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Tuesday, July 31, 2012

VSG Acquisition Corp. v SM and SP Inc.

DOCKET NO. A-6208-10T1



SM & SP, INC.,

July 9, 2012

Submitted April 25, 2012 - Decided

Before Judges Sapp-Peterson and Ostrer.

On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-2651-11.

Javerbaum Wurgaft Hicks Kahn Wikstrom & Sinins, attorneys for appellant (Gary E. Roth, of counsel and on the briefs).

Archer & Greiner, P.C., attorneys for respondent (Patrick Papalia, of counsel; Mr. Papalia and Patrick A. Ascolese, on the brief).


Plaintiff VSG Acquisition Corp. (VSG), a temporary help service firm, N.J.S.A. 34:8-43, sued defendant SM & SP, Inc. (SMSP), also a temporary help service firm, for services rendered by VSG's employee. VSG appeals from Judge Heidi Currier's order granting SMSP's motion for summary judgment, dismissing VSG's complaint. Judge Currier held that because VSG was then unregistered, it was barred from maintaining its collection action, N.J.S.A. 34:8-45b, and not entitled to equitable relief in lieu of a contractual remedy. We affirm.
The facts are undisputed. VSG and SMSP are in the business of providing computer training, analysis, and management consulting to clients. VSG was formed in 2010 to acquire Vision Systems Group. Although VSG applied in March 2010 to register with the New Jersey Division of Consumer Affairs as a consulting and temporary help services firm, VSG did not timely respond to the agency's request for additional information. As a result, VSG was not registered until May 2011, after completing the services that are at issue.
In May 2010, VSG and SMSP entered into an agreement for one of VSG's employees to be placed temporarily with one of SMSP's end clients. The agreement stated that VSG would provide SMSP with the services of qualified consultants, employed by VSG. VSG agreed not to compete with SMSP or solicit its customers, and agreed that it would obtain a signed non-compete, non-solicitation agreement from its employee. SMSP agreed to pay VSG an hourly rate for the consultant's services as provided in an attached purchase order, with payment due within thirty days of invoicing. According to the purchase order, VSG provided Subhash Chand, a software architect, at the rate of $70 an hour, starting March 15, 2010.
The project ended October 15, 2010 and VSG sent an invoice to SMSP for a total of $76,160 for Chand's services. After SMSP refused to pay, VSG filed it complaint for collection in April 2011; SMSP filed its answer in May; and then, before the production of discovery (although mutual requests were served), SMSP moved for summary judgment on June 14, 2011 on the basis that VSG was not registered as a temporary help services firm.
After oral argument on August 5, 2011, Judge Currier issued an oral opinion granting the motion. Judge Currier first considered VSG's argument that it was exempt from the registration requirement under N.J.S.A. 34:8-46h, which provides that the act shall not apply to:
h. Any temporary help service firm which does not:

(1) Charge a fee or liquidated charge to any individual employed by the firm or in connection with employment by the firm;

(2) Prevent or inhibit, by contract, any of the individuals it employs from becoming employed by any other person;

(3) Knowingly send individuals it employs . . . for the purpose of replacing individuals who are striking or who are locked out . . . .

[N.J.S.A. 34:8-46(h).]

It was undisputed that VSG did not collect fees or charges as described in N.J.S.A. 34:8-46h(1), and did not knowingly send individuals to replace striking or locked out workers, as described in N.J.S.A. 34:8-46h(3). VSG argued that was sufficient to qualify VSG for exemption, because a temporary help services firm need only meet one of the three conditions to be exempt. The judge rejected this argument, relying on the statute's use of semicolons between the provisions and the absence of the word "or." 1
Judge Currier also rejected VSG's claim that since SMSP was also an unregistered temporary help service firm, and VSG had begun the registration process, equitable principles should have allowed it to collect the invoiced amount. Judge Currier noted the registration delay resulted from VSG's own failures. Also, although SMSP's conduct was "less than exemplary," its failure to register was not a ground for denying it the benefit of the Act's protection. The judge also noted that SMSP was not the party filing a claim. Relying in part on Data Informatics, Inc. v.Amerisource Partners, 338 N.J. Super. 61 (App. Div. 2001), she held that equitable relief was unavailable.
VSG appeals and raises the following points:
A. The Trial Court Erred In Granting Summary Judgment Based on Plaintiff's Failure To Register As A Temporary Help Services Firm.

