SUPERIOR COURT OF NEW JERSEY
HARDENBERGH, CANETTI & HILL,
INC., a New Jersey Corporation,
t/a HCH REAL ESTATE,
NOREEN CALLAHAN, and ZACHARIAE
REALTY, a New Jersey Corporation,
t/a PRUDENTIAL ZACK REALTORS,
LOWELL P. CAVE, a/k/a JOHN P. CAVE
and JOHN CAVE, DAWN CAVE and
HUEY BUG L.L.C., a/k/a CAVE HOLDINGS,
July 16, 2012
Argued February 28, 2012 - Decided
Before Judges Carchman, Fisher and Nugent.
On appeal from the Superior Court of New Jersey, Law Division, Ocean County, Docket No. L-3728-06.
David A. Dorey argued the cause for appellant (Blank Rome, LLP, attorneys; Stephen M. Orlofsky, of counsel; Mr. Dorey, on the brief).
Kevin B. Thomas argued the cause for respondents.
This is an appeal from a jury verdict in this action involving claims of breach of contract and tortious interference with prospective economic advantage, resulting in a verdict for plaintiff Hardenbergh, Canetti & Hill, Inc. t/a HCR Real Estate (HCR or plaintiff) against defendants Noreen Callahan and Prudential Zack Realtors (PruZack).1 Plaintiff alleged breach of a contractual provision pursuant to which Callahan, a real estate agent employed by plaintiff, was barred from soliciting plaintiff's customers for one year after she left plaintiff's employ. Plaintiff also sought recovery for fraudulent concealment of evidence based on a pretrial determination and spoliation of evidence.
The jury concluded that Callahan breached her contract with plaintiff but found for defendants on the remaining claims of tortious interference and a related conspiracy count. The jury awarded plaintiff $1752. As to the spoliation claim, the jury found that defendants fraudulently concealed evidence and awarded plaintiff $26,737.96. Plaintiff was also awarded $15,000 in counsel fees as a sanction for the spoliation, in addition to $7167 it had been awarded pursuant to a pre-trial determination.
On appeal, plaintiff focuses on the trial court's evidentiary rulings and jury instructions, as well as the sufficiency of the damages awarded. While we conclude that error occurred, we determine that many of the claims lose vitality as a result of the jury award, and to the extent that there was error, it was harmless. Accordingly, we affirm the judgment. We conclude that plaintiff was entitled to prejudgment interest and costs on the breach of contract award and remand for consideration of plaintiff's claim in this regard.
To provide a context for the rulings under review, we set forth an expansive statement of the facts adduced at trial.
Callahan was hired as a sales representative by plaintiff in 1999. She signed an independent contractor agreement on March 31, 1999, which contained a duty of loyalty clause. According to Thomas Cook, plaintiff's vice-president, the clause imposed a duty to keep all customer information and company policies and practices confidential. The contract protected non-public information about the company's finances, personnel, methods of operation, customers and clients.
Among its general conditions, the contract also included the following post-contract provisions:
18. Sales Representative agrees that, upon the termination of this Agreement, he will not, for a period of 12 months thereafter, either on his own or for any other person or entity (a) solicit, interfere with, or endeavor to cause any employee or sales representative of [HCH] to terminate his relationship with [HCH] or (b) induce or attempt to induce any employee or sales representative of [HCH] to breach his employment or sales representative agreement with [HCH].
19. Sales Representative agrees that, upon the termination of this Agreement, he will not, for a period of 12 months thereafter, solicit, induce, or attempt to induce any past or current customer of [HCH] (a) to cease doing business in whole or in part with or through [HCH] or (b) to do business with any other person or entity which performs services substantially similar to or competitive with those provided by [HCH].
. . . .
21. Sales representative agrees to indemnify, defend and hold harmless [HCH]
. . . from and against all claims, losses, liabilities and expenses, including but not limited to attorneys' fees and costs, arising from or related to (a) any breach of this Agreement by Sales Representative or (b) any negligent, reckless, or willful acts or omissions of Sales Representative. . . .
. . . from and against all claims, losses, liabilities and expenses, including but not limited to attorneys' fees and costs, arising from or related to (a) any breach of this Agreement by Sales Representative or (b) any negligent, reckless, or willful acts or omissions of Sales Representative. . . .
The agreement contained a provision addressing attorneys' fees: "In any successful action by [HCH] to enforce this Agreement, hch shall be entitled to recover its attorneys' fees and expenses incurred in such action."
