Opinion
DOCKET NO. A-0730-13T1
03-05-2015
ROBERT BORTECK, Plaintiff-Respondent, v. THOMAS TORZEWSKI, Defendant/Third-Party Plaintiff-Appellant, and JENNIFER L. MCINERNEY, Defendant/Third-Party Plaintiff, v. ROBERT D. BORTECK, P.C., Third-Party Defendant-Respondent.
Thomas N. Torzewski, appellant pro se (Jennifer L. McInerney, of counsel and on the brief). Nagel Rice, LLP, attorneys for respondents Robert Borteck and Robert D. Borteck, P.C. (Bruce H. Nagel and Jay J. Rice, of counsel and on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Messano, Hayden and Sumners. On appeal from Superior Court of New Jersey, Chancery Division, Essex County, Docket No. C-6-13. Thomas N. Torzewski, appellant pro se (Jennifer L. McInerney, of counsel and on the brief). Nagel Rice, LLP, attorneys for respondents Robert Borteck and Robert D. Borteck, P.C. (Bruce H. Nagel and Jay J. Rice, of counsel and on the brief). PER CURIAM
Defendant/third-party plaintiff Thomas Torzewski appeals from an October 2, 2013 order, which granted plaintiff, Robert Borteck's, and third-party defendant, Robert D. Borteck, P.C.'s, motion for reconsideration of an order entered on July 31, 2013. For the following reasons, we reverse.
Defendant/third-party plaintiff Jennifer L. McInerney did not appeal this decision.
The order was made on October 1, 2013; however, it was filed on October 2, 2013.
Borteck in this opinion will refer to both Robert Borteck and his law firm.
On February 15, 2010, Borteck hired Torzewski as a non-equity partner in his firm. According to Torzewski, in 2012, Borteck made him an equity partner. Borteck denied this claim. In December 2012, the parties met to discuss their year-end compensation and were unable to come to a consensus due to their disagreement regarding Torzewski's equity status. The parties decided to end their partnership but were unable to finalize a separation agreement. As a result, Torzewski took certain client files and relocated to a new office on December 29, 2012.
Torzewski asserted that he took only the files of clients he procured and served, and who declined to remain with Borteck.
On January 10, 2013, Borteck filed an order to show cause and complaint against Torzewski, seeking return of the client files Torzewski removed from the firm, and a determination that Torzewski had no interest in the firm's assets and was not entitled to further compensation. On February 6, 2013, Borteck filed an amended complaint, adding requests for compensatory damages against Torzewski for breach of contract and breach of duty of loyalty and fair dealing. Borteck also joined McInerney, alleging tortious interference for aiding Torzewski in removing the clients' files.
On February 26, 2013, Torzewski filed an answer and a counterclaim, and a third-party complaint against Robert D. Borteck, PC, alleging a breach of the partnership agreement and conversion. The counterclaim and third-party complaint also sought, among other things, an accounting and distribution of partnership assets, including accounts receivable from unpaid billable hours and work in progress, and appointment of a receiver to manage the assets and affairs of the partnership. Subsequently, Torzewski began collecting accounts receivable from those clients for work billed by the firm in 2012.
On April 12, 2013, the judge entered a consent order wherein Torzewski represented "that he has provided to plaintiff a full and complete list of all files, wills and trusts removed" from the law firm. On June 7, 2013, pursuant to Rule 4:58-1, the Offer of Judgment Rule, Borteck served an offer to allow judgment to be taken by Torzewski against him in the amount of $25,000. On June 12, 2013, Torzewski accepted the offer. That same day, the court entered judgment "in favor of [Torzewski] and . . . against [Borteck] for the sum of [$25,000]" and closed the case.
Nevertheless, in early July 2013, both parties filed motions in aid of litigant's rights. Borteck sought an accounting of all money Torzewski collected for accounts receivable from the firm's former clients for work billed in 2012 and payment of that money to Borteck. Borteck argued that the entry of the judgment resulted in the dismissal of Torzewski's counterclaim that he was entitled to an equity interest and to collect from certain clients for work he performed. In his motion, Torzewski sought payment of the $25,000 judgment, which was due twenty days after entry of the judgment. Torzewski also maintained that the entry of judgment operated to extinguish all claims that Borteck had made in his complaint, including the claim that Torzewski had no equity interest in the firm or that Borteck was entitled to the fees collected by Torzewski.