1. Plaintiff Is Exempt From The Registration Requirements Under N.J.S.A. 34:8-46h.

a. A temporary help services firm should not be required to meet all three exemption criteria.

2. Assuming Arguendo That Plaintiff Is Not Exempt From The Registration Requirements Under N.J.S.A.34:8-46h, The Trial Court Should Have Denied Summary Judgment Based On Application Of Equitable Principles.


We review the trial court's grant of summary judgment de novo applying the standard set forth in Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). Lapidoth v. Telcordia Tech., Inc., 420 N.J. Super. 411, 417 (App. Div. 2011); Agurto v. Guhr, 381 N.J. Super. 519, 525 (App. Div. 2005). Judgment shall be granted if the evidence in the motion record shows "there is no genuine issue as to any material fact challenged and that the moving party is entitled to judgment or order as a matter of law." R. 4:46-2(c). Having reviewed the record and applicable law in light of that standard, we affirm substantially for the reasons set forth by Judge Currier in her cogent oral opinion. We add the following comments on the two issues raised by plaintiff.
Plaintiff concedes that it is a temporary help services firm as defined by N.J.S.A. 34:8-43, and that it was not registered pursuant toN.J.S.A. 56:8-1.1 when its cause of action arose. Plaintiff also concedes that unless it is exempt from the law, it was barred from bringing a collection action because it was unregistered. N.J.S.A. 34:8-45b (stating that a person "shall not bring or maintain an action" in a New Jersey court to collect "a fee, charge or commission" for services regulated by the act "without alleging and proving licensure or registration, as appropriate, at the time the alleged cause of action arose"). Plaintiff argues it was exempt from registration under the act because it met two of three grounds for exemption, N.J.S.A. 34:8-46h, which it argues should be read in the disjunctive. As a result, it was not subject to the provision barring unregistered firms from bringing actions to collect a fee, charge, or commission. We disagree.
The statute includes three grounds for exemption, but, as it omits "or" or "and" before the third exemption, the statute does not expressly state whether the exemptions should be read in the disjunctive, or conjunctive. We implicitly construed the provision to condition exemption on satisfaction of all three grounds in Data Informaticssupra, 338 N.J. Super. at 78. Although we were unpersuaded that the plaintiff qualified as a temporary help service firm, we also held it was not exempt. It may have satisfied one of the grounds for exemption dealing with replacement workers, but it failed to satisfy the two remaining grounds. We stated:
[E]ven if plaintiff were a "temporary help service firm," it could not prevail as (1) the statutory exemption from the Act's requirements for certain temporary help service firms does not apply to plaintiff because it charged a fee in connection with Balawat's employment and inhibited Balawat from becoming employed by Alliance by virtue of the "Master Service Contract[.]"

[Ibid. (citing N.J.S.A. 34:8-46h(1), (2)).]

Our reading is consistent with legislative intent. See Cast Art Indus., LLC v. KPMG LLP209 N.J. 208, 222 (2012) ("[I]f the language selected by the Legislature is ambiguous or admits of more than one plausible interpretation, courts may turn to extrinsic evidence such as legislative history to discern the legislative intent."); Pine Belt Chevrolet v. Jersey Cent. Power & Light Co.132 N.J. 564, 578 (1993) (whether a statute should be read in the conjunctive or disjunctive is primarily a question of legislative intent). The current statute is the product of a comprehensive modernization of the law on employment service providers, which repealed and replaced the prior statute. See Statement to A3018AS (January 12, 1990). The new law extended regulation to cover "consulting firms, career placement, outplacement, and prepaid computer job matching services." Ibid. However, in general, the drafters' intent was to continue existing law. "Most of the substitute's provisions regarding the regulation of private employment agencies are similar to the provisions of P.L. 1951, c. 337 (C. 34:8-24 et seq.), which is repealed by the substitute." Ibid.
Therefore, it is instructive to consider the provision in the prior law governing exemptions of temporary help service firms, which the 1989 law repealed and replaced. It is evident that the prior law required that, in order to be exempt from registration, a temporary help service firm had to satisfy all three of the grounds now set forth in N.J.S.A. 34:8-46h. The prior law stated:
Provisions of act not applicable.

2. The provisions of this act shall not apply to:

. . . .