Plaintiff kept track of customers, sales and rentals and stored listing agreements together with rolodex cards. These records were available to anyone who worked in the office but were considered confidential, as plaintiff did not want the information to go to its Long Beach Island competitors, such as PruZack.
According to Cook, plaintiff developed information for landlords relating to prospective customers. This information was entered into an in-house computer system program known as ProxSys, as well as a system known as HalSys, which was available to all realtors.
When one of plaintiff's agents and a cooperating broker were involved with a sale, the commission was split between plaintiff and the other broker, and plaintiff's agent received half of the commission received by plaintiff. When one of plaintiff's agents represented both the buyer and seller, the agent received fifty-five percent of the total commission paid to plaintiff. When two agents from plaintiff were involved, one representing the seller, the other representing the buyer, they split the fifty-percent commission. In addition, after earning $30,000 in sales commissions within a twelve-month period, an agent could earn an additional commission on a sliding scale of between twenty-five and thirty percent. With respect to rentals, plaintiff typically received a commission of twelve percent of the total lease, with the amount split between the company and the agent.
According to Cook, at one point in 2003, Callahan, one of plaintiff's top producers and commission earners, complained that she should have received a larger commission on a transaction. She wanted the graduated commission schedule to apply to the transaction because she believed other realtors gave their agents graduated commissions on all transactions.
Callahan met with Kevin Thomas, PruZack's chief executive officer, on June 15, 2005, to discuss working for PruZack, which meeting was followed up by an offer. According to Cook, on June 24, 2005, Callahan "barged" into his office and complained that she deserved more money on a transaction -- sixty-five percent rather than the usual fifty percent commission -- because of how hard she had worked. Cook told her he could not give her more because that would not be fair to the other agents.
On July 23 or 24, 2005, Callahan verbally accepted Thomas' offer to work for PruZack. She did not tell plaintiff at that time because she wanted to stay with plaintiff until a sale (the Cave-Sobel sale) closed so that she could get her $65,000 commission. The sale was scheduled to close on July 27 or 28. Callahan claimed that she complained to Cook about the lack of a graduated commission on the Cave-Sobel sale, but he told her to "leave it alone."
Dennis O'Brien, a former agent with plaintiff, noted that Callahan complained to him about the commissions in the early spring of 2005. In July he noticed that Callahan had canceled at least two of plaintiff's rentals on the rental board and had rebooked them with PruZack. After Callahan went to PruZack, she told O'Brien that she had told customers that plaintiff would be out of business within a year.
Another agent with plaintiff, Kathryn Smith, believed that Callahan was leaving plaintiff by mid-June 2005 because Smith would see her copying records for fifteen or twenty minutes at a time. In mid-July, Smith saw boxes of documents in Callahan's van. Other employees saw Callahan with master file drawers of tenant cards and other records not normally removed from the file room. Employees noted that Callahan made entries under PruZack's name on the rental board.
On July 27, 2005, Cook's wife, Gail, saw an entry on the rental board, with the words "per Noreen [Callahan]" whited-out. Gail told her husband, who was "astonished" and understood this to mean that Callahan would leave plaintiff and work for PruZack.
Callahan acknowledged that she canceled one reservation on the rental board but denied whiting out her name and writing in PruZack. In fact, Callahan came to Cook's office to explain that she had merely corrected an error on the rental board. She told the Cooks that she was uncomfortable because they had not spoken to her in the past few weeks, and that she was speaking to other real estate agencies. Cook decided to fire Callahan and drafted a termination agreement, which Callahan refused to sign.
When she left the office, Callahan took her personal belongings, as well as some three hundred prospect cards and a year's worth of leases that she had copied. She claimed that she took the prospect cards because she believed they were hers. She informed Cook that she was joining PruZack.
After the termination of Callahan's employment, Cook found only a dozen of the three hundred tenant cards Callahan had possessed during her employment with plaintiff. Cook also claimed that Callahan took a year's worth of leases with her when she left.
On July 29, 2005, Callahan signed an independent contractor agreement with PruZack and began working for the company on August 1, 2005. She claimed that she did not realize, or remember, that there were competition restrictions in her agreement with plaintiff.
Plaintiff contacted its customers within three or four days after Callahan left to inform them of her departure and to assess their interest in remaining clients and customers of the company. Cook acknowledged that it is a maxim in the real estate industry that customers tend to follow the agent, rather than stay with the agent's former firm.
