Network Infrastructure Technologies, Inc. v. Hackensack University Medical Center ( 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NOT FOR PUBLICATION WITHOUT THE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-1032-21
NETWORK INFRASTUCTURE
TECHNOLOGIES, INC.,
Plaintiff-Appellant,
v.
HACKENSACK UNIVERSITY
MEDICAL CENTER, a division of
HMH HOSPITALS CORP., NTT
DATA SERVICES, LLC, 1 ARTHUR
LITTWIN, CHRISTOPHER
COVELLO, JED B. KESSLER,
MICHAEL SCAGLIONE, MIGUEL
FALCON, JOSE SANCHEZ, and
BILLY WALLBURG,
Defendants-Respondents.
______________________________
Submitted October 18, 2023 – Decided November 4, 2024
Before Judges Vernoia, Gummer and Walcott-
Henderson.
1
NTT Data Services, LLC was improperly pleaded as NTT Data Corp.
On appeal from the Superior Court of New Jersey,
Chancery Division, Bergen County, Docket No. C-
000086-20.
Nagel Rice LLP, attorneys for appellant (Jay J. Rice
and Bradley L. Rice, of counsel and on the brief).
Greenberg Traurig, LLP, attorneys for respondents
Hackensack University Medical Center, Arthur Littwin
and Christopher Covello (Wendy Johnson Lario and
Clarissa Gomez, of counsel and on the brief).
Anne B. Sekel (Foley & Lardner, LLP), attorney for
respondents NTT Data Services, LLC, Jed Kessler,
Michael Scaglione, Miguel Falcon, Jose Sanchez and
Billy Wallburg (Donald W. Schroeder (Foley &
Lardner, LLP), of the Massachusetts bar, admitted pro
hac vice, of counsel and on the brief; Anne B. Sekel, on
the brief).
The opinion of the court was delivered by
WALCOTT-HENDERSON, J.S.C. (temporarily assigned).
Plaintiff Network Infrastructure Technologies, Inc., appeals from an order
entered on March 3, 2021, denying its motion for partial summary judgment on
its various claims against defendant Hackensack University Medical Center
(HUMC) based on their contract as alleged in plaintiff's third-amended
complaint. Plaintiff also appeals from a February 5, 2021 discovery order, an
August 11, 2021 judgment issued after a bench trial, and a November 18, 2021
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amended judgment in which the court awarded defendant Arthur Littwin
attorneys' fees. For the reasons that follow, we affirm.
I.
The facts and procedural history are extensive; thus, we summarize only
those facts relevant to our determination of the issues before us. It is undisputed
plaintiff specializes in providing information technology (IT) services to health-
care organizations. HUMC is a private, for-profit hospital and is a division of
the Hackensack Meridian Health (HMH) network of hospitals. NTT Data
Services, LLC (NTT) is another IT services provider. Defendant Littwin was a
"Remedy Developer" for plaintiff since 2014 and was responsible for
maintaining and customizing what was titled the Remedy program, a unique IT
ticketing system utilized by HUMC. Defendant Christopher Covello and other
individually named defendants were employees of plaintiff.
On July 23, 2013, plaintiff and HUMC entered into a Master Services
Agreement (MSA), which remained in effect through February 4, 2020. The
MSA required plaintiff to provide IT and personnel services to HUMC for an
initial term of thirty-nine months following the execution of the agreement.
Under the MSA, "Initial Term" is defined as "a period of thirty-nine (39)
months" beginning on the "Effective Date" of July 22, 2013.
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In the MSA, plaintiff agreed "that its personnel performing services shall
be qualified and trained to, and shall fulfill the requirements set forth in the
[statements of work (SOW)] and as reasonably specified by [HUMC] from time
to time." Paragraph 9 of the MSA addressed the agreement's term and
termination, with Paragraph 9(a) discussing the "Initial Term" and Paragraph
9(c) detailing "Termination."
The MSA also included a non-solicitation provision whereby each party
agreed not to offer employment to the other's employees for a period of one year
after termination of the MSA. The MSA also included an indemnity clause in
Paragraph 3 providing:
nothing in this [a]greement or otherwise shall require
either [p]arty to defend, indemnify[,] or hold harmless
the other [p]arty for any loss, claim, damage, expense,
fees, settlement, penalty or attorneys' fees that result
from the act or omission of the [p]arty seeking such
defense, indemnification or hold harmless.
The limitation-of-liability clause in Paragraph 4 stated there was no
liability to either party for lost profits and that:
IN NO EVENT WILL EITHER PARTY'S LIABILITY
. . . FOR ANY DAMAGES TO [HUMC] . . . EXCEED
THE FEES PAYABLE BY [HUMC] TO [PLAINTIFF]
HEREUNDER FOR THOSE SERVICES RENDERED
HEREUNDER WITHIN THE THREE (3) MONTHS
PRIOR TO [THE] EVENT FROM WHICH SUCH
DAMAGES AROSE, . . . REGARDLESS OF THE
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FORM OF ACTION (INCLUDING NEGLIGENCE,
STRICT LIABILITY OR OTHER ACTIONS IN
TORT) . . . .
The MSA referred to SOWs, and it is undisputed that beginning in 2013,
the parties agreed to various SOWs, each describing with particularity different
services plaintiff would provide to HUMC. There are three SOWs at issue in
this appeal: the Help Desk SOW, the Surface Pro/Anesthesia SOW and the
Remedy SOW. Each of the SOWs stated, "the parties desire to add this [SOW]
to the [MSA]" and "[a]ll terms not otherwise defined in this SOW shall have the
meanings ascribed to them in the [MSA]." Each SOW included a separate
temporal term, and each provided that its "term shall otherwise be governed by
the [MSA]."
The Help Desk SOW
The Help Desk SOW required plaintiff to provide call support for HUMC.
It included a call-volume threshold of 125,000 calls per year, at a bi-weekly cost
of $36,048. Under the MSA, when the yearly call-volume threshold was
reached, plaintiff would invoice HUMC for "overages," defined as calls that
exceeded the call-volume threshold. In 2019, the yearly call volume was
reached in September. Manira Hossain, plaintiff's Director of Finance, prepared
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invoices for overage charges after the call-volume threshold was reached, and
she began invoicing HUMC for overages. 2
The Anesthesia SOW
In December 2017, plaintiff and HUMC signed the Anesthesia SOW that
required plaintiff to provide a technician to "deploy" 115 Surface Pro laptop
computers for use in HUMC's anesthesia department. According to the SOW,
the "deployment project" required plaintiff to unbox all the laptops and
associated hardware, provide a full inventory list, configure and connect the
devices, and train each anesthesiologist in two-hour slots on how to use the
equipment. The cost for plaintiff's services under the Anesthesia SOW was
$14,900.
The first shipment of Surface Pros was delivered to HUMC on March 13,
2018, and the second shipment, containing the majority of the Surface Pros, was
delivered on June 11, 2018. On August 5, 2019, one of plaintiff's employees
informed HMH that sixty-one Surface Pros were missing.3 According to another
2
In September 2019, the charge for overages was $75,057; in October 2019,
the charge was $134,813; in November, the charge was $122,092; and in
December 2019, the charge was $161,889.
3
Hackensack Police Department investigated the cause of the missing computer
equipment and filed a report on September 24, 2019, but later determined there
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employee, all the work required of plaintiff under the Anesthesia SOW on fifty
of the remaining computers had been completed. Those fifty Surface Pros were
ready to be deployed, but that employee averred he had been told HUMC was
not prepared to receive the computers.
Plaintiff argues that it partially performed under the terms of the contract
and is entitled to a portion of the $14,900 otherwise due under the Anesthesia
SOW. HUMC asserts there was a breach of the Anesthesia SOW because it
never requested a delay in deploying the Surface Pros and that plaintiff is liable
for conversion of the missing computers because they were lost while in
plaintiff's care.
The Remedy SOW and Termination of Littwin's Employment
In late 2013, plaintiff and HUMC signed the Remedy SOW, which
required plaintiff to provide a full-time on-site "Remedy" specialist. To that
end, plaintiff hired Littwin in January 2014 to provide Remedy services. He
was the sole employee who worked in that capacity through February 21, 2020,
and served as a full-time on-site specialist to support HUMC's use of the Remedy
was not enough evidence to press charges against anyone. HUMC never filed
an insurance claim for the missing Surface Pros. On September 6, 2019, HUMC
obtained an estimate for replacing the missing equipment at a cost of $134,000.
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application. Pursuant to the Remedy SOW, plaintiff charged HUMC $75 per
hour for Littwin's services.
In November 2019, Littwin's manager was terminated after the Surface
Pros went missing. According to Littwin's deposition testimony, he began
searching for other employment at that time because he believed he would also
be terminated. On January 5, 2020, Littwin applied through the HUMC website
for a position with HMH as a reporting analyst. Weeks later, he was offered and
accepted employment with HMH.
The Extension Agreement and Settlement of Plaintiff's Claims
Toward the end of 2019, HUMC began discussing alternative IT solutions
with another company, defendant NTT. Although HUMC had signed a contract
with NTT in October 2019 for NTT to take over the IT solutions responsibilities
at HUMC effective January 1, 2020, HUMC also executed an extension
agreement with plaintiff on November 18, 2019, for plaintiff to continue to
provide IT solution services by extending the MSA and all SOWs "at their
current levels and fees in order to maintain the status quo through January 4,
2021." The first clause of the extension agreement expressly notes plaintiff and
HUMC "previously entered into a [MSA] . . . which auto-renews by its terms."
And, HUMC signed the extension agreement without informing plaintiff that it
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had already entered into the October 2019 contract with NTT pursuant to which
NTT was required on January 1, 2020, to begin to provide HUMC with the IT
services that plaintiff was otherwise contractually obligated—pursuant to the
extension agreement—to provide.
Plaintiff estimated that HUMC owed nearly $2 million in overage fees
under the Help Desk SOW that had accrued prior to January 1, 2019. To resolve
the payment issue and disputed claims related to overage fees due under the Help
Desk SOW, plaintiff and HUMC executed a settlement agreement and release
on December 18, 2019. Pursuant to this agreement, HUMC paid plaintiff
$1,070,000.