(6) Any temporary help service firm; provided, that no fee or liquidated charge is charged any employee employed by the temporary help service firm or in connection with such employment. In addition, no temporary help service firm shall by contract with any of its temporary employees, prevent or inhibit any of such employees from becoming employed by any other person, firm or entity; further provided, that no temporary help service firm shall knowingly send its employees to, or knowingly continue to render services to, any plant or office where a strike or lockout is in progress for the purpose of replacing striking or locked out employees.

[L. 1981, c. 1, § 2, codified at N.J.S.A. 34:8-25, repealed by L. 1989, c. 331, § 28.]

In the first sentence of the old provision, the exemption was conditioned solely on not imposing charges or fees on employees; but, the next sentence added that the firm could not interfere with an employee's subsequent employment, and could not send its employees to replace striking or locked out workers. In short, the prior law treated the exemption grounds conjunctively.
There is no evidence the Legislature, in enacting the 1989 modernization of the law, intended to alter pre-existing policy on exempting temporary help service firms from the law. "There is authority for a presumption that amendatory acts do not change existing law further than is expressly declared or necessarily implied." Norman J. Singer & J.D. Shambie Singer, Sutherland Statutory Construction § 22.30 (7th ed. 2009). In addition, exceptions are to be strictly construed and doubts resolved in favor of the general rule rather than the exception. AsburyPark Press, Inc. v. City of Asbury Park19 N.J. 183, 197 (1955).
Finally, if one were to adopt plaintiff's construction of the statute, the exemption would have an unreasonably broad effect. Simply by eschewing the assignment of replacements for striking or locked-out workers — a relatively rare circumstance — a temporary help service firm could avoid complying with the remedial provisions of the Act. "Courts will not construe a clause in a statute in such fashion as to charge the Legislature with deliberately rendering impotent the clear and unambiguously expressed intention of the whole act." Asbury Park Press, Inc.,supra, 19 N.J. at 196 (quotation omitted).
In sum, we conclude, as did the trial court, that plaintiff was not exempt from the law, and, as an unregistered firm, was barred from bringing a collection action. N.J.S.A. 34:8-45(b).
We also reject plaintiff's argument that it is entitled to equitable relief, to avoid unjustly enriching SMSP, which itself had unclean hands because it was an unregistered temporary help service firm. Unclean hands is an equitable principle requiring that a court deny relief to a party who is guilty of inequitable conduct in the controversy. Seee.g.Glasofer Motors v. Osterlund, Inc., 180 N.J. Super. 6, 13 (App. Div. 1981). However, SMSP is not seeking relief. Plaintiff is.
We rejected a similar plea for equitable relief by an unlicensed employment agency in Data Informatics, Inc.supra, 338 N.J. Super. at 79-80. Our explanation in that case applies with equal force here:
While we appreciate plaintiff's argument that enforcement of the Act should not benefit alleged wrongdoers, ultimately, we must balance that concern against a legislative mandate which precludes otherwise possibly meritorious causes of action in order to insure enforcement of a statutory scheme which served the greater good. Such legislative trade-offs are not unknown, and where well-grounded in legitimate public policy considerations, will be enforced.

[Id. at 79-80.]

See also Accountemps Div. of Robert Half of Philadelphia, Inc. v. Birch Tree Group, Ltd.115 N.J. 614, 626 (1989) ("Our courts have consistently held that public policy precludes enforcement of a contract entered into in violation of [a] licensing statute."); cf. McCann v. Biss65 N.J. 301, 310 (1974) (where a claim in quantum meruit would substantially undermine a law and its spirit — in that case, the Statute of Frauds — "[i]t cannot be allowed"); Tanenbaum v. Sylvan Builders, Inc.29 N.J. 63, 71-72 ("the legislative objective in closing the courts to the unlicensed broker" barred pursuit of tort claims, as well as contract claims arising out of unlicensed activities). The provision barring collection actions also serves the goal of general deterrence — discouraging covered firms from ignoring the registration mandate. Granting equitable relief would undermine that goal.
1 Judge Currier also rejected VSG's argument that it actually satisfied all three grounds for exemption, as a VSG representative had certified that, to the best of her knowledge, Shand had never actually signed the non-compete and non-solicitation agreement. However, VSG has abandoned this argument on appeal. See also Data Informatics, Inc. v. Amerisource Partners, 338 N.J. Super. 61, 78 (App. Div. 2001) (restrictive provisions in a master contract serve to inhibit employment even when there is no agreement signed by the individual employee).

