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Michael A. Fazio v. Temporary Excellence

February 2, 2012

MICHAEL A. FAZIO, PLAINTIFF-APPELLANT/ CROSS-RESPONDENT,
v.
TEMPORARY EXCELLENCE, INC., TEMPORARY EXCELLENCE OF NY, INC., JAMES E. CUNNINGHAM, AND LUPITA ROSA-CUNNINGHAM, DEFENDANTS-RESPONDENTS/ CROSS-APPELLANTS.



On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-9353-06.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued November 29, 2011

Before Judges Payne, Reisner and Simonelli.

Plaintiff Michael Fazio appeals and defendants Temporary Excellence, Inc., Temporary Excellence of NY, Inc. (collectively TEI), and James and Lupita Cunningham (James, Lupita, or the Cunninghams), cross-appeal from those parts of two final judgments, dated April 17, 2009, that are unfavorable to them. Plaintiff also appeals from the June 12, 2009 order, which denied his motion for a new trial and judgment notwithstanding the verdict. We affirm.

This case has a long and tortured procedural history marked by extensive and contentious pre-trial discovery and motion practice. We shall only refer to facts in the record and procedural matters that are pertinent to this appeal.

The Cunninghams are TEI's sole shareholders. In June 1997, plaintiff began his employment with TEI as an account manager. He became Director of Marketing in 1999, Executive Vice President in 2002, and President in March 2004. On March 12, 2004, plaintiff and TEI executed an employment agreement (the Employment Agreement), which set forth the terms of plaintiff's "at-will" employment, including compensation for the years 2004 through 2008, and payment of a percentage of TEI's sales price in the event the company was sold during the term of the agreement. The agreement also contained a twelve-month non-compete clause and non-disclosure of confidential information and non-solicitation clauses.

The parties' relationship soured after the Cunninghams' daughter and son-in-law, Kim and Brian Meyers (the Meyers), entered into a real estate contract in February 2006 to purchase plaintiff's home. The Meyers terminated the contract and requested the return of their deposit after an inspection revealed termite-related structural damage and problems with the air-handler and air conditioning system. Plaintiff rejected the Meyers' attempt to terminate the contract, and refused to return their deposit. Instead, and pursuant to the terms of the contract, plaintiff elected to either make repairs or give the Meyers a credit at closing for the cost thereof. Plaintiff also warned the Meyers that he would suffer damages if the closing did not occur by March 15, 2006, announced that date as "time of the essence" for the closing, and threatened litigation. This did not sit well with the Cunninghams, who had contributed $50,000 toward the deposit. What happened next resulted in this litigation.

On more than one occasion, plaintiff had shown James photographs of plaintiff with naked or partially naked women, which were taken during bachelor parties in Las Vegas.

Plaintiff had also told James that he kept the photographs in an envelope in his locked desk drawer at TEI. James retrieved the photographs, sent plaintiff e-mail and telephone messages alluding to them, and threatened to show them to plaintiff's wife if he did not release the Meyers from the contract and return the deposit. In one message, James warned plaintiff that "divorce lawyers are very expensive and then [your wife] gets half your shit," but that James could make "those pictures . . . disappear . . . if you get the Meyers[] off your contract and stop bullshitting around." James added that "[e]verybody and their mother's gonna change[] . . . a real estate . . . contract; so, you know you're the only one with a fucking problem about it."

Lupita also jumped into the fray. She told plaintiff's mother that she and James had "disgusting" and "pornographic" photographs of plaintiff. Lupita also described the photographs to plaintiff's wife in graphic detail, offered to show them to her, warned her that it appeared from the photographs that plaintiff had been seeing the women shown in them for some time, and advised her that "[i]f I were you, I would get myself checked because you never know what kind of diseases [plaintiff] can bring home." On March 13, 2006, plaintiff complained to the Borough of Park Ridge police. The police issued an incident report on March 15, 2006.

In addition to the threats, James revoked plaintiff's company car, criticized his job performance to his co-workers, and withheld his commission and expense-reimbursement checks. Plaintiff attempted to negotiate a purchase of TEI; however, James refused to release any of TEI's financial information relevant to its valuation unless plaintiff "squash[ed] the police report" and returned the deposit. Ultimately, the parties could not agree on a price for TEI.

On August 3, 2006, plaintiff filed a complaint in the Chancery Division, General Equity Part,*fn1 alleging breach of contract, breach of the covenant of good faith and fair dealing, tortious interference with contractual relations, conversion,*fn2 intentional infliction of emotional distress, harassment/hostile work environment, and invasion of privacy. He also sought dissolution of the restrictive covenants in the Employment Agreement.*fn3 One day later, on August 4, 2006, plaintiff's employment with TEI was terminated. On September 15, 2006, defendants filed a counterclaim, seeking replevin and asserting three counts of breach of contract.

