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Sierra Technologies, Inc v. Thomas F. Daley


July 2, 2012


On appeal from Superior Court of New Jersey, Law Division, Sussex County, Docket No. L-628-06.

Per curiam.


Submitted February 15, 2012 -

Before Judges Yannotti and Kennedy.

Plaintiff Sierra Technologies, Inc. (Sierra), appeals from a judgment dismissing its complaint on a promissory note against defendant Thomas F. Daley (Daley) following a jury verdict finding that Daley did not fail to repay the note. Daley cross- appeals from an order entered at the close of all the evidence dismissing his counterclaim for payment for "professional services" allegedly rendered to Sierra for the years 2001 and 2002. For reasons stated in this opinion, we affirm on the appeal and cross-appeal.


Sierra is an aerospace electronics firm founded in 1992. Daley, a Sierra shareholder, worked for the company and served as Vice President and General Counsel. In 1998, several Sierra shareholders gave notice that they wanted to sell their shares, and Daley and three others expressed an interest in purchasing those shares. Each purchaser, including Daley, agreed to pay $1.6 million for the shares, which would raise their ownership interest in Sierra by two percent.

One of the purchasers paid cash for the shares, but the other three, including Daley, paid $160,000 and accepted a loan from Sierra of $1.44 million to pay the balance. Daley, like the others, signed a promissory note agreeing to repay that sum, plus interest, by May 14, 2003. The note provided, among other things, that it would be an "[e]vent of [d]efault" if the borrower failed to apply to the "prepayment of the Note" all the proceeds of any dividend or distribution paid to the borrower by Sierra, within ten days of the borrower's receipt of such funds.

With this purchase, Daley's ownership interest in Sierra rose to five percent. By August 1999, through the application of dividends, distributions and bonuses otherwise due to him, Daley had paid over $860,000 on the note, leaving a balance due of $751,005.91.

In 1998, Sierra's shareholders had formed Clearwire Technologies, Inc., a wireless technology enterprise, and Sierra loaned $18.4 million to Clearwire as "seed money" to get the business started. Jeffrey Miller, the former chief financial officer for Sierra, testified that "the tax people" suggested dividing Clearwire's debt to Sierra among Sierra's shareholders "[s]o instead of [Sierra] having a big note, 20 shareholders would have small . . . note portions." Because Daley was a five percent shareholder, he received a K-1 from Sierra in 2000 reflecting a "distribution" to him of $920,000.

Sierra claimed that this "distribution" was merely a paper transaction for "tax" purposes and that no money actually changed hands. Daley claimed that as a consequence of a $100 million investment in Clearwire made by a group of investors from Goldman Sachs in 2000 and 2001, the $920,000 distributed to him as a result of the Clearwire transaction was paid over to Sierra in full satisfaction of Daley's remaining obligation on the 1998 note.

Another Sierra shareholder who had purchased Sierra shares in 1998 under the same arrangement as Daley, testified that he had received Clearwire stock in exchange for his interest in the $18.4 million debt owed by Clearwire and that he later sold that stock in the "public market." He added that he later entered into a "compromise arrangement" with Sierra over the remainder due on his note.

Daley also testified that Sierra owed him $450,000 for work he performed on behalf of Sierra in coordinating the efforts of outside counsel in litigation matters that concerned the company. Daley claimed that this figure was based on "three years of activity" between 1999 and 2002 and that the work was undertaken pursuant to a verbal agreement with John Gero, the "chairman" of Sierra. Gero denied such an agreement. Daley never produced time records or otherwise explained how the sum he claimed was calculated.

At the close of all the evidence, Sierra moved to dismiss Daley's counterclaim for "professional services." The trial judge granted the motion, stating "the paucity of proofs in this case [is] so extreme that there is no genuine factual issue established by the defendant in connection with his claim for the so-called professional services at the same time that he was employed by another entity."

After deliberations, the jury returned a verdict finding that Daley did not "fail to repay the note." This appeal followed.


On appeal, Sierra presents the following arguments:

I. Defendant's Conflicting Testimony Created Credibility Issues That Were Not Properly Considered By The Jury

II. Plaintiff Is Entitled To Have The Jury Verdict Set Aside As It Was Against The Weight of the Evidence

III. The Trial Court Erred By Permitting Defendant To Testify As To Matters Reserved for Expert Testimony

On his cross-appeal Daley asserts the following:


Having reviewed these arguments in light of the record and the applicable legal principles, we find them to be without merit and, therefore, affirm. We first will address Sierra's claims on appeal and thereafter we will consider the cross-appeal.


Sierra contends that the trial judge erred by not charging the jury sua sponte on "false in one, false in all." That charge states:

If you believe that any witness or party willfully or knowingly testified falsely to any facts significant to your decision in the case, with intent to deceive you, you may give such weight to his or her testimony as you may deem it is entitled. You may believe some of it, or you may, in your discretion, disregard all of it. [Model Jury Charge (Civil), Section 1.12M (approved 11/98)]

However, Sierra never requested that this charge be given to the jury and explicitly approved the jury charge that had been given by the trial judge, which included the general model charge on credibility. Consequently, we analyze this claim under a plain error standard; that is, whether it is an error that is "clearly capable of producing an unjust result." R. 2:10-2.

