Frank v. iPak, Inc.
| Decision Date | 25 April 2023 |
| Docket Number | A-3563-19 |
| Parties | SCOTT FRANK, Plaintiff-Appellant, v. IPAK, INC., KAREN PRIMAK, ALLAN PINSKY, and IRIS PINSKY, Defendants-Respondents, and IPAK, INC., Third-Party Plaintiff- Respondent, v. JULIE FRANK, Third-Party Defendant- Appellant. |
| Court | New Jersey Superior Court — Appellate Division |
NOT FOR PUBLICATION
Submitted October 12, 2021
On appeal from the Superior Court of New Jersey, Law Division Camden County, Docket No. L-4273-17.
Alan L. Frank Law Associates, PC, attorneys for appellants (Alan L. Frank, on the briefs).
Brown & Connery LLP, attorneys for respondents (William M Tambussi and Jonathan L. Triantos, on the brief).
Before Judges Accurso, Rose and Enright.
ACCURSO, J.A.D.
Plaintiff Scott Frank and his wife, third-party defendant Julie Frank, appeal in their bitterly contested business dispute with defendant IPAK, Inc. and its chief executive officer, defendant Karen Primak, and her parents, board member defendants Allan and Iris Pinsky, from trial court orders entered over the course of two years denying Scott's[1] motion to amend his complaint to add additional board members; dismissing Scott's claim for wage and hour violations; granting IPAK summary judgment on Scott's claims for breach of contract and tortious interference; denying Scott's motion to dismiss IPAK's counterclaim and third-party complaint based on a discovery violation; denying Julie's request for sanctions pursuant to Rule 1:4-8; granting IPAK's request for attorneys' fees and costs; and denying Scott's request to vacate IPAK's post-judgment levy on Scott and Julie's bank account. We affirm, largely for the reasons expressed by Judge Kassel in his opinions from the bench on the motions.
The essential facts are undisputed. In 2013, Scott and Julie entered into negotiations to sell the business they owned, C&L Packaging, Inc., to IPAK, a company providing printing, packaging and distribution of marketing and educational products and services. The deal was structured as an asset sale for $185,000, and the contract included a provision requiring Scott to execute an employment agreement with IPAK satisfactory to it in form and substance. C&L was to cease operations after the closing. Both agreements were signed the same day in January 2014. At their depositions, both Scott and Julie acknowledged they understood C&L's customers and contracts, along with the sales Scott would bring to IPAK, are what induced IPAK to purchase their business.
As Judge Kassel noted, the employment agreement executed by Scott and IPAK's CEO Primak is not a model of clarity in some important respects.
The compensation provisions are certainly clear. The agreement provides IPAK will employ Scott as its Vice President of Sales at a base salary of $194,153, and that he would be entitled, in addition to his base salary, to commissions on "Compensable Project Sales" in accord with an attached schedule. The length of the contract and the nature of Scott's employment during its existence, however, are not so unambiguous.
The employment agreement provides for an initial term of five years, "unless sooner terminated as hereinafter provided," including "for Cause," defined as:
(a) Employee's engagement in any activity or conduct materially harmful to Company's business; (b) a breach by Employee of any provision of this Agreement or Employer's employee handbook as amended from time to time; (c) Employee's commission of an act, or failure to perform an act, the commission or omission of which constitutes a breach of law, breach of this Agreement, or does or could subject Company to liability; (d) the failure of Employee to adequately perform his duties under this Agreement, as determined by Company in [its] sole discretion. Company shall provide Employee with written notice that Cause exists within a reasonable period of time after Company's discovery thereof.
(Emphasis added).
Although the quoted provision provides for a five-year term that can only be terminated for cause, including Scott's failure to adequately perform his duties, albeit "as determined by [the] Company in [its] sole discretion," the agreement elsewhere states it "does not bind [IPAK] or [Scott] to any specific period of employment, and shall not be construed in any manner as an employment agreement or to make [Scott's] employment other than terminable at will at any time by [IPAK] in its sole discretion."