Unpaid Invoices
In December 2019, HUMC suffered a ransomware attack, resulting in a
significant increase in help desk calls. Approximately two months later, HUMC
notified plaintiff it would terminate the MSA effective May 31, 2020. After
plaintiff learned the MSA would be terminated, Hossain began invoicing HUMC
for monthly overages, instead of waiting to invoice HUMC after the yearly call-
volume threshold reached 125,000 calls as provided for in the MSA. Hossain
pro-rated the 125,000 annual threshold into twelve equal monthly thresholds of
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about 10,417 calls per month and billed HUMC each month for the calls that
exceeded what she had determined was the monthly call-volume threshold.
Hossain sent a list of invoices—without the actual invoices—to HUMC
for overage charges for the period from January 2020 through April 2020.
HUMC did not pay these charges. More particularly, Hossain sent HUMC an
invoice for "overages" for January 2020, where the total number of help desk
calls that month was 21,780, and Hossain calculated the overage amount due as
$85,876. On December 24, 2020, using plaintiff's QuickBooks records, Hossain
created a statement-balance report reflecting the total balance plaintiff claimed
was owed by HUMC. However, Hossain did not send that report to HUMC and
did not provide the actual invoices.
Littwin's Termination and the Non-Compete Clause
Plaintiff stopped providing Remedy services to HUMC after Littwin, who
had been the only individual working for plaintiff as a Remedy specialist at
HUMC, resigned his employment with plaintiff. Littwin's acceptance of
employment with HMH instantly became an issue with plaintiff because he had
previously signed plaintiff's "Acknowledgment of Non-Compete and
Confidentiality Policies," which restricted employees from working for "a
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client, customer or [p]artner" of plaintiff within one year of the termination of
their employment with plaintiff.4
On February 18, 2020, Littwin notified NIT's president, Lior Blik, that he
had accepted employment with HMH beginning February 24, 2020, and that his
last day of work for plaintiff would be February 21, 2020. That same day, the
Human Resources Director of Matrix Global Services, LLC—which had
acquired plaintiff in 2016—sent Littwin a letter confirming his resignation but
stating that he was being terminated immediately for violating the non-compete
agreement he had signed at the beginning of his employment in 2014 with
plaintiff. Despite the letter, Littwin continued to work daily through February
21, 2020, as he had indicated in his resignation later, and plaintiff never revoked
his credentials during that time. It is undisputed that in February 2020, when
Littwin left, he had been paid for the work he did on February 18, 2020, but had
not been paid for the remaining days of February 19, 20, and 21, 2020, he had
worked.
4
Plaintiff required that its employees sign an acknowledgment of receipt of its
employee manual that included an employment-at-will policy stating employees
could be terminated at any time and, in pertinent part, that they could not accept
employment with a client of plaintiff within one year following the termination
of their employment.
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The Litigation
Approximately three months after Littwin started working for HMH,
plaintiff filed suit against HUMC, seeking specific performance of the MSA, the
SOWs, and the extension agreement between NIT and HUMC as well as
"compensatory damages, punitive damages, costs of suit and reasonable
attorney's fees." In the lawsuit, plaintiff asserted various causes of action,
including breach of contract, unfair competition and misappropriation of trade
secrets, and fraud and intentional misrepresentation. Thereafter, plaintiff
amended its complaint to include NTT as well as Littwin and other former
employees as defendants, alleging tortious interference against NTT and breach
of contract against Littwin and other former employees and seeking enforcement
of the non-solicitation clause. Plaintiff later filed a third-amended complaint,
adding a new defendant, Christopher Covello, plaintiff's IT asset management
administrator.
Plaintiff's third-amended complaint is the operative complaint for
purposes of this appeal, and it includes nine counts. The first seven counts are
against HUMC and allege: breach of contract pertaining to the non-solicitation
clause (count one); specific performance enjoining HUMC from terminating the
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contract (count two); 5 misappropriation of trade secrets (count three); breach of
the SOWs (count four); non-payment of invoices (count five); breach of the
implied covenant of good faith and fair dealing with respect to the MSA and the
settlement and extension agreements (count six); fraud and intentional
misrepresentation with respect to the extension and settlement agreements
(count seven). Count eight, tortious interference with contract, is pleaded
against NTT. Count nine, breach of contract, is pleaded against the individual
defendants for enforcement of the restrictive covenants, specifically based on
the non-solicitation clause in plaintiff's employee manual.
In its amended answer, HUMC counterclaimed for: conversion of the
missing Surface Pros (count one); breach of the Anesthesia SOW (count two);
breach of the covenant of good faith and fair dealing with respect to the
Anesthesia SOW (count three); breach of contract with respect to the MSA and
SOWs (count four); and breach of the covenant of good faith and fair dealing as
to the MSA and SOWs (count five). Littwin also filed a counterclaim alleging
violations of the New Jersey Wage Theft Act, N.J.S.A. 34:11-56A, and Wage
Payment Law, N.J.S.A. 34:11-4.1. to -33.6.
5
Count two of the third-amended complaint was dismissed by consent on March
4, 2021.
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Plaintiff moved for partial summary judgment on counts one, four and
five—which respectively alleged breach of contract as to the non-solicitation
provision of the MSA, breach of the SOWs, and non-payment of invoices—and
dismissal of HUMC's counterclaims for conversion (count one), breach of
contract (count two), and breach of the covenant of good faith and fair dealing
(count three). HUMC, Littwin, and Covello cross-moved for summary judgment
on all the counts against them. In the same motion, HUMC also sought summary
judgment on counts two and three—for breach of the Anesthesia SOW and
breach of the covenant of good faith and fair dealing with respect to the
Anesthesia SOW—of its counterclaim.6 Littwin also moved for summary
judgment on the wage claim in his counterclaim. NTT also moved to dismiss
count eight—tortious interference with contract—and the individual defendants
moved to dismiss count nine—enforcement of a restrictive covenant.
At oral argument on the summary-judgment motions, the court stated,
"[b]oth counsel agree[] that the terms of the various agreements were
unambiguous, and the [c]ourt should interpret the agreements as written."
However, the court recognized the parties had offered different and conflicting
6
Littwin and Covello moved for summary judgment only as to count nine of
the third-amended complaint—for breach of contract and enforcement of
restrictive covenant.
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interpretations of what they otherwise asserted were the agreements'
unambiguous terms. The court framed the parties' arguments as follows:
the difficulty is that NIT and HUMC interpret the
agreement differently. NIT asserts that, after the
[I]nitial term, no early termination of the MSA and
related agreements are permitted. Rather, after the
[I]nitial term, the only way the MSA and related
documents could be terminated was by nonrenewal at
the end of a renewal term.
On the other hand, HUMC asserts that, pursuant to
Section 9(c) of the MSA, either party could terminate
at any time either during the [I]nitial term or the
renewal term.
Counsel for both plaintiff and HUMC agreed there were no material
factual disputes and it was appropriate for the court, on summary judgment, to
interpret Paragraph 9 of the MSA to determine whether plaintiff was entitled to
judgment as to the alleged breach of the SOWs (count four) and alleged breach
of the implied covenant of good faith and fair dealing (count six).
The court found the MSA contained two paragraphs that governed
different rights: automatic renewal after the Initial Term; and termination after
the Initial Term. First, Paragraph 9(a), captioned "Term," provides that after the
Initial Term of thirty-nine months, the MSA will renew annually unless HUMC
provides notice of termination of the MSA ninety-days prior to the end of the
Initial Term or any renewal term. Second, Paragraph 9(c) provides that after the
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first three months of payment under the Initial Term, either party may terminate
the MSA without cause upon ninety days' written notice. The court concluded
that Paragraph 9(c) "clearly and unambiguously provides that, after the first
three months of payment under the [I]nitial [T]erm, either party may terminate
the MSA and related agreements during the [I]nitial [T]erm and any renewal
term. Such termination could occur 'without cause by giving the other party
[ninety] days' advanced written note.'"
Plaintiff also argued that by signing the extension agreement, plaintiff and
HUMC understood that there would be an extension of plaintiff's provision of
IT services to HUMC through January 4, 2021. Plaintiff further claimed it had
presented evidence HUMC "expected that NTT Data would replace [plaintiff]
by no later than May 2020" because HUMC had built into its master services
agreement with NTT Data a penalty if NTT Data was unable to takeover NIT's
duties by that date. Plaintiff therefore maintained that, at a minimum, questions
of material fact existed as to whether HUMC and HMH had acted in bad faith
by offering plaintiff the extension agreement "despite knowing it never intended
to complete the term of that agreement." By contrast, HUMC asserted that "NTT
Data and HMH began negotiations on the NTT Data MSA in July 2019, months
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before either HUMC or [plaintiff] broached the discussion of any extension of
the MSA."
On this issue, the court concluded that "since the [e]xtension [a]greement
describes the SOWs as having been entered into 'under the MSA,' . . . the SOWs
as modified by the extension agreement could be terminated on [ninety] days'
notice by either party." In reviewing these provisions, the court concluded that
"renewal is not the same as termination" and "neither [Paragraph] 9(a) nor
[Paragraph] 9(c) refer to each other and, therefore, do not modify or govern the
rights set forth in each separate provision."
The court found that "the right to renew the MSA and the right to terminate
are separate rights pursuant to the MSA" and noted that "both counsel agreed
that the terms of the various agreements were unambiguous, and the [c]ourt
should interpret the agreement as written." The court further concluded that
termination should be governed by Section 9(c) of the MSA and all of the SOWs
could likewise be terminated by either party on ninety days' written notice, and
that "since the [e]xtension [a]greement describes the SOWs as having been
entered into 'under the MSA' . . . the SOWs as modified by the [e]xtension
[a]greement could be terminated on ninety-days' notice by either party."
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The court denied plaintiff's motion for summary judgment on the
following claims in its complaint: breach of contract as to the non-solicitation
provision in the MSA (count one); breach of contract as to the MSA and the
SOWs, (count four) and breach of contract as to the unpaid invoices (count five).
The court also denied plaintiff's motion as to HUMC's counterclaim for breach
of contract (count two) and breach of the implied covenant of good faith and fair
dealing with respect to the missing Surface Pros (count three). The court granted
plaintiff's motion for summary judgment as to HUMC's counterclaim for
conversion with respect to the missing Surface Pros (count one of HUMC's
counterclaim).
