ERIC M. RAUCH VS. STUART RAUCH(L-4177-10, PASSAIC COUNTY AND STATEWIDE) ( 2017 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court."
Although it is posted on the internet, this opinion is binding only on the
parties in the case and its use in other cases is limited. R.1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-4745-14T4
ERIC M. RAUCH and SHAN CHIN,
individually and in their
capacity as officers of and
derivatively as shareholders
and members respectively of
PHYLCO, LTD, d/b/a DOCTORS
SUBACUTE CARE and SOUTHVIEW,
LLC,
Plaintiffs-Appellants,
v.
STUART RAUCH and PHYLLIS RAUCH,
Defendants-Respondents,
and
PHYLCO, LTD, d/b/a DOCTORS
SUBACUTE CARE and SOUTHVIEW,
LLC,
Nominal Defendants.
______________________________________
Argued March 16, 2017 – Decided August 30, 2017
Before Judges Espinosa, Suter and Guadagno.
On appeal from the Superior Court of New
Jersey, Law Division, Passaic County, Docket
No. L-4177-10.
Stephen Schweizer (Quinn Emanuel Urquhart &
Sullivan, LLP) of the New York bar, admitted
pro hac vice, argued the cause for appellants
(Greenbaum, Rowe, Smith & Davis, LLP, and Mr.
Schweizer, attorneys; Justin P. Kolbenschlag
and Mr. Schweizer, on the brief).
Kevin H. Marino argued the cause for
respondents (Marino, Tortorella & Boyle, PC,
attorneys; Mr. Marino, John A. Boyle, and Erez
J. Davy, on the brief).
PER CURIAM
Plaintiffs Eric Rauch and Shan Chin appeal four orders arising
from their litigation against defendants Stuart and Phyllis Rauch. 1
The litigation, asserting legal and equitable causes of action,
requested declaratory judgment, specific performance damages and
injunctive relief stemming from a dispute over plaintiffs' claimed
ownership interest in defendants' business. The June 10, 2014
order denied defendants' motion for summary judgment and
plaintiffs' cross-motion for summary judgment. The January 20,
2015 order granted defendants' renewed motion for summary
judgment, and dismissed with prejudice eight counts of plaintiffs'
ten-count complaint. That order also denied plaintiffs' cross-
motion to dismiss three of defendants' affirmative defenses. The
May 4, 2015 order granted defendants' motion in limine to exclude
from the trial all testimony and evidence that was not related to
1
We use the parties' first names to avoid confusion.
2 A-4745-14T4
the reasonable value of plaintiffs' services. The May 19, 2015
order granted a directed verdict in favor of defendants on the
remaining counts of the complaint, dismissing it with prejudice.
We affirm all four orders.
I.
Plaintiff Eric Rauch is the son of Stuart and Phyllis Rauch,
and is married to plaintiff Shan Chin. In 2005, Stuart and Phyllis
purchased a nursing home (the facility) through Southview, LLC, a
company they formed in 2001, and operated the facility through
Phylco Limited LTD, d/b/a Doctors Subacute Care (DSC), another
company that they owned (collectively, the Rauch companies). The
facility suffered financial losses almost from the beginning of
its operation. At Eric's urging, Shan began working at the
facility in February 2006 with responsibility for bookkeeping and
billing insurance providers. By 2008, the facility's net losses
exceeded $585,000.
In February 2009, Eric lost his job in the merger and
acquisition section of a large law firm and immediately approached
Stuart about working for the Rauch companies. Eric was concerned
about his parents because "they had personal guarantees on [the
Rauch companies] and if [they] had gone under it would have meant
the end of them . . . they would go bankrupt personally." Eric
3 A-4745-14T4
began to work at the nursing facility in February 2009 without a
salary.
Eric's plan was to increase the number of Medicare and managed
care patients to improve the facility's reimbursement rates. None
of the parties dispute that the financial condition of the facility
improved markedly in 2009, earning $554,000, which meant the
business improved its performance by over one million dollars
during that year. Net revenues increased further in 2010.