Yardley v. Betar

DOCKET NO. A-5740-09T1






July 10, 2012

Submitted March 26, 2012 - Decided

Before Judges Sabatino and Ashrafi.

On appeal from Superior Court of New Jersey,
Law Division, Morris County, Docket No.

Merrick Wilson, appellant/cross-respondent pro se.

Santo J. Bonanno, attorney for

Third-party defendant Merrick Wilson1 appeals from judgment after trial before a jury in favor of third-party plaintiffs Greg and Donna Betar for $61,289.93 plus prejudgment interest and costs awarded by the court totaling $5,843.78. Wilson contends that certain prejudicial trial errors occurred, but primarily, he argues that the trial court erroneously permitted the jury to find him personally liable for breach of a settlement agreement with the Betars that he executed only on behalf of the corporate plaintiff, Yardley Travel Ltd. The Betars cross-appeal from the trial court's denial of their motion to amend their third-party complaint to add claims of fraud. We reject the arguments in both the appeal and the cross-appeal and affirm the judgment.
Yardley Travel Ltd. was a Pennsylvania corporation engaged in the travel business and owned by appellant Wilson's wife, Susan Wilson. In 2006, Yardley hired Greg and Donna Betars' son as a travel agent. The following year, Yardley added a ticket brokerage service to its business, and the Betars' son was given primary responsibility for running that service.
In early January 2008, Susan Wilson discovered that a large number of event tickets had been purchased by unauthorized use of her personal American Express card, Yardley's corporate American Express card, and several credit cards of Yardley's clients. Appellant Wilson investigated the unexplained credit card charges and concluded that the Betars' son had carried out a fraudulent ticket purchase scheme. Wilson calculated a loss of $61,298.92 to Yardley and the credit card holders.
On January 4, 2008, Wilson confronted the son, who immediately left the office complaining of health problems. Wilson was not able to contact him after he left. On the same day, Wilson contacted the police in Lower Makefield Township, Pennsylvania, and relayed his belief that the Betars' son had engaged in credit card fraud and theft of the tickets.
Within days, Wilson contacted Greg and Donna Betar, who lived in Oak Ridge, New Jersey. Donna Betar testified at trial that Wilson and his son, Matt Wilson, left threatening messages on her answering machine about her son's potential criminal liability. She testified that the Wilsons told her of an imminent meeting with the police scheduled for the afternoon of January 7, 2008. They offered to cancel the meeting and withdraw their police complaint if the Betars reimbursed Yardley for the losses attributed to their son. In his testimony, Wilson stated he did not recall whether he agreed not to press charges if the Betars paid for the loss.
After many phone conversations, Donna Betar reached an agreement with Wilson to make payment to avoid criminal and other accusations against her son. At trial, Wilson acknowledged that an agreement was reached but could not recall the substance of the agreement. Donna Betar testified that the agreement was that the Betars would pay Yardley $61,289.93, and in exchange all claims or charges before the police, Yardley's insurance carrier, and American Express would be withdrawn and no further action would be taken against any of the Betars.
On January 7, 2008, the Betars went to Yardley's office in Yardley, Pennsylvania, to complete the settlement. The Betars and Wilson had each prepared a written document for signature by the other party to the oral agreement. The relevant terms of Wilson's settlement document provide:
[The Betars] have given Yardley Travel Ltd. a certified check in the amount of $61,298.92 as consideration to pay for the expenses of the alleged theft, alleged criminal activities, and losses perpetrated by your son . . . against Yardley Travel Ltd. and Yardley Tickets, which have been discovered to date and are outlined in the attached spreadsheet . . . . Yardley Travel Ltd., at your request and as consideration to you, will notify the Lower Makefield Township police department, Selective Insurance Company, and American Express Co. that $61,298.92 has been received to cover the alleged losses . . . .

[The Betars] recognize that the . . . payment is only for the alleged criminal activities that have been discovered and identified as of January 6, 2008 and outlined on the attached itemized spreadsheet . . . .

The Betars' handwritten settlement document provides:
The checks in the total amount of $61,289.93 are to reimburse Yardley Travel in full for the alleged fraudulent credit card charges that were done by [the Betars' son].

This payment is being made after the verbal agreement between Donna Betar and Rick Wilson and Matt Wilson via telephone stating that upon receipt of the agreed amount . . . Yardley Travel would guarantee all claims and charges would be dismissed with American Express, the Insurance Company, and the police department. . . .