The court also granted HUMC's motion for summary judgment as to
counts three, four, five, six, seven and nine of plaintiff's third-amended
complaint (misappropriation of trade secrets, breach of contract as to the SOWs
and unpaid invoices, breach of the implied covenant of good faith and fair
dealing, fraud and intentional misrepresentation, and enforcement of the
restrictive covenants, respectively). The court denied HUMC's motion for
summary judgment as to Littwin's counterclaims for alleged violations of the
New Jersey Wage Theft Act and the New Jersey Wage Payment Law; and
HUMC's counterclaims, count one (conversion of the missing Surface Pros) and
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count three (breach of contract and breach of implied covenant of good faith and
fair dealing with respect to the Anesthesia SOW).
The court also granted NTT's motion for summary judgment on plaintiff's
count-eight claim alleging against it tortious interference with contract. The
court further granted summary judgment in favor of all the individually named
defendants, including Littwin and Covello, as to plaintiff's claim in count nine
alleging violation of its restrictive covenant.
Two days later, on March 5, 2021, the court issued an order clarifying that
its dismissal of count five of plaintiff's third-amended complaint (non-payment
of invoices) pertained to invoices accounted for in the settlement agreement
signed by plaintiff and HUMC in December 2019. Plaintiff moved for
reconsideration of the court's summary-judgment ruling. The court denied the
motion in an order dated April 1, 2021. The court specifically found both the
settlement and extension agreements were entered into in good faith and plaintiff
had provided no evidence to the contrary.
The effect of the court's rulings and orders on the various motions was
that the following claims proceeded to trial: count one of plaintiff's complaint
against HUMC for breach of the non-solicitation provision of the MSA related
to the hiring of Littwin; counts four and five of the complaint against HUMC
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for breach of the MSA and SOWs and plaintiff's claim for damages related to
unpaid invoices; counts two and three of HUMC's counterclaim against plaintiff
for breach of contract and the implied covenant of good faith and fair dealing
regarding the missing Surface Pros; counts four and five of HUMC's
counterclaim against plaintiff alleging breach of the MSA and SOWs related to
the Help Desk and the alleged failure by plaintiff to provide services; and counts
one and two of Littwin's counterclaim against plaintiff for alleged violations of
the New Jersey Wage Theft Act and the New Jersey Wage Payment Law.
During the five-day bench trial, Hossain testified that under the Help Desk
SOW, $443,305 was due and owing to plaintiff, including overage charges of
$249,733 for the period from January through April 2020, as well as invoices
for other SOWs totaling $193,571. The testimony was based on a report
generated by Hossain summarizing the invoices, but the underlying invoices on
which the summary report was based were not made available in discovery. On
cross examination, Hossain conceded that invoices totaling $13,097.50 were
shown in the report as "open" but had been paid. However, invoices totaling
$115,486 were relied on by plaintiff and included in the calculation of its
claimed damages in the report but had not been produced in discovery or at trial.
HUMC did not receive Hossain's report but received an email on October 6,
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2020, from Hossain that listed invoices, including those from December 2014
and August 2019, which were not produced in discovery.
As to Littwin and his alleged violation of the non-compete policy in the
employee manual, Blik testified that when Littwin had notified plaintiff on
February 18, 2020, that he would begin employment with HMH on February 24,
2020, Blik terminated Littwin and directed Matrix's Human Resources Director
to send Littwin a letter confirming their discussion and Littwin's termination.
Littwin testified that he had reported for work with plaintiff on February 19, 20,
and 21 and performed work on those days with access to the Remedy application
and did not see the February 18, 2020 letter regarding his termination until after
the litigation had commenced.
The court found that for purposes of Littwin's unpaid wage claim, he had
credibly testified he had worked on February 19, 20, and 21, and was not paid
for those three days. The court did not find credible his testimony concerning
the timing and circumstances of his hiring by HMH for purposes of its
determination of plaintiff's claim that Littwin had breached the non-compete
policy in the manual.
Following the bench trial, in a comprehensive twenty-three-page opinion,
the court found that HUMC should not be viewed as a separate entity from its
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parent company HMH and that HUMC violated the non-solicitation clause in
the MSA. The court, however, dismissed count one of the complaint, which
alleged breach of contract as to the non-solicitation provision, concluding
"[plaintiff] has not shown damages resulting from such violation" of the MSA
as plaintiff "chose not to hire anyone to replace Mr. Littwin" and because
Paragraph 4 of the MSA specifically excluded liability for "any lost profits or
other indirect, special, incidental, exemplary or consequential damages."
As to plaintiff's claims concerning the alleged breach of the MSA, the
SOWs, and the settlement agreement, the court found plaintiff had failed to
present sufficient evidence establishing it had sustained any damages. The court
concluded "[plaintiff] failed to produce, either during discovery or during the
course of trial, the vast majority of the invoices as to which it seeks recovery."
In denying plaintiff's claim in connection with the Anesthesia SOW, the court
concluded "there is no evidence in the record pursuant to which the court may
make any determination as to the value of any services which may have been
provided by [plaintiff] to HUMC." Specifically, the court found the evidence
did not allow it to determine the value of services plaintiff had rendered for
configuring fifty Surface Pros under the Anesthesia SOW.
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As to HUMC's breach-of-contract claims for plaintiff's failure to meet the
"performance metrics" under the Help Desk SOW, among others, based on
provisions in the MSA—which HUMC alleged entitled it to $449,413.40 in
damages—the court dismissed these claims based on its determination there was
insufficient evidence to support them. As to Littwin's wage claim, the court
concluded Littwin was entitled to judgment in the amount of $3,467.88,
representing the salary due for the three days—February 19, 20, and 21—he had
worked but for which he did not receive payment. The court concluded that
Blik's testimony as to the date of Littwin's termination was less credible "since
he could not definitely state that Littwin was terminated as of February 18,
2020."
Addressing whether the disclaimer contained in plaintiff's employment
manual effectively barred any claim that the manual constituted a binding and
enforceable contract, and relying on the principles explained by the Supreme
Court in Woolley v. Hoffmann-La Roche, Inc., 99 N.J. 284, 285-86 (1985) ("We
hold that absent a clear and prominent disclaimer, an implied promise contained
in an employment manual that an employee will be fired only for cause may be
enforceable against an employer even when the employment is for an indefinite
term and would otherwise be terminable at will."), the court rejected plaintiff's
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argument the non-compete clause in the employee manual constituted an
enforceable contractual obligation restricting each individual defendant's ability
to accept employment with HUMC. The court determined that "[t]he
employment manual in question here indisputably contained" an effective
disclaimer such that the manual, and its putative non-compete clause, did not
"constitute a contract which binds the parties."
In reaching its conclusion, the court relied on Woolley for the proposition
that an employer can avoid creating a contractual obligation in an employment
agreement by providing a clear and prominent disclaimer. See id. at 285-86. It
rejected plaintiff's argument that the acknowledgement signed by Littwin and
the individual defendants resulted in a binding contractual obligation to abide
by all the employee manual's requirements—including the non-compete
provision—because the acknowledgement also incorporated the disclaimer
stating, on the first page, the employee manual did not constitute a legally
binding agreement.
The court entered an August 11, 2021 judgment followed by an amended
judgment on November 18, 2021: dismissing, with prejudice, counts one, four,
and five of plaintiff's third-amended complaint, alleging breach of contract as to
the non-solicitation provision, breach of contract as to the MSA and SOWs
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thereunder, and breach of contract as to the settlement agreement entered
between plaintiff and HUMC. The court entered judgment in favor of HUMC
and against plaintiff as to counts two and three of HUMC's counterclaim for
breach of contract and the implied covenant of good faith and fair dealing
regarding the missing Surface Pros, awarded damages of $134,537, and
dismissed counts four and five of HUMC's counterclaim for breach of contract
and breach of the covenant of good faith and fair dealing as to the MSA and
SOWs. The court entered judgment in favor of Littwin and against plaintiff as
to counts one and two of Littwin's counterclaim for violations of the New Jersey
Wage Theft Act and Wage Payment Act and awarded him $3,467.88 in lost
wages. The November 18, 2021 amended judgment also included an award of
attorneys' fees to Littwin in the amount of $12,805.
This appeal followed with plaintiff presenting these arguments for our
consideration:
POINT II [7]
THE TRIAL COURT ERRED IN DISMISSING
APPELLANT'S AFFIRMATIVE CLAIMS AGAINST
RESPONDENT HUMC.
7
Plaintiff's point I pertains to the standard of review and will not be separately
addressed.
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A. THE TRIAL COURT ERRED IN ITS
INTERPRETATION OF THE MASTER SERVICE
AGREEMENT TERMINATION PROVISION.
B. THE TRIAL COURT ERRED IN DISMISSING
APPELLANT'S FOURTH AND FIFTH COUNTS FOR
BREACH OF CONTRACT AND BREACH OF THE
IMPLIED COVENANT OF GOOD FAITH AND
SEVENTH COUNT FOR FRAUD AND
MISREPRESENTATION WITH RESPECT TO THE
EXTENSION AND SETTLEMENT AGREEMENT.
1. THE TRIAL COURT FAILED TO ANALYZE
APPELLANT'S SIXTH CAUSE OF ACTION
UNDER THE PROPER LEGAL
FRAMEWORK.
2. THE TRIAL COURT COMMITTED
REVERSIBLE ERROR IN DECLINING TO
FIND HUMC BREACHED THE IMPLIED
COVENANT OF GOOD FAITH AND FAIR
DEALING IN ENTERING INTO THE
EXTENSION AGREEMENT AND/OR THE
SETTLEMENT AGREEMENT.
C. THE TRIAL COURT IMPROPERLY DISMISSED
APPELLANT'S CLAIMS FOR BREACH OF
CONTRACT AND BREACH OF THE IMPLIED
COVENANT OF GOOD FAITH AND FAIR
DEALING FOR UNPAID INVOICES.
1. APPELLANT PROVED WITH
UNREBUTTED EVIDENCE THAT HUMC
FAILED TO PAY INVOICES FOR SERVICES
RENDERED.