In August 2009, Eric asked his father for a fifty percent
equity interest in the business, to be shared with Shan, and told
his father if he did not agree within a week, that he and Shan
would leave after a brief period of transition. However, if Eric
and Shan were given this fifty percent equity interest, they would
continue working. No other employment conditions were discussed,
nor was the length of time they would stay.
Stuart agreed and they shook hands. Both Eric and Shan
continued working at the Rauch companies for the next ten months.
There was no written agreement. Eric described the terms that
were discussed:
[W]e would continue to discuss significant
operating decisions collaboratively as we had,
that was in response to [Stuart's] concern
that he would have no more authority over the
business. Another term that was agreed to was
that we, Shan and I, would each have [twenty-
five] percent in Phylco and Southview as of
4 A-4745-14T4
that moment. Another point that was discussed
was that he wanted to buy an apartment and
wanted to know if this fifty-percent deal
would prevent him from doing that. I told him
that I [didn't] think that it would . . . .
Other terms that were discussed on that day
were that he, after the agreement, offered me
again, a salary, and I told him that I didn't
need much money, but I would appreciate if the
business started paying my rent, and he said
that I should have to do that.
There was no discussion about the other fifty percent of the
Rauch companies until January 2010 at a family brunch. Stuart and
Phyllis wanted Daniel, their other son, to have twenty-five percent
of the business, and Eric objected.
In June 2010, Eric wanted Stuart and Phyllis to sign a
"Director Agreement" (the Agreement). The document identified
Stuart and Phyllis as owners and Eric as director. Under its
terms, the owners would "ensure that the [d]irector's judgment is
adhered to with regard to major decisions regarding the [b]usiness
including but not limited to transfer of ownership, assets, and
hiring of key personnel." The "[o]wners" also would "compensate
the [d]irector for service previously rendered." Plaintiffs
described the Agreement as setting forth "the manner in which
defendants were to grant Eric Rauch exclusive authority to make
certain decisions" about transfer of ownership interests, assets
and hiring. The Agreement was never signed.
5 A-4745-14T4
Eric and Shan contend that they were fired by Stuart shortly
thereafter. Defendants contend that Eric and Shan simply did not
return to work once Stuart would not sign the Agreement.
On July 9, 2010, Stuart met with Eric and Shan at their
apartment but unknown to Stuart, Eric tape-recorded their
conversation. In the beginning of the recording, Stuart appeared
to make a financial proposal to Eric and Shan. Eric apologized
to his father. "I feel like I used the fact that you needed me
and Shan there to get you to agree to give us [fifty percent] of
the business. And I know that it was . . . a betrayal." His
father acknowledged an agreement, stating "what I agreed to . . .
was . . . a gentleman's agreement in principle." During the
conversation Stuart explained to Eric "[the business] will
definitely be [fifty percent] yours if you wait until the will is
executed, because that's my intention. And it's still my
intention." Toward the end of the recording, Stuart stated:
I would not have given you an agreement to
give you [fifty percent] if you hadn't coerced
me that day. The entire structure was
predicated on a coercion. And if you build a
structure on a bad foundation the whole thing
is going to topple. And it did topple. And
I believe that there was a flaw in the original
agreement that we had reached. If we had
reached an agreement that was a virtuous one,
by virtuous means, which I can't imagine how
that would take place, but I note that the
agreement that we reached was the farthest
thing in my mind from mutually agreed upon. I
6 A-4745-14T4
was backed into a corner and I agreed on
something which I tried to stomach. But in
my mind, not only was it a bad and unfair
agreement to begin with, but it got worse and
worse and worse every week, every month that
our working together took place.
Stuart continued that he did not consider he was "breaking an
agreement that was a fair agreement or mutually agreed upon"
because he thought Shan and Eric were going to "leave that day if
I didn't agree in some way, shape, or form to the [fifty-fifty]
division."