On August 2, 2005, Callahan reserved a rental for PruZack for July 2006 on behalf of one of plaintiff's former clients, canceling a reservation she had made in July 2005 for the client while she was with plaintiff. On August 3, 2005, she did the same with respect to tenants renting from some of plaintiff's landlords. Callahan sent out some three hundred mailings to plaintiff's customers on August 5, 2005 informing them of her move to PruZack. She stated that she did the mass mailing because she wanted to get her "name back out there."
On that same date, one of plaintiff's attorneys, Thomas Barron, sent a cease and desist letter to defendants, requesting Callahan to: return all of plaintiff's documents and property, stop contacting its actual and prospective customers and clients for the one year period set forth in Callahan's agreement with plaintiff, and reimburse plaintiff for any lost commissions, fees or income from its customers and clients. Specifically, Barron cited Callahan's: "improper removal of over 300 customer information cards;" booking of plaintiff's customers for rental units; and inducing Cave to rescind his listing agreements with plaintiff.2 Barron also requested that PruZack agree to monitor Callahan's activities and to return any money plaintiff lost as a result of her conduct.
Thomas claimed that he was unaware of Callahan's contractual restrictions until he received the Barron letter, and PruZack did not have a policy of asking agents hired from competitors whether they had contractual restrictions. After receiving the letter, Thomas determined that the solicitations Callahan engaged in "arguably" violated the terms of her contract with plaintiff. He told her to stop soliciting plaintiff's customers until he spoke to counsel. However, he also told her that if the customers contacted her first, she could proceed. Thomas noted that he communicated with Callahan about this matter "on an ongoing basis," telling her not to contact anyone associated with plaintiff, and that she assured him that she complied with his request.
Gail observed more of plaintiff's listings coming off the rental board and received calls from people inquiring about their listings. Incoming tenants, in particular, were confused. Gail spent time reassuring these customers. This problem persisted into the fall of 2005, as plaintiff continued to try to "put out fires." Cook claimed that Callahan's actions disrupted plaintiff's business for several months to a year after she left.
The HalSys event log indicated that property listed with plaintiff (the Mitchie property, listed for $1.75 million) was added as a PruZack listing on August 25, 2005 (Callahan claimed it was August 1). Callahan also was successful in diverting six of plaintiff's rental customers to PruZack in August 2005.
Both employees and a series of clients related that during this period and the ensuing months, Callahan solicited them to either work for PruZack or list property with that agency. In one instance, on September 16, 2005, Callahan sent an e-mail to a person who had been her customer during her employment with plaintiff, in which she praised PruZack and stated that plaintiff was "still on [her] back . . . trying to stop me from doing business with all [her] past[,] present and future customers, haha." In total, plaintiff offered testimony from six customers of plaintiff, only two of whom left plaintiff for PruZack.
One of the customers who left plaintiff was Evelyn Anderson; a letter addressed to her became the subject of a subsequent dispute. Anderson, who had listed her rental property with plaintiff, stated that she received a call from Callahan sometime after Labor Day 2005, informing her that Callahan was with PruZack and asking her whether she would rent her house to a prospective tenant of Callahan's. Anderson also received a letter from Callahan bearing a September 2005 date, but which Callahan claimed was generated in early August 2005. In the letter, Callahan asked Anderson to sign a rental authorization for PruZack for the 2006 rental season. She also informed Anderson that she had customers who would want to rent from Anderson again. Anderson agreed and signed the rental authorization.
According to Callahan and Thomas, the letter was part of a computer-generated general mass mailing PruZack sent out every September. Thomas agreed that if the Anderson letter were mailed in September, that would have been in violation of his instructions.
Conflicting evidence was presented as to plaintiff's reputation as a broker in the community, with Gail indicating that plaintiff had a good reputation, while Joy Luedtke, a real estate broker on Long Beach Island, indicated, over plaintiff's objection, that the atmosphere at plaintiff was "[n]erve-wracking" and "extremely unpleasant," primarily because of Gail. Luedtke described plaintiff's reputation in the Long Beach Island real estate community as "[v]ery poor."
Plaintiff initially sought to introduce a sales and rentals chart that listed customers it alleged Callahan took from plaintiff after she joined PruZack, from 2005 to 2008. The chart included sales and rentals plaintiff claimed were lost because of Callahan's actions, amounting to approximately $455,000 in damages. The court restricted the damages sought based on that chart to those rentals and sales that took place within one year of Callahan's departure from plaintiff. As a result, the list was reduced to three transactions for which plaintiff claimed: $75,997.50 in damages for lost commissions; the loss of over sixty tenant leases for which plaintiff claimed $79,463.40 in damages for lost commissions; and $14,052 in damages for lost commissions from rental authorizations, totaling approximately $170,000. Plaintiff also offered a chart of Callahan's commissions from October 2004 to October 2005. The jury awarded plaintiff $1752 for breach of contract but found no cause of action on the remaining claims.
