
The following factual and procedural background informs our decision on these appeals.
The factual background relevant to this appeal was set forth in the Supreme Court's opinion, Stomel v. City of Camden, 192 N.J. 137 (2007) (Stomel II), affirming in part and reversing in part our earlier opinion with respect to this controversy, Stomel v. City of Camden, 383 N.J. Super. 615 (App. Div. 2006) (Stomel I).
Stomel served part-time as Camden's municipal public defender from 1982 until 1999. After his initial appointment in 1982, he was reappointed annually through October 31, 1998. Written agreements between Stomel and the City were anything but consistent. For seven of his seventeen years, Stomel worked under one-year contracts. The remainder of those years was served without a new one-year contract, during which time Stomel continued under the terms and with the salary of his most recently expired annual contract. During the years when new contracts were negotiated, Stomel arranged the compensation terms with the municipal court's administrator through the submission of a request for approval that would result in the monthly rate to be paid for his municipal public defender services. For the entirety of his seventeen years as public defender, Stomel was paid a flat amount, monthly, for the representation of indigent defendants that he undertook for the City.
Stomel's last contract with the City provided for municipal public defender legal services to be rendered for the period November 1, 1997, though October 31, 1998, during which he was compensated at an annual rate of $30,000 paid in monthly installments. The contract was signed by Milan and approved by the City Council. Stomel continued to provide public defender services under the terms of that contract until he was removed from office on December 17, 1999.
During the Fall of 1997, Camden Municipal Prosecutor Joseph Caruso solicited a contribution from Stomel on behalf of Mayor Milan. According to Stomel, Caruso threatened that he could not guarantee Stomel's reappointment as municipal public defender unless he "contributed" $5,000 to Milan's re-election campaign. Stomel reported the incident to the Camden County Prosecutor's Office and to the Office of the United States Attorney. At the direction of the Camden County Prosecutor's Office, Stomel paid the $5,000 contribution and was reappointed as municipal public defender for the 1997-98 contractual period.
A federal investigation followed, resulting in Caruso's indictment. At Caruso's criminal trial, Stomel appeared as a government witness on December 7, 1999, and his testimony directly implicated Mayor Milan. On December 17, 1999, three days after a mistrial was declared, Milan sent a letter to Stomel advising that he was being replaced by another lawyer, who would be appointed as Camden's municipal public defender effective January 3, 2000, pending final approval by the City Council. See N.J.S.A. 40:69A-36(b) (providing municipal council with "advice and consent" power).
On December 28, 1999, Stomel filed a verified complaint and order to show cause against the City, Mayor Milan, and the City Council. The complaint alleged that Stomel was terminated from his position as municipal public defender for cooperating with investigators and testifying in Caruso's trial, in violation of the Conscientious Employee Protection Act, N.J.S.A. 34:19-1 to -8. [Stomel also alleged that the defendants acted in violation of 42 U.S.C.A. § 1983, alleging that he was removed from office in violation of his First Amendment rights under the United States Constitution.] On December 29, 1999, the Law Division temporarily enjoined Mayor Milan and the City from appointing a new public defender. In a hearing on January 12, 2000, however, the trial court lifted the restraining order and permitted the City to appoint another public defender, but also ordered that Stomel could continue to represent the indigent public defender clients already assigned to him. Thereafter, on February 10, 2000, the Mayor's appointee for municipal public defender was not approved by the City Council. Milan was replaced as mayor by Gwendolyn Faison in December 2000. With Council approval, Mayor Faison appointed Frank Fontanez as the City's new municipal public defender in March 2001. [Stomel II, supra, 192 N.J. at 142-44 (footnote omitted).]
Following a period for discovery, the defendants moved for summary judgment. In October 2002, the Law Division dismissed all of Stomel's claims against Camden, as well as his CEPA claim against Milan. In June 2004, following a three-day trial, a jury found in Stomel's favor on his § 1983 claim against Milan, awarding him $30,000 in compensatory damages and $60,000 in punitive damages. With prejudgment interest, attorneys' fees, and costs, the entire amount of the judgment was $316,464.89. The trial judge denied Stomel's post-trial motion seeking to compel Camden to pay the judgment against Milan, who was incarcerated on unrelated charges at the time. Stomel then filed his first appeal.