In August 2010, Eric and Shan sued Stuart, Phyllis, and their
companies in a ten-count complaint.2 Defendants answered and filed
counterclaims. Following discovery and mediation, both sides
filed summary judgment motions.
On June 10, 2014, Judge Donald J. Volkert, Jr. denied
defendants' motion for summary judgment, which had requested
dismissal of the complaint on the grounds that the agreement was
unenforceable because of economic duress. Judge Volkert also
denied plaintiffs' cross-motion, which requested summary judgment
on their contract and conversion causes of action.
2
The claims included breach of contract (Count One); declaratory
judgment to transfer ownership (Count Two); oppression (Count
Three); promissory estoppel (Count Four); unjust enrichment (Count
Five); breach of fiduciary duty (Count Six); constructive trust
(Count Seven); wrongful termination (Count Eight); breach of
covenant of good faith and fair dealings (Count Nine); fraud and
conversion (Count Ten).
7 A-4745-14T4
In his written opinion, Judge Volkert found that although
both parties appeared to benefit from the deal, "a rational fact
finder could well determine that plaintiffs' promise of continued
employment with the Rauch companies in exchange for a [fifty
percent] equitable share of [the] Rauch companies did not
constitute adequate consideration." He found a genuine issue of
material fact remained as to "whether or not the alleged
[a]greement contained adequate consideration." Regarding the
economic duress defense, he found there was a genuine issue of
fact about "whether or not defendants' unfettered will was
overcome."
The court denied plaintiffs' cross-motion for summary
judgment on the contract and conversion claims, concluding as an
initial matter, that defendants had only "accepted plaintiffs'
factual assertions as true in support of the [m]otion for [s]ummary
[j]udgment," and the claims were not barred by judicial estoppel.
The court then found there were essential terms that the parties
"never agreed to or even discussed." These included "the
possibility of transferring ownership interests to other members
of the family, assumption of corporate liabilities and debts, and
pre-existing encumbrances." Other essential terms were disputed
by the parties. These included "the timing of the alleged
transfer, the composition/source of the alleged transfer, the
8 A-4745-14T4
recipients of the alleged transfer, the allocation of the alleged
transfer, and the corresponding liability and/or conditions
contingent upon or accompanying the transfer." The court denied
the cross-motion for summary judgment because "when presented with
the terms of the agreement, or lack thereof, the trier of fact
would be required to engage in 'sheer speculation' to determine
whether the parties lived up to their respective obligations."
Defendants renewed their motion for summary judgment after
Judge Volkert's decision, alleging the agreement was unenforceable
because of the absence of the essential terms that Judge Volkert
had identified. Plaintiffs filed a cross-motion to dismiss certain
of defendants' affirmative defenses.3
By order dated January 9, 2015, Judge Thomas J. LaConte
granted defendants' summary judgment motion in part by dismissing
all of the complaint except for Count Four (promissory estoppel)
and Count Five (unjust enrichment), and denied plaintiffs' cross-
motion for summary judgment in its entirety. In analyzing the
four required elements to prove a claim of promissory estoppel,
the court found that there was a clear and definite promise to
give a fifty percent equity interest in the company, that the
3
These included the failure of consideration defense, the no
meeting of the minds defense, and the no clear and definite promise
defense.
9 A-4745-14T4
promise was made with the expectation that it would be relied upon
by Eric and Shan, and that Shan and Eric relied upon the promise
by continuing to work for another ten months. However, the court
found an issue of fact about whether they had incurred a detriment
of a definite and substantial nature, which must be incurred in
reliance on the promise.
The court dismissed the remaining counts of the complaint,
finding that essential terms were missing. In addition to the
three missing essential terms found by Judge Volkert, Judge LaConte
found the "contract was somewhat illusory from the standpoint that
there was no firm commitment [by] Shan and Eric as to how long
they would stay in exchange for getting [fifty] percent of this
company." It would be "sheer speculation" as to what Eric and
Shan agreed to by way of continued employment. Therefore, the
agreement was unenforceable.