In August 2006, plaintiff contacted the Bergen County Prosecutor's Office. Following an investigation, James was arrested and charged with second-degree theft by extortion, N.J.S.A. 2C:20-5, on September 18, 2006.

Mediation in the civil matter occurred on February 6, 2007, and concluded that day without a written settlement agreement. Thereafter, the parties disagreed on the settlement terms to which they had allegedly agreed that day. Although the mediator certified that the parties had reached a settlement, he did not state its terms. Plaintiff admitted, however, that "the parties had reached a settlement" and agreed to the following terms:

(1) the [d]efendants will pay $900,000 to [plaintiff], less a $150,000 credit to

[d]efendants; (2) the [d]efendants will agree to release [plaintiff] from the restrictive covenants in the [Employment]

Agreement on May 15, 2007 instead of August 3, 2007, 79 days early; and (3) the criminal charges, which had been filed following [plaintiff's] termination, against James Cunningham would be dismissed by the Bergen County Prosecutor.

On April 11, 2007, plaintiff filed a motion to enforce the settlement and requested a hearing. In a written decision and order dated June 20, 2007, the court declined to hold a hearing, finding that Rule 1:40-4(c) precluded the mediator's testimony.

The court also found there was no settlement to enforce because the settlement agreement was not in writing and the parties had no "meeting of the minds" on the settlement terms.*fn4

On August 20, 2007, a grand jury indicted James for second-degree criminal attempt/theft by extortion, N.J.S.A. 2C:5-1 and N.J.S.A. 2C:20-5.

Plaintiff filed an amended complaint on September 14, 2007, adding a claim pursuant to Pierce v. Ortho Pharm. Corp., 84 N.J. 58 (1980), for wrongful termination in violation of public policy based on his objecting to James's and Lupita's conduct (the Pierce claim). Also in September 2007, plaintiff formed Prime Staffing, LLC, a company that competed with TEI. On March 3, 2008, defendants filed an amended counterclaim, adding a fourth count for breach of contract, and claims of breach of fiduciary duty, conversion, tortious interference with economic advantage, and tortious interference with contractual relations.*fn5

Plaintiff had used TEI's e-mail system and computer equipment to exchange e-mails with the attorney who represented him during his attempt to purchase TEI. On July 2, 2008, plaintiff filed a motion, seeking an order compelling defendants to turn over the e-mails, and barring defendants from using them. The court denied the motion, holding that plaintiff had no expectation of privacy in the e-mails because they were exchanged from a TEI-owned computer and server and recovered after the termination of plaintiff's employment. The court memorialized its decision in an order dated July 18, 2008.

On July 14, 2008, James pled guilty to an amended charge of fourth-degree criminal coercion/theft by extortion, N.J.S.A. 2C:13-5a(3) and N.J.S.A. 2C:20-5. He was sentenced to a one-year probationary term.

On September 10, 2008, plaintiff filed a motion to extend discovery and compel production of certain TEI financial information, which allegedly related to the calculation of his damages. The court denied the motion because it had already extended discovery eight times, the extended discovery period ended on September 30, 2008, and the trial would begin on October 28, 2008.

The court held a bench trial on the Employment Agreement-related claims and counterclaims, and a jury trial on plaintiff's intentional infliction of emotional distress, harassment/hostile work environment, invasion of privacy, and Pierce claims. Prior to the start of the bench trial, plaintiff filed a motion in limine to bar the e-mails exchanged with the attorney who represented him during his attempt to purchase TEI, and defendants filed a motion in limine to bar plaintiff's economic expert, Michael Banker, from testifying.*fn6

In a November 20, 2008 oral decision, the court denied plaintiff's motion, holding that "[p]laintiff had no expectation of privacy in information stored on his workplace computer and, thus, had waived any attorney-client privilege." The court also denied defendants' motion without prejudice pending a Rule 104 hearing. Following that hearing, the court granted the motion and barred Banker's testimony after finding the following procedural defects: (1) plaintiff never indicated that he intended to obtain a damages expert and never named Banker as an expert; (2) plaintiff represented to the court on September 12, 2008 that he was ready for trial; (3) plaintiff never amended his interrogatory answers to name Banker as an expert; and (4) plaintiff's late service of Banker's expert report on September 26, 2008 and failure to submit a certification of due diligence violated Rule 4:17-7.

Substantively, the court found that Banker's report constituted an inadmissible net opinion because an employee of Banker, who was not a certified public accountant, had prepared it and conducted the research and calculations on which Banker relied, and Banker did not (1) review any financial data or records from TEI or Prime Staffing, LLC; (2) cite any established or generally accepted basis for his conclusions; (3) base his opinions on facts in evidence and instead relied on irrelevant evidence, assumptions and possibilities; and (4) know about plaintiff's status as an "at-will" employee, among other things. The court also found that Banker's opinion that plaintiff was entitled ...


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