This payment now makes Yardley Travel whole and fully compensated and allows no further action to be taken against [the Betars' son], Donna Betar, and Gregory Betar.

The parties simultaneously signed the two documents, and the Betars made the promised payment by certified checks payable to "Yardley Travel."2 The Betars agreed to sign Wilson's settlement document only on the condition that Wilson sign their settlement document. Despite the contradictory terms of the two documents as to the scope of matters covered by the settlement, the parties acknowledged at trial that both documents are part of the settlement agreement.
Wilson testified that he signed the settlement documents on behalf of Yardley in his capacity as vice-president of the corporation. His signature on both agreements is accompanied by the title "Vice President, Yardley Travel Ltd." However, Wilson produced no documentary evidence at trial to verify his status as an officer of the corporation, and he conceded at trial that there was no formal appointment of him as vice-president. In another document, Wilson indicated he was Yardley's president, and in yet other documents, he had no title related to the corporation.
A month after the settlement agreement was executed, Wilson learned that the Betars' son had arranged an October 2007 trip to Las Vegas for his parents without receiving payment. Yardley sent the Betars a demand letter for $2,342.30 for the Las Vegas trip. The Betars refused to pay the amount demanded, taking the position that others owed part of that sum. Wilson then contacted the local police department and accused the Betars of conspiring in their son's credit card scheme.
Wilson continued to communicate with the police in furtherance of criminal proceedings against the son in Bucks County, Pennsylvania. He did not withdraw the criminal complaint he had filed earlier because, he said, he felt morally obligated to cooperate with the police and the prosecutor and the settlement agreement did not apply to additional losses he discovered.3
After the agreements were executed, Susan Wilson contacted American Express to file a fraud complaint. Also after the agreements were executed, Wilson contacted Yardley's insurer to file a claim for losses related to the credit card scheme.
On February 15, 2008, Wilson filed a Small Claims complaint on behalf of Yardley in the Superior Court of New Jersey, Special Civil Part, to recover $2,342.30 allegedly owed by the Betars for the Las Vegas trip. The Betars filed a counterclaim against Yardley and a third-party complaint against Wilson alleging that he breached the settlement agreement. As damages, the Betars sought a refund of the settlement payment they had made to Yardley. Because the relief sought exceeded the jurisdictional limit of the Special Civil Part, the matter was transferred to the Law Division pursuant to Rule 6:4-1(c).
While trial was pending, Yardley filed for Chapter 7 bankruptcy protection, and the corporation ceased to exist on April 4, 2009. As a result, the Betars' counterclaim for breach of contract against Yardley was dismissed.
The Law Division conducted a four-day trial in June 2010 on Yardley's Small Claims complaint and the Betars' third-party complaint against Wilson. At the close of evidence, the Betars moved to dismiss Yardley's complaint, arguing that Wilson lacked capacity to sue on Yardley's behalf. They also moved to amend their third-party complaint to add fraud claims against Wilson based on his testimony at trial. Wilson moved to dismiss the Betars' third-party complaint, arguing no reasonable jury could conclude that he agreed to be bound personally by the settlement agreement. The court denied all three motions.
In its final charge to the jury, the court gave instructions as to the limited liability of a corporate officer undertaking acts on behalf of the corporation. The jury found that the Betars owed Yardley $300 for the Las Vegas trip. As to the third-party complaint, the jury found that "a contract was formed between the Betars and Merrick Wilson on the subject of reimbursement for the alleged thefts," that Wilson breached the contract, and that the Betars were entitled to damages in the amount of $61,289.93. The court entered judgment on July 15, 2010, for the amounts found by the jury plus prejudgment interest.
Four issues are presented by Wilson's appeal and the Betars' cross-appeal: (1) whether there was sufficient evidence to permit the jury to find that Wilson was bound personally by the settlement agreement; (2) whether testimony that Yardley went out of business prejudiced Wilson; (3) whether the court erred by allowing the jury to hear the answering machine messages left by Wilson and his son for the Betars; and (4) whether the court erred in denying the Betars' motion to amend their third-party complaint to add claims for fraud.
To the extent Wilson may be challenging the jury verdict as against the weight of evidence, Rule 2:10-1 precludes the argument on appeal because he did not move for a new trial on that ground. In the absence of a motion for a new trial raising the issue, an appellate court will usually not consider an appeal challenging the jury verdict as against the weight of the evidence. Ogborne v. Mercer Cemetery Corp., 197 N.J. 448, 462 (2009); Gebroe-Hammer Assocs., Inc. v. Sebbag, 385 N.J. Super. 291, 295 (App. Div.), certif. denied188 N.J. 219 (2006).
We view Wilson's appeal as alleging error in the trial court's denial of his motion to dismiss the Betars' claims at the close of evidence pursuant to Rule 4:37-2(b). He argued that he was merely an agent of Yardley when he negotiated the settlement and signed the documents, and that there was no proof he undertook to be personally bound by Yardley's agreement with the Betars. The trial court denied Wilson's motion because it found sufficient evidence for reasonable minds to differ as to whether Wilson had agreed to be a party to the oral agreement negotiated over the telephone and whether Wilson was acting exclusively as an agent of Yardley when he signed the settlement documents.
Our standard of review on an appeal from denial of a motion to dismiss under Rule 4:37-2(b) is whether the evidence, together with all legitimate inferences, could sustain a judgment in favor of the party opposing the motion, here, the Betars. See R. 4:40-1; Besler v. Bd. of Educ.of W. Windsor-Plainsboro Reg'l School Dist.201 N.J. 544, 572 (2010); Potente v. Cnty. of Hudson187 N.J. 103, 111 (2006). We are "not concerned with the worth, nature or extent (beyond a scintilla) of the evidence, but only with its existence." Dolson v. Anastasia55 N.J. 2, 5-6 (1969). In reviewing the sufficiency of the evidence, we will accept as true all evidence supporting the third-party complaint and accord that evidence all favorable inferences. Ibid. If reasonable minds could differ, the denial of the motion must be affirmed. Ibid. Under this standard of review, we will not re-weigh witness credibility. Alves v. Rosenberg, 400 N.J. Super. 553, 565-66 (App. Div. 2008); Cavanaugh v. Skil Corp., 331N.J. Super. 134, 176 (App. Div. 1999), aff'd164 N.J. 1 (2000). That function belonged to the jury.
Wilson contends the evidence could not sustain the finding that he was a party to the agreement because he was a disclosed agent of Yardley and therefore not liable for Yardley's contract of settlement, and because he was an officer of Yardley and the circumstances do not justify piercing the corporate veil. We can dispense quickly with the argument regarding piercing the corporate veil because the jury's verdict rests on the Betars' claim that Wilson agreed to be bound personally by the terms of the agreement.
We can also dispense with discussion of Wilson's choice-of-law contentions because the law of personal liability for corporate actions is not different in New Jersey and Pennsylvania. See Gantes v. Kason Corp.145 N.J. 478, 484 (1996); Veazey v. Doremus103 N.J. 244, 248 (1986). The law in both states is that a corporation acts only through its agents, and the personal liability of an agent for a corporation's contract is determined under the common law of agency. African Bio-Botanica, Inc. v. Leiner, 264 N.J. Super. 359, 363 (App. Div.) (citing Looman RealtyCorp. v. Broad St. Nat'l Bank of Trenton32 N.J. 461, 476-79 (1960)), certif. denied134 N.J. 480 (1993); see Bucks v. Buckwalter215 A.2d 625, 627 (Pa. 1966). In both jurisdictions, the general rule is that "[u]nless the parties agree otherwise . . . an agent who contracts on behalf of a fully disclosed principal is not personally liable on the contract." African Bio-Botanicasupra, 264 N.J. Super. at 363-64 (citing Loomansupra, 32N.J. at 476-78); see Revere Press, Inc. v. Blumberg246 A.2d 407, 409 (Pa. 1968); Pa. Gas & Water Co. v. Nenna & Frain, Inc.467 A.2d 330, 336 (Pa. Super. Ct. 1983); accord Restatement (Third) of Agency § 6.01 (2005).
When a claimant contends an agent agreed to be a party to a contract, that party "has the burden of showing a manifestation of assent by the agent . . . ." Restatementsupra, § 6.01 comment d(1); e.g.Leutwyler v. Royal Hashemite Ct. of Jordan, 184 F. Supp.2d 303, 309 (S.D.N.Y. 2001). "An agent is not a party . . . if any portion of the parties' writing makes clear that the agent acts solely in a representative capacity . . . ."Restatementsupra, § 6.01 comment d(1). "The manner in which an agent's name appears in a contract is often relevant to establishing . . . whether the agent has manifested assent to become a party to the contract." Ibid. However, "[u]sing language that simply describes a person as an agent is insufficient to indicate that the person acts only in a representative capacity . . . ." Ibid. (emphasis added). "The nature of the parties' contract may also establish whether an organizational executive agreed to be individually liable." Id. at comment d(2).