Defendants filed a motion in limine to exclude from trial any
testimony and evidence that was unrelated to the reasonable value
of plaintiffs' services for the ten months they worked at the
facility. The court's May 4, 2015 order precluded plaintiffs'
expert, Gerald V. Rasmussen, from testifying on any matter that
was not related to the reasonable value of plaintiffs' services
during the ten-month period. The court found that in this case,
"the proper measure of damages for promissory estoppel and unjust
10 A-4745-14T4
enrichment [was] . . . the value of Eric and Shan's services for
those ten months, minus what they received." The court rejected
plaintiffs' claim that they were entitled to expectation damages,
holding that it was "not going to measure damages based upon their
owning [fifty] percent of the company."
Trial commenced on the promissory estoppel and unjust
enrichment claims. After Eric testified, the court conducted a
hearing under N.J.R.E. 104 to determine whether plaintiffs' expert
was competent to testify about the reasonable value of plaintiffs'
services. During questioning, Rasmussen acknowledged there was
nothing in his report that talked about the reasonable value of
Eric and Shan's services to the Rauch Companies from August 2009
to June 2010. He was not able to tell the judge how much a person
in Eric's position would have been paid by a facility of this size
and scope with his duties and responsibilities, but only what an
outside management firm would charge. The court excluded
Rasmussen's testimony.
The next day, plaintiffs requested that the court take
judicial notice of the Department of Labor's Occupational
Employment statistics that reported the mean salary for a chief
executive was $221,300. The judge observed that, even if he were
to take judicial notice of that statistic, it would not be "a
terribly compelling piece of evidence." The judge found he had
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"no competent evidential material . . . that would lead [him] to
come up with a rational salary for Eric for those ten months
. . . that would create a base line against which we could then
litigate the issues involving what the defense says his actual
compensation was." The court granted defendants' motion for a
directed verdict, and dismissed the remaining counts of the
complaint.
On appeal, plaintiffs contend the trial court erred in
dismissing their complaint. Plaintiffs argue that the court erred
because Stuart and Eric intended to be bound by the agreement, and
that it was not illusory or unenforceable. Plaintiffs assert the
trial court ruled sua sponte that the agreement lacked
consideration, and that the ruling was wrong as a matter of law
and fact. Furthermore, plaintiffs contend that the agreement was
not rendered unenforceable due to missing terms. Rather, it was
error to grant summary judgment because defendants waived their
defenses of indefiniteness and lack of consideration by accepting
performance from Eric and Shan for ten months.
Plaintiffs assert it was error to deny their initial cross-
motion for summary judgment on the contract claim. Also,
defendants' defense of "economic duress" was legally insufficient
and should have been rejected by the court. Plaintiffs claim that
the court's in limine ruling was erroneous, and that they should
12 A-4745-14T4
not have been limited to proving reliance damages because the
proper measure was compensation for their expectations.
Therefore, it was error to exclude the testimony of their damages
expert.
II.
A.
We review a trial court's orders granting or denying summary
judgment under the same standard employed by the motion judge.
Globe Motor Co. v. Igdalev, 225 N.J. 469, 479 (2016). The question
is whether the evidence, when viewed in a light most favorable to
the non-moving party, raises genuinely disputed issues of fact
sufficient to warrant resolution by the trier of fact, or whether
the evidence is so one-sided that one party must prevail as a
matter of law. Templo Fuente De Vida Corp. v. Nat'l Union Fire
Ins. Co., 224 N.J. 189, 199 (2016); see also Brill v. Guardian
Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). However, we review
issues of law de novo and accord no deference to the trial judge's
legal conclusions. Nicholas v. Mynster, 213 N.J. 463, 478 (2013).
Here, we agree with the trial court that the agreement between
Stuart and Eric was unenforceable because it was lacking essential
terms.