On July 19, 2013, the court heard argument on the motions. The court observed that it was "difficult . . . to order relief under [Rule] 1:10-3 here on either side, when it's frankly not clear what exactly the settlement was." The judge concluded that there was "confusion or a non-meeting of the minds as to what this settlement means." Even so, the judge offered both parties the opportunity to submit additional papers to supplement their arguments. On July 31, 2013, the judge entered an order denying both motions without prejudice and providing that "leave is granted to either party to file any further application relative to the settlement."
On September 3, 2012, Borteck filed a motion seeking reconsideration of the July 31 order or, in the alternative, an order vacating the June 12, 2013 judgment. Borteck contended that his purpose in making the offer of judgment was to pay $25,000 in exchange for Torzewski relinquishing a claim to an equity interest in the law firm. Unless the court agreed with his stated purpose, Borteck argued, there was no meeting of the minds and the judgment should be vacated.
After hearing argument, the court granted the motion for reconsideration on October 1, 2013. The court reasoned that "as a result of [Torzewski's] acceptance of the Offer of Judgment, all of the pleadings [were] dismissed, including [Torzewski's] counterclaim seeking an interest in [their former partnership]" and that "any claim asserted by [Torzewski] for a percentage of equity ownership or an interest in [the partnership was] dismissed." The court ordered (1) Borteck to forward the sum of $25,000 to Torzewski; (2) Torzewski to account for and turn over all monies received from clients who had an account receivable with their partnership in 2012; (3) Torzewski to refrain from collecting or retaining any receivables related to services rendered by their partnership in 2012. This appeal followed.
Before us, Torzewski argues that (1) the trial court erred in granting the motion for reconsideration because the motion required an evidentiary hearing, was time-barred and failed to satisfy the requirements of Rule 4:49-2; (2) the trial court erred in determining the legal effect of Torzewski's acceptance of the offer of judgment; (3) the entire controversy doctrine and the doctrine of res judicata barred Borteck's post-judgment relief for an accounting and turnover of the partnership funds collected by Torzewski; and (4) the order violated Torzewski's due process rights. On the other hand, Borteck contends that the trial court correctly determined the legal effect of Torzewski's acceptance of the offer of judgment and urges affirmance.
Torzewski objects that Borteck's motion for reconsideration was filed beyond the time limit provided for in Rule 4:49-2, which states that motions for reconsiderations "shall be served not later than 20 days after service of the judgment or order . . . ." However, the court urged the parties to file supplemental papers to clarify the issues and as such, the order was interlocutory and not untimely. See Rusak v. Ryan Automotive, L.L.C., 418 N.J. Super. 107, 117 n.5 (App. Div. 2011) (noting that the time limitations in this Rule apply only to final judgments and orders).
The offer of judgment rule allows a party under certain circumstances to take a judgment against him or herself for a specific sum. R. 4:58-1. "The fundamental purpose of the Rule is to induce settlement by discouraging the rejection of reasonable offers of compromise." Best v. C&M Door Controls, Inc., 200 N.J. 348, 356 (2009). Rejecting an offer of judgment results in the imposition of costs and counsel fees where the settlement offer is more favorable than the ultimate judgment by a specified amount. Ibid. "Rule 4:58 requires a plaintiff against which a counterclaim is filed to submit an offer of judgment for resolution of the entire case including the counterclaim." Firefreeze Worldwide, Inc. v. Brennan & Assocs., 347 N.J. Super. 435, 442 (App. Div. 2002); see R. 4:58-4(c) ("If a claimant asserts multiple claims for relief or if a counterclaim has been asserted against the claimant, the claimant's offer shall include all claims made by or against that claimant.").
Specifically, Rule 4:58-1(a) allows a party to make
an offer to take a monetary judgment in the offeror's favor, or as the case may be, to allow judgment to be taken against the offeror, for a sum stated therein (including costs). The offer shall not be effective unless, at the time the offer is extended, the relief sought by the parties in the case is exclusively monetary in nature. (emphasis added).
The underlined sentence was included in the September 2006 amendments to the Rule to address the difficulty of comparing an offer with a judgment actually rendered where non-monetary relief is sought and fully or partially granted. Pressler & Verniero, New Jersey Court Rules, comment on R. 4:58-1 (2015). Unless counts seeking non-monetary relief are dismissed before the offer, said offer cannot be made pursuant to this Rule. Ibid.
After the parties submitted their briefs, this court requested by letter that the parties submit supplemental briefs to address the effect of the above underlined sentence of Rule 4:58-1(a) on this matter. In their supplemental briefs, both parties urge us not to interpret the Rule to set aside the judgment. Borteck argues that any equitable claims in the pleadings were secondary to the monetary relief sought and that by the offer and acceptance the parties implicitly had "agreed to a dismissal of their respective claims for equitable relief[.]" Torzewski contends that the sentence requiring "exclusively monetary" claims for an effective offer of judgment only applied when an offer was rejected and the need to compare the offer to the amount of the final judgment arose. Both parties agree that they intended to enter into a binding settlement that disposed of the case and should be enforced.
When interpreting court rules, the court employs the same principles as that used for statutory construction. See Hopewell Valley Citizens' Grp., Inc. v. Berwind Prop. Grp. Dev. Co., L.P., 204 N.J. 569, 577-78 (2011); see also State v. O'Brien, 418 N.J. Super. 428, 435-36 (App. Div. 2011). That is, "the analysis must begin with the plain language of the rule." Wiese v. Dedhia, 188 N.J. 587, 592 (2006). "The Court must 'ascribe to the [words of the rule] their ordinary meaning and significance . . . .'" Ibid. (internal citations omitted). In deciphering plain meaning, courts utilize the internal structure and conventional meanings of the Rules' words and phrases. Evans v. Atlantic City Bd. of Educ., 404 N.J. Super. 87, 91 (App. Div. 2008). If the language of the rule "leads to a clear and unambiguous result, then our interpretive process is over." State v. Gandhi, 201 N.J. 161, 177 (2010). If, however, the language of the rule is ambiguous or has more than one plausible interpretation, then the court should look to extrinsic evidence. Wiese, supra, 188 N.J. at 592.
Our function is not "to rewrite a plainly-written enactment of the Legislature [or the Supreme Court] or presume that the Legislature [or the Supreme Court] intended something other than that expressed by way of the plain language." Borough of Glassboro v. Fraternal Order of Police, Lodge No. 108, 197 N.J. 1, 11 (2008) (internal quotation marks and citations omitted). Further, courts may not "read into a statute words that were not placed there by the Legislature." State v. Smith, 197 N.J. 325, 332 (2009). A conventional meaning of the term "exclusive" is "single or sole." Am. Heritage Coll. Dictionary 478 (3d ed. 1997). Moreover, the Rule is cast in mandatory terms. R. 4:58-1(a) ("shall not be effective") (emphasis added). Thus, the plain language of Rule 4:58-1(a) is clearly unambiguous and leads to only one conclusion: an offer of judgment is effective only where the relief sought is solely monetary.
As Borteck argued in his brief, after the consent order, the following prayers for relief remained unresolved: (1) Borteck's request for declaratory relief that Torzewski had no further interest in the firm's assets and was entitled to no further compensation; (2) Borteck's request for compensatory and punitive damages; (3) Torzewski's request for an accounting of the partnership business since his departure; (4) Torzewski's request that the partnership's property and assets be divided according to the partner's respective interests; (5) Torzewski's request for appointment of a receiver; and (6) Torzewski's request for release of certain retainers held in the law firm's trust account.
While not contained in this list, the record does not contain an amended complaint which eliminated the demand for relief contained in the complaint and the amended complaint that Torzewski "return all files removed from the firm[.]"
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It is clear that, at the time the offer was made in this case, "the relief sought" was not "exclusively monetary in nature." Borteck's complaint sought a declaration that Torzewski had no equity interest in the firm, a return of the files taken by Torzewski as well as monetary damages. Torzewski's counterclaim and third-party complaint sought a mixture of monetary damages and equitable relief, including an accounting, a receiver, and distribution of partnership assets. The inclusion of the words "exclusively monetary" dictates the conclusion that the offer was not effective under the Rule at the time it was made. The record contains no suggestion that the parties had agreed to dismiss the non-monetary claims against each other before the offer of judgment was made. Thus, it should not have been permitted as a valid offer of judgment under Rule 4:58-1.
This does not conclude our analysis. Both parties agree that an offer and acceptance were made with the intent to enter into a settlement to end the litigation. We will examine the controversy in light of the acknowledged intent of the parties to settle the claims and counterclaims.
"A settlement agreement between parties to a lawsuit is a contract." Nolan v. Lee Ho, 120 N.J. 465, 472 (1990) (citing Pascarella v. Bruck, 190 N.J. Super. 118, 124 (App. Div.), certif. denied, 94 N.J. 600 (1983)). As a general rule, courts should enforce contracts as the parties intended." Pacifico v. Pacifico, 190 N.J. 258, 266 (2007). Since settlement of litigation ranks high in our public policy, Jannarone v. W.T. Co., 65 N.J. Super. 472, 476 (App. Div.), certif. denied, 35 N.J. 61 (1961), "settlement agreements will be honored 'absent a demonstration of fraud or other compelling circumstances.'" Nolan, supra, 120 N.J. at 472 (internal citations and quotation marks omitted).
However, it is well settled that "[a] contract arises from offer and acceptance, and must be sufficiently definite 'that the performance to be rendered by each party can be ascertained with reasonable certainty.'" Weichert Co. Realtors v. Ryan, 128 N.J. 427, 435 (1992) (quoting Borough of W. Caldwell v. Borough of Caldwell, 26 N.J. 9, 24-25 (1958)). If the parties agree on the essential terms and agree to be bound by those terms, they have created an enforceable contract. Ibid. On the other hand, if the parties do not agree on one or more essential terms of the contract, "courts generally hold that the agreement is unenforceable." Ibid.; see also Malaker Corp. Stockholders Protective Comm. v. First Jersey Nat'l Bank, 163 N.J. Super. 463, 474 (App. Div. 1978) (noting there is no contract when the agreement is "so deficient in the specification of its essential terms that the performance by each party cannot be ascertained with reasonable certainty[.]"), certif. denied, 79 N.J. 488 (1979). Hence, unless there is "an agreement to the essential terms" by the parties, there is no settlement in the first instance. Mosley v. Femina Fashions, Inc., 356 N.J. Super. 118, 126 (App. Div. 2002), certif. denied, 176 N.J. 279 (2003).
In the case at hand, it is clear that the parties' perception of the effect of the entry of the monetary judgment was significantly divergent. Within weeks of the entry of judgment and termination of the litigation, Borteck had demanded that Torzewski return all the files he had removed and refused to pay the amount of the judgment. Torzewski refused, claiming the settlement covered all claims between the parties, including Borteck's claim seeking the return of the files. Neither the offer of judgment nor the acceptance discussed the resolution of the equitable claims or what the monetary offer covered.
Generally, when there is a dispute between the parties about their intent, an evidentiary hearing is necessary to discuss the events and negotiations leading to the agreement. See Amatuzzo v. Kozmiuk, 305 N.J. Super. 469, 474-75 (App. Div. 1997). Here, as we read the record, the parties had no discussion about the terms of the settlement other than the written offer and acceptance of the offer of judgment. We perceive that no hearing is necessary or helpful as the parties did not discuss or agree on the essential terms of the settlement. As there was no accord as to the essential components of settling the entire litigation, we are convinced that no settlement was reached in this case. See Mosley, supra, 356 N.J. Super. at 126.
In sum, because the court relied on the judgment, entered pursuant to an offer of judgment under Rule 4:58-1, in granting the motion for reconsideration, which we found was not effective under the plain language of the Rule, and because there was no meeting of the minds that resulted in a settlement agreement, we are constrained to reverse the order granting the motion for consideration and vacate the purported settlement. Consequently, the pleadings must be reinstated. We recognize that this reversal is on different grounds than those urged by Torzewski but "we affirm or reverse judgments and orders, not reasons." State v. Maples, 346 N.J. Super. 408, 417 (App. Div. 2002).
Reversed and remanded for further proceedings consistent with this opinion. We do not retain jurisdiction. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION