Jacob v. Norris, McLaughlin & Marcus
| Decision Date | 10 April 1991 |
| Citation | 588 A.2d 1287,247 N.J.Super. 266 |
| Parties | Cynthia M. JACOB and Richard F. Collier, Jr., Each Individually and Shareholders of Norris, McLaughlin & Marcus, a New Jersey Corporation, Plaintiffs-Respondents, v. NORRIS, McLAUGHLIN & MARCUS, a New Jersey Corporation, Richard A. Norris, Thomas P. McLaughlin, G. Robert Marcus, Peter D. Hutcheon, Herbert S. Ford, Joel N. Jacobson, Bruce E. Mantell, William C. Slattery, Walter G. Reinhard, Victor S. Elgort, Bruce P. McMoran, Kevin T. O'Brien, M. Karen Thompson, John J. Eagan, Stephen M. Aspero and James H. Laskey, Individually and as Shareholders and Officers of Norris, McLaughlin & Marcus, a New Jersey Corporation, and as Partners of Somerset Leasing Associates, a New Jersey Partnership, Defendants-Appellants. Bruce P. McMORAN, Individually and as a Shareholder of Norris, McLaughlin & Marcus, a New Jersey Corporation, Defendant-Cross-Claimant, Third-Party Plaintiff, v. NORRIS, McLAUGHLIN & MARCUS, a New Jersey Corporation, Richard A. Norris, Thomas P. McLaughlin, G. Robert Marcus, Peter D. Hutcheon, Cynthia M. Jacob, Herbert S. Ford, Peter R. Knipe, Joel N. Jacobson, Bruce E. Mantell, William C. Slattery, Walter G. Reinhard, Victor S. Elgort, Richard F. Collier, Jr., Kevin T. O'Brien, M. Karen Thompson, John J. Eagan, Stephen M. Aspero, James H. Laskey, Kenneth R. Schaeffer, David R. Strickler and John L. Mesrobian, Individually and as Shareholders and Officers of Norris, McLaughlin & Marcus, Third-Party Defendants. NORRIS, McLAUGHLIN & MARCUS, a New Jersey Corporation, Fourth-Party Plaintiff, v. McMORAN & PALMIERI, P.C., a New Jersey Corporation, William Behan and Frank Palmieri, Individually and as Shareholders and Officers of McMoran & Palmieri, P.C., Fourth-Party Defendants. |
| Court | New Jersey Superior Court — Appellate Division |
Laurence B. Orloff, for defendant-appellant Norris, McLaughlin & Marcus (Orloff, Lowenbach, Stifelman & Siegel, attorneys; Laurence B. Orloff, of counsel; Laurence B. Orloff and Samuel Feldman, Roseland, on the brief).
Frederick L. Whitmer, for plaintiff-respondent Cynthia M. Jacob (Pitney, Hardin, Kipp & Szuch, attorneys; Frederick L. Whitmer, Morristown, on the brief).
James F. Keegan, for plaintiff-respondent Richard F. Collier, Jr. (Bendit, Weinstock & Sharbaugh, attorneys; James F. Keegan, West Orange, on the brief).
Before Judges ANTELL, O'BRIEN and SCALERA.
The opinion of the court was delivered by
ANTELL, P.J.A.D.
Defendant Norris, McLaughlin & Marcus is a professional corporation engaged in the practice of law. Plaintiffs are attorneys at law who terminated their membership in defendant firm around October 19, 1987, ("termination date") and brought this suit for compensation under a Service Termination Agreement dated February 11, 1986. They now practice law under the firm name of Collier, Jacob and Sweet. David Sweet is a former associate of defendant who also terminated his association with defendant to form a partnership with plaintiffs.
Defendant denies its liability under the Service Termination Agreement. It asserts that because plaintiffs have been representing clients who were clients of defendant on the termination date and because plaintiffs solicited professional and paraprofessional employees of defendant to join or be employed by the law firm which they formed on the day before their departure, the Service Termination Agreement imposes no obligation to pay benefits.
This appeal is taken by defendant from an order for partial summary judgment entered on the third count of the complaint, which awards damages to plaintiffs and invalidates those provisions of the Service Termination Agreement upon which defendant relied. The trial court concluded that the nullified provisions constituted a restriction upon plaintiffs' right to practice law and were therefore violative of sound public policy.
Defendant purports to appeal as of right on the ground that the order was entered as a final judgment by the trial court pursuant to its determination that there was "no just reason for delay" under R. 4:42-2. We have previously had occasion to state that the only intention of that rule "is to permit execution on a partial summary judgment fully adjudicating a separable claim for affirmative relief of all claims by or against a single party; its intention is not to provide a mechanism for interlocutory appellate review." Taylor by Wurgaft v. General Elec. Co., 208 N.J.Super. 207, 211, 505 A.2d 190 (App.Div.1986), certif. denied, 104 N.J. 379, 517 A.2d 388 (1986). The rule specifically states that final judgment may be entered only if the order will thereby be rendered enforceable and the trial court certifies "that there is no just reason for delay of such enforcement." R. 4:42-2 (emphasis ours).