"A contract arises from offer and acceptance, and must be
sufficiently definite 'that the performance to be rendered by each
13 A-4745-14T4
party can be ascertained with reasonable certainty.'" Weichert
Co. Realtors v. Ryan, 128 N.J. 427, 435 (1992) (quoting Friedman
v. Tappan Dev. Corp., 22 N.J. 523, 531 (1956)) (other citations
omitted). Where the "parties agree on essential terms and manifest
an intention to be bound by those terms, they have created an
enforceable contract." Ibid. (citations omitted). "An essential
characteristic of an enforceable contract is that its obligations
be specifically described in order to enable a court or a trier
of fact to ascertain what it was the [promisor] undertook to do."
Malaker Corp. Stockholders Protective Comm. v. First Jersey Nat'l
Bank, 163 N.J. Super. 463, 474 (App. Div. 1978) (citations
omitted), certif. denied, 79 N.J. 488 (1979). However, an
agreement is unenforceable when the parties do not agree to one
or more essential terms. Ibid.The degree of specificity required in the contract terms is
even greater when equitable remedies are requested. Alnor Const.
Co. v. Herchet, 10 N.J. 246, 250 (1952). This is so because a
"precise understanding of all the terms" is required before
performance can be enforced. Id. at 250-51.
Essential terms are those that are "[o]f the utmost
importance" or are "basic and necessary" to the parties' agreement.
Black's Law Dictionary 663 (10th ed. 2014). See also McCoy v.
Alden Indus., 469 S.W.3d 716, 725 (Tex. Ct. App. 2015) ("Essential
14 A-4745-14T4
terms are those that the parties would reasonably regard as vitally
important elements of their bargain, an inquiry that depends
primarily on the intent of the parties."). "Each case, being
unique, turns on its facts." Malaker, supra, 163 N.J. Super. at
474. The terms that are deemed "essential" will vary depending
on the nature of the underlying agreement. Satellite Entm't Ctr.
v. Keaton, 347 N.J. Super. 268, 277 (App. Div. 2002) (noting that
"incidental terms . . . do not bar enforcement of the essential
agreement between the parties"). "Whether an agreement contains
all essential terms, and is therefore enforceable, is a question
of law." McCoy, supra, 469 S.W.3d at 725 (citations omitted).
"So long as the basic essentials are sufficiently definite,
any gap left by the parties should not frustrate their intention
to be bound." Hagrish v. Olson, 254 N.J. Super. 133, 138 (App.
Div. 1992) (quoting Berg Agency v. Sleepworld-Willingboro, Inc.,
136 N.J. Super. 369, 377 (App. Div. 1975)). The Restatement
(Second) of Contracts acknowledges that a court may supply
"reasonable" terms that may be missing.4 Restatement (Second) of
Contracts § 204. However, the supplying of reasonable terms "is
intended to be applied in cases in which the parties failed to
4
We give "considerable weight" to the Restatement. See Pop's
Cones, Inc. v. Resorts Intern. Hotel, Inc., 307 N.J. Super. 461,
471 (App Div. 1998) (quoting Mazza v. Scoleri, 304 N.J. Super. 555(App. Div. 1997)).
15 A-4745-14T4
agree regarding an issue, generally because they did not anticipate
that it would arise or merely overlooked it." Pacifico v.
Pacifico, 190 N.J. 258, 266 (2007) (citing Restatement (Second)
of Contracts § 204 (1981)).
Here, Judge Volkert found there were three essential terms
missing from the agreement which included 1) the possibility of
transferring ownership interest to other family members, 2)
assumption of corporate liabilities and debts, and 3) treatment
of preexisting encumbrances. Judge LaConte found as an additional
missing but essential term that the parties never discussed how
long plaintiffs would continue working for the Rauch companies.
