Goldfarb v. Solimine, 021821 NJSC, A-24-19

Docket NºA-24-19
Opinion JudgeLaVECCHIA, JUSTICE
Party NameJed Goldfarb, Plaintiff-Respondent, v. David Solimine, Defendant-Appellant.
AttorneyChristine A. Amalfe argued the cause for appellant (Gibbons, attorneys; Christine A. Amalfe, of counsel and on the briefs, and Richard S. Zackin and Christopher Walsh, on the briefs). Andrew M. Moskowitz argued the cause for respondent (Javerbaum Wurgaft Hicks Kahn Wikstrom & Sinins, attorneys; A...
Judge PanelCHIEF JUSTICE RABNER and JUSTICES FERNANDEZ-VINA, SOLOMON, and PIERRE-LOUIS join in JUSTICE LaVECCHIA's opinion. JUSTICE ALBIN filed a dissent. JUSTICE PATTERSON did not participate. JUSTICE ALBIN, dissenting.
Case DateFebruary 18, 2021
CourtSupreme Court of New Jersey

Jed Goldfarb, Plaintiff-Respondent,

v.

David Solimine, Defendant-Appellant.

No. A-24-19

Supreme Court of New Jersey

February 18, 2021

Argued September 15, 2020

On certification to the Superior Court, Appellate Division, whose decision is reported, in part, at 460 N.J.Super. 22 (App. Div. 2019).

Christine A. Amalfe argued the cause for appellant (Gibbons, attorneys; Christine A. Amalfe, of counsel and on the briefs, and Richard S. Zackin and Christopher Walsh, on the briefs).

Andrew M. Moskowitz argued the cause for respondent (Javerbaum Wurgaft Hicks Kahn Wikstrom & Sinins, attorneys; Andrew M. Moskowitz, of counsel and on the briefs).

Jon W. Green argued the cause for amicus curiae National Employment Lawyers Association of New Jersey (Green Savits, attorneys; Jon W. Green, of counsel and on the brief).

SYLLABUS

This syllabus is not part of the Court's opinion. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Court. In the interest of brevity, portions of an opinion may not have been summarized.

LaVECCHIA, J., writing for the Court.

Plaintiff Jed Goldfarb claims that defendant David Solimine reneged on a promise of employment after Goldfarb quit his job to accept the promised position managing the sizeable investment portfolio of defendant's family. The key issue in this appeal involves whether plaintiff may bring a promissory estoppel claim because he relied on defendant's promise in quitting his prior employment even though, under New Jersey's Uniform Securities Law of 1997 (Securities Law or the Act), he may not bring a suit on the employment agreement itself.

Prior to meeting defendant, Goldfarb was employed as a research analyst tasked with analyzing financial markets in order to offer investment advice. From 2009 to 2013, he earned between approximately $308, 000 and $466, 000 per year, exclusively from commissions. Goldfarb met defendant in March 2013. According to Goldfarb's testimony, after several conversations, defendant offered him a job managing defendant's family's investment portfolio. His employment was to begin in July or August of 2013, and he would be formally employed by either defendant, defendant's father, or one of two of the family's companies. According to Goldfarb, defendant assured him on June 20, 2013 that he had a job. Goldfarb asked defendant for a term sheet, but defendant failed to provide any writing memorializing their agreement, and no written employment agreement was ever produced or presented to plaintiff. Nevertheless, counting on the new job that had been offered, Goldfarb quit his old one and began providing defendant with profitable stock tips and financial advice. Then, in August 2013, defendant told Goldfarb that he would not employ him. Goldfarb commenced this action in response.

Defendant argued that the agreement between the parties was governed, and barred, by the Securities Law. The trial court submitted the case to the jury on a theory of promissory estoppel. The court limited plaintiff's potential damages, describing them as restricted "to the minimum salary he would have made" in defendant's employ. The jury found for plaintiff on liability and awarded $237, 000 in damages. The Appellate Division affirmed the verdict as to liability, but it concluded "that plaintiff was entitled to present evidence of his reliance damages" and remanded for a new trial limited to those damages. The Court granted defendant's petition for certification. 240 N.J. 83 (2019).

HELD: The Securities Law does not bar plaintiff's promissory estoppel claim for reliance damages. The Court affirms the liability judgment on that claim and the remand for a new damages trial in which plaintiff will have the opportunity to prove reliance damages. He is not entitled to benefit-of-the-bargain damages. To the extent that the Appellate Division relied on an alternative basis for its liability holding -- that a later-adopted federal law "family office" exception has been incorporated into our Securities Law -- the Court rejects that reasoning and voids that portion of the court's analysis.