We reversed the trial court's determination that Stomel was not an employee for the purposes of CEPA, Stomel I, supra, 383 N.J. Super. at 633-37, but affirmed the determination that there was no viable § 1983 claim against Camden, id. at 626-33. We also affirmed the trial judge's denial of Stomel's motion seeking to make Camden responsible for the payment of the judgment against Milan on theories of agency and vicarious liability. Id. at 637-38. Finally, we affirmed the trial judge's refusal to award counsel fees on the dismissed CEPA claim to Camden, as to which issue Camden had filed a cross-appeal. Id. at 638.
The Supreme Court granted the parties' cross-petitions for certification. 188 N.J. 491 (2006). The Court affirmed our reversal with respect to the CEPA claim, Stomel II, supra, 192 N.J. at 153-56, but reversed our affirmance with respect to dismissal of the § 1983 claim against Camden, id. at 144-53.
The case was returned to the trial court for disposition of Stomel's CEPA claim against Milan and his CEPA and § 1983 claims against Camden. On remand, Milan moved for leave to amend his answer to assert cross-claims against Camden. The motion was denied in January 2008.
Stomel then moved for summary judgment on his claims against Camden. In February 2008, the motion judge granted summary judgment on Stomel's CEPA and § 1983 claims against Camden. Because the judge concluded that the compensatory damage award against Milan at the earlier trial had already established the appropriate measure of such damages on Stomel's claims against Camden, he entered judgment against Camden in the amount of $256,464.89, excluding the amount of previously awarded punitive damages and reserving that issue for trial. The resulting order also reflected Stomel's voluntary dismissal, with prejudice, of his CEPA claim against Milan, which effectively dismissed Camden's cross-claims against Milan. See Pressler, Current N.J. Court Rules, comment 3.3 on R. 4:7-5 (2010).
Stomel and Camden filed motions for reconsideration. On March 28, 2008, the judge denied Camden's motion for reconsideration of the summary judgment as to the § 1983 claim, but granted it as to liability on the CEPA claim. The judge also granted Stomel's motion for reconsideration of summary judgment on the quantum of compensatory damage, concluding that Stomel may have suffered additional damages during the period after the first trial. Stomel's motion to extend discovery as to the issue of damages was denied, with limited exceptions.
Following a trial on the CEPA claim and punitive damages in November 2008, the jury returned a verdict in favor of Stomel, awarding $385,000 in compensatory damages and $150,000 in punitive damages. The final judgment against Camden, entered on February 20, 2009, reflected those amounts, plus an award for counsel fees in the amount of $263,344.50. See N.J.S.A. 34:19-13(d). Including pre-judgment interest and costs, the total judgment against Camden was $994,580.37.
These consolidated appeals followed.
Camden's primary contentions on appeal are that the Law Division erred in (1) granting summary judgment on the § 1983 claim, (2) concluding that Stomel was an at-will employee, and (3) failing to dismiss Stomel's claim for punitive damages. Camden further argues that certain trial errors require that the jury verdict be set aside and a new trial held, and that it should not be bound by the verdict against Milan. Finally, Milan and Camden each contend that the Law Division erred in refusing to allow them to assert cross-claims against the other.
We turn first to the issue of whether the motion judge properly granted Stomel's motion for summary judgment on the § 1983 claim. Camden argues that it was entitled to a trial on that claim because the motion judge's grant of summary judgment went beyond the Supreme Court's holding in Stomel II.*fn2 We disagree.
In Stomel II, the Supreme Court rejected Camden's argument that Stomel left Camden's employment because his contractual term had ended and, consequently, was not "removed" from office.
Given the procedural posture in which this matter is before us, we find it unnecessary to address this aspect of the City's argument at length. Stomel was successful in his § 1983 civil action against Mayor Milan. In returning its verdict against Milan, the jury made a factual determination that Milan unlawfully removed Stomel from his position as municipal public defender for purposes of § 1983. In that trial, the jury found that "[p]laintiff's speech concerning the actions of Milan and Caruso was a substantial or motivating factor for Milan's decision to terminate the Plaintiff's employment and/or services," and that Stomel would not have been "terminated" but for engaging in that speech activity. (Emphasis added). Those findings are memorialized in Stomel's Order of Judgment against Milan. The essential facts underpinning Stomel's § 1983 claim against Milan are the same as those necessary for determining whether the City may be vicariously liable for Milan's actions. Although Stomel will have to make that showing to obtain a judgment on his claim against the City, it is plain that summary judgment in favor of the City was unwarranted. That the jury found in Stomel's favor in respect of the "removal" issue during the trial against Milan illustrates that, at the very least, a material issue of fact existed and further demonstrates that a reasonable fact-finder could reject the City's assertion that Stomel simply was not reappointed, as opposed to being "removed" from office. [Stomel II, supra, 192 N.J. at 147-48 (footnote omitted).]
In the footnote omitted from the above quote, the Court observed that Milan's trial took place following Camden's dismissal from the action and noted that "[t]herefore, the proofs in support of Stomel's § 1983 claim that were adduced against Milan would have to become part of a record in respect of his claim against the City." Id. at 147 n.4. Accordingly, the Supreme Court "remand[ed] the matter for the development of a record before the Law Division." Id. at 153 (emphasis added). Stomel accomplished the incorporation of those proofs into the record through his motion for summary judgment and the application of res judicata.
Res judicata, or claim preclusion, "'refers broadly to the common-law doctrine barring relitigation of claims or issues that have already been adjudicated.'" Tarus v. Borough of Pine Hill, 189 N.J. 497, 520 (2007) (quoting Velasquez v. Franz, 123 N.J. 498, 505 (1991)). Res judicata bars repetitive litigation when there has been a final judgment by a court of competent jurisdiction and the causes of action, issues, parties, and relief sought are substantially similar. Culver v. Ins. Co. of N. Am., 115 N.J. 451, 460 (1989).
To be successful, the party seeking claim preclusion must demonstrate each of the following requirements:
(1) the judgment in the prior action must be valid, final, and on the merits; (2) the parties in the later action must be identical to or in privity with those in the prior action; and (3) the claim in the later action must grow out of the same transaction or occurrence as the claim in the earlier one. [McNeil v. Legislative Apportionment Comm'n of N.J., 177 N.J. 364, 395 (2003) (quoting Watkins v. Resorts Int'l Hotel & Casino, Inc., 124 N.J. 398, 412 (1991) (citations omitted)), cert. denied, 540 U.S. 1107, 124 S.Ct. 1068, 157 L.Ed. 2d 893 (2004).]
Res judicata, like its close relative collateral estoppel, serves "important policy goals" of "'finality and repose; prevention of needless litigation; avoidance of duplication; reduction of unnecessary burdens of time and expenses; elimination of conflicts, confusion and uncertainty; and basic fairness.'" Hennessey v. Winslow Twp., 183 N.J. 593, 599 (2005) (quoting City of Hackensack v. Winner, 82 N.J. 1, 31-33 (1980)).
There can be no doubt that the first and third requirements have been met. As to the second, we conclude that Camden was "in privity" with Milan for the purposes of applying res judicata in this case and that the City Council was directly involved in Stomel's termination. With effective notice of the termination by Milan, the Council failed to stop it, thereby effectively ratifying Milan's action. Stomel II, supra, 192 N.J. at 153. As the Supreme Court held, we have no doubt in these circumstances that Milan was the policy-maker for the City in respect of Stomel's removal as municipal public defender before a replacement had been authorized to assume the office.
Although another attorney was the mayor's preferred appointee, that appointment could not become effective unless and until it had been blessed by the Council. See N.J.S.A. 40:69A-36(b). In fact, the Council disapproved the mayor's selection for replacing Stomel, yet the Council also ratified Milan's removal of Stomel as municipal public defender by not acting to stop it. The City Council can not be permitted to step away, in this fashion, from the authority that it conferred on Milan. [Ibid.]
Camden seeks to avoid the consequences of the Court's holding by characterizing it as dictum based upon an incomplete record. Even if we were to agree that the holding can fairly be characterized as dictum, which we do not, "as an intermediate appellate court, we consider ourselves bound by carefully considered dictum from the Supreme Court." State v. Breitweiser, 373 N.J. Super. 271, 282-83 (App. Div. 2004), certif. denied, 182 N.J. 628 (2005).
Consequently, we conclude that the motion judge appropriately granted Stomel's motion for summary judgment on the issue of § 1983 liability and affirm that decision.