There is much discussion in the record by the parties about
the timing of the transfer, the composition and source of the
transfer, the recipients of the transfer, and the allocation of
the transfer. The parties dispute these issues. That said,
however, there is no dispute that in August 2009, there was no
discussion about giving Daniel an equity interest, or whether
plaintiffs would assume the companies' liabilities or debts, the
treatment of preexisting encumbrances, or how long plaintiffs
would continue to work.
Plaintiffs contend that because these issues were not
discussed, they were not important and thus, were not essential
to the agreement. It was vitally important to the promisor that
16 A-4745-14T4
Eric and Shan stay. Eric and Shan contend they turned around
these financially failing companies, an issue that is not disputed
here by Stuart. Stuart acknowledged in the taped conversation
that their staying was the raison d'être for his promise to
transfer half the equity in his companies. We agree with Judge
LaConte that this term was essential and its omission made
sufficiently indefinite the obligation undertaken by Eric and Shan
that the promise by Stuart should not be enforced as a contract.
This was not the type of term the parties would merely overlook.
It was central to the agreement.
The parties also did not discuss the companies' debts,
liabilities or prior encumbrances. These also were not issues
these parties would have overlooked. Eric acknowledged that his
parents had "personal guarantees" on the companies, and if the
companies failed "it would have meant the end of them." With no
discussion of assets and liabilities, the agreement lacked terms
"normal to an obligation of this magnitude." Malaker, supra, 163
N.J. Super. at 475.
Although "part performance may give meaning to indefinite
terms of an agreement," Restatement (Second) of Contracts § 34
comment c, the fact that Eric and Shan worked for ten months did
not define the scope of nor the conditions of their commitment.
17 A-4745-14T4
It also gave no meaning to the other missing essential terms,
which were not supplemented by their performance.
Finding no enforceable contract, the court dismissed most of
the complaint on January 20, 2015. Only Count Four (promissory
estoppel) and Count Five (unjust enrichment) remained after the
court's January 20, 2015 order of dismissal.5
B.
Promissory estoppel arises where "[t]he reliance is on a
promise, and not on a misstatement of fact, and so the estoppel
is termed 'promissory' to mark the distinction." Friedman, supra,
22 N.J. at 536 (citation omitted). "Four separate factual elements
must be proved prima facie to justify application of the doctrine."
Malaker, supra, 163 N.J. Super. at 479. These include:
(1) a clear and definite promise by the
promisor; (2) the promise must be made with
the expectation that the promisee will rely
thereon; (3) the promisee must in fact
reasonably rely on the promise, and (4)
detriment of a definite and substantial nature
must be incurred in reliance on the promise.
5
The remaining counts of the complaint centered on the allegation
there was a contract and, having ruled there was not an enforceable
contract, those causes of action were dismissed. Plaintiffs have
not pursued their claims for wrongful termination, breach of
fiduciary duty, or fraud in this appeal and, having not done so,
waived any alleged error in the court's order. See Gormley v.
Wood-El, 218 N.J. 72, 95 n. 8 (2014); Drinker Biddle v. N.J. Dep't
of Law & Pub. Safety, Div. of Law, 421 N.J. Super. 489, 496 n. 5
(App. Div. 2011) (noting that claims not address in merits brief
are deemed abandoned).
18 A-4745-14T4
[Pop's Cones, supra, 307 N.J. Super. at 469
(quoting Malaker, supra, 163 N.J. Super. at
479).]
"The essential justification for the promissory estoppel
doctrine is to avoid the substantial hardship or injustice which
would result if such a promise were not enforced." Ibid. (citing
Malaker, supra, 163 N.J. Super. at 484).
Here, the parties did not dispute that Stuart made a promise
to Eric of a fifty percent equity interest for continued
employment. Based on that promise, the trial court found that the
first three elements necessary to establish a claim for promissory
estoppel were met. It was the last element, involving a definite
and substantial detriment incurred in reliance on the promise,
that remained for trial.6 Plaintiffs asserted no claim of error
regarding the court's analysis of the factors.
