November 3, 2010
RICHARD M. TIMINSKI, SR., APPELLANT,
BOARD OF REVIEW, DEPARTMENT OF LABOR AND ADAM'S BAR, INC., RESPONDENTS.
On appeal from the Board of Review, Department of Labor, Docket No. 228,940.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted October 12, 2010
Before Judges Rodríguez, Miniman and LeWinn.
Appellant, Richard M. Timinski, Sr., is the owner and sole corporate officer of Adam's Bar, Inc., in Orange. On February 27, 2009, the City of Orange condemned the one hundred-year-old building in which the bar is located and ordered it to be vacated because numerous repairs were necessary. Appellant thereupon applied for unemployment benefits. He now appeals from the October 8, 2009 final decision of the Board of Review (Board) affirming the decision of the Appeal Tribunal finding him ineligible for such benefits.
A telephonic hearing was held before the Appeal Tribunal on June 24, 2009. At the outset, the hearing examiner identified the issue as "a question regarding [appellant's] availability to work . . . that stems from the fact that [he is] currently listed as corporate owner . . . of Adam's Bar." Appellant testified that he had no plans to resume operations of the bar in the future and that "[e]ventually" he planned to dissolve the business; he had not commenced dissolution proceedings as of the time of the hearing. In fact, appellant inquired of the hearing examiner as to how to proceed.
The hearing examiner advised appellant that he first had to file for a "tax clearance" and gave appellant the telephone number for the Division of Taxation to begin the process. The hearing examiner also explained to appellant that "if [he is] listed as a corporate officer . . . [he is] not eligible for unemployment [benefits] right now."
The hearing examiner further advised appellant: "Without proof that the corporation has been dissolved or without proof that [he] at least filed for dissolution[,]" he would not be considered "available for work[,]" and, therefore would be ineligible to receive unemployment benefits. The examiner offered to hold appellant's case open while he took the steps necessary to dissolve the corporation.
The Appeal Tribunal issued its decision on July 6, 2009. At the outset, the Tribunal noted that appellant "was employed [fifteen] years as the owner of a corporation [of] which . . . [he] owned [one hundred] percent of the stock until [February 27, 2009,] when the corporation closed operations temporarily due to construction violations. The corporation expects to resume operations in a time which has yet to be determined." The decision noted that appellant "was to begin the process of dissolution of the business, but he informed the hearing officer, under the advice of his attorney, he will not cease operation of his business."
Therefore, the Appeal Tribunal determined that appellant was ineligible for unemployment benefits pursuant to N.J.S.A. 43:21-19(m)(1), which provides, in pertinent part:
An individual shall be deemed "unemployed" for any week during which:
(A) The individual is not engaged in full-time work and with respect to which his remuneration is less than his weekly benefit rate . . . except that for benefit years commencing on or after July 1, 1984, an officer of a corporation, or a person who has more than a [five percent] equitable or debt interest in the corporation, whose claim for benefits is based on wages with that corporation shall not be deemed to be unemployed in any week during the individual's term of office or ownership in the corporation[.]
Noting that appellant "has not dissolved his business, and has no immediate plans to do so in the near future[,]" the Tribunal concluded that appellant would not be "considered 'unemployed' as provided by N.J.S.A. 43:21-19(m)(1)."
In support of his appeal to the Board, appellant sent a letter stating that "[u]nder the advice of [his] attorney, the corporation was not dissolved because [the attorney] said if [appellant] want[s] to sell the building and the liquor license it would be two contracts." Appellant expressed concern that if he "dissolve[d] the corporation, [he] may gain something but lose much more at [the] time of the sale of the property or the liquor license . . . . [I]t may kill a deal if someone wanted to buy both the property and the liquor license."
In upholding the decision of the Appeal Tribunal, the Board noted that "[s]ince . . . appellant was given a full and impartial hearing and a complete opportunity to offer any and all evidence, there is no valid ground for a further hearing."
Appellant now challenges the Board's decision on two bases:
(1) that he was not required to dissolve his corporation in order to be eligible for unemployment benefits; and (2) the Appeal Tribunal's finding that the corporation expected "to resume operations" was unsupported by the record. Having considered these contentions in light of that record and the controlling legal principles, we conclude they are without merit, and affirm. We add only the following comments.
In support of his first contention, appellant relies upon our decision in Nota v. Bd. of Review, 231 N.J. Super. 341 (App. Div. 1989). There, the plaintiff had formed a corporation for the express purpose of becoming a subcontractor to American Telephone & Telegraph Company (AT&T); after one year, AT&T "did not authorize renewal of the contract . . . ." Id. at 344. Upon advice from his accountant, the plaintiff depleted the corporate checking account, "'upon payment of all corporate payroll taxes and liabilities,'" and "'filed its final corporate federal and New Jersey tax returns . . . .'" Id. at 344-45.
On that record, we reversed the Board's denial of unemployment benefits to the plaintiff, finding that "[a] claimant may disassociate himself from a corporation that was his last employer by resigning his office or by disposing of his stock or debt interest." Id. at 346. We noted further:
The association is also broken if the corporation permanently ceases doing business. In the latter instance, as a matter of administrative convenience the Division [of Unemployment and Disability Insurance] may reasonably require a corporation to dissolve in order to establish that it has permanently ceased doing business. However, the Division may not use such a litmus test without first adopting it by regulation, which it has not done, so that interested members of the public may express their views and those affected will know in advance what to expect.
[Ibid. (citations omitted).]
Following our decision in Nota, the Department of Labor promulgated N.J.A.C. 12:17-12.1(a), which provides, in pertinent part:
An officer of a corporation and/or a person who has more than five percent equitable or debt interest in the corporation, whose claim for benefits is based on wages with that corporation, shall not be considered unemployed in any week during the individual's term of office or ownership in the corporation and the claim shall be determined invalid.
3. A corporation is considered viable unless it has permanently ceased operations and has filed for formal dissolution in accordance with the New Jersey Business Corporation Act, N.J.S.A. 14A:1-1 et seq.; or has filed for bankruptcy under Chapter 7 of the United States Bankruptcy Code.
We have noted that N.J.A.C. 12:17-12.1(a) "[c]learly . . . was promulgated in response to Nota and effectively renders an officer of a corporation and/or a person who has more than a [five percent] equitable or debt interest in the corporation ineligible for unemployment compensation benefits while that person still holds his . . . office . . . and the corporation has neither been dissolved, nor filed for bankruptcy." Rudbart v. Bd. of Review, 339 N.J. Super. 118, 124 (App. Div. 2001). See also Fernicola v. Bd. of Review, 335 N.J. Super. 523, 525 (App. Div. 2000) (holding that "[t]he regulation neither contradicts the statutory language, nor does it go beyond it").
Adam's Bar, Inc., thus remains a "viable" corporation within the purview of N.J.A.C. 12:17-12.1(a)(3). Therefore, we conclude that the Board's decision was reached "'on sufficient credible evidence present in the record,' considering 'the proofs as a whole' . . . ." In re Taylor, 158 N.J. 644, 656 (1999) (citations omitted). We will not disturb that ruling. Brady v. Bd. of Review, 152 N.J. 197, 210 (1997).
Finally, we concur with appellant that the Appeal Tribunal's finding that the corporation "expects to resume operations in a time which has yet to be determined[,]" is not supported by the record. That finding, however, was not dispositive of appellant's claim. Rather, his claim was properly denied based on the controlling law.
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