The grant of leave for interlocutory review lies within the exclusive jurisdiction of the Appellate Division. R. 2:2-4. R. 4:42-2 "was not intended to permit trial judges to control appellate calendars by granting, in effect, a motion for leave to appeal." Delbridge v. Jann Holding Co., 164 N.J.Super. 506, 510, 397 A.2d 356 (App.Div.1978). The matter is therefore subject to dismissal on our own motion. Because of the public importance of the issue presented, however, we grant leave to appeal nunc pro tunc and proceed to a consideration of the merits.
The relationship among and between defendant and its members was controlled primarily by two agreements, a Buy-Sell Agreement and a Service Termination Agreement. The Buy-Sell Agreement governed the valuation and transfer of the separate members' stock interest in the corporation upon death, disability and termination of employment. Plaintiffs have received their full entitlement under that agreement and no issue is raised with respect thereto.
The Service Termination Agreement was designed to provide shareholders with additional compensation over and above their equity interest in the firm upon termination of employment. Paragraph 1 recites that in consideration of the member's services to the firm, the firm "agrees to pay the applicable amount of termination compensation (if any) to the Member and to provide related benefits appropriate to the category of termination as set forth in this Paragraph...." Paragraph 1a sets forth the compensation appropriate to the termination category described as a member's non-competitive voluntary departure. Paragraph 1b deals with competitive voluntary departures. Upon a non-competitive departure the firm must pay the departing member "an amount equal to the sum of: ... 25% X 110% of the Member's annual draw applicable immediately prior to departure." 1 Upon a competitive voluntary departure no termination compensation is paid, and the member is given only the right to purchase from the law firm life insurance which the firm maintained on the departing member's life under the Buy-Sell Agreement. Paragraph 2a defines a competitive departure to have occurred:
if within one (1) year of the date of termination of employment the Member either engages in the practice of law involving providing professional services to clients of the Law Firm, who are clients of the Law Firm at the date of termination, or solicits other professional and/or paraprofessional employees of the Law Firm to engage in the practice of law with the departed Member except if the Member is employed by a governmental agency (including serving in a judicial capacity) or by a corporation, partnership or other business or non-profit entity where the Member provides legal services only to such corporation, partnership or entity.
Following their departure, plaintiffs and David Sweet furnished defendant with lists of those clients who would be leaving defendant to be served by plaintiffs' new firm. It is estimated that these represent annual gross billings of $500,000.
Because Paragraph 1 of the Service Termination Agreement provides compensation only to those departing members who, for one year, rendered no services to clients who were clients of defendant on the termination date, the trial court found that under the Rules of Professional Conduct the arrangement was a restriction upon plaintiffs' right to practice law. The pertinent rule of professional conduct is RPC 5.6, which states:
A lawyer shall not participate in offering or making: (a) a partnership or employment agreement that restricts the rights of a lawyer to practice after termination of the relationship, except an agreement concerning benefits upon retirement.
Although the RPC is stated in terms of a lawyer's right to practice his or her profession, the purpose of the rule is to preserve unencumbered the right of a client to be represented by counsel of his own choosing. Dwyer v. Jung, 133 N.J.Super. 343, 347, 336 A.2d 498 (Ch.Div.1975), aff'd, 137 N.J.Super. 135, 348 A.2d 208 (App.Div.1975). The theory of the ruling under review is that because the termination benefits offered for non-competitive departures furnish plaintiffs an incentive to decline representation of firm clients, Paragraphs 1a and 1b of the Service Termination Agreement function together as a restriction. We see the matter in a different light than did the trial court and reverse the order under review to the extent that it enters summary judgment in favor of plaintiffs.
It should be made clear that defendant has not sought to enjoin or interfere with plaintiffs' right to represent any clients they choose to represent or to restrict their practice of law in any other respect. The case presents only the question of plaintiffs' right to be paid termination benefits under the Service Termination Agreement. Defendant's position, simply stated, is that because of plaintiffs' deliberate undertaking to represent defendant's former clients the obligation to pay termination compensation never came into existence.
In our view, the Service Termination Agreement reflects a careful attempt to foresee and...
To continue reading
Request your trial
-
Jacob v. Norris, McLaughlin & Marcus
...court held that that effect was not tantamount to the type of restriction on the practice of law prohibited by RPC 5.6. 247 N.J.Super. 266, 272, 588 A.2d 1287 (1991). The court noted the difficulty a firm faces in compensating its departing members while suffering the contemporaneous loss o......
-
Kelly v. Smith
...of earned fees which had not been collected upon withdrawal have been held to violate Prof.Cond.R. 5.6. Jacob v. Norris, McLaughlin & Marcus (1991), 247 N.J.Super. 266, 588 A.2d 1287 (lawful restriction on practice of law to impose a monetary penalty on partners taking the firm's staff or c......
-
Katchen v. Wolff & Samson
...RPC 5.6 and