When reviewing a jury charge, we must read the charge as a whole. Myrlak v. Port Auth. of N.Y. & N.J., 157 N.J. 84, 107 (1999) (citing State v. Wilbely, 63 N.J. 420, 422 (1973)). "'Appropriate and proper charges to a jury are essential for a fair trial.'" Reynolds v. Gonzalez, 172 N.J. 266, 288-89 (2002) (quoting State v. Green, 86 N.J. 281, 287 (1981)). These jury charges must provide a "'comprehensible explanation of the questions that the jury must determine, including the law of the case applicable to the facts that the jury may find.'" Dubak v. Burdette Tomlin Mem'l Hosp., 233 N.J. Super. 441, 456 (App. Div.) (quoting Green, supra, 86 N.J. at 287-88), certif. denied, 117 N.J. 48 (1989). However, no party is entitled to a jury charge in his own words; a trial court need only provide a charge that is accurate as a whole. Kaplan v. Haines, 96 N.J. Super. 242, 251 (App. Div. 1967), aff'd, 51 N.J. 404 (1968), overruled on other grounds, Largey v. Rothman, 110 N.J. 204, 206.

Guided by these principles, we find no error in the jury charge, much less plain error. The trial judge fully explained the concept of credibility to the jury and charged the jurors that "you may believe everything a witness said or only part of it or none of it." These charges appropriately conveyed to the jurors the scope of their duties in assessing credibility.

Next, Sierra claims the verdict is against the weight of the evidence. However, Sierra failed to move for a new trial on this basis. "In both civil and criminal actions, the issue of whether a jury verdict was against the weight of the evidence shall not be cognizable on appeal unless a motion for a new trial on that ground was made in the trial court." R. 2:10-1; Ogborne v. Mercer Cemetery Corp., 197 N.J. 448, 462 (2009); Gebroe-Hammer Assocs. v. Sebagg, 385 N.J. Super. 291, 295 (App. Div.), certif. denied, 188 N.J. 219 (2006). The rule should be strictly enforced, particularly in civil cases such as this, where there are no constitutional rights at stake. See Fiore v. Riverview Med. Ctr., 311 N.J. Super. 361, 363 n.1 (App. Div. 1998). We perceive no interest of justice warranting a relaxation of Rule 2:10-1 in this case.

Even if we were to find justifiable reason to disregard that rule, we find no basis to order a new trial. Trial courts are directed to grant a new trial after a jury verdict only if, "having given due regard to the opportunity of the jury to pass upon the credibility of the witnesses, it clearly and convincingly appears that there was a miscarriage of justice under the law." R. 4:49-1(a). That standard was not met here. There was an ample factual basis in the evidence for the jury determination that Daley had repaid the note, in accordance with its terms, by the application to the note of distributions otherwise owed to Daley.

Finally, Sierra claims that the trial judge erred in permitting Daley to testify as to the tax treatment of items in his own and the Sierra income tax returns. Sierra contends that this constituted expert testimony. We disagree and we find this claim of error to be without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).


Daley appeals from the grant of a motion for judgment at the close of evidence dismissing his counterclaim for payment for "professional services" allegedly due to him. Under Rule 4:40-1, "[a] motion for judgment . . . may be made by a party . . . at the close of all the evidence offered by an opponent." The standard of review is the same as that for a motion under Rule 4:37-2(b) for involuntary dismissal and Rule 4:40-2 for judgment notwithstanding the verdict. Pressler & Verniero, Current N.J. Court Rules, comment 1 on R. 4:40-2 (2012).

In deciding the motion, the court "must accept as true all evidence supporting the position of the party defending against the motion and must accord that party the benefit of all legitimate inferences which can be deduced [from the evidence]." Besler v. Bd. of Educ. of West-Windsor Reg'l School, 201 N.J. 544, 572 (2010) (quoting Lewis v. Am. Cyanamid Co., 155 N.J. 544, 567 (1998)). If reasonable minds could reach different conclusions, the motion must be denied. Rena, Inc. v. Brien, 310 N.J. Super. 304, 311 (App. Div. 1998) (citing Brill v. Guardian Life. Ins. Co. of America, 142 N.J. 520, 535-36 (1995)).

If the evidence is so one-sided, however, that one party must prevail as a matter of law, then a directed verdict is appropriate. Frugis v. Bracigliano, 177 N.J. 250, 269 (2003) (quoting Brill, supra, 142 N.J. at 536). The trial judge may not consider issues of witness credibility in making the determination. See Rena, supra, 310 N.J. Super. at 312. We utilize the same standard that governed in the trial court. Frugis, supra, 177 N.J. at 269.

In deciding the motion for a directed verdict, the trial judge found Daley's claims for counsel fees to be so insufficient as to warrant dismissal. We agree. Daley claimed to have reached a verbal agreement with Sierra's chairman for payment of counsel fees for overseeing the work of outside attorneys for Sierra. Gero denied there was any agreement to pay Daley for these "services." Daley claimed entitlement to payment for this unusual relationship, but offered no detail about whether he was to be paid hourly, the fee he was entitled to receive, the precise services to be performed, or any record of services actually rendered or billed.

The trial judge correctly found that Daley had presented insufficient evidence to establish he was entitled to be paid for this work. See Alpert, Goldberg, Butler, Norton & Weiss, P.C. v. Quinn, 410 N.J. Super. 510, 529 (App. Div. 2009) (holding that "[b]ecause 'of the unique and special relationship between an attorney and a client, ordinary contract principles governing agreements between parties must give way to the higher ethical and professional standards enunciated by our Supreme Court.'") [citations omitted]. Daley offered no testimony or other evidence about the services he performed, the basis for payment or the agreed-upon rate for his services. Thus, there was no factual support for his claim for counsel fees and the trial judge properly struck the claim.

Affirmed on the appeal and cross-appeal.


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