October 13, 2010
WALTER WOLF, PLAINTIFF-APPELLANT,
C.B. RICHARD ELLIS GROUP, INC., DEFENDANT-RESPONDENT.
On appeal from Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-5580-09.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued September 14, 2010
Before Judges Payne, Baxter and Koblitz.
Plaintiff, Walter Wolf, a former employee of defendant, C.B. Richard Ellis (CBRE), a real estate brokerage firm, filed suit against his former employer seeking commissions on real estate transactions with the Snapple Beverage Group (Snapple) (Count One), commissions on a real estate transaction involving Montclair State University (MSU) (Count Two), damages for tortious interference by CBRE with prospective business relationships (Count Three), damages for wrongful discharge (Count Four), and damages resulting from CBRE's breach of its covenant of good faith and fair dealing (Count Five). CBRE moved to dismiss the complaint, arguing that Wolf's commission claims were subject to internal resolution and that the claim of wrongful discharge was subject to arbitration by the American Arbitration Association (AAA). Wolf filed a cross-motion in which he argued that CBRE's motion was actually a premature motion for summary judgment because of its reliance on various documents in addition to Wolf's complaint; that the arbitration that CBRE alleged to have occurred in the matter should be deemed a sham and thus null and void; and that a stay of CBRE's motion should be entered pending completion of discovery.
The motion judge agreed with CBRE's position and dismissed Counts One, Two, Three and Five of Wolf's complaint with prejudice, orally finding that each concerned Wolf's right to commissions, which was a matter subject to internal resolution. The judge granted CBRE's motion to compel arbitration of the wrongful discharge claims contained in Count Four. Wolf has appealed. We reverse and remand for further proceedings.
The record indicates that, on September 14, 1998, as a condition of his employment, Wolf entered into an employment agreement with Insignia/ESG, Inc. (ESG), a real estate broker that CBRE terms its "predecessor." CBRE accepted the agreement after it acquired ESG. The agreement contains terms of relevance to the present dispute that we will discuss later in this opinion.
According to the complaint, in December 2007, Wolf cold-called Snapple to determine its interest in a 220,000-square-foot warehouse building located in Clifton. As the result of that and subsequent calls, Wolf learned of Snapple's interest in leasing a 1,000,000-square-foot distribution center in central New Jersey, and that it was also seeking a national services provider for all of its real estate needs. Wolf informed employees of CBRE's Dallas, Texas office of both business opportunities. However, Wolf was then informed by his New Jersey manager, Ray Sohmers that "the powers to be" no longer wanted plaintiff's active participation in the Snapple opportunities, and that the industrial specialists Wolf had invited to work with him on the assignment were not capable of handling such a large requirement. The prohibition was reinforced in a subsequent meeting with CBRE's New Jersey "Management Team," which included Sohmers, Tom Tucci*fn1 and Patrick Luzzi. In August 2008, CBRE announced that it had obtained the Snapple national account and that the account manager was Seth Kelly, a person whom Wolf had contacted when he became initially aware of the opportunity. Wolf received no commission on the Snapple business.
Wolf alleged in his complaint that the MSU business opportunity commenced with a cold call to St. Joseph's Medical Center in Paterson to determine its interest in leasing a 200,000 square foot medical office building located in West Paterson. During the twelve months that followed, St. Joseph's advised Wolf that it was seeking to form a joint venture with MSU to form a "new medical/teaching/health facility." As a consequence, CBRE employees, including Wolf, sought to interest the joint venture in a large office building owned by the Hampshire Company in Bloomfield. At about that time, the four CBRE employees involved in the transaction, including Wolf and employees David Sherman and Marc Trevisan, who later left the company, agreed to split any commission earned into four equal shares. Thereafter, St. Joseph's withdrew its participation, but MSU's interest continued. Wolf has alleged that, despite an additional agreement by the four men to split the commission from the MSU lease, with one-fourth to each participant, Sherman and Trevisan took the position that the lease constituted a "new deal" in which Wolf had no participatory interest. As a result, Wolf contacted Sohmers to request his assistance in receiving his share of the commission. Wolf alleges that Sohmers responded on or about November 10, 2008 that Wolf could demand arbitration, but that he would be penalized $5,000 if the arbitration were unsuccessful. Nonetheless, Wolf states that he demanded that arbitration take place. However, according to Wolf, "Defendant never contacted the Plaintiff regarding his claim, never asked for documentation to support his claim, never allowed the Plaintiff to present witnesses or even to speak with the other 'team' members." Further, when Wolf requested that Sherman and Trevisan come to CBRE's Saddle Brook offices to discuss the matter, they refused.