During the trial, issues arose as to spoliation of evidence. These are the additional facts related to that claim.
In April 2006, plaintiff sought copies of e-mails sent, and received by Callahan from June 1, 2005, onward. This request was listed as a "continuing demand." PruZack provided a response in July 2006 and a supplemental response in April 2007. Defendants turned over some documentation of Callahan's communications with plaintiff's customers at that time.
One of plaintiff's trial attorneys, David Dorey, was presented at the spoliation trial3 as an expert as to the fees and expenses required to investigate the fraudulent concealment of evidence. Dorey also related the circumstances surrounding plaintiff's discovery of the information defendants allegedly fraudulently concealed.
Dorey noted that plaintiff did not discover the existence of the solicitation letter from Callahan, dated September 2005, until November 2008, after the completion of discovery. Plaintiff amended its complaint at that time to allege spoliation of evidence, and the trial continued. Dorey claimed that the letter was important because it indicated which customers received solicitation letters from Callahan. Additionally, as documentary evidence it was helpful in examining witnesses, whose memories might have faded.
Defendants' attorney sent plaintiff a letter dated February 3, 2009, claiming that the letter was part of a mailing Callahan prepared in early August 2005 to between twenty and thirty people she had known during her association with plaintiff, and that the letter was dated September 2005 because September was when the general mailing would be sent to homeowners. Defendants' attorney further claimed that during the one-year non-solicitation period Callahan kept track of a lot of incoming calls from people who had done business with plaintiff, and turned that list over to her former counsel.
In addition, defendants' attorney claimed that all relevant e-mails from Callahan's laptop computer had been turned over to her former counsel, but because the hard drive of the computer crashed in January 2006 the information contained on it could no longer be recovered.
After the complaint was amended, plaintiff again deposed Callahan, in March 2009. That deposition revealed that she had a hotmail e-mail account, in addition to an account provided to her by PruZack. Peter Sarkos, one of defendants' attorneys, told Callahan in late August 2005 to save the e-mails that were also on her personal hotmail account. She turned over the log of incoming phone calls to Sarkos in 2006.
Callahan admitted that when she sent out notices about her move to PruZack, she knew she could be held responsible for soliciting plaintiff's customers. However, she could not recall how many notices she sent out and had not retained copies. She could not explain why the Anderson letter was dated September 2005.
Dorey stated that plaintiff learned of the phone log from the Anderson letter, which led plaintiff to obtain all of the e-mails on the computer hard drive that were recoverable. Plaintiff's efforts to pursue the fraudulent concealment of evidence claim generated expenses.
Sarkos began representing defendants in August 2005. He claimed that he told Callahan at the start of his representation to preserve all relevant communications, including letters sent to plaintiff's customers, and he reminded her to keep such records throughout the representation. According to Sarkos a colleague informed him that Callahan had sent a log of her communications to him; however, he found no such log. His representation ended in November 2008. By mid-October 2008, he provided plaintiff all of the discovery of which he was aware.
Plaintiff claimed $32,931.62 in expenses it paid to third parties as a result of the fraudulent concealment. In addition, it sought, but was denied, permission to introduce a chart tabulating what it claimed to be counsel fees and costs incurred as a result of defendants' fraudulent concealment.
The jury awarded plaintiff $26,737.96: $13,773.32 from PruZack, and $12,964.64 from Callahan.
Post-trial, plaintiff sought over $1,300,000 in counsel fees, plus $54,000 in counsel fees for its former attorney, taxed costs of $32,931.62, and $244,270.22 in discovery sanctions.
In his post-trial counsel fee decision, the trial judge rejected plaintiff's reliance on paragraph 21 of the agreement between Callahan and plaintiff because the paragraph did not require Callahan to "reimburse" plaintiff for the counsel fees it incurred arising from the breach of the agreement. The judge stated that that paragraph was only intended to address third-party claims brought against plaintiff as a result of Callahan's breach.
The court found paragraph 2 was the applicable contractual counsel fee provision, stating that while plaintiff was successful in obtaining a February 2006 injunction, the court did not view plaintiff as successful at trial because the jury award was not proportionate to the amount it had sought. Moreover, it held that plaintiff's defense of the counterclaim was not an action to enforce the agreement under paragraph 2. The court awarded plaintiff $46,524 in counsel fees associated with obtaining the February 2006 preliminary injunction and $15,000 in counsel fees for the trial. In addition, the judge awarded plaintiff $21,461.47 in taxed costs for the preliminary injunction, but no taxed costs for trial.