The agreement further provides that "[n]o provision of this Agreement may be amended unless such amendment, modification or discharge is agreed to in writing signed by the parties hereto." Finally, the agreement includes a non-compete provision prohibiting Scott from engaging "in any business competitive with that of [IPAK]" during his employment and for two years thereafter, and a provision requiring Scott to indemnify IPAK for expenses, including attorneys' fees, "suffered . . . as a result of a breach of this Agreement by [Scott] or suffered as a result of the enforcement by [IPAK] of this Agreement."
IPAK's employee handbook, which Scott admits receiving, expressly states that "[b]eing intoxicated or under the influence of a controlled substance while at work" is prohibited and "can result in disciplinary action, up to and including your termination. "It also provides that while employees may access IPAK's email system for personal use, employees could have no expectation of privacy with respect to personal information transmitted, and sending "discriminatory, harassing, sexually explicit or pornographic messages . . . regardless of whether the message recipient is an IPAK employee or not" would subject the employee to discipline, "up to and including termination."
Primak testified at her deposition that at the closing, three weeks after the agreements were signed, Julie told her, referring to Scott, "He's your problem now." At her own deposition, Julie admitted she might have made the comment "in jest," and that she also remarked that Scott would be a better salesman once he was relieved of his administrative responsibilities.
Unfortunately for everyone, that did not turn out to be the case. The record is replete with complaints by IPAK's management to Scott about his work performance, including his lackluster sales and failure to adhere to the company's procedures for reporting on prospects and sales, bidding jobs, and accounting for his whereabouts while on company time. In June 2014, less than six months into his new job with IPAK, Scott was forced to apologize to Primak for reports she'd received from several people, including current and prospective customers, that he'd been "visibly intoxicated" with slurred speech, glassy eyes and an unsteady gait at a company event. Primak warned Scott in writing that type of behavior was "harmful to our business and could open us up to liability."
Two months later in August, IPAK's chief operating officer met with Scott to complain he was not "following IPAK processes," not clearly communicating job specifications, thus impeding IPAK's ability to complete quotes, not keeping a weekly status report detailing his meetings with customers and failing to maintain a "quote log." Primak followed up in September emphasizing the need for Scott to send weekly reports of his sales efforts. In March 2015, Primak expressed IPAK's disappointment with Scott's sales, noting "[t]hey were significantly lower than what you forecasted and about 50% less than total C&L sales in 2013." Primak closed her email by saying Scott's approach was
In September 2015, Primak emailed Scott about a purchase order IPAK was forced to turn down on a job Scott quoted because "the specs are different than our quote and timing is too tight." Primak wrote IPAK cannot "effectively manage client expectations" without Scott "communicating proper specifications in writing, both internally and to the client." Primak stated that as she had advised Scott before, She closed by saying she expected him "to put in writing how you will address this with all accounts moving forward." Ten days later, Primak wrote again to Scott that he had yet to provide her "a written response containing your corrective action plan." She also noted that in reading Scott's reports, she didn't "see any new client prospecting." In 2016, Primak put a note in Scott's file that she'd learned Merck was not renewing his visitor's badge, which he'd failed to mention to IPAK.
In January 2017, after Scott had been with IPAK for three years, Primak sent him a letter confirming their discussion that IPAK, in lieu of terminating his employment, would be reducing his salary from $194,153 to $94,153 "for lack of performance." Primak wrote separately, attaching Scott's sales figures, reiterating his salary was being decreased to $94,153 "due to lack of sales" and that should his "sales increase, we can discuss an increase in salary." Although Scott testified at his deposition he protested the move, he acknowledged he did not respond in writing. Instead, he continued to work at IPAK for the next seven months at the reduced level of pay.
In August, IPAK learned Scott was negotiating with a competitor Rondo-Pak, and Primak fired him. Scott admitted he'd signed a Mutual NonDisclosure Agreement with Rondo-Pak "[i]n connection with a potential or existing business relationship" the week before he was terminated, but claimed he'd simply stopped by to see its facility at the invitation...
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