Joshua Levine, Etc. v. Acuative Corporation ( 2024 )

NOT FOR PUBLICATION WITHOUT THE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-0079-22
JOSHUA LEVINE, on behalf
of himself and others similarly
situated,
Plaintiff-Appellant,
v.
ACUATIVE CORPORATION
and VINCE SCIARRA,
individually,
Defendants-Respondents.
_____________________________
Argued November 14, 2023 – Decided January 12, 2024
Before Judges Mayer, Enright and Paganelli.
On appeal from the Superior Court of New Jersey, Law
Division, Passaic County, Docket No. L-2756-20.
William M. Goldberg argued the cause for appellant.
Phillip G. Ray argued the cause for respondents (Kluger
Healey, LLC, attorneys; William Henry Healey and
Phillip G. Ray, on the brief).
PER CURIAM
Plaintiff Joshua Levine appeals from an August 5, 2022 order granting
defendants' Acuative Corp. (Acuative) and Vincent Sciarra (Sciarra) motion for
summary judgment and dismissing plaintiff's complaint against defendants with
prejudice. We affirm.
I.
We glean the facts from the motion record. On November 16, 2016,
plaintiff signed Acuative's Offer Letter (OL) for the position of "Senior V[ice]
P[resident] of Sales & Marketing." The OL provided: "[t]his letter sets forth
the terms and conditions of the employment offer, and your signature below will
signify your understanding of an agreement to the terms and conditions
contained herein." The OL contained an "additional benefits clause" providing:
You will be considered a key employee, as such you
will be entitled to additional benefits such as stock
options and or other such equity programs. Currently
Acuative does not have these program[s] however an
agreement can be structured over the next [ninety] days
that will give you upside on growing company value.
The intent is to have you participate in personal gain
based on the increase of company value. There may
also be an opportunity to "buy in" if the company
recapitalizes. In the event the company is sold and the
sale was as a direct result of you securing the buyer you
will be entitled to a transaction fee.
Moreover, the OL provided:
A-0079-22
2
The terms and conditions of employment, including this
and any subsequent agreement, may be modified only
by written agreement signed by the CEO [of] Acuative.
Plaintiff served as Acuative's Senior Vice President from December 2016
until his resignation in December 2018.
On September 14, 2020, plaintiff filed a class action complaint 1 against
defendants for: (1) breach of contract; (2) breach of the implied covenant of
good faith and fair dealing; (3) an award of punitive damages; (4) violation of
the New Jersey Consumer Fraud Act (CFA), N.J.S.A. §§ 56:8-1 to -202; and (5)
common law fraud. Plaintiff alleged that defendants breached the "additional
benefits clause."
At the close of discovery, defendants moved for summary judgment. The
motion judge heard the parties' arguments on August 5, 2022, and made the
following factual findings and legal determinations:
[Here, the OL] says that something can be worked out
in [ninety] days. The 2016 [OL] says that [plaintiff]
will be considered a key employee and entitled to
additional benefits such as stock options and/or other
such equity plans.
1
On January 4, 2022, the parties entered into a consent order dismissing with
prejudice "Count One of the Complaint (Class Action Allegations)."
2
On January 8, 2021, plaintiff's CFA claim was dismissed for failure to state a
claim upon which relief can be granted. R. 4:6-2(e). The dismissal is not on
appeal.
A-0079-22
3
It's not even firm that it would be a stock option, and it
is very clear that those programs don't exist.
So I find that it is not an enforceable part of this
agreement, the stock option part.
Even if [the stock option provision] were enforceable,
there's no basis to calculate whether or not there have
been any damages and it's going to be the plaintiff's
burden.
The defendant has an expert, and the defendant's expert
is going to say that [plaintiff] would have lost money
on the stock option. But again, it is the plaintiff's
burden, and the plaintiff needs an expert to be able to
establish that there would have been a loss.
And also, in the absence of the stock option, we don't
even know what the terms of that would be.
....
So the plaintiff is not going to be entitled to, number
one, an enforceable contract for the additional
compensation or stock options because they are illusory
and unenforceable, and even if they were not, [plaintiff]
would never be able to establish damages without an
expert.
The motion judge entered an order granting defendants' motion for summary
judgment.
II.
A-0079-22
4
On appeal, plaintiff argues the motion judge erred in: (1) finding the
parties' contract, as to "stock options and/or other such equity plans," was
illusory and unenforceable; (2) denying him a trial on the issue of damages and
requiring him to have an expert to prove damages; and (3) dismissing his claim
for breach of the implied covenant of good faith and fair dealing.
We review the grant of summary judgment de novo, applying the same
legal standards as the trial court. Green v. Monmouth University, 237 N.J. 516,
529 (2019).
The judgment or order sought shall be rendered
forthwith if the pleadings, depositions, answers to
interrogatories and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as
to any material fact challenged and that the moving
party is entitled to a judgment or order as a matter of
law. An issue of fact is genuine only if, considering the
burden of persuasion at trial, the evidence submitted by
the parties on the motion, together with all legitimate
inferences therefrom favoring the non-moving party,
would require submission of the issue to the trier of
fact.
[R. 4:46-2(c).]
"If there is no genuine issue of material fact, we must then decide whether
the trial court correctly interpreted the law." DepoLink Ct. Reporting & Litig.
Support Servs. v. Rochman, 430 N.J. Super. 325, 333 (App. Div. 2013) (citations
A-0079-22
5
omitted). We review issues of law de novo and accord no deference to the trial
judge's conclusions of law. Nicholas v. Mynster, 213 N.J. 463, 478 (2013).
Here, plaintiff has not argued that summary judgment was erroneously
granted because there are material facts in dispute. Instead, he argues the judge
made the following errors of law: (1) incorrectly interpreting the OL; (2) finding
no basis to measure damages and requiring an expert to prove damages; and (3)
barring plaintiff's claim for the breach of the implied duty of good faith and fair
dealing.
Having considered plaintiff's arguments applying the summary judgment
standard, we are convinced that defendants are entitled to a judgment as a matter
of law.
A.
Plaintiff contends the motion judge incorrectly deemed the parties'
"additional benefits" clause illusory because "[Acuative] did not have the right
to ignore its obligation . . ." to provide plaintiff a "plan of equity . . . within
[ninety] days after the commencement of [appellant's] employment."
"Under general principles of contract law, an agreement[] . . . based only
upon an illusory promise is unenforceable." Jaworski v. Ernst & Young US
LLP, 441 N.J. Super. 464, 477 (App. Div. 2015). "An illusory promise has been
A-0079-22
6
defined as a 'promise which by its terms make performance entirely optional
with the promisor whatever may happen, or whatever course of conduct in other
respects he may pursue.'" Ibid. (citing Bryant v. City of Atlantic City, 309 N.J.
Super. 596, 620-21 (App. Div. 1998) (alterations in original omitted) (quoting
Restatement (Second) of Contracts, § 2, cmt. e (1979))). "Hence, an illusory
promise is one in which the 'promisor has committed himself not at all.'" Bryant,
309 N.J. Super. at 620 (quoting J.D. Calamari and Joseph M. Perillo, Contracts,
§ 4-17 at 159 (2d ed.1977)). Where "performance of an apparent promise is
entirely optional with a promisor, the promise is deemed illusory." Ibid. "In
general, our courts should seek to avoid interpreting a contract such that it is
deemed illusory." Id. at 621 (citing Russell v. Princeton Lab, Inc., 50 N.J. 30,
38 (1967); Nolan v. Control Data Corp., 243 N.J. Super. 420, 431 (App. Div.
1990)).
Here, the "additional benefits clause" stated plaintiff:
w[ould] be considered a key employee, as such [he]
w[ould] be entitled to additional benefits such as stock
options and or other such equity programs. Currently
Acuative does not have these program[s] however an
agreement can be structured over the next [ninety] days
that w[ould] give you upside on growing company
value.
A-0079-22
7
Plaintiff focuses on the word "entitled," and argues "a plan of equity [was]
not optional, or even ambiguous. . . . [he] was 'entitled' to these benefits." He
argues defendant has no "right to ignore its obligations."
Defendant argues "that a stock option plan did not exist[;] . . . . [t]here are
. . . no terms expressing what the stock option plan would entail[;] . . . . the
language does not state that the stock option plan would be structured, but that
it could be structured[;] . . . . [and] there was no promise of any express, essential
term that can ever be enforced."
Despite our general charge, "to avoid interpreting a contract such that it is
deemed illusory," id. at 621, we are convinced the OL's reference to "stock
options or other such equity programs" is just that. The clause states "[c]urrently
Acuative does not have these program[s]." Therefore, plaintiff is not "entitled"
to the benefit of a current program.
Rather, plaintiff seeks to be "entitled" to a future program. However, in
that respect, the OL provides that "an agreement can be structured." The
language of the clause undermines plaintiff's position because it does not
provide a program will be structured, but merely that it "can be," in other
words—it is possible. Therefore, Acuative "has committed [it]self not at all."
Id. at 620.
A-0079-22
8
Moreover, the lack of detail in the clause leads us to conclude it is illusory.
For instance, the clause vaguely provides "additional benefits such as stock
options and or other such equity programs." The clause does not define with
any particularity what "additional benefits" could be forthcoming, and, instead,
loosely provides examples of what Acuative may, at its discretion, structure.
See Jaworski, 441 N.J. Super. at 477.
We are convinced the "additional benefits clause" is illusory and,
therefore, unenforceable.
B.
To prevail on claims for breach of contract, Globe Motor Co. v. Igdalev,
225 N.J. 469, 482 (2016); common law fraud, Banco Popular N. Am. v. Gandi,
184 N.J. 161, 260 (2005); and breach of the implied covenant of good faith and
fair dealing, Sons of Thunder v. Borden, Inc., 148 N.J. 396, 425-26 (1997);
plaintiff must establish damages. Plaintiff has failed to do so.
First, the motion judge determined "even if [the stock option provision]
were enforceable, there [was] no basis to calculate whether or not there have
been any damages . . . ." We agree.
The lack of a basis to measure damages goes to the illusory nature of the
clause. In other words, there is no basis to measure "additional benefits such as
A-0079-22
9
stock options and or other such equity programs" when they have not been
defined. Indeed, plaintiff acknowledges it "does not (and cannot) rely on the
components of a 'Plan' that he never received, (and does not exist)."
Instead, plaintiff avers that he "intends to rely on the fair value of the
services he rendered to Acuative during the period of his employment, based on
his oral understanding with Sciarra, as to the dollar value of the 'equity' he would
receive by joining the [c]ompany." However, such an approach is unavailing.
Initially, any oral understanding prior to plaintiff "joining the [c]ompany"
preceded plaintiff's execution of the OL. The OL "set[] forth the terms and
conditions of the employment offer . . . ." The OL's "additional benefits" clause
was silent as to any actual valuation of the "additional benefits such as stock
options . . . or other such equity programs."
Moreover, the OL permitted "[t]he terms and conditions of employment,
including this and any subsequent agreement, [to] be modified only by written
agreement . . . ." Therefore, to the extent plaintiff relies on conversations that
occurred after he executed the OL, they would be unavailing because plaintiff
has not produced any writing establishing an agreement as to valuation.
Further, we note that the "additional benefits clause" refers to plaintiff's
ability to "participate in personal gain on the increase of company value." We
A-0079-22
10
reject the argument that plaintiff's measure of his "fair value of . . . services"
equates to an "increase of company value." Even if plaintiff worked more than
seven hours per day five days per week, such efforts would not necessarily
translate into an increase in the value of the company.
Second, the motion judge determined that "plaintiff needs an expert to be
able to establish that there would have been a loss." We find no abuse of
discretion in the motion judge's determination that plaintiff requires an expert to
establish damages. "The necessity for, or propriety of, the admission of expert
testimony, and the competence of such testimony, are judgments within the
discretion of the trial court." State v. Zola, 112 N.J. 384, 414 (1988).
"[V]aluation disputes . . . frequently become battles between experts."
Balsamides v. Protemeen Chmes., 160 N.J. 352, 368 (1999). "It is fundamental
that a plaintiff must 'prove damages with such certainty as the nature of the case
may permit, laying a foundation which will enable the trier of facts to make a
fair and reasonable estimate.'" Kelly v. Berlin, 300 N.J. Super. 256, 258 (App.
Div. 1997) (quoting Lane v. Oil Delivery, Inc., 216 N.J. Super. 413, 420 (App.
Div. 1987)). "Conjecture and speculation cannot be used as a basis for
damages." Brach Eichler, Rosenberg & Gladstone, P.C. v. Ezekwo, 345 N.J.
Super. 1, 11 (App. Div. 2001) (citing Lesniak v. Cnty. of Bergen, 117 N.J. 12,
A-0079-22
11
21 (1989)). "Thus, in general, '[a] jury should not be allowed to speculate
without the aid of expert testimony in an area where laypersons could not be
expected to have sufficient knowledge or experience.'" Kelly, 300 N.J. Super.
at 268.
Therefore, we conclude plaintiff is unable to satisfy his burden that he has
sustained damages because any damages are immeasurable and would require
expert support. Thus, his claims for breach of contract; common law fraud; and
breach of the implied covenant of good faith and fair dealing all fail, allowing
for the grant of summary judgment.
C.
Plaintiff contends the motion judge erred by not permitting his claim for
the breach of the implied duty of good faith and fair dealing to proceed .3
Plaintiff cites Sons of Thunder, 148 N.J. at 420, for the proposition "that
in every contract there is an implied covenant that neither party shall do anything
which will have the effect of destroying or injuring the right of the other to
receive the fruits of the contract . . . ." Moreover, he argues "damages for the
breach of the implied covenant of good faith performance and fair dealing may
3
As discussed, we conclude that plaintiff's claim for this alleged breach fails
because he cannot establish damages. We address this additional argument for
completeness.
A-0079-22
12
be recovered for the 'expectations' which a party 'anticipated under the
contract[,]'" citing Noye v. Hoffman-LaRoche, Inc., 238 N.J. Super. 430, 437
(App. Div. 1990).
Plaintiff relies on the implied covenant claim to overcome the illusory
"additional benefits clause." Plaintiff's argument is misguided. The implied
covenant of good faith and fair dealing does not transform unenforceable
illusory promises into contract terms. Instead, the implied covenant ensures a
contracting party that the other contracting party will not "do anything which
will have the effect of destroying or injuring the[ir] right . . . to receive the fruits
of the contract." Id. at 420. Here, plaintiff has no right to receive the "additional
benefits" because they are illusory and unenforceable. The implied covenant,
therefore, is inapplicable to the "additional benefits" clause.
To the extent we have not addressed plaintiff's other arguments, we deem
them without sufficient merit to warrant discussion in a written opinion. R.
2:11-3(e)(1)(E).
Affirmed.
A-0079-22
13