Wilson admitted he understood and assented to the terms of the Betars' handwritten document after he had entered into an earlier oral agreement. The Betars' document provides that they were making payment in reliance upon "the verbal agreement between Donna Betar and Rick Wilson and Matt Wilson via telephone." Donna Betar testified she believed as a result of the telephone conversations that her agreement was with the Wilsons as well as with Yardley. It makes little sense in the factual circumstances presented that the Betars would agree to pay $61,289.93 without an undertaking by the Wilsons not to do in their personal capacities what they could not do on behalf of Yardley, that is, continue pursuit of criminal or fraud charges against any of the Betars.
Wilson's signature on both settlement documents included the title "Vice President, Yardley Travel." Federal and New York courts have held that an officer cannot negate express terms indicating personal liability by simply adding his or her title to the signature line of the agreement. E.g.Am. Mgmt. Corp. v. Dunlap, 784 F. Supp. 1245, 1250-51 (N.D. Miss. 1992); PNC Capital Recovery v. Mech. Parking Syss.726 N.Y.S.2d 394, 397 (N.Y. App. Div. 2001), appeal dism.781 N.E.2d 911 (N.Y. 2002); Chem. Bank v. Masters574 N.Y.S.2d 754, 755 (N.Y. App. Div. 1991); see also In re Estate of Duran692 A.2d 176, 179 (Pa. Super. Ct. 1997) ("The mere presence of the corporate name above the signature line does not exclusively indicate corporate liability.").
Wilson's reliance on the designation of his purported title is undermined by the fact that the signing occurred after the oral agreement had been reached and also by the nature of the agreement itself. See Chem. Banksupra, 574 N.Y.S. 2d at 755. The disputed factual issue of whether Wilson signed the agreement only on behalf of the corporation or also on his own behalf was for the jury to determine based on all the evidence.
The jury could take into consideration the particular nature of the agreement to conclude that Wilson had personally agreed not to pursue criminal or other fraud charges against any of the Betars provided that they made payment to Yardley of the amount then known to have been lost, which they did. The jury could also consider the fact that Susan Wilson had personally incurred potential liability because her own American Express card had been used in furtherance of the fraudulent ticket purchase scheme and therefore could seek charges against the Betars' son on her own behalf. The jury could conclude that the duties under the settlement agreement did not fall entirely within the scope of Wilson's capacity as a purported corporate officer.
In his brief, Wilson fails to undermine the evidence favoring the Betars' view of the agreement or to reconcile the terms of the conflicting settlement documents. Instead, he points to evidence indicating the parties' intent that Yardley would be bound by the contract, for example, Donna Betar's testimony to that effect, the use of Yardley letterhead for his settlement document, the signing of the documents at Yardley's office, and the designation of Yardley as the payee on the settlement checks. But Wilson does not explain why evidence that Yardley was a party to the agreement demonstrates that he was not a party as well. See Sherman v. Josephson, 44 N.J. Super. 419, 426-27 (App. Div. 1957) (it does not follow as "a necessary inference" that because the subject matter of a contract was owned by the corporation that the officer was only acting in the capacity of an agent of the corporation (quoting Sadler v. Young78 N.J.L. 594, 596 (E. & A. 1910))).
Wilson testified that he is an officer of five other corporations and is familiar with the execution of corporate contracts. Yet he did not follow the best practice under these circumstances by signing in a manner that clearly indicates he was acting only in a representative capacity, such as, "Merrick Wilson for Yardley Travel" or "Yardley Travel by Merrick Wilson," Restatementsupra, § 6.01 comment d(1); see Sherman,supra, 44 N.J. Super. at 426 (affirming denial of motion to dismiss because agent "signed individually . . . without any qualification or designation denoting agency"). Wilson's argument is also undermined by his inability to produce any corroborating evidence at trial to support his claim that he was in fact an officer of the corporation. See Bennett v. T. & F. Distrib. Co., 117 N.J. Super. 439, 441-44 (App. Div. 1971), certif.denied60 N.J. 350 (1972) (agency is generally a question of fact for the jury).
