Seidenberg v. Summit Bank

348 N.J. Super. 243, 791 A.2d 1068 (2002)

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Nature of the Case

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Facts

Ps owned companies that provided consultation services and sold health insurance benefit plans to employers. In 1997, Ps sold their stock to D in exchange for 445,000 shares of the common stock in D's parent corporation. Ps retained their positions as executives of the brokerage firms and also were to be placed in charge of the daily operations of any other employee benefits insurance business which might be acquired by D. The employment agreements with D acknowledged the parties' joint obligation to work together with respect to the future performance of the brokerage firms. Ps sued D for a breach of their contracts. Ps contend that D (a) failed to allow for the creation of a close working relationship between the entities, (b) failed to create an effective cross-selling structure to generate leads, (c) failed to introduce the brokerage firms to vendors doing business with D as a way of increasing their potential customer base, (d) failed to develop existing relationships (referred to in the pleadings as 'low hanging fruit') which could easily be picked and turned into clients for the brokerage firms, (e) failed to provide plaintiffs with information necessary to provide full advice concerning health and other employee benefits, thereby precluding plaintiffs from quoting coverage to D, (f) unreasonably delayed a direct mail campaign, (g) thwarted an agreed-upon joint marketing campaign, and (h) failed to advise of D's pursuit of the acquisition of another entity which Ps claim would fall within their ambit and right to operate. D's lack of performance in these areas impacted their reasonable expectations of compensation and future involvement. Ps' salaries were reduced in exchange for a bonus to which they would be entitled based on the growth of the brokerage firms. Ps also claim there was an expectation of continued employment since their employment agreements contained a minimum term of five years and provided also that, in the absence of termination by D, employment would continue until each reached the age of 70. Ps assert that these allegations give rise to an inference of bad faith. They claim that these circumstances demonstrate that D 'never had any intention to perform to begin with,' and that Summit 'from the start, . . . never [was] committed to developing the business with [plaintiffs], but rather simply wanted to acquire the business and seek out their own broker to run it or grow it.' D terminated Ps from their positions, triggering this lawsuit. All claims except Ps' claim of a breach of the implied covenant of good faith and fair dealing were settled. The matter was transferred to the Law Division where the judge held that the parol evidence prohibited Ps from proving the existence of an oral agreement allegedly made beyond the four corners of the written agreements in violation of the parol evidence rule. The judge reasoned that the complaint is alleging agreements made orally outside of the written agreements that the bank would do certain things. And, that because D didn't do certain things, Ps were deprived of certain income. The judge looked at the equal bargaining power between the parties and the parol evidence rule and the motion to dismiss was granted. Ps appealed.