2. HUMC'S REFUSAL TO PAY HELP DESK
OVERAGES OF $251,763.53 IN 2020
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VIOLATED THE COVENANT OF GOOD
FAITH AND FAIR DEALING AND THE
TRIAL COURT'S REJECTION OF THIS
CLAIM WAS PLAIN ERROR.
D. THE TRIAL COURT SHOULD BE REVERSED
AND A MONEY JUDGMENT OF APPELLANT'S
LOST PROFITS SHOULD BE ENTERED AGAINST
HUMC FOR BREACH OF THE MSA NON-
SOLICITATION PROVISION.
POINT III
THE TRIAL COURT COMMITTED REVERSIBLE
ERROR IN ENTERING JUDGMENT AGAINST
APPELLANT IN FAVOR OF HUMC REGARDING
THE LOST SURFACE PROS.
A. THE TRIAL COURT IMPROPERLY DENIED
APPELLANT'S MOTION FOR SUMMARY
JUDGMENT SEEKING DISMISSAL OF HUMC'S
SECOND AND THIRD COUNTERCLAIMS AS
THERE WAS NO GENUINE ISSUE OF MATERIAL
FACT AS THE THEFT OF THE SURFACE PROS
CONSTITUTED AN INTERVENING CAUSE THAT
PRECLUDE HUMC FROM ESTABLISHING
PROXIMATE CAUSATION.
B. IT WAS REVERSIBLE ERROR FOR THE TRIAL
COURT TO AWARD JUDGMENT TO
RESPONDENT HUMC REGARDING THE
SURFACE PROS BASED ON THE EVIDENCE
PRESENTED AT TRIAL.
1. THE TRIAL COURT'S DECISION
PROVIDES NO LEGAL SUPPORT FOR ITS
FINDING THAT APPELLANT ASSUMED
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THE RISK OF LOSS FOR THE SURFACE
PROS.
2. THE TRIAL COURT ERRED IN FAILING
TO ADDRESS THAT THE INTENTIONAL
TORT OF AN EMPLOYEE BREAKS THE
CAUSAL CHAIN TO HOLD APPELLANT
LIABLE.
3. THE TRIAL COURT FAILED TO
CONSIDER HUMC'S FAILURE TO
MITIGATE ITS DAMAGES.
4. THE TRIAL COURT IMPROPERLY
ASSESSED DAMAGES AS THE COST OF
REPLACEMENT RATHER THAN HUMC'S
ACTUAL OUT OF POCKET LOSSES.
5. THE TRIAL COURT FAILED TO FIND
THAT APPELLANT MET ITS OBLIGATION
AND SUBSTANTIALLY PERFORMED
UNDER THE ANESTHESIA SOW,
ENTITLING IT TO A PRO RATA PORTION
OF FEES UNDER THE ANESTHESIA SOW.
POINT IV
THE TRIAL COURT ERRED IN AWARDING
JUDGMENT TO RESPONDENT LITTWIN.
A. THE TRIAL COURT'S RULINGS ON LITTWIN'S
CREDIBILITY REQUIRED DISMISSAL OF HIS
WAGE CLAIMS.
B. LITTWIN FAILED TO MEET HIS BURDEN OF
PROOF TO DEMONSTRATE THAT HE ACTUALLY
WORKED THE THREE DAYS ALLEGED.
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C. THE TRIAL COURT ERRED IN AWARDING
RESPONDENT LITTWIN $12,805.00 IN LEGAL
FEES.
POINT V
IT WAS REVERSIBLE ERROR FOR THE COURT
TO DISMISS APPELLANT'S CLAIMS FOR
BREACH OF THE RESTRICTIVE COVENANTS
AGREED TO BY LITTWIN & THE INDIVIDUAL
DEFENDANTS.
A. THE TRIAL COURT IMPROPERLY HELD THAT
APPELLANT'S RESTRICTIVE COVENANT WAS
NOT ENFORCEABLE AS A MATTER OF LAW.
B. THE EVIDENCE PRESENTED ON SUMMARY
JUDGMENT DEMONSTRATED THAT LITTWIN &
THE INDIVIDUAL DEFENDANTS BREACHED
THEIR RESTRICTIVE COVENANTS WITH
APPELLANT.
POINT VI
APPELLANT'S CLAIMS AGAINST RESPONDENT
NTT DATA SHOULD NOT HAVE BEEN
DISMISSED.
A. APPELLANT WAS ENTITLED TO DISCOVERY
CONCERNING THE NTT DATA MSA AND
RETENTION OF THE INDIVIDUAL
DEFENDANTS.
B. THE TRIAL COURT IMPROPERLY GRANTED
RESPONDENT NTT DATA'S MOTION FOR
SUMMARY JUDGMENT ON APPELLANT'S
TORTIOUS INTERFERENCE CLAIM.
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II.
We first address the court's order granting defendants' summary-judgment
motion dismissing plaintiff's affirmative claims against HUMC for: the breach
of the SOWs (count four); non-payment of invoices (count five); fraud and
intentional misrepresentation with respect to the extension and settlement
agreements (count seven); and enforcement of the restrictive covenant against
the individual defendants (count nine).
We review summary-judgment orders de novo using the same standard
that governs the trial court. Templo Fuente De Vida Corp. v. Nat'l Union Fire
Ins. Co. of Pittsburgh, 224 N.J. 189, 199 (2016). That standard requires the
court to grant summary judgment when "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." R. 4:46-
2(c); Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 528-29 (1995). A
reviewing court owes no special deference to the "trial court's interpretation of
the law and the legal consequences that flow from established facts." Manalapan
Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).
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30
As to the termination of the MSA, plaintiff asserts the court erred in its
interpretation of the MSA's termination provision—Paragraph 9(c)—on the
critical issue of whether HUMC had breached its contract with plaintiff by
failing to provide adequate notice prior to its termination of the agreement. The
determination of this issue impacted the court's denial of plaintiff's summary-
judgment motion on counts four and five of the third-amended complaint
(breach of contract claims as to the SOWs and unpaid invoices). The court also
granted HUMC's cross-motion for summary judgment as to counts four and five
of the third-amended complaint.
Plaintiff argues that Paragraph 9(c)'s "ninety-day termination provision
only operated during the MSA's [I]nitial [T]erm, not its yearly renewal terms,"
and the court "failed to give meaning to each of the terms of the MSA" when it
held that "after the first three months of payment under the [I]nitial [T]erm,
either party may terminate the MSA and related agreements during the [I]nitial
[T]erm and any renewal term." Specifically, plaintiff asserts that:
Paragraph 9(a) indicates a difference between the
"Initial Term" and "renewal term", where the "Initial
Term" is defined as "The term . . . begin[ning] as of the
Effective Date and . . . continu[ing] for a period of
thirty-nine (39) months unless earlier terminated as
provided herein" and "Renewal term" is defined as
"After the Initial Term," each "annual [] . . . period of
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one-year . . . unless ninety (90) days' notice is given by
client prior to the end of the term or any renewal term."
Paragraph 9 of the MSA addresses the agreement's term and termination.
More particularly, Paragraph 9(a) provides that:
The term of this Agreement shall begin as of the
Effective Date and shall continue for a period of thirty-
nine (39) months unless earlier terminated as provided
herein ("Initial Term"). After the Initial Term this
agreement shall renew annually for a period of one-year
(renewal term) unless ninety (90) days' notice is given
by client prior to the end of the term or any renewal
term. Six (6) mo[n]ths prior to the expiration of the
Initial Term, and three (3) months prior to the
expiration of any renewal term, the parties shall enter
into discussions regarding the pricing for the renewal.
In the event the parties do not agree prior to the renewal
date, the pricing shall increase by 3% or the rate of
inflation as measured by the Bureau of Labor Statistics
for the month in which this agreement or any Statement
of Work renews, whichever is less. In no event shall
the rate of inflation result in a reduction of the contract
or Statement of Work pricing.
Plaintiff further asserts that because Paragraph 9(c) references only the
"Initial Term," it was improper for the court to find that Paragraph 9(c) applies
to any "renewal term" as "the parties expressly omitted such a reference from
that provision." Specifically, Paragraph 9(c), provides:
After the first three (3) months of payments under the
Initial Term, either party may terminate this Agreement
and any [statements of work] without cause by giving
the other Party [ninety] days advance written notice. In
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the event of termination, [HUMC] shall compensate
[plaintiff] for work authorized and completed through
the effective date of termination.
[Emphasis added.]
Additionally, plaintiff contends that if the right to terminate the MSA
under Paragraph 9(c) continued throughout the "Initial Term" and all "Renewal"
terms of the MSA, then the provisions of Paragraph 9(a)—allowing a party to
prevent renewal by giving notice of non-renewal ninety days before the renewal
date—would be superfluous and unnecessary because each party would be free
to terminate at any time.
Plaintiff further argues the motion court failed to acknowledge that the
one-year term of the extension agreement reflects the parties' intention that the
ninety-day notice for termination applies only to the "Initial Term" and that the
court's interpretation of the MSA "deprived [plaintiff] of the benefit of its
bargain in entering into the [e]xtension [a]greement." Plaintiff contends that at
a minimum, given the differing interpretations of Paragraph 9(c) and evidence
of the parties' intent to have plaintiff serve HUMC through January 2021, the
court should have denied the motions for summary judgment on the causes of
action whose resolution is dependent on the disposition of this issue.
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33
HUMC maintains that the court "properly granted summary judgment to
[it] on [plaintiff's] breach of contract claim related to the MSA's termination
provision,"8 because "[P]aragraph 9(c) of the MSA clearly and unambiguously
provides that, after the first three months of payment under the Initial Term,
either party may terminate the MSA and related agreements during the [I]nitial
[T]erm and any renewal term."
HUMC also maintains that the court correctly determined that Paragraph
9(a) expressly addressed renewal of the MSA and provided that HUMC could
choose not to renew the MSA at the end of the Initial Term, which had long
expired by the time it terminated the contract. HUMC argues the court correctly
stated "renewal is not the same as termination" and "[t]he timing of notice of
non-renewal was expressly tied to each Term, be it initial or renewal." It also
argues that "[t]ermination . . . was not tied to any term and could be elected after
the first three months of payments."