Finally, the judge rejected plaintiff's request for sanctions for the spoliation/fraudulent concealment claim on the following grounds: plaintiff had already been granted counsel fees and sanctions by another judge, who had heard portions of this litigation; only two of plaintiffs' submissions reflected fees and costs related to an application to enforce a discovery order, and plaintiff had enough information prior to receipt of the Anderson letter to pursue its claims.
We now relate certain procedural determinations, as they become relevant to issues raised on appeal.
After the complaint and defendants' counterclaim were filed and discovery was completed, plaintiff moved for summary judgment and Callahan cross-moved for summary judgment as to an unpaid commission. The motion judge granted summary judgment on plaintiff's claim that Callahan breached her duty of loyalty but denied the breach of contract claim as well as Callahan's motion for the commission. The judge concluded:
[E]ven if the Court decides there are material issues of fact regarding the enforcement of the contract, it does find that Callahan breached her duty of loyalty to HCH. First, Callahan admits that she agreed to work for PruZack, a direct competitor of HCH, almost three to four days before her termination by HCH. Additionally, prior to leaving HCH defendant changed a listing set to be done through HCH to be done through PruZack. It does not appear that she advised HCH of this action while she was still employed by them. When taking the relevant New Jersey law into consideration, it is apparent that Callahan violated her duty of loyalty to HCH simply on this one act alone . . . . When taking into account the totality of her conduct before, during and immediately after her termination with HCH, Callahan was clearly acting contrary to HCH's interests.
During additional motion practice, the motion judge determined, among other rulings, that plaintiff was entitled to an adverse inference charge at trial as a result of defendants' alleged concealment and destruction of evidence.
On appeal, plaintiff raised over thirteen issues including claims that the judge erred: 1) by refusing to admit into evidence the summary judgment ruling that Callahan violated her duty of loyalty; 2) by failing to give a proper adverse inference charge; 3) by refusing to judicially notice a pretrial order enjoining defendants from using plaintiff's confidential information and soliciting plaintiff's customers; 4) by failing to instruct the jury regarding the Cave-Sobel commission; 5) by refusing to inform the jury that PruZack was paying Callahan's counsel fees; 6) by permitting a witness to testify as to plaintiff's reputation; 7) by instructing the jury on breach of contract causation that defendants' conduct must be "the" proximate cause of plaintiff's damages; 8) by refusing to give a curative instruction regarding plaintiff's failure to call additional witnesses; 9) by refusing to recognize and correct an inconsistent jury verdict; 10) by excluding testimony as to customer complaints resulting from Callahan's solicitation; 11) by limiting plaintiff's damages as well as denying prejudgment interest and costs as well as counsel fees; 12) by denying a new trial as to damages for spoliation; and 13) by limiting counsel fees as to spoliation.
We first note that the jury concluded that Callahan breached the contract. In addition, during the trial, Callahan withdrew her counterclaim. As such, issues related to the breach of contract cause of action or similarly related to the counterclaim are moot and need no further discussion. For example, plaintiff asserts that the refusal to allow evidence of the prior ruling on plaintiff's motion for summary judgment and the finding that Callahan breached her duty of loyalty were relevant to both the claim for breach of contract and the counterclaim. The jury found in favor of plaintiff on the breach of contract claim, and defendants voluntarily dismissed the counterclaim. We need not address this issue further.
We reach a similar result as to the adverse inference charge, the refusal of the judge to charge the issue of the preliminary injunction, and the judge's failure to charge the jury to disregard evidence of Callahan's withdrawn counterclaim for commissions. The jury's finding of liability as to defendants renders moot any claim that the judge erred in his ruling on the adverse inference charge. While we agree that the judge should not have left the application of the charge to the jury, the jury still found in favor of plaintiff. There was no error here. As to the injunction and the commissions, the jury's finding of liability renders these arguments moot.
As to the issues of PruZack's payment of Callahan's counsel fees as well as the testimony about plaintiff's reputation, we conclude that plaintiff has failed to demonstrate that the judge abused his discretion either in admitting the reputation testimony or in excluding counsel fee evidence.