Wolf has alleged additionally:
92. On or about January 22, 2009, the Defendant terminated the Plaintiff;
93. On or about February 2, 2009, the Plaintiff advised the Defendant's New Jersey Management Team that a synopsis should be prepared by the Plaintiff in preparation for arbitration;
94. On or about February 6, 2009, the Defendant's Management Team, by e-mail, advised the Plaintiff that since the Plaintiff was no longer employed by the Defendant, there would be no arbitration;
95. Subsequently, on March 5, 2009, by e-mail, the Defendant's Management Team advised the Plaintiff that the "arbitration" had been conducted and that the Plaintiff lost, that this decision was binding and that Management would have nothing further to do with the matter[.]
Wolf claims that the arbitration was a sham, as he had no opportunity to present his facts, confront the opposing party, or otherwise meaningfully participate in the proceeding.
CBRE sought dismissal of Wolf's complaint. In support of its motion, CBRE relied on a certification by its attorney, Jennifer Barna, to which was attached a letter by Barna to Wolf's attorney, James H. Cleary, that contained a point-by-point factual refutation of the causes of action set forth in Wolf's complaint and a demand, pursuant to Rule 1:4-8, that the complaint be withdrawn. CBRE also submitted the certification of its Senior Vice-President and General Counsel, Wanda N. Goodloe, to which was appended as Exhibit A the employment contract between its predecessor and Wolf, which CBRE construed as requiring internal resolution of the disputes regarding commissions and resolution by the AAA of Wolf's claim of wrongful termination. Also attached as Exhibit B was CBRE's Policy 10.11, Commission Agreements between Sales Professionals and Eligible Producer Support, Effective June 1, 2000 and Revised on June 1, 2006, which provided [Paragraphs A. and B. redacted.]
C. Resolution of Disputes
In the event of a dispute relating to the conduct of business, including, without limitation, the commission distribution, listing rights and obligations, etc., the Managing Director or Profit Center Manager shall have the power to resolve the dispute. If the dispute involves more than one office or Profit Center, resolution shall rest with the next senior level of management. If the commission has been received, the Company reserves the right to hold the commission pending resolution of the dispute.
The Goodloe certification attached as Exhibit C a December 23, 2008 letter from Wolf's counsel to CBRE's Legal Department stating:
We agree that this is an internal dispute which my client tried to resolve (see attached correspondence)*fn2 with N.J. Saddle Brook Management prior to my involvement.
What we are asking for is "internal" arbitration through a neutral third party not involved with this dispute. While my client has a great deal of respect for the N.J. Senior Managing Director, the N.J. Senior Managing Director and the Dallas Senior Managing Director are both "involved" in this dispute and it would be inappropriate for them to now act as "arbitrator" preventing my client from a fair and impartial hearing.
Please advise as to when we can arrange arbitration and who that arbitrator will be.
As a final matter, Goodloe attached as Exhibit D a February 6, 2009 response from her in which she stated:
As a follow up to our telephone discussion today, enclosed is a copy of CBRE Policy 10.11 Commission Agreements between Sales Professionals and Eligible Producer Support, which was inadvertently missing as an enclosure to my December 5, 2008 letter. Also, pursuant to your request enclosed is a copy of Mr. Wolf's employment agreement.
As I explained to you, Ray Sohmer, the then Senior Managing Director of the Saddle Brook, New Jersey office, and Mark Fewin, the Senior Managing Director of the Dallas, Texas office, argued their respective positions regarding Mr. Wolf's dispute involving the Snapple representation. They presented their positions based on the facts that were provided to them by their direct reports, including Mr. Wolf. I have been advised that, based on documentary evidence, Mr. Sohmer was persuaded that the Dallas brokers were negotiating the national exclusive agreement with Snapple prior to Mr. Wolf contacting them, meaning that Mr. Wolf did not provide the Dallas brokers with any valuable information and was not instrumental in any way in finalizing the exclusive national deal.
