Goldfarb v. Solimine

• Decision Date: 18 February 2021
• Docket Number: A-24 September Term 2019,083256
• Citation: 245 N.J. 326,245 A.3d 570
• Parties: Jed GOLDFARB, Plaintiff-Respondent, v. David SOLIMINE, Defendant-Appellant.
• Court: New Jersey Supreme Court

245 N.J. 326

245 A.3d 570

Jed GOLDFARB, Plaintiff-Respondent,

v.David SOLIMINE, Defendant-Appellant.

A-24 September Term 2019

083256

Supreme Court of New Jersey.

Argued September 15, 2020

Decided February 18, 2021

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, Newark, on the briefs).

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

JUSTICE LaVECCHIA delivered the opinion of 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. Although an employment agreement and its terms were never reduced to writing, plaintiff asserts that he received specific promises of a base salary and return on investments for managing in-house 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.

Defendant maintains that plaintiff cannot bring a promissory estoppel claim because New Jersey's Uniform Securities Law of 1997, N.J.S.A. 49:3-47 to -89 (the Securities Law or the Act), requires investment advisers to have a writing memorializing the terms for an investment relationship. According to defendant, the Act's writing requirement should have doomed plaintiff's action. Defendant argues that the trial court erred in allowing the matter to be tried to a jury, which found in favor of plaintiff on liability and damages. He therefore asks this Court to reverse the Appellate Division's judgment, which affirmed the liability determination but remanded for a new damages trial.

We now hold that the Securities Law does not bar plaintiff's promissory estoppel claim for reliance damages, and we affirm the liability judgment on that claim. We further affirm 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.

The plain language of the Securities Law that governs investment practices and arrangements bars "any suit on the contract" when its "making" is in violation of the Act. N.J.S.A. 49:3-71(h). Defendant's argument equates the job offer he made to plaintiff -- an offer he alleges violated the Act's writing requirement -- with "the contract" mentioned in N.J.S.A. 49:3-71(h). Thus, defendant contends, plaintiff's promissory estoppel claim is barred by the statute because it is "any suit on the contract." But plaintiff's promissory estoppel claim is not an action based on "the contract" referenced in the Securities Law. Rather, it is a claim based on defendant's broken promise to engage in an employment relationship with plaintiff.

The distinction can perhaps most readily be understood through the distinct types of recovery at issue. Benefit-of-the-bargain or expectation damages look forward. Here, they would look ahead to what plaintiff would have earned if he had worked for defendant, and they would grant him recovery based on that projected employment. Defendant is correct that plaintiff here could not recover under the unwritten employment agreement between them: that agreement -- "the contract" within the meaning of N.J.S.A. 49:3-71(h) -- violated the Act's writing requirement, and so plaintiff is statutorily barred from bringing suit based on that agreement. Plaintiff is not entitled to benefit-of-the-bargain damages from the unachieved investment employment position.

But he is entitled to seek reliance damages. Reliance damages look backward. Here, they would look back to determine what losses plaintiff suffered as a result of his relying on defendant's later-broken promise -- what he would have earned had he not quit his job to work for defendant. A promissory estoppel claim provides equitable relief to restore a plaintiff to the position he would have been in, had the relied-upon promise not been made and later broken. The claim allows relief designed to deter individuals who make promises with the intent that others rely on them and thereafter seek to avoid the consequences of that reliance when the promise is broken. Properly viewed, Goldfarb's promissory estoppel claim for reliance damages does not violate the Act's plain language, nor does it undermine the consumer protection purposes of the Securities Act. It is a claim separate and apart from a contract-based claim that would be barred under the Act.

For the reasons provided, the judgment of the Appellate Division is affirmed as modified by the reasoning contained herein. 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 -- we reject that reasoning and void that portion of the court's analysis. We affirm the remand for a new trial on damages and order that the admissibility of any damages experts the parties may choose to present at that trial should be determined by the remand court.

I.

A.

This matter has a convoluted history, much of which is not germane to the issues before us. The appeal arrived before the Appellate Division following a jury trial and extensive pre-trial motion activity, which included whether the trial judge who presided over the matter should have recused herself. The jury determined liability in favor of plaintiff and awarded plaintiff $237,000 in expectation damages after the trial court had barred the testimony of plaintiff's economic expert.

Plaintiff appealed the denial of his recusal motion, maintaining that the judge's continued involvement and rulings tainted the soundness of the damages award, but that the liability judgment was insulated by the jury's findings. He sought a new trial only on damages.

Defendant cross-appealed, invoking the Securities Law and arguing, among other points, that the agreement between the parties was governed, and barred, by the Act and its writing requirement. The Appellate Division's published opinion in this matter dealt comprehensively with the recusal error that occurred here. Goldfarb v. Solimine, 460 N.J. Super. 22, 213 A.3d 200 (App. Div. 2019). That plays no part in our present review.¹ Our focus centers on defendant's arguments concerning the promissory estoppel claim.

B.

The factual tableau for plaintiff's promissory estoppel claim is summarized from the trial proceedings.

First, certain basic matters are undisputed in the record. Prior to meeting defendant, Goldfarb was employed as a research analyst² with Monness, Crespi, Hardt & Co., Inc., where he was 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. The factual disputes arise from the interactions that followed.

According to Goldfarb's testimony, over the course of several conversations with defendant, the two discussed, among other things, anticipated market increases in a particular stock and Goldfarb's interest in new employment. The conversations continued on the phone and in-person, and included a later call and meeting with defendant's father, Emil, and another employee. Goldfarb testified that, eventually, defendant offered him a job managing defendant's family's sizable investment portfolio. Plaintiff testified that he was promised a base salary between $250,000 and $275,000, between fifteen and twenty percent "of the profits and loss that [he] generated on [the] portfolio," and between ten and fifteen percent of any of the family's profits directly attributable to his investment advice. His employment was to begin in July or August of 2013, and he would be formally employed by either defendant or his father, Emil, personally, or by one of two of the family's companies, DMS Global Ventures or Kore Insurance.

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. There was a dispute in this record over whether defendant told plaintiff that such a document had been mailed to him, but a written employment agreement was never 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.

Although a variety of claims were advanced in pleadings that ensued, plaintiff's second amended complaint asserted his claim for promissory estoppel, which seeks "payment for wages lost in reliance on promises of employment by [d]efendant." Defendant's answer asserted that the employment was not in writing and thus was contrary to the requirements of the Securities Law. Defendant later filed a motion for summary judgment, reiterating the argument that plaintiff's action was precluded by the Securities Law. The trial court denied the motion.

Trial commenced on July 20, 2016.³ Plaintiff sought the admission of expert testimony concerning his lost wages. The court granted defendant's motion to bar the witness, finding that the expert lacked a proper basis on which to ground his testimony.

At the close of the evidence, defendant moved for dismissal pursuant to Rule 4:40-1, again arguing that the agreement between the parties was governed, and barred, by the...