With respect to the majority of the issues raised by plaintiff on appeal, we are guided by the bedrock principle that admission or exclusion of proffered evidence is within the discretion of the trial judge whose ruling will not be disturbed unless there was a clear abuse of that discretion.Board of Educ. of Clifton v. Zoning Bd. of Adjustment of Clifton, 409 N.J. Super. 389, 430 (App. Div. 2009). As to the admission of testimony about the payment of counsel fees, the connection between the judge's exclusion of the evidence that PruZack was paying Callahan's counsel fees and the jury's damages award is too attenuated to support the conclusion that the court erred in excluding the evidence. The question here was the magnitude of the damages plaintiff suffered as a result of the breach, not the identity of the entity that paid Callahan's counsel fees. The evidence was not directly related to a damage award. See Green v. Buck Bros. Co., 98 N.J. Super. 187, 193 (App. Div.), aff'd o.b., 51 N.J. 6 (1967).
Addressing the issue of plaintiff's reputation, we again note that the reputation emerged during the presentation of plaintiff's case-in-chief, when Cook testified as to plaintiff's good reputation in the real estate community. Luedkte's testimony was presented in rebuttal.
Rebuttal evidence may be offered after the opposing party has "opened the door." See State v. Anastasia, 356 N.J. Super. 534, 542-43 (App. Div. 2003). The "open the door" doctrine is a rule of expanded relevancy that authorizes the admission of evidence that otherwise would have been irrelevant or inadmissible in order to respond to evidence that has generated an issue. "The doctrine of opening the door allows a party to elicit otherwise inadmissible evidence when the opposing party has made unfair prejudicial use of related evidence." Ibid. However, the rebuttal evidence is still subject to N.J.R.E. 403 and may be excluded where a court finds that its probative value is substantially outweighed by the risk of undue prejudice, confusion of issues, or the misleading of the jury. Ibid.
In State v. Baluch, 341 N.J. Super. 141 (App. Div.), certif. denied, 170 N.J. 89 (2001), on cross-examination of a witness, defense counsel elicited testimony that defendant had been "very nice" and "fair" to the victim. Id. at 190. We held that the defendant had opened the door; therefore, it was not error for the prosecution to elicit testimony in rebuttal as to the defendant's ill will and temper towards the victim. Ibid.
Similarly, here, Cook's testimony opened the door for his cross-examination about plaintiff's reputation, to which plaintiff did not object, as well as for Luedtke's testimony rebutting Cook's claims. Cf. State v. Vandeweaghe, 351 N.J. Super. 467, 482-83 (App. Div. 2002), aff'd, 177 N.J. 229, 241 (2003) (holding that the proffered rebuttal evidence should have been excluded under N.J.R.E. 403). We cannot conclude that any prejudice here was undue, especially in the face of plaintiff's affirmative claims as to its reputation. We find no error here.
Plaintiff asserts that the charge related to causation was erroneous. While we agree that the charge should have conformed to the language prescribed in Totaro, Duffy, Cannova & Co., L.L.C. v. Lane, Middleton & Co., L.L.C., 191 N.J. 1 (2007), we nevertheless conclude that the error does not warrant a reversal for the following reasons: first, plaintiff did not object to the charge as given by the trial judge. Second, the jury found in plaintiff's favor on the breach of contract claim, so that the issue as to the erroneous charge is rendered moot by the jury's finding. We also reject plaintiff's argument that an improper charge resulted in a low damage award. Nothing in the record supports this theory, and we conclude that any error was harmless.
Plaintiff next maintains that the judge erred by allowing defense counsel to improperly refer to absent witnesses after denying defendants' request for an adverse inference charge. We conclude that this was not error.
We have previously been confronted with a similar issue. In Nisivoccia v. Ademhill Associates, 286 N.J. Super. 419, 421 (App. Div. 1996), the defendant, in the absence of a request for an adverse inference charge, made reference during summation to the plaintiff's failure to produce a witness at trial. The plaintiff did not object and stated in summation that the reason the witness was not called was that she did not witness the accident. Id. at 423.
We have held that a defendant is not required to seek either an adverse inference charge, or permission from the court, before commenting on the witness's absence. Id. at 429. We noted that, unlike in criminal trials,4 in civil trials, one party is not obligated to help the other party's case, and attorneys in civil trials are charged with the knowledge that an adversary may focus on the failure to call a witness. Id. at 429-30.
Moreover, in civil trials the plaintiff has generally the last word and has the opportunity to address the defendant's summation comments about the failure to produce a witness. Id. at 430-31. Finally, in Nisivoccia, we found that the defendant's summation remarks were not prejudicial because the plaintiff should have realized prior to summation that the absent witness might be an unanswered question in the jurors' minds. Id. at 431.