We next address the issue of whether Stomel was an employee-at-will. Camden argues that the trial judge erred in treating him as one, thereby allowing him to collect inflated damages. We disagree.
The facts existing at the time of Stomel's termination simply do not support Camden's position. At the operative time, Stomel's most recent contract had expired. As had happened frequently in the past, he continued working indefinitely under the financial terms of the prior contract. Indeed, the record demonstrates that he worked without a contract for more than half of his seventeen years as a municipal public defender for Camden.
Until such time as he was replaced, was terminated, or resigned, he was an employee-at-will. That was his status at the time he was terminated.*fn3 As Camden itself concedes, citing Woolley v. Hoffman-La Roche, Inc., 99 N.J. 284, 290 (1985), "[a]n employment relationship is considered to be at-will when the intended duration of the employment relationship is not specified in a contract or other written document."
In any event, labels are not the key to applying CEPA. Because CEPA is remedial legislation and is to be construed broadly to achieve its purposes, the Supreme Court has recognized that in some situations CEPA protects persons designated as independent contractors. D'Annunzio v. Prudential Ins. Co. of Am., 192 N.J. 110, 120-22 (2007). In determining whether CEPA applies, courts must "'look to the goals underlying CEPA and focus not on labels but on the reality of plaintiff's relationship with the party against whom the CEPA claim is advanced.'" Id. at 121 (quoting Feldman v. Hunterdon Radiological Assocs., 187 N.J. 228, 241 (2006)).
There can be little doubt that CEPA was intended to protect someone such as Stomel, however his employment status is characterized. In affirming our decision that Stomel's CEPA claim against Camden should not have been dismissed, the Supreme Court held that "Stomel ha[d] set forth a prima facie case that he is an employee for CEPA purposes." Stomel II, supra, 192 N.J. at 156.
We find no merit in Camden's assertion that treating Stomel as an at-will employee, or its equivalent, caused an inflated award for compensation damages. As already noted, Stomel had a lengthy history of employment by Camden, during which he served without a contract for most of the time. Absent Milan's retaliatory action, in which Camden participated when it did not disapprove Milan's action, Stomel had every reason to believe that his employment would continue indefinitely and he certainly had the right to have the jury determine that issue. See id. at 152-53 n.6 ("Stomel was relieved of a position that he had held, and he alleges he likely would have continued to hold, as he had for seventeen years with and without written contracts, but for Milan's retaliatory action ejecting him from the office.") The record fully supported the jury's apparent determination in Stomel's favor on that issue.
Similarly, we see no merit in Camden's argument that damages for emotional distress should have been limited and not assessed as of the time of trial. Even if Camden were correct that lost wages ought to have been limited, which we have concluded is not the case, Camden has cited no law to support its argument that the emotional damages should be so limited. Its citation of contract law is simply inapposite, inasmuch as the underlying claim here is based on CEPA and not breach of contract.
Camden also argues that the trial judge should have dismissed Stomel's claim for punitive damages. While it concedes that punitive damages may be awarded against a public entity under CEPA, see Abbamont v. Piscataway Township Board of Education, 138 N.J. 405, 426 (1994), Camden argues that such damages were not warranted under the facts of this case because Milan was solely responsible for Stomel's termination. We again disagree.
Camden's arguments on this point are largely a repetition of its earlier arguments that Camden should not be held responsible for Milan's bad acts. In making them, Camden again ignores the Supreme Court's determination that "the Council . . . ratified Milan's removal of Stomel as municipal public defender by not acting to stop it" and that the "City Council can not be permitted to step away, in this fashion, from the authority that it conferred on Milan." Stomel II, supra, 192 N.J. at 153. Contrary to Camden's argument, the deterrent aspect of punitive damages is appropriately directed to conduct such as the City Council's in this case. See Lockley v. Dept. of Corr., 177 N.J. 413, 431 (2003) ("[T]he potential for punitive damages exerts a salutary effect on government actors at the highest level.").
Camden further argues that the punitive damages were excessive and disproportionate to his loss. As Stomel correctly notes, the cap on damages in the Punitive Damages Act (PDA), N.J.S.A. 2A:15-5.9 to -5.17, does not apply to CEPA claims, N.J.S.A. 2A:15-5.14(c). In any event, because the punitive damages in this case were significantly less than the compensatory damages, $150,000 as compared to $385,000, the PDA's cap of five times compensatory damages, or $350,000, whichever is greater, would not warrant a reduction. See N.J.S.A. 2A:15-5.14.