1. Consistent with its investor-protective purpose, the Securities Law prohibits any party from engaging in dishonest and unethical practices as defined by the Chief of the Bureau of Securities. N.J.S.A. 49:3-53(a)(3). On the list of "[d]ishonest or unethical practices" prohibited by that statute, the Bureau of Securities has included "[e]ntering into, extending, or renewing any investment advisory contract, unless such contract is in writing and discloses" certain material terms. N.J.A.C. 13:47A-6.3(a)(57) (emphasis added). Although the writing requirement is found in a regulation, it is reinforced by statute: N.J.S.A. 49:3-71(h) declares that "[n]o person who has made or engaged in the performance of any contract in violation of any provision of this act or any rule or order hereunder . . . may base any suit on the contract." (emphasis added). (pp. 11-13)

2. It is thus clear that the Securities Law intends to forbid the enforcement of an investment advisory contract that has not been reduced to writing. It also appears clear, however, that "the contract" of which the Act speaks in subsection 71(h) is N.J.A.C. 13:47A-6.3(a)(57)'s investment advisory contract that was not reduced to writing. Thus, in the instant case, the Act's reference to forbidding suits based on "the contract" would translate to a suit based on the employment agreement that Solimine dishonored. The question here is whether that prohibition reaches beyond the dishonored employment agreement to include the promise of employment itself. (pp. 13-14)

3. Suits to enforce contracts and suits predicated upon promissory estoppel are different in both their requisite elements and their goals. To prevail on a claim of breach of contract, a party must show that a contract has been made, with an offer, acceptance, and consideration all present, and that the moving party has performed or is excused from performing. If a party prevails on this claim, the party is entitled to expectation damages in order to recover the benefit of its bargain. Promissory estoppel, on the other hand, requires that a promise has been made, that the promise was made with the expectation it be relied upon, that the moving party reasonably relied on the promise, and that the promisee incurred a detriment due to that reliance when the promisor broke the promise. If those elements are proved, the promisee may be awarded reliance damages so as to restore him or her to the position he or she was in before the parties met. (pp. 15-19)

4. Goldfarb's claim of promissory estoppel is not a "suit based on the contract." It is instead a suit based on his reasonable reliance, to his detriment, on Solimine's promise of a job. However far-reaching the prohibitions of the Securities Law may be, they do not prohibit the instant action and its goal of deterring persons from reneging on promises. There was no error in allowing plaintiff's promissory estoppel claim to have been presented to the jury. Where the trial court did err was in mis-matching the permissible cause of action -- promissory estoppel -- with the impermissible remedy -- expectation damages -- that would have accompanied a contract-based claim. (pp. 19-21)

5. Turning to the Appellate Division's discussion of the "family office" exception recognized by federal law, the record reveals that the jury was never asked to find whether the employment offered by defendant met the definition of a "family office." A factual finding was necessary; it was beyond the ability of the Appellate Division to exercise original jurisdiction to resolve that question. The Court therefore rejects the appellate judgment's reliance on the family office exception. (pp. 22-26)

6. The Court also expresses reservations about the reasoning adopted by the Appellate Division in concluding that the Securities Law incorporated the federal definition of "family office." The timeline of the enactment of the federal family office exception presents a set of circumstances that raises serious doubt that the Securities Law, by definition, could have incorporated that exception under settled principles of statutory incorporation. To eliminate a misperception that could arise from future application of the Appellate Division's reasoning, the Court voids the Appellate Division's analysis on this issue. (pp. 26-28)

7. The Court leaves to the remand court the responsibility to determine the admissibility of any and all proffered experts the parties may seek to present. (pp. 28-29)

AFFIRMED AS MODIFIED. REMANDED for further proceedings.

JUSTICE ALBIN, dissenting, explains that in passing the Securities Law, the Legislature's clearly expressed goal was to remove any financial incentive for an investment advisor to enter into an investment advisory contract not reduced to writing. Justice Albin notes that the Legislature did not suggest that some damages are available for breach of the writing requirement; it simply barred "any suit on the contract" for a violation of the Securities Law. See N.J.S.A. 49:3-71(h). In Justice Albin's view, the majority's importation of an equitable remedy to rescue a sophisticated professional from his statutory dereliction, by granting him reliance damages on a promissory estoppel claim, contravenes the clear language of the Securities Law, undermines its consumer protection purposes, and ultimately will eviscerate its writing requirement.

CHIEF JUSTICE RABNER and JUSTICES FERNANDEZ-VINA, SOLOMON, and PIERRE-LOUIS join in JUSTICE LaVECCHIA's opinion. JUSTICE ALBIN filed a dissent. JUSTICE PATTERSON did not participate.

OPINION

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