Here, defendants requested that the court give an adverse inference charge. Even though the court declined the request, it did not rule that defendants could not make reference to the absent individuals in summation. In addition, plaintiff properly responded to defense counsel's remarks in its own summation. Finally, as is thematic for many of plaintiff's claims of error, the jury found in plaintiff's favor on the breach of contract claim. There was no error.
Plaintiff next contends that the court improperly limited its damages evidence in the main trial to $170,000, even though it had offered evidence of damages of $455,000. Plaintiff further asserts that the judge erred in instructing the jury not to consider evidence of lost earnings.
We conclude that the court did not abuse its discretion in limiting the damages evidence presented to the jury because the evidence was limited to losses incurred during the year after Callahan left plaintiff.
Plaintiff's original claim for damages for lost sales and commissions spanned 2005 to 2008. Ultimately, the court limited the transactions described in the damages chart submitted by plaintiff to the ones that fell within the one-year period following Callahan's departure from plaintiff. The judge was concerned that transactions in plaintiff's chart beyond that point in time would be "so remote . . . from the expiration of the one[-]year period and the agency agreement that . . . to draw any causal connection between anything she might have done during that one[-] year period and . . . ultimately signing up these people" would require the jury to engage in "pure speculation."
After the court ruled that the only rental and sales that could be recoverable were those that took place in the year starting July 29, 2005, the list was reduced to include three sales for which plaintiff claimed $75,997.50 in damages for lost commissions, over sixty tenant leases for which plaintiff claimed $79,463.40 in damages for lost commissions, and $14,052 in damages for lost commissions for rental authorizations. This totaled approximately $170,000.
As with other evidence, the admission or exclusion of damages evidence is a matter within the trial court's discretion. Sweeney v. Pruyne, 134N.J. Super. 15, 18-19 (App. Div. 1974), aff'd o.b., 67 N.J. 314 (1975).
Where a breach of a contract has been committed, mere uncertainty as to the amount of damages will not preclude recovery. Jersey CityRedev. Agency v. Clean-O-Mat Corp., 289 N.J. Super. 381, 402 (App. Div.), certif. denied, 147 N.J. 262 (1996). However, the evidence presented must afford a sufficient factual basis for estimating damages with some reasonable degree of certainty. Ibid. "It is . . . sufficient that the plaintiff prove damages with such certainty as the nature of the case may permit, laying a foundation which will enable the trier of the facts to make a fair and reasonable estimate." Lane v. Oil Delivery Inc., 216 N.J. Super. 413, 420 (App. Div. 1987). In a breach of contract case such as here, plaintiff is required to demonstrate the appropriate method for quantifying the loss. Totaro, supra, 191 N.J. at 15.
In Totaro, we held that the trial court erred in its calculation of damages due to "the manner in which the court evaluated the evidence demonstrating that all of the business would have eventually been lost even in the absence of a breach." Id. at 16. The Court upheld the trial court's determination of damages for the first year following the breach because the record established that each of the clients in question would have remained a client of the plaintiff in the first year following the defendant's departure. Id. at 17. However, the Court found no support for the trial court's apparent conclusion that the loss would have continued at the same level for the following two years. Ibid.
A similar circumstance is present here. The court concluded that evidence concerning customers lost by plaintiff beyond the one-year period set forth in the contract was speculative and would require the jury to engage in speculation. This was not an abuse of the trial court's discretion, in light of the one-year non-solicitation provision in the contract. The court did not err in restricting jurors' deliberations on damages for customers and transactions allegedly lost by plaintiff to PruZack during the one-year period after Callahan left plaintiff.
Plaintiff further argues that the court improperly barred the jury from considering business interruption and lost earnings damages. Plaintiff presented evidence regarding the disruption that Callahan's departure created and claimed that it was entitled to damages as a result. Plaintiff also presented evidence of Callahan's commissions from October 2004 to October 2005, which plaintiff used to show it would have benefited from Callahan's sales and rentals going forward had Callahan stayed with the company, and which plaintiff argued the jury could have used to extrapolate damages.
In instructing the jury on damages, the court stated:
In arriving at the amount of the award you should include all damages suffered by plaintiff because of lost profits at the time of the making of the contract, that is to say profits which the plaintiff would have made but for the breach of contract by the defendant.
[T]he plaintiff is to be awarded damages for such loss of profits as is capable of determination with reasonable certainty. In arriving at the amount of any loss of profits sustained by the plaintiff you may consider any past earnings of the plaintiff in its business as well as any other evidence bearing upon the issue.