In addressing the termination provision in the MSA, the court denied
plaintiff's motion for summary judgment as to counts four and five of the third-
amended complaint (breach of contract as to the SOWs and unpaid invoices,
8
We discern that HUMC in making this argument is referring to the claims in
counts four and five, which pertain to the SOWs (count four) and unpaid
invoices (count five), in the third-amended complaint.
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34
respectively). In considering the termination issue, the court relied on the
express language in Paragraph 9(c) of the MSA and concluded that it clearly and
unambiguously:
provides that, after the first three months of payment
under the [I]nitial [T]erm, either party may terminate
the MSA and related agreements during the [I]nitial
[T]erm and any renewal term. Such termination could
occur "without cause by giving the other party [ninety]
days" advanced [notice].
We review a court's interpretation of a contract de novo. Serico v.
Rothberg, 234 N.J. 168, 178 (2018). The interpretation of contract language is
generally a question of law unless its meaning is unclear and turns on conflicting
testimony. Bosshard v. Hackensack Univ. Med. Ctr., 345 N.J. Super. 78, 92
(App. Div. 2001). It is axiomatic, of course, that contract provisions are to "be
read as a whole, without artificial emphasis on one section, with a consequent
disregard for others." Borough of Princeton v. Bd. of Chosen Freeholders of
Mercer, 333 N.J. Super. 310, 325 (App. Div. 2000), aff'd, 169 N.J. 135 (2001).
"The plain language of the contract is the cornerstone of the interpretive inquiry;
'when the intent of the parties is plain and the language is clear and
unambiguous, a court must enforce the agreement as written, unless doing so
would lead to an absurd result.'" Barila v. Bd. of Educ. of Cliffside Park, 241
N.J. 595, 616 (2020) (quoting Quinn v. Quinn, 225 N.J. 34, 45 (2016)).
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35
"[I]t is not the function of the court to make a better contract for the
parties, or to supply terms that have not been agreed upon." Graziano v. Grant,
326 N.J. Super. 328, 342 (App. Div. 1999) (citing Schenck v. HJI Assocs., 295
N.J. Super. 445, 450 (App. Div. 1996)). "If the terms of a contract are clear, we
must enforce the contract as written and not make a better contract for either
party." Ibid. "However, a contract must be interpreted considering the
surrounding circumstances and the relationships of the parties at the time it was
entered into, in order to understand their intent and to give effect to the nature
of the agreement as expressed by them." Ibid.We note that under either Paragraph 9(a) or (c), the issue is whether the
parties to the agreements may terminate the MSA, SOWs, and extension
agreement by providing the 90-days' notice permitted under Paragraph 9(c) only
during the Initial Term or whether either party may also exercise the right to
terminate the MSA, SOWs, and extension agreement consistent with HUMC's
February 4, 2020 notice of termination under Paragraph 9(c) by providing 90-
days' notice during any annual renewal period of the MSA following the Initial
Term. As we have noted, the SOW's—the temporal terms of which were
extended by the extension agreement—expressly provide that their terms are
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36
otherwise subject to the MSA. Thus, Paragraph 9 of the MSA governs the
termination of the MSA as well as all the SOWs.
With that in mind, we consider the express language contained in the
relevant Paragraphs—9(a) and (c)—of the MSA. Paragraph 9(a), captioned
"Term," provides that the agreement shall "renew annually for a period of one-
year (renewal term) unless ninety (90) days' notice is given by the client prior
to the end of the term or any renewal term." Paragraph 9(c), captioned
"Termination," expressly applies after the expiration of the first three months of
payments under the Initial Term of the contract and states that following those
payments "either party may terminate this agreement and any SOW without
cause by giving the other party [ninety] days advance written notice."
In reviewing the MSA terms, we discern no error in the motion court's
conclusion that Paragraph 9(c) is the operative provision for purposes of
analyzing plaintiff's breach-of-contract claims in counts four and five of the
third-amended complaint. Contrary to plaintiff's assertion that there were
differing interpretations of Paragraph 9(a) and (c) that warranted a denial of the
motion for summary judgment and that the one-year extension agreement altered
HUMC's right to terminate the contract because it reflected the parties' intent to
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37
extend the agreement for the one-year term, we note that plaintiff's arguments
are not supported by the plain language of the MSA.
Based on the plain language, Paragraph 9(a) is a "renewal provision" that
governs the extension and renewal of the MSA, and Paragraph 9(c) is a
"termination provision" that expressly addresses when a party may terminate the
agreement and any SOWs "after the first three (3) months of payments under the
Initial Term." By contrast, Paragraph 9(a) expressly addresses the effective
date, Initial Term, and renewal of the MSA, and although Paragraph 9(a)
mentions "termination," it does so solely in the context of explaining the initial
thirty-nine-month term of the MSA, stating "the term of this Agreement shall
begin . . . and shall continue for a period of thirty-nine (39) months unless earlier
terminated." Only Paragraph 9(c) addresses termination of the MSA and SOWs
within the relevant timeframe applicable here: "after the first three (3) months
of payments under the Initial Term."
In considering the plain language of the renewal and termination
provisions, we are satisfied that the renewal provision has no application here
because the issue presented is not whether the agreement was properly renewed
at the end of its term or whether HUMC provided proper notice of non-renewal.
Rather, the issue is whether HUMC provided proper notice of its intent to
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38
terminate the MSA in its letter dated February 4, 2020—after having signed the
extension agreement on November 18, 2019.
We first address plaintiff's argument that the court erred in its
interpretation of the MSA's termination provision and in granting summary
judgment in favor of HUMC's interpretation of Paragraph 9 on counts four and
five of the third-amended complaint because the parties presented two opposite
interpretations of Paragraph 9: plaintiff's argument that the ninety-day provision
operated only during the MSA's Initial Term, not its yearly renewal terms, and
HUMC's argument that the ninety-days' notice period applied at any time during
the term of the MSA.
We also discern no ambiguity in Paragraph 9(a) and 9(c). Only the latter
applies to terminations of the contract, and it permits termination of the contract
by the provision of ninety-days' notice "[a]fter the first three (3) months of
payment under the Initial Term." HUMC provided notice of termination of the
MSA in accordance with that plainly stated requirement. Where the intent of
the parties to a contract is clear and the plain "language of the contract is clear
and unambiguous, a court must enforce the agreement as written, unless doing
so would lead to an absurd result." Quinn, 225 N.J. at 45.
A-1032-21
39
Additionally, we are not persuaded by plaintiff's argument that because
Paragraph 9(c) refers to the "Initial Term," the right to terminate the agreement
did not apply to any "renewal term." In the first instance, we reject the argument
because the reference to the Initial Term in Paragraph 9(c) relates to the
commencement, and not end date, of the period during which the parties may
terminate the agreement. That is, Paragraph 9(c) allows for the termination of
the MSA at any time "[a]fter the first three (3) months of payments under the
Initial Term." We also reject plaintiff's argument because the MSA otherwise
provides for automatic renewals of the agreement beyond the Initial Term ,
Paragraph 9(c) does not limit the exercise of the right to terminate to the
agreement to the Initial Term, and we are not at liberty to add or subtract from
the terms contained in the parties' agreement. E. Brunswick Sewerage Auth. v.
E. Mill Ass'n, Inc., 365 N.J. Super. 120, 125 (App. Div. 2004).
Again, Paragraph 9(c) clearly provides that either party may terminate the
MSA and, for the reasons we have explained, the SOWs as well, by giving the
other ninety-days' notice, and there is no language in the extension agreement
modifying this plainly stated termination right. Indeed, the extension agreement
simply extended the temporal terms of the SOWs, but the express terms of the
SOWs otherwise remained the same and they provided that termination of the
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40
agreements was governed by the MSA. Plaintiff's claim to the contrary finds no
support in language found in the MSA or the extension agreement and, if
adopted, would render the Paragraph 9(c) termination provision meaningless.
Porreca v. City of Millville, 419 N.J. Super. 212, 233 (App. Div. 2011) ("A
contract 'should not be interpreted to render one of its terms meaningless.'")
(quoting Cumberland Cnty. Improvement v. GSP Recycling Co., 358 N.J. Super
484, 497 (App. Div. 2011)).
We also conclude there is no support for plaintiff's argument that the
court's interpretation of the MSA deprived it of the benefit of its bargain in
entering into the extension agreement. As HUMC asserts, courts cannot make
a better contract for parties than the parties made for themselves, and here the
extension agreement is subject to the terms of the MSA, which includes
Paragraph 9(c). See Graziano, 326 N.J. Super. at 342 ("It is not the function of
the court . . . to supply terms that have not been agreed upon.").
We are further persuaded that Paragraph 9(c) is the operative provision
intended to govern terminations after the Initial Term because of the express
language contained in the final sentence of the Paragraph, which provides that
"[i]n the event of termination, [HUMC] shall compensate NIT for work
authorized and completed through the effective date of termination." The
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41
language expressly requiring that payment be made for work performed prior to
termination of the agreement is not found anywhere else in the parties'
agreement, including Paragraph 9(a), and is indicative of the parties' intent that
Paragraph 9(c) governs termination of the agreement.
We therefore decline to adopt plaintiff's interpretation of Paragraph 9 and
remain unpersuaded that the trial court erred in granting summary judgment in
favor of HUMC as to plaintiff's claims that HUMC breached the MSA by failing
to provide it with timely notice prior to terminating the contract with HUMC.
Thus, the court's grant of summary judgment in favor of HUMC was proper as
to plaintiff's counts four (breach of the SOWs) and five (breach of contract as to
the unpaid invoices). Likewise, the court's denial of plaintiff's summary
judgment as to counts four (breach of the SOWs) and five (breach of contract as
to the unpaid invoices) was proper.
We next consider plaintiff's argument that the court erred in dismissing
counts six of the third-amended complaint—for breach of the implied covenant
of good faith and fair dealing—as to the MSA, SOWs, extension and settlement
agreements, and that the court provided no analysis supporting its determination.
Plaintiff argues the court erred because it made no finding about the
elements of the covenant of good faith and fair dealing, see Sons of Thunder v.
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42
Borden, Inc., 148 N.J. 396, 420 (1997) ("Every contract or duty within this Act
imposes an obligation of good faith in its performance or enforcement . . . . Good
faith is defined as 'honesty in fact in the conduct or transaction concerned.'")
(first citing N.J.S.A. 12A:1–203, then quoting N.J.S.A. 12A:1–201(19)), and did
not give plaintiff all favorable inferences. Instead, according to plaintiff, the
court simply dismissed count seven, finding plaintiff had not presented evidence
supporting a cause of action for fraudulent misrepresentation.
According to plaintiff, HUMC breached the covenant of good faith and
fair dealing by executing the extension agreement with plaintiff shortly after
"secretly" retaining NTT to replace them just two months after agreeing to the
extension and settling plaintiff's claims at a significant discount. Further,
plaintiff alleges HUMC executed and performed the extension and settlement
agreements solely to ensure that it could continue to utilize plaintiff's
information technology services for "only so long as necessary until defendant
NTT Data was ready to assume responsibility for HUMC's information
technology needs." Plaintiff maintains that these acts of HUMC constituted
breaches of the covenant of good faith and fair dealing. Plaintiff further argues
that a breach of the implied covenant of good faith and fair dealing is
incorporated into every contract and is violated where the breaching party
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43
deprives the other party from "receiving its reasonably expected fruits under the
contract."
HUMC asserts that the court's "findings of facts and conclusions of law
fully support dismissal of count six and demonstrate that HUMC did not deprive
[plaintiff] from receiving its 'reasonably expected fruits under the contract'" and
that plaintiff's expectations it would continue to provide services to HUMC for
one full year is not reasonable when the extension agreement "could be
terminated with [ninety-days'] notice."
The covenant of good faith and fair dealing is implied in every contract in
New Jersey. Wilson v. Amerada Hess Corp., 168 N.J. 236, 244 (2001). This
means that neither party shall do anything that will have the effect of destroying
or injuring the right of the other party to receive the fruits of the contract. Sons
of Thunder, Inc., 148 N.J. at 421.
Good faith is a concept that defies precise definition. The
Uniform Commercial Code, as codified in New Jersey,
defines good faith as "honesty in fact and the observance
of reasonable commercial standards of fair dealing in the
trade." Good faith conduct is conduct that does not
"violate community standards of decency, fairness or
reasonableness." "Good faith performance or enforcement
of a contract emphasizes faithfulness to an agreed
common purpose and consistency with the justified
expectations of the other party." The [covenant] calls for
parties to a contract to refrain from doing "anything which
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44
will have the effect of destroying or injuring the right of
the other party to receive" the benefits of the contract.
[Brunswick Hills Racquet Club, Inc. v. Route 18 Shopping
Ctr. Assocs., 182 N.J. 210, 224-25 (2005) (citations
omitted).]
The party claiming a breach of the covenant must show the other party "engaged
in some conduct that denied the benefit of the bargain originally intended by the
parties." Id. at 225. "[A]n allegation of bad faith or unfair dealing should not
be permitted to be advanced in the abstract and absent an improper motive." Id.
at 231 (quoting Wade v. Kessler Inst., 172 N.J. 327, 341 (2002)).
Based on our de novo review of the record, we discern no basis to
conclude the court erred in granting HUMC's summary judgment dismissing
count six (the implied covenant of good faith and fair dealing claim) and denying
plaintiff's reconsideration motion. We reach this determination because the
implied covenant of good faith and fair dealing cannot override an express term
in a contract. Wilson, 168 N.J. at 244.
Here, plaintiff's count six claim for breach of the implied covenant of good
faith—based on HUMC's "failure to disclose its agreement with NTT Data"—
ignores that the extension agreement is subject to the MSA, as we have
previously determined, which provides for termination on ninety-days' notice.
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45
The extension agreement is not a stand-alone document; it extends the
SOWs specifically referenced therein until January 4, 2021. Given the plain
language in the SOWs, Paragraph 9 of the MSA governs the termination of the
SOWs. And no party argues to the contrary. HUMC's notice of termination
expressly sought to terminate the MSA and SOWs, including the Help Desk,
Anesthesia and Remedy SOWs in effect at the time.
Because the extended terms of the SOWs continued to be governed by the
MSA's termination provision in Paragraph 9, plaintiff cannot establish a breach
of the covenant of good faith and fair dealing by virtue of HUMC's exercise of
its right to terminate the extension agreement when it had a contractual right to
do so under the express language in the MSA. Ibid.An allegation of bad faith or unfair dealing may not be advanced in the
abstract and absent improper motive. Id. at 251. Plaintiff alleges HUMC's sole
motive for signing the extension agreement and approximately one month later
entering into a settlement agreement with plaintiff was the potential of receiving
a significant discount on moneys owed to plaintiff for prior services.
Nevertheless, the court in examining this issue found that the extension
agreement and the settlement agreement were separate and distinct, and even
considering their "temporal proximity"—the agreements were signed
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46
approximately one month apart—plaintiff did not provide evidence of bad faith
on the part of HUMC when it gave proper notice of termination of the extension
agreement one month after signing the settlement agreement. Plaintiff points to
no evidence of bad motive or intent, and, like the motion court, we are persuaded
that HUMC's decision to terminate the extension agreement and ultimately the
MSA prior to January 2021 does not constitute bad faith or breach of good faith
and fair dealing under those agreements. And, in the absence of a showing of
"bad motive or intention, discretionary decisions that happen to result in
economic disadvantage to a party are of no legal significance." Seidenberg v.
Summit Bank, 348 N.J. Super. 243, 261 (App. Div. 2002) (quoting Wilson, 168
N.J. at 261).
We therefore agree with HUMC's argument that "there is no evidence that
[it] acted in bad faith or performed its contractual obligation with a lack of good
faith" by terminating the extension agreement prior to January 2021. Contrary
to plaintiff's assertion, the court specifically found both the settlement and
extension agreements were performed in accordance with their terms and
enforced in good faith and that plaintiff provided no evidence to the contrary.
Plaintiff's argument that the court erred in dismissing count seven—
alleging fraudulent misrepresentation—is equally unavailing. As with plaintiff's
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claim that HUMC violated the covenant of good faith and fair dealing, plaintif f
asserts that it entered into the settlement agreement on "false pretenses from the
onset of negotiations . . . ." Plaintiff, however, fails to articulate any specific
statements or misrepresentations it alleges HUMC made and instead seemingly
relies on HUMC's settlement of their claims and subsequent termination of the
extension agreement as establishing the alleged fraudulent misrepresentation.
Again, plaintiff argued before the motion court that HUMC negotiated the
extension agreement after it had executed its agreement with NTT and that
HUMC negotiated and executed the extension and settlement agreements when
it had no intention of fulfilling the terms of the extension agreement for the one-
year term to save itself approximately $900,000.
The extension agreement lists a number of "whereas" paragraphs that
recount plaintiff's and HUMC's prior agreements, including the extension of "the
Field Services SOW, Help Desk SOW, CVP SOW, Faculty Practice SOW,
Remedy SOW, Telecomm SOW and the Backlog SOW . . . to maintain the status
quo through January 4, 2021." The settlement agreement also contains a number
of similar provisions summarizing "various statements of work under the MSA."
Plaintiff claimed that at the time the extension agreement was signed,
HUMC owed it nearly $2 million in overage fees that had accrued prior to
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January 1, 2019, but on December 18, 2019, the parties signed the settlement
agreement providing that HUMC would pay plaintiff only $1,000,070 for those
fees. Plaintiff maintains HUMC's entry into settlement discussions with NIT
related to the extension agreement while simultaneously conducting
negotiations with NTT for a replacement MSA "solely to extract significant
concessions by NIT on owed accounts receivables," constituted sufficient
evidence supporting its cause of action for fraud and misrepresentation.
On this issue, the court found plaintiff had "failed to demonstrate the
elements of fraudulent misrepresentation as to HUMC's execution" of the
extension agreement and settlement agreement. Rather, the court found the
agreements were separate and the "terms of the settlement agreement stated that
the parties did not rely on any the representations, except as specifically set forth
therein." The court dismissed count seven of the third-amended complaint on
that basis. On reconsideration, the court clarified that it had considered all the
evidence, including "the temporal relationship between the execution" of the
settlement and extension agreements and HUMC's failure to disclose its
negotiations with NTT, in finding no fraudulent representations in the execution
of the settlement or extension agreements.
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Fraudulent misrepresentation occurs when an individual purports to
represent a fact when it is in fact false. Jewish Ctr. of Sussex Cnty. v. Whale,
86 N.J. 619, 624 (1981). Moreover, legal fraud or fraudulent misrepresentation
must be established by clear and convincing evidence. See Stochastic
Decisions, Inc. v. DiDomenico, 236 N.J. Super. 388, 395-96 (App. Div. 1989).
"To establish common-law fraud, a plaintiff must prove: '(1) a material
misrepresentation of a presently existing or past fact; (2) knowledge or belief by
the defendant of its falsity; (3) an intention that the other person rely on it; (4)
reasonable reliance thereon by the other person; and (5) resulting damages.'"
Banco Popular N. Am. v. Gandi, 184 N.J. 161, 172-73 (2005) (quoting Gennari
v. Weichert Co. Realtors, 148 N.J. 582, 610 (1997)).
Here, plaintiff is seeking to establish fraudulent misrepresentation by
implication based on HUMC's conduct in seeking to retain NTT's services after
having agreed to a contract extension with them. But fraudulent
misrepresentation cannot be implied based on HUMC's conduct as alleged here;
rather, plaintiff was required to present evidence establishing the elements
required to sustain its fraud claim, including by showing clear and convincing
evidence of a material misrepresentation of a presently existing fact, known or
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believed by HUMC, with the intention that there will be reasonable reliance on
the misrepresentation, Jewish Ctr. of Sussex Cnty., 86 N.J. at 624.
Plaintiff does not argue that HUMC's failure to disclose its negotiations
with NTT constitutes fraudulent misrepresentation. In fact, plaintiff offers little
support for its claim the court erred in dismissing count seven for fraud and
misrepresentation. We note, however, plaintiff fails to point to any evidence
presented to the motion court establishing each of the essential elements of its
fraud claim.
The record shows that plaintiff and HUMC entered into the settlement
agreement, adjusting part of plaintiff's financial claims against HUMC at a
discount. And there is no dispute that HUMC had been negotiating with NTT
for IT services when it signed the extension agreement with plaintiff in
November 2019, and the settlement agreement in December 2019. Nevertheless,
the record lacks any evidence HUMC misrepresented any facts pertinent to its
entry into the extension or relating to its negotiations with NTT. Plaintiff also
makes no showing that any requirement to notify plaintiff of its negotiations
with another entity exists in the MSA or in the law. Moreover, we observe that
it is hardly imprudent for a hospital to ensure continuing IT services while
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seeking a new IT vendor and then delivering notice to terminate a prior
agreement—the MSA—in the manner expressly set forth in that agreement.
And, even if plaintiff had submitted such proof at trial, the settlement
agreement itself stated the parties did not rely on any representations except
those specifically included in the agreement, and plaintiff does not assert that
there are misrepresentations in the settlement agreement. See JPC Merger Sub
LLC v. Tricon Enters., Inc., 474 N.J. Super. 145, 160 (App. Div. 2022) (quoting
In re County of Atl., 230 N.J. 237, 254 (2017) ("It is well-settled that '[c]ourts
enforce contracts based on the intent of the parties, the express terms of the
contract, surrounding circumstances and the underlying purpose of the
contract.'") (internal quotations omitted); M.J. Paquet, Inc. v. N.J. Dep't of
Transp., 171 N.J. 378, 396 (2002) (stating contract terms are generally "given
their plain and ordinary meaning").
Plaintiff provides no evidence of any fraudulent misrepresentations and
bases its argument entirely on HUMC's actions in terminating the MSA or
settling plaintiff's claims at an admittedly reduced rate, only to subsequently
terminate the MSA. Accordingly, plaintiff did not establish, by clear and
convincing evidence, that HUMC made fraudulent misrepresentations on which
plaintiff relied, and, thus, cannot satisfy the elements to sustain its claim for
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fraudulent misrepresentation. We therefore affirm the court's dismissal of
plaintiff's fraudulent-misrepresentation claim.
III.
Turning to the issues at trial, we next address plaintiff's argument the court
erred in dismissing its claim against HUMC for unpaid invoices and committed
reversible error by entering judgment in favor of HUMC regarding the lost
Surface Pro computers.
Our "review of a judgment following a bench trial is limited."
Accounteks.net, Inc. v. CKR Law, LLP, 475 N.J. Super. 493, 503 (App. Div.
2023). "The trial court's factual findings are entitled to deference on appeal so
long as they are supported by sufficient credible evidence in the record." Ibid.Moreover, "[d]eference is particularly appropriate when the court's findings
depend on credibility evaluations made after a full opportunity to observe
witnesses testify, Cesare v. Cesare, 154 N.J. 394, 412 (1998), and the court's
'feel of the case.'" Accounteks.net, Inc., 475 N.J. Super. at 503 (quoting State
v. Johnson, 42 N.J. 146, 161 (1964)). For that reason, "[i]n reviewing the judge's
findings, '[w]e do not weigh the evidence, assess the credibility of witnesses, or
make conclusions about the evidence.'" 160 W. Broadway Assocs., LP v. 1
Memorial Drive, LLC, 466 N.J. Super. 600, 610 (App. Div. 2021) (second
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53
alteration in original) (quoting Mountain Hill, LLC v. Twp. of Middletown, 399
N.J. Super. 486, 498 (App. Div. 2008)).
Plaintiff's argument with respect to the unpaid invoices is two-fold: 1) the
court "improperly failed to afford any weight" to Hossain's report summarizing
a number of outstanding invoices and "placed an overreliance on the fact that
five of six-hundred-and-seventeen invoices contained in plaintiff's [r]eport were
challenged by HUMC at trial"; and 2) the court "erroneously rejected plaintiff's
request to seek overage charges of $251,763.53 for January, February, March
and April 2020" based on its determination that no overage charges had become
due under the terms of the MSA and Help Desk SOW because the MSA provided
that "overage charges between plaintiff and HUMC were calculated annually at
the end of the calendar year" and the contractual annual threshold of 120,000
calls was never reached in 2020.
On the first issue, at trial plaintiff produced a report from Houssain
summarizing a number of outstanding invoices, but plaintiff never produced or
presented at trial the invoices referenced in the report. HUMC's counsel
objected to the admission of the report, but it was admitted into evidence over
the objection in accordance with N.J.R.E. 1006. In its decision, the court
concluded that plaintiff had failed to produce the "vast majority of the invoices
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as to which it seeks recovery." Plaintiff asserted that the invoices could not be
located, but the judge observed that the invoices dated back to only 2019 and
2020, and stated:
I have a difficult time getting my head around the fact
that somebody could have a claim for $569,000 worth
of outstanding invoices and yet don't have the invoices
available. And these are invoices that go back to 2019
and 2020. I'm not being asked – people aren't being
asked to produce invoices that go back substantial
periods of time.
....
[plaintiff] failed to produce, either during discovery or
during the course of the trial, the vast majority of the
invoices as to which it seeks recovery. Further, the trial
testimony calls into significant question the bona fides
of all such claims by [plaintiff], which has failed to
prove to this court that it is entitled to collect any of the
money for services which it claims.
Here, the original invoices were not made available at trial and absent
such critical evidence, the court determined plaintiff could not sustain its burden
of proof. Nothing about the court's decision on this issue warrants reversal. See
Accounteks.net, Inc., 475 N.J. Super. at 503 ("The trial court's factual findings
are entitled to deference on appeal so long as they are supported by sufficient
credible evidence in the record."). And, the court's determination that plaintiff
lacked evidence and failed to sustain its burden of proof is unassailable and
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entitled to deference. Balducci v. Cige, 240 N.J. 574, 595 (2020) ("We may not
overturn the trial court's factfindings unless we conclude that those findings are
'manifestly unsupported' by the 'reasonably credible evidence' in the record.")
(quoting Seidman v. Clifton Sav. Bank, S.L.A., 205 N.J. 150, 169 (2011)).
As to plaintiff's claims related to the Help Desk SOW overage charges
from January 2020 to April 2020, plaintiff contends that at trial it demonstrated
that "between January 2020 and April 2020, [it] went well beyond the normal
help desk functions to assist HUMC with their ransomware attack and the fallout
of COVID-19, despite knowing that their agreement would be terminated as of
May 2020." The court, however, found plaintiff had not yet handled 125,000
calls for the year, so no actual overages had occurred under the parties'
agreement.
Hossain's report included a monthly overage charge calculation based on
whether the call-volume exceeded the monthly average. However, as noted by
the court, the MSA does not require a monthly calculation of overage charges
until the call volume exceeded 125,000 in a given year. The court found that
"[t]he evidence at trial reveals that overage charges between [plaintiff] and
HUMC were calculated annually at the end of the calendar year."
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We agree that based on the undisputed facts, at the time plaintiff began
invoicing HUMC for monthly overages, HUMC had not yet reached the annual
threshold of 125,000 calls as set forth in the MSA. And, pursuant to the express
terms of the Help Desk SOW, the overage charges were meant to be calculated
when the yearly call-volume threshold was reached and there was no basis in
the MSA or Help Desk SOW to support plaintiff's bald assertion that "HUMC
was obligated to compensate [plaintiff] for its pro rata work when it prematurely
terminated [] the [e]xtension [a]greement." The contract simply does not
contemplate a pro rata payment method, and we may not write into an agreement
a provision the parties opted not to include. Graziano, 326 N.J. Super. at 342("It is not the function of the court . . . to supply terms that have not been agreed
upon."); see also Schenck, 295 N.J. Super at 450; see also E. Brunswick
Sewerage Auth., 365 N.J. Super. at 125.
We also reject plaintiff's argument that the motion court committed
reversible error by entering judgment in favor of HUMC regarding the lost
Surface Pros.9 In its counterclaims, HUMC alleged plaintiff had breached the
Anesthesia SOW by failing to provide the Surface Pros and complete the work
9
The court granted plaintiff summary judgment dismissing HUMC's conversion
counterclaim but denied its motion to dismiss HUMC's claims for breach of
contract and breach of the implied covenant of good faith and fair dealing.
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agreed upon and plaintiff had breached the implied covenant of good faith and
fair dealing with respect to the Surface Pros and the Anesthesia SOW. HUMC
alleged that plaintiff was responsible for all IT inventory, including the Surface
Pros pursuant to the terms of the Anesthesia SOW and breached the SOW by
failing to "deploy even a single Surface Pro to the end users" resulting in
$134,000 in "missing hardware and accessories."
Plaintiff argues the court erred by finding it last had possession of the
Surface Pros and, therefore, assumed the risk of care and custody of them.
According to plaintiff, the Anesthesia SOW did not expressly obligate it to
assume the risk of loss of the Surface Pros and the court added an implied term
to the Anesthesia SOW.
The evidence at trial demonstrated that the Surface Pros went missing
while in the care and custody of plaintiff after it had confirmed delivery and
receipt of the entire shipment, which was stored in a protected area of HUMC
under the control of plaintiff until sixty-one of the computers went missing.
Although the Anesthesia SOW did not expressly provide that plaintiff assumed
the risk for the Surface Pros, it required plaintiff to accept, unbox, inventory,
configure, and distribute them and it was implicit in the Anesthesia SOW that
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when plaintiff began working on the Surface Pros, it became responsible for the
care and custody of them.
The court found that "[w]hile the Anesthesia SOW is silent as to the
required activities of [plaintiff] to protect [the Surface Pros], it is implied that
[plaintiff] was responsible for the care and custody of the Surface Pros." The
court went on to state that:
[Plaintiff] cannot explain what occurred and cannot
provide any explanation as to when any of its
representatives last saw the missing Surface Pros. In
allocating responsibility, this court must conclude that
[plaintiff] last had possession of the [sixty-one]
[S]urface [P]ros and is responsible for their loss.
The court then awarded $134,537 to HUMC, representing the value of the
missing Surface Pros. In doing so, the court also found HUMC was not
responsible for the $14,900 in costs plaintiff sought for configuring the Surface
Pros because that work was never completed.