As you made clear during our call, you are dissatisfied with this result and your client wishes to take part in a formal internal CBRE arbitration presided over by what you call a "neutral" party. Senior management will consider such a request after Mr. Wolf provides us with the names of three CBRE senior level employees whom Mr. Wolf believes would qualify as a "neutral" person to preside over a potential arbitration.*fn3
I am hopeful that this matter can be resolved swiftly and amicably, while reassuring Mr. Wolf of the neutrality and fairness of CBRE's process.
Wolf responded to CBRE's evidence with his own certification, placing in issue most of CBRE's factual contentions.
CBRE prevailed on its motion. The judge ruled, after reviewing plaintiff's employment agreement, that there was no requirement that internal dispute resolution with respect to commissions take any specific form or adhere to arbitration law. Indeed, he found that a binding decision could be made by the Designated Executive without resort to arbitration, and the Executive could base that decision on the documents or "whatever information he thought reliable." Thus, the judge did not regard the process employed by CBRE to constitute a sham and, in light of the contract's internal dispute resolution provisions, the judge did not regard the complaint as setting forth a valid cause of action for commissions. The judge also held that plaintiff's termination was subject to AAA arbitration. An order was entered dismissing Counts One, Two, Three and Five. CBRE's motion to compel arbitration was granted with respect to Count Four. In a rider to the order, the judge found on the basis of correspondence attached to the Goodloe certification that plaintiff had failed to exhaust his internal remedies when he refused to participate further in dispute resolution. This appeal followed.
In deciding this matter, we note that Wolf does not contest the motion judge's determination to refer his claim of wrongful discharge to AAA arbitration. Hence, our focus is on Wolf's commission claims. In that connection, we conclude that CBRE's motion was converted into one for summary judgment pursuant to Rule 4:46 by CBRE's inclusion of the two certifications and accompanying letters*fn4 and by Wolf's response. Rule 4:6-2(e); Lederman v. Prudential Life Ins. Co., 385 N.J. Super. 324, 337 (App. Div.), certif. denied, 188 N.J. 353 (2006). As a consequence we must view the facts in the light most favorable to Wolf and, if the competent evidential materials, when viewed in that light, present material issues of disputed fact, summary judgment must be denied. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995); Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998) (utilizing the same standard on appellate review). Employing that standard, we conclude that the matters at issue were prematurely determined without resolution of ambiguities contained in operative contractual provisions and application of those provisions, as construed, to the facts presented by Wolf in his complaint and certification. In short, we are uncertain what precisely happened and under what standards Wolf's claims were allegedly resolved, and as a result, we are not confident that the result conformed to relevant contractual provisions and the law. Discovery and further legal analysis will be required to resolve the issues presented.
Pivotal provisions regarding commission disputes are found in Paragraph 4(H) and 10 of Wolf's employment contract. Their operation is not entirely clear to us on their face and as applied. Thus, construction of the contractual provisions is required. Grow Co., Inc. v. Chokoshi, 403 N.J. Super. 443, 476 (App. Div. 2008) (holding that a determination whether a contract is ambiguous is a question of law). Paragraph 4(H) provides, in a case in which a disagreement as to percentages of commission compensation exists: such percentages shall be determined by the Designated Executive, after consultation with each affected employee or (if the Designated Executive so determines) such percentages shall be determined as between the affected employees by binding arbitration in accordance with the then current Company policies and procedures governing internal arbitration between and among its commissioner brokers and salespersons; and in such event Employee hereby agrees to have such percentages (and any related matters then in dispute) finally determined in accordance with such arbitration proceedings. (Emphasis supplied.)
Paragraph 10 states:
All decisions and determinations made by the Designated Executive as provided for in this Agreement shall be made in the Designated Executive's sole and absolute discretion, after consultation with Employee, and shall be final and conclusive upon Employee and Company; and Employee agrees that, for all such decisions and determinations, the Designated Executive shall be deemed the sole arbitrator thereof whose decision shall be final and binding on both Employee and the Company and enforceable pursuant to Section 2A:24-1 of the New Jersey Statutes Annotated. . . .
While it is clear to us that these provisions require internal dispute resolution, we are uncertain at the outset whether the disputes at issue here were resolved solely by the Designated Executive and, if so, whether he engaged in the requisite "consultation with Employee," and whether he was disinterested. This question arises particularly (but not solely) in connection with CBRE's resolution of Wolf's claim for commissions in connection with the Snapple business opportunities as the result of Goodloe's February 6, 2009 letter describing some sort of interaction between Saddle Brook's Sohmer and Dallas's Fewin resulting in the denial of Wolf's claim. We cannot determine in this connection who the Designated Executive might have been, whether he was disinterested in the proceeding, what "consultation" with Wolf occurred, and whether the procedures utilized conformed to CBRE's General Rules and Policies as set forth in Policy 10.11c or in other policies and procedures that have not been furnished to Wolf or to us.*fn5
Further questions occur to us if, as Wolf claims, he was promised and afforded a process that CBRE designated as "arbitration." In this connection we note the reference in Paragraph 10 to the former New Jersey Arbitration Act, now superseded for purposes of this litigation by the Uniform Arbitration Act, as adopted in New Jersey in N.J.S.A. 2A:23B-1 to -32. See N.J.S.A. 2A:23B-3c ("On or after January 1, 2005, this act governs an agreement to arbitrate whenever made" with the exception of collective bargaining agreements). An issue of contract interpretation thus arises as to whether the parties intended any arbitration to be conducted in accordance with the Uniform Act, as Wolf suggests.*fn6 Additionally, issues of fact and law exist as to whether any contractual modifications to the Act's provisions, effected through reference to "current Company policies and procedures," were permissible pursuant to N.J.S.A. 2A:23B-4. Finally, issues exist as to whether whatever CBRE did conformed to statute or contract, as applicable, and if CBRE's procedures were not statutorily compliant, whether the result is enforceable. In this regard, Wolf has asserted that CBRE's determinations should be vacated pursuant to N.J.S.A. 2A:23B-23a(3).*fn7 He is entitled to pursue that position.
We are also mindful of Wolf's allegation that CBRE initially determined that since he was no longer employed by it, there could be no arbitration. CBRE's position is supported by paragraph 1 of Wolf's employment agreement, which states:
1. This Agreement shall commence as of the 14th day of September, 1998. Either party may terminate this Agreement at any time by furnishing notice to the other party. Termination will be effective on the date specified in the notice, which may be the same date as the notice.
Nonetheless, other provisions of the contract appear to permit internal dispute resolution to occur regardless of the employment status of the affected employees. At present, a number of the employees that Wolf claims to have been participants in the business undertakings for which Wolf claims a share of the commissions are no longer employed by CBRE. We question, as a result, whether internal dispute resolution as initially employed or as potentially ordered in the future can serve as a viable means for achieving an equitable distribution of commissions in the circumstances presented.
In summary, we find unresolved legal issues to exist as to the enforceability of Wolf's employment contract arising from CBRE's nondisclosure of the policies and procedures governing the internal dispute resolution process to which Wolf agreed. We additionally find factual issues to exist as to what mechanism was utilized to resolve Wolf's claims and whether that mechanism conformed to contractual standards. In connection with CBRE's internal arbitration process, various issues exist; most particularly, (1) whether by referring to the Arbitration Act, CBRE indicated an intent to be bound by that Act, (2) whether it intended to contractually modify the Act's provisions or not be bound by them, and (3) whether it did so legally. As a final matter, we question the effect of Wolf's termination and the departure of other key employees on the operation of the employment agreement.
In addition to those legal issues, we are uncertain as to what occurred in the decision-making process and as to how what took place fits within the legal dispute resolution framework that is found to be properly operative in this case. While we do not contest CBRE's right to contract for internal dispute resolution processes, we regard the lack of transparency in those processes and procedures to be troubling.
As a consequence, we affirm the referral of Count Four to AAA arbitration and remand the remainder for further proceedings to resolve the issues that we have raised.
Affirmed in part; reversed in part.