At the conclusion of the charge, defendants objected to the court's reference to past earnings, claiming that the case was not about lost profits but lost commissions. The court agreed that lost profits should not have been charged and that the chart with Callahan's pre-departure commissions had no "probative consequence." The court then instructed the jurors to disregard that portion of the charge that stated that they could consider past earnings.
Plaintiff claims the court's amended instruction was error because "the jury had identifiable commission numbers from which it could extrapolate reimbursement for the cost to HCH of having to respond and resolve customer complaints, and other unquantified lost commission revenue caused by Callahan's solicitations." But the court did not rule, or instruct, the jury that it could not consider damages for having to respond to and resolve customer complaints. Nor did the court's amended instruction forbid the jury from "extrapolating" as plaintiff sought. Rather, the judge informed the jury that it could consider lost commissions but not past lost earnings, or profits.
Plaintiff next seeks a remand for a determination of prejudgment interest on the breach of contract award. We agree that plaintiff is entitled to this relief.
Prejudgment interest may be awarded in the court's discretion in breach of contract actions, in accordance with equitable principles.County of Essex v. First Union Nat'l Bank, 186 N.J. 46, 61 (2006). That exercise of discretion will be upheld unless it constitutes a manifest denial of justice. Musto v. Vidas, 333 N.J. Super. 52, 74 (App. Div.), certif. denied, 165 N.J. 607 (2000). The primary consideration in awarding prejudgment interest is that interest covers the value of the amount of the award for the period when defendant had use of the money awarded to plaintiff for breach of contract. Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 506 (1974). Such interest may be awarded, even though the damages are unliquidated. Performance Leasing Corp. v. Irwin Lincoln-Mercury, 262 N.J. Super. 23, 30 (App. Div.), certif.denied, 133 N.J. 443 (1993).
Nothing in the record indicates that the court ruled on plaintiff's request for prejudgment interest on the breach of contract award or that an award was made. We remand for that purpose. See Jones v. Bennett, 306 N.J. Super. 476, 488 (App. Div. 1998) (mandating a remand for reconsideration and a statement of reasons on application for prejudgment interest).
Plaintiff also asserts that the court erred in not awarding it taxed costs of $39,218.20 on its breach of contract claim. Under Rule 4:42-8(a), the prevailing party is ordinarily entitled to taxed costs. A prevailing party may be denied an award of costs only for "special reasons." Schaeferv. Allstate N.J. Ins. Co., 376 N.J. Super. 475, 487 (App. Div. 2005). "While the award of costs is to some extent discretionary, its denial requires special reasons beyond those justifying, for example, a denial of interest in non-tort actions." Pressler & Verniero, Current N.J. Court Rules, comment 1.1 on R. 4:42-8 (2012).
As with prejudgment interest, there is nothing in the record indicating that the court ruled on plaintiff's request for costs. We remand for that purpose as well.
While the trial court's ruling on the admissibility of the damages evidence was not an abuse of discretion, its denial of prejudgment interest and costs is reversed and the matter is remanded for further proceedings as to these issues.
Finally, we have carefully considered the extensive record here as well as the arguments of counsel and conclude that the remaining arguments as to inconsistency of the verdicts, admissibility of evidence as to customer complaints, reconsideration of counsel fees on the breach of contract claim, the claim for a new trial on damages as to the spoliation of evidence and the adequacy of fees as sanctions for the spoliation claim are without merit and do not warrant further discussion. R. 2:11-3(e)(1)(E).
1 Defendants Lowell and Dawn Cave, and their company Huey Bug L.L.C., were named and charged with alleged violations of their obligation of good faith and fair dealing in various listing agreements. Those claims were dismissed prior to trial.
2 According to Cave, he was a client of Callahan and wanted to follow her to PruZack. He did not do so, and Callahan denied soliciting him to move.
3 The issues regarding spoliation were bifurcated from the other issues and were the subject of a separate proceeding.
4 We take particular note that recently the New Jersey Supreme Court, in holding that an adverse inference charge should not be given against a criminal defendant, observed that while all such "negative inferences" should be carefully scrutinized, and prior notice given to the defense, the prejudicial effect from such an improper charge is much greater than a similar reference in the prosecution's summation. State v.Hill, 199 N.J. 545, 561-67 (2009). Similarly, in the civil context: "[i]t is one thing for counsel in his summation to point to the absence of particular witnesses; it is quite another when the court puts the weight of its authority behind such a summation by telling the jury it may draw an adverse inference from their absence." Wild v. Roman, 91 N.J. Super. 410, 415 (App. Div. 1966).