We do not view the amount of the punitive damage award as excessive or disproportionate under the circumstances of this case. A punitive damages award may only be set aside if "sustaining . . . the award would result in a manifest denial of justice." Leimgruber v. Claridge Assocs., Ltd., 73 N.J. 450, 459 (1977). Camden has failed to demonstrate any entitlement to relief under that standard. Consequently, we affirm the award of punitive damages.
We very briefly address Camden's argument with respect to the admission of statements made by Caruso,*fn4 which we find to be without merit and not warranting an extended discussion in a written opinion. R. 2:11-3(e)(1)(E).
Caruso was a municipal official and an attorney-at-law of New Jersey. To the extent he threatened to have Stomel terminated if he did not contribute to Milan's campaign, he risked criminal prosecution and disciplinary action with respect to his status as a member of the New Jersey Bar. See, e.g., In re Caruso, 172 N.J. 350 (2002); In re Caruso, 286 A.D. 2d 547 (N.Y. App. Div. 2001).*fn5 Consequently, those statements were admissible under N.J.R.E. 803(c)(25) as statements against interest.
In addition, we note that the event that precipitated Stomel's termination was not his refusal to make the contribution, which in fact he made as part of the criminal investigation, but rather his testimony at the resulting criminal trial just ten days prior to Milan's termination letter. Stomel II, supra, 192 N.J. at 142-44. Consequently, even if the statements attributed to Caruso were inadmissible for their truth, there was no error. They were merely part of the chain of events that led up to Milan's decision to terminate Stomel following his testimony at Caruso's trial and the subsequent mistrial.
Consequently, we affirm the judge's evidential rulings.
Camden also seeks to appeal the judgment against Milan that was entered in September 2004. Stomel argues that the issue is moot because the § 1983 damages are subsumed in the CEPA damages awarded against Camden, and Stomel concedes that he cannot recover both. We agree.
The final judgment entered on February 20, 2009, provides that Camden is responsible for the judgment entered against Milan only if it is not responsible for the CEPA damages awarded against it. Because we uphold the award of CEPA damages against Camden, we see no need for a detailed discussion of the issue.
Finally, we briefly turn to the issue of cross-claims. Both Milan and Camden argue that they should have been permitted to pursue cross-claims against the other.
Milan did not file cross-claims against Camden when he filed his answer at the commencement of the litigation, as he should have done under Rule 4:7-5(b) ("A defendant shall assert a claim for contribution or indemnity against any party to the action by inserting [the claim] in the answer. . . . "). Indeed, he did not seek to amend his answer until after a judgment had been entered against him and the matter was remanded following appeal by other parties.*fn6
In December 2007, after the matter had been remanded so that Stomel could pursue his CEPA claim against Milan and his claims against Camden, Milan for the first time filed a motion seeking to assert claims for indemnification and contribution against Camden in connection with the judgment entered against him in June of 2004, more than three years earlier. By that time, the two-year statute of limitations on his claim had expired. Mettinger v. Globe Slicing Mach. Co., Inc., 153 N.J. 371, 387 (1998) ("[T]he statute of limitations pertaining to a defendant's claim for contribution or indemnification begins to accrue when the plaintiff recovers a judgment against [him]."). Consequently, we affirm the denial of Milan's motion seeking to assert those claims.*fn7
With respect to Camden's cross-claims against Milan on the CEPA claim, they were dismissed when the CEPA claim against Milan was dismissed by Stomel. At that point, Milan was no longer a party to the litigation. Cross-claims are against co-parties. See R. 4:7-5. Although Camden could have sought leave to file a third-party complaint against Milan, Rule 4:8, it did not to do so. We see no error in the judge's dismissal of the cross-claims when the underlying substantive claim against Milan was dismissed and he ceased to be a party.
In addition, Camden would have no claim against Milan unless it were only secondarily liable. Erlich v. First Nat'l Bank of Princeton, 208 N.J. Super. 264, 306 (Law Div. 1984). Inasmuch as Camden's liability is primary, premised on its failure to block Milan's wrongful termination of Stomel, it has no claim against Milan even under its own theory of the law.
For all of the reasons set forth above, we affirm the judgments and orders on appeal.