6
Unjust enrichment is a remedy that may be imposed when there is
"no express contract providing for remuneration." Caputo v. Nice-
Pak Prods., Inc., 300 N.J. Super. 498, 507 (App. Div.), certif.
denied, 151 N.J. 463 (1997). It applies where a plaintiff shows
that it "expected remuneration from the defendant at the time it
performed or conferred a benefit on defendant and that the failure
of remuneration enriched defendant beyond its contractual rights."
VRG Corp. v. GKN Realty Corp., 135 N.J. 539, 554 (1994) (citations
omitted).
Here, plaintiffs were claiming defendants were unjustly
enriched by breaching the agreement and should be estopped from
doing so. The court focused its analysis on the promissory
estoppel claim.
19 A-4745-14T4
Plaintiffs sought damages in the litigation for the benefit
the Rauch companies received from them, asserting the proper
measure was the benefit obtained by the promisor, which in this
case was fifty percent of the value of the companies, not their
profits. Defendants contended plaintiffs were limited in their
damages to the reasonable value of their services, describing the
factual issue for trial as the "difference between the compensation
[Eric and Shan] received for that ten months and the fair
compensation for that ten months," namely, their detriment. The
court found that the "proper measure of damages for [the]
promissory estoppel and unjust enrichment [causes of action] are
. . . the value of Eric and Shan's services for those ten months
minus what they received." The trial court rejected plaintiffs'
"measure [of] damages based upon their owning [fifty] percent of
the company."
The trial court did not err in limiting plaintiffs to reliance
rather than expectation damages. A claim for expectation damages
requires a court to "ascertain what it was the promisor undertook
to do," which cannot be done in the absence of agreement on
essential terms. Malaker, supra, 163 N.J. Super. at 474. Here,
the agreement lacked essential terms.
Where an agreement is unenforceable because of a lack of
essential terms, a party may still be entitled to the reasonable
20 A-4745-14T4
value of his services based on the promise. See Restatement
(Second) of Contracts § 90 comment d (where the promise central
to a claimed expectation interest is unenforceable because of lack
of definitiveness, "relief may sometimes be limited to restitution
or to damages or specific relief measured by the extent of the
promisee's reliance rather than by the terms of the promise").
The Restatement explained through illustration 10 in the comments
to Section 90 that the promisee of a franchise agreement where
negotiations collapse is "entitled to his actual losses . . . and
for his moving and temporary living expenses," but "is not entitled
to lost profits . . . or to his expectation interest in the
proposed franchise." Pop's Cones, supra, 307 N.J. Super. at 471
(citing Restatement (Second) of Contracts, § 90 comment d,
illustration 10 (1979)). Thus, we agree with the trial court that
plaintiffs' remedy was limited to the extent of their detrimental
reliance on the promise, and not to the extent of their
expectations.
As a general matter, substantial deference is given to a
trial judge's evidentiary rulings. State v. Morton, 155 N.J. 383,
453 (1998), cert. denied, 532 U.S. 931, 121 S. Ct. 1380, 149 L.
Ed. 2d 306 (2001). The trial court did not abuse its discretion
by excluding testimony from plaintiffs' expert. The expert
acknowledged he could not address the reasonable value of
21 A-4745-14T4
plaintiffs' services to the Rauch companies during the ten months
Eric and Shan remained. Although plaintiffs presented the trial
court with general statistics compiled by the Department of Labor,
the trial court did not abuse its discretion by declining to rely
upon those statistics, which did not provide a fair market value
for the services that these plaintiffs provided to the companies.
Without creditable proof of damages, the court did not err in
directing a verdict in defendants' favor on the remaining two
counts of the complaint.7
Affirmed.
7
Plaintiffs' claim the court erred by not dismissing defendants'
economic duress defense is irrelevant given our decision on the
other issues and does not warrant discussion in a written opinion.
R. 2:11-3(e)(1)(E).
22 A-4745-14T4