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Softpath Systems, Inc v. Business Intelligence Solutions

January 8, 2013


On appeal from Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-2787-10.

Per curiam.


Submitted December 10, 2012

Before Judges Parrillo and Maven.

Plaintiff Softpath Systems, Inc. (Softpath) appeals from the November 4, 2011 summary judgment dismissal of its fee collection action against defendant Business Intelligence Solutions, Inc. (BIS) based on Softpath's failure to comply with the registration or licensing requirements of the Private Employment Agency Act, N.J.S.A. 34:8-43 to -66 (Act).*fn1 BIS appeals from that portion of the final judgment dismissing Softpath's action without prejudice to refiling its complaint in the State of New York. We affirm.

The facts are not genuinely in dispute. Softpath is a computer software company that employs and subcontracts consultants competent in software development and support. The company is registered as a corporation in Delaware and as a foreign corporation in New York, where its offices are located. Sometime prior to May 11, 2009, a principal of BIS, a New Jersey corporation with offices in Princeton, contacted Softpath's president requesting resumes of Softpath employees to perform information technology consulting services for BIS. The principal also indicated that BIS would draft a contract stating BIS's requirements if satisfied that Softpath employees would meet its needs.

BIS did in fact prepare a proposed contract, and on May 11, 2009, the parties executed a "Master Services Agreement" (MSA) in New York City. Therein, Softpath agreed to provide BIS with certain of its employees for temporary work. The MSA characterized Softpath's relationship to BIS as that of an independent contractor, and provided that all "Resources shall be deemed to be employees of Softpath Systems, and Softpath Systems shall be solely responsible for the prompt and timely payment of all salary and other compensation and benefits due such Resources." Softpath was also required to comply "with all legal obligations of an employer with respect to [its employees], including without limitation all reporting, withholding, payroll taxes, workers' compensation and other legal requirements." All Softpath employees were "to follow all legitimate orders of [BIS's] and/or its Clients' supervisors as the case may be."

At Softpath's request, a draft of the agreement was revised to provide that disputes would be resolved in the courts of New York and in accordance with New York law. Thus, the final version expressly stated that the MSA shall be governed by and construed in accordance with the laws of the State of New York, U.S.A. Disputes relating to the interpretation, execution or enforcement of this MSA or arising from the dealings between [BIS] and [Softpath] under this MSA shall be dealt with under the exclusive jurisdiction and venue of the federal and state courts located in New York, New York, and the parties irrevocably submit for all purposes to the jurisdiction of each such court.

Subsequent to the execution of the MSA, Softpath provided employees to BIS at its Princeton location, and billed for services in accordance with the terms of the MSA. BIS accepted these services and made partial payment against Softpath's billing. However, BIS bounced two checks, leaving a balance due Softpath of $70,200, which it has to date failed to pay. BIS has not claimed erroneous billing or failure to deliver promised services. At the time the invoices for the services rendered by Softpath's employees became due from BIS, Softpath was not registered or licensed with the New Jersey Division of Consumer Affairs as a temporary help service firm or employment agency under the Act.

As a result of BIS's default in payments, Softpath sued BIS in the Law Division to collect the amount due. The parties then cross-moved for summary judgment, BIS contending that, as a consequence of failing to register as a temporary help service firm, N.J.S.A. 34:8-45(b), Softpath was unable to maintain a cause of action in the State for the collection of the amount due the company. The motion judge agreed with BIS and dismissed Softpath's complaint, but without prejudice to Softpath's pursuit of recovery in the State of New York.

As noted, Softpath appeals from the summary judgment dismissal of its action and BIS appeals from the "without prejudice" feature of that order.

I Softpath essentially contends that it does not meet the Act's definition of a "temporary help service firm" and thus its failure to comply with the registration requirements of N.J.S.A. 34:8-45 does not bar its cause of action in this State. Alternatively, Softpath argues that the application of New York law in accordance with the MSA relieved it of any obligation to register under the New Jersey statute. We disagree with both contentions.

The Act provides in pertinent part:

[a] person shall not bring or maintain an action in any court of this State for the collection of a fee, charge or commission for the performance of any of the activities regulated by this act without alleging and proving licensure or registration, as appropriate, ...

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