Ultimately, the outcome of this case turned on the jury's understanding of the conflicting terms of the settlement documents as developed through the testimony of Wilson and Donna Betar. Where a jury's verdict turns on witness credibility, we defer to the jury's determination.
In sum, we reject Wilson's argument that he was entitled to dismissal of the third-party complaint because he was not personally bound by the settlement agreement.
Citing Brodsky v. Grinnell Haulers, Inc., 362 N.J. Super. 256, 265-66 (App. Div. 2003), aff'd181 N.J. 102 (2004), Wilson contends he was prejudiced when the jury learned that Yardley was no longer "financially viable" because that knowledge may have caused the jury to shift responsibility to him.
The trial transcript alludes to an in limine ruling instructing the Betars' attorney not to reveal Yardley's bankruptcy. On direct examination, Wilson's attorney asked him what his involvement was with Yardley. Wilson responded: "At this moment in time . . . Yardley Travel Limited doesn't exist." During cross-examination, the Betars' attorney asked Wilson: "When did the company cease to exist?" Wilson's attorney objected, but the court overruled the objection because the question did not seek to reveal Yardley's bankruptcy or insolvency.
In Brodsky, an automobile negligence case, we stated that efforts to focus the jury "on irrelevant and prejudicial facts, such as a party's financial status or insurance status . . . may constitute reversible error" when the statements "reinforc[e] in the jurors' minds the need to shift sufficient blame to the apparently-solvent defendants . . . ." Id. at 265-66. In this case, there was no reference to the solvency or insurance status of Yardley. Moreover, Wilson himself informed the jury that Yardley no longer existed at the time of trial.
There was no abuse of discretion in the court's permitting on cross-examination a question to establish the time at which Yardley went out of business. See Estate of Hanges v. Met. Prop. & Cas. Ins. Co.202 N.J. 369, 382 (2010).
Wilson contends the trial court erred in allowing the jury to listen to recorded messages left by him and his son on the Betars' answering machine. He contends the Betars recorded those messages in violation of the "Pennsylvania Wiretap Act," which he does not cite in his brief.
Wilson's attorney objected at trial to admission of the recordings, arguing they were cumulative and inflammatory. The court overruled the objections and allowed the jury to hear the messages because they were relevant to the terms of the oral agreement between Wilson and the Betars.
The short answer to Wilson's contention on appeal is that Pennsylvania's Wiretapping and Electronic Surveillance Control Act, 18 Pa.C.S.A. §§ 5701-5782, even if applicable to a message on an answering machine located in New Jersey, does not bar voluntary recordings left on a telephone answering machine or on voice mail. The persons who left the messages, Wilson and his son, Matt Wilson, knew they were leaving recorded messages and therefore consented to the recordings. See id. at § 5704(4).
In their cross-appeal, the Betars contend the trial court erred in denying their motion pursuant to Rule 4:9-2 to amend the pleadings at the close of evidence to add claims of fraud. They pointed to Wilson's testimony at trial that his motivation in signing their handwritten settlement document was to induce them to make the payment. The court acknowledged New Jersey's liberal approach to amending pleadings but denied the Betars' motion because there was insufficient evidence to establish the "material misrepresentation" element of fraud.
"Rule 4:9-2 requires that motions for leave to amend be granted liberally." Kernan v. One Wash. Park Urban Renewal Assocs.154 N.J. 437, 456 (1998). The court must balance "undue delay or prejudice from the amendment" against "the overriding need to seek justice." Adron, Inc. v.Home Ins. Co., 292 N.J. Super. 463, 475-76 (App. Div. 1996).
The standard of review for denial of a motion to amend in these circumstances is abuse of discretion. See Kernansupra, 154 N.J. at 457. We find no abuse of discretion in the trial court's ruling, especially since the Betars prevailed in the jury's verdict without the requested amendment.
1 Merrick Wilson, Rick Wilson, Richard Wilson, and Marricio Wilson are alternative names in the record for the same person. The caption of the case is from the trial court's judgment. Appellant identifies himself as Merrick Wilson in his pro se brief. We will refer to him by his last name.
2 There is a small discrepancy in the settlement figures recited by the parties. The checks the Betars subsequently issued to Yardley matched their $61,289.93 figure, and the jury's award also used that figure.
3 Our record does not indicate the outcome of any criminal prosecution of the son in Pennsylvania, and we make no determination as to whether criminal offenses were committed.