Baker v. National State Bank

• Decision Date: 02 June 1998
• Parties: Ann BAKER and Barbara Hausleiter, Plaintiffs-Respondents/ Cross-Appellants, v. The NATIONAL STATE BANK, New Jersey National Bank (a/k/a Corestates) its Successor-In-Interest, Leo Ahern, Reg. Mgr. of NSB and Individually, Arthur Campbell, Formerly Exec. V.P. of NSB and Individually, Defendants-Appellants/ Cross-Respondents.
• Court: New Jersey Superior Court — Appellate Division

Page 268

312 N.J.Super. 268

711 A.2d 917

Ann BAKER and Barbara Hausleiter, Plaintiffs-Respondents/ Cross-Appellants, v. The NATIONAL STATE BANK, New Jersey National Bank (a/k/a Corestates) its Successor-In-Interest, Leo Ahern, Reg. Mgr of NSB and Individually, Arthur Campbell, Formerly Exec V.P. of NSB and Individually, Defendants-Appellants/ Cross-Respondents.

Superior Court of New Jersey,

Appellate Division.

Argued April 27, l998.

Decided June 2, 1998.

Cynthia M. Jacob, Somerset, for defendants-appellants/ cross-respondents (Collier, Jacob & Mills, attorneys; Ms. Jacob, of counsel and on the brief; David H. Ganz and Sandra N. Fears, on the brief).

Patricia Breuninger, Fanwood, for respondents/ cross-appellants (Breuninger & Fellman, attorneys; Ms. Breuninger, of counsel and on the brief; Laura M. LeWinn, Princeton, and Fredric J. Gross, Mount Ephraim, on the brief).

Before Judges NEWMAN and COLLESTER.

The opinion of the court was delivered by

NEWMAN, J.A.D.

Plaintiffs Ann Baker and Barbara Hausleiter, branch managers with defendant, The National State Bank (the Bank), were terminated in a reduction in force in 1991. Defendants Leo Ahern, the Bank's regional manager, and Arthur Campbell, its vice president in charge of branch operations and community banking, were responsible for choosing plaintiffs for dismissal. Defendant New Jersey National Bank, a/k/a Corestates New Jersey National Bank, is the Bank's successor in interest.

Plaintiffs proved during trial that their dismissals were the result of age discrimination (Baker was fifty-four and Hausleiter was forty-nine), and for Baker, also gender discrimination. A jury awarded Baker and Hausleiter compensatory damages which, with interest, totalled $155,133.00 and $128,235.00, respectively, and punitive damages of $4,000,000.00 which plaintiffs agreed to share evenly. Plaintiffs were awarded attorneys' fees and costs which totalled $338,227.45.

Defendants object to various sections of the jury charge, primarily arguing error in the explanation of preponderance of the evidence, and in failing to charge that plaintiffs were required to prove a prima facie case. Defendants further contend that the award of punitive damages was improper, because (1) there was no malicious or willful conduct; (2) the award was inconsistent because it was against the Bank only, and not the individuals; (3) the successor bank should not be liable for punitive damages; and (4) plaintiffs failed to prove the financial condition of the Bank at the time of the wrongdoing. Finally, defendants argue that evidence of the performance of the employees who replaced plaintiffs should not have been admitted, the verdict was against the weight of the evidence, and the award of counsel fees was excessive.

Plaintiffs cross appeal, contending that the hourly rate used for the counsel fee award should have been the current rate, rather than the rate at the time the services were performed. We are satisfied that the issues raised on the appeal and cross-appeal should be rejected and, therefore, affirm.

These are the relevant facts. Ann Baker began working for the Bank in 1973 as a part-time teller. In 1978, Baker became a full-time teller and was promoted to head teller within a year. By l98l, Baker was an assistant branch manager. After completing a management training program, Baker successfully assisted with a difficult merger.

Baker next served as branch manager at Kenilworth for a few months and in August 1985 was transferred to Rahway, which was experiencing serious difficulties in personnel and audits. An audit in November 1985 showed substantial improvement.

Arthur Campbell, regional administrator at that time, occasionally visited Baker's branch and commented that things were going well. He also sent her several memoranda thanking her for her exceptional work.

Terry Busichio became Baker's regional manager while Baker was in Rahway. In June 1988, Busichio wrote to Campbell recommending Baker for a promotion and a raise because her lending authority had increased and she was successfully managing a portfolio of $3.7 million. In March 1989, Busichio evaluated Baker's overall performance as consistently exceeding expectations, noting her branch's success in deposit growth, loan growth, control of expenses, and outstanding audit rating which was the highest possible. Busichio recommended Baker as "capable of taking on more complex assignments."

In early 1989, Busichio transferred Baker to Perth Amboy, a larger branch than Rahway, which had been experiencing many problems. Indeed, management "had lost control of the branch." Baker was upset, because, after working hard to "turn [Rahway] around," she was finally beginning to enjoy it, and could spend time with customers instead of constantly "putting out fires." In addition, Baker was not looking forward to the overtime required for a problem branch. When Baker protested, however, Busichio insisted that only Baker "could handle the responsibility." On Busichio's recommendation to Campbell, Baker was promoted to assistant vice president when she was transferred to Perth Amboy.

Perth Amboy was Baker's "worst nightmare come true." Every area of the bank was a problem. Morale was low, staff members did not get along, loans were unproductive and not properly documented, and policies and procedures were not followed. Baker worked late many nights, sometimes until 10:00 p.m.

Michael Couch, who supervised branch managers' loans, worked out of the Perth Amboy office and was familiar with its problems. Couch "felt for" Baker when she became manager there because she was "walking into a hornet's nest." Baker's regional manager in Perth Amboy was Joseph Gervasio, who constantly complimented Baker on her efforts to turn the branch around. Gervasio reported to Campbell, who was aware of Baker's success.

Meanwhile, Bill McDowell, a young man in his late twenties or early thirties who managed the Perth Amboy branch before Baker, was assigned to the Pennington branch, which was new, in a nice location, and easier to manage. Baker noted that the Bank had terminated managers for problems less serious than the ones McDowell had created at Perth Amboy. She felt it unfair that she had to "clean up his mess," while he was not held accountable. According to Campbell, however, the Bank terminated the regional manager who was responsible for Perth Amboy's "fairly considerable loan problems," and McDowell's lending authority was suspended.

When Baker began at Perth Amboy on March 28, 1989, she requested an audit to ascertain exactly what needed to be done. The audit, completed on May 5, 1989, rated Perth Amboy as unsatisfactory, which was not surprising. On November 14, 1989, another audit rated Perth Amboy as below average, an improvement over the first audit.

In February 1990, Gervasio recommended and Campbell approved a promotion and raise for Baker because of her successful performance. In Baker's performance appraisal of March 1990, Gervasio rated her overall performance as meeting all expectations. He commented that "a less qualified person could not have survived the operational and human resource issues that confronted Perth Amboy," praised Baker's leadership, and expressed confidence in her "ability to put Perth Amboy back in its rightful place."

An audit of August 7, 1990 again rated the Perth Amboy branch as below average. Baker felt that this was fair, as there were still many things that needed to be done. Nancy Lystash, an audit examiner with the Bank, recalled that when Baker was at Rahway, the audits there were favorable and "very smooth." She explained that even before Baker came to Perth Amboy, there were serious violations of operating procedures, including a lack of separation of duties, unsecured bearer instruments, and excessive teller differences. "[S]erious financial loss to the bank" was a concern because "the controls [were] breaking down."

Prior to Baker's arrival, the Perth Amboy branch was last audited in l988 and was considered "satisfactory." Lystash explained, however, that this audit did not reflect the subsequent problems with teller differences prior to Baker's arrival, which required unofficial audits without ratings. According to Lystash, the unsatisfactory audit of May 3, 1989, was not attributable to Baker because Baker had not been at Perth Amboy for very long. Lystash noted improvement in Perth Amboy between the November 1989 and August 1990 audits performed while Baker was branch manager.

Gervasio again assessed Baker's performance in March 1991, and rated her overall performance as meeting most expectations. He commented:

Perth Amboy is finally turning the corner toward a deposit growth and overall profitability. This in large part is due to Ann's ability to manage both the financial and human resource issues to accomplish the [branch's] expectation. Ann's management expertise are [sic] a good match for what is needed in Perth Amboy.... [I]n the areas [in which] the branch needs improvement, I am confident Ann has built the foundation to succeed in 1991.

There were two areas in which Baker did not meet expectations: increasing ATM use and the number of deposits. Baker explained that the ATM was in a remote location where vagrants would congregate, leave beer bottles, and urinate on the machine. Additionally, rather than increasing deposits, customers were closing their accounts because of concern about the Bank's financial condition. Gervasio acknowledged that a branch manager who needed to attend to numerous operational problems would not be able to spend as much time on increasing deposits and obtaining new business.

According to Baker, Gervasio understood these problems and assured her that "meets most is not a bad review." At managers' meetings, Campbell repeatedly explained that an evaluation of "meets most" was not a bad review and should not be a cause for concern. Gervasio...