We accept and are bound by the court's findings of fact, which are
supported by substantial credible evidence in the record. Accounteks.net, Inc.,
475 N.J. Super. at 503. The court found that when plaintiff began to work on
the Surface Pros, it became responsible for the care and custody of them and it
was plaintiff who was last in possession of the computers. From this record, it
is undisputed that the Anesthesia SOW required plaintiff to configure one-
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hundred and fifty Surface Pros, deploy them and provide training to
anesthesiologists on how to use them. This never happened because the majority
of the Surface Pros went missing. Plaintiff contends that some Surface Pros
were configured but acknowledged that none were ever deployed, and no
training was provided. It suggests that the invoice for the Anesthesia SOW
should have been applied pro rata based on the alleged work performed on the
Surface Pros that were not lost or stolen. However, neither the MSA nor
Anesthesia SOW provided any basis by which the court could calculate a value
for partial work. And, instead, the court determined the value of the missing
equipment in rendering its decision.
We therefore discern no error in the court's allocation of responsibility or
determination of the value of the missing Surface Pros computer equipment that
warrants reversal.
IV.
Plaintiff also argues the court erred in ordering that it pay damages to
Littwin for the wages it had failed to pay him for his work from February 19 to
21, 2021, plus liquidated damages of 200 percent of the wages, plus costs and
attorneys' fees, as required under N.J.S.A. 34:11-4.10(c).
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Littwin testified that he notified plaintiff's president on February 18, 2020,
that he would begin employment with HMH on February 24, 2020, and his last
day of work for plaintiff would be February 21, 2020. According to Littwin, on
February 18, 2020, Blik informed him that he was in breach of the MSA's non-
compete policy, but at his deposition Blik could not recall the conversation
clearly and did not remember whether he had terminated Littwin. That same
day, plaintiff disabled Littwin's accounts so he could no longer access its system,
however, Littwin still had access to his HUMC email and credentials. And, it is
undisputed that Littwin reported for work on February 19, 20, and 21 and logged
his time each day.
The court found Littwin's testimony not credible with respect to the
conditions under which he was hired by HUMC. But it found his testimony
regarding his lost wages to be credible and, therefore, awarded him damages of
$3,467.88, representing unpaid wages of $1,155 for the three days plus 200
percent of the unpaid wages ($2,311.92). The court also awarded fees of
$12,805 even though $18,322 had been requested.
Central to plaintiff's argument is that the court found Littwin lacked
credibility when he testified about the circumstances under which he was hired
by HUMC. Plaintiff suggests that the court erred by failing to dismiss all of
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Littwin's testimony after finding he lacked credibility when he testified about
the timing of his employment with HUMC—which was in violation of the non-
compete clause.
The court, however, specifically found Littwin's testimony credible that
he was entitled to be paid for the days he worked after notifying plaintiff of his
impending departure and plaintiff having sent him a termination letter. The
court considered that he still had his credentials, access to emails, and concluded
that he was capable of completing his work week as he had claimed. The court's
decision, which was based on Littwin's testimony and the court's finding that he
was credible, is entitled to deference. "Appellate courts owe deference to the
trial court's credibility determinations as well because it has 'a better perspective
than a reviewing court in evaluating the veracity of a witness.'" C.R. v. M.T.,
248 N.J. 428, 440 (2021) (quoting Gnall v. Gnall, 222 N.J. 414, 428 (2015)).
The court's factual findings supporting its damages award are supported by
substantial credible evidence the court deemed credible. We therefore find no
basis to reverse the court's judgment in Littwin's favor.
V.
On a related matter, plaintiff next contends the court was incorrect in
failing to award damages after concluding that HUMC had breached the non-
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solicitation clause by hiring Littwin. Plaintiff sought $8,500 in lost profits
related to HUMC's breach of the non-solicitation clause that resulted in plaintiff
not being able to perform its obligations under the Remedy SOW. Plaintiff
claimed direct damages pursuant to the MSA. The court declined to award
damages based on its finding that the correct measure of damages would have
been lost profits, which are expressly prohibited under the MSA.
We agree lost profits are expressly prohibited under the MSA, which
states "[i]n no event shall either party . . . be liable for any lost profits or any
other indirect, special, incidental, exemplary or consequential damages . . . ,"
and plaintiff's attempt to characterize its losses as direct damages is unavailing.
There is no dispute plaintiff sought damages related to its alleged lost profits:
income it may have earned had HUMC not hired Littwin. Thus, because plaintiff
did not establish a basis for any damages other than lost profits, the court
correctly found plaintiff was not entitled to the lost-profits damages it sought
for HUMC's breach of the non-solicitation clause.
VI.
We also address whether the non-compete policy in the employee manual
constitutes a contract. Plaintiff appealed from the court's determination there
was no binding contract, asserting the court erred in dismissing count nine,
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which sought enforcement of the restrictive covenant in the non-solicitation
provision of the employee manual against the individual defendants. We remain
unpersuaded.
In granting summary judgment in favor of the individual defendants as to
this claim, the court determined that the restrictive covenant in its employee
manual limiting its employees' ability to accept employment with HUMC was
not binding because the manual did not constitute a binding contract under the
principles explained by the Court in Woolley. See Woolley, 99 N.J. at 309. The
trial court stated:
In Woolley, the New Jersey Supreme Court was
presented with an employment manual and asked to
decide whether the terms therein created a contractual
obligation. The [C]ourt in Woolley held that an
employer can confirmatively avoid creating a
contractual obligation in an employment agreement by
providing a clear and prominent disclaimer. That the
handbook is not a contract, reserving the right for the
employer to revise the handbook with or without notice.
The employment manual in question here indisputably
contained such a disclaimer, and, thus, does not
constitute a contract which binds the parties.
Plaintiff also argues the acknowledgement form employees were required
to sign, which referenced the employment manual containing the non-compete
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clause, constituted a contract in-and-of itself. The court also rejected this
argument, stating:
[Plaintiff] asks this [c]ourt to conclude that a physically
separate acknowledgement form whereby employees
acknowledged having received and read the
employment manual creates a restrictive covenant and
precludes the individuals from competing pursuant to
that document. The disclaimer in the employment
manual is positioned prominently at the beginning of
the manual. The disclaimer is not provided for in every
subsection, and the disclaimer only applies to the
employment manual taken as a whole. Nor does the
employment manual contain any language exempting
the acknowledgement from the disclaimer.
In fact, this [c]ourt has a difficult time believing that
the actual terms of the employment manual, including
those with respect to . . . [plaintiff's] non[-]compete and
confidentiality policies, are not binding in themselves,
but that somehow by an act of acknowledgement that
one has read the manual, that this binds the employees
to the terms of the manual. The [c]ourt rejects such
argument.
....
If the acknowledgement form were to be construed or
is to be construed as a contract separate and apart from
the employment manual, it is facially defective, as it
fails to describe the terms of the agreement which the
parties are binding themselves to.
We conclude that although defendant Littwin signed the acknowledgment
form, the disclaimer in plaintiff's employment manual rendered both the manual
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and disclaimer non-binding given that the manual, referenced in the signed
acknowledgement, contains a disclaimer that makes clear the manual is not a
contract. To be effective, a disclaimer must be sufficient to advise a reasonable
reader that the document does not create a legally binding obligation. Woolley,
99 N.J. at 297-99. Although specific language is not required, the disclaimer
must clearly advise the employee that the employer has the power to terminate
employment "with or without cause." Id. at 309. The disclaimer must also be
"in a very prominent position." Ibid.10
We conclude, as the trial court did, that plaintiff's disclaimer satisfied the
requisite legal standard for conspicuousness. The manual contains a very
prominent Woolley disclaimer on the first page—between the cover page and
the table of contents—stating:
10
The requirement of prominence may be satisfied in a variety of ways so long
as it is "separated from or set off in a way to attract attention." Nicosia v.
Wakefern Food Corp., 136 N.J. 401, 415 (1994). Ways to give a statement
prominence include bold lettering, italics, capital letters, underlining, color,
bordering, or highlighting or any other presentation that would "make it likely
that it would come to the attention of an employee reviewing it." Id. at 415-16.
"[T]he requirement of prominence can be satisfied in a variety of settings, and
[] no single distinctive feature is essential per se to make a disclaimer
conspicuous." Id. at 416. Where the content and placement of the disclaimer is
undisputed, the effectiveness of the disclaimer is a question of law to be decided
by the court. Ibid. The question of conspicuousness is always a question of law.
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ABOUT THIS MANUAL / DISCLAIMER
....
Neither this manual nor any other verbal or written
communication by a management representative, is, nor
should it be considered to be, an agreement, contract of
employment, express or implied, or a promise of
treatment in any particular manner in any given
situation. [Plaintiff] adheres to the policy of
employment at will, which permits the Company or the
employee to terminate the employment relationship at
any time, for any reason, with or without cause or
notice.
[Emphasis in original.]
We further reject plaintiff's argument that the signing of the subsequent
acknowledgement form incorporated the employee manual, and the non-
compete provision within it, into a binding contract. The acknowledgment
required employees to read and sign a form confirming receipt and
acknowledgment of the Employee Manual. To conclude otherwise would allow
plaintiff to make an end run around its own Woolley disclaimer and illogically
permit it to claim the manual does not constitute a binding contract as it concerns
plaintiff's obligations to its employees and, at the same time, claim it is a binding
contract as it concerns provisions of the manual listing putative employee
obligations to plaintiff. See Morgan v. Raymours Furniture Co., 443 N.J. Super.
338, 342-43 (App. Div. 2016) (explaining that it is "inequitable" for an employer
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to "seek both the benefit of its disclaimer, while insisting that the handbook was
contractual when it suits its purposes"). Also, the disclaimer covers any other
communications with plaintiff and expressly states that such communications
do not constitute binding contractual obligations. As such, the
acknowledgement, which was communicated to the employees when they
received the manual, fell within the disclaimer's express terms and, as stated in
the disclaimer, also did not constitute, and did not establish, a binding
contractual obligation.
In sum, our review of the trial court's opinion leads us to conclude the
court evaluated each and every claim asserted by the parties and resolved them
by making appropriate findings of fact, credibility determinations, and legal
conclusions consistent with the MSA and the law. To the extent we have not
addressed any arguments, we conclude they lack sufficient merit to warrant any
further discussion in this written opinion. R. 2:11-3(e)(1)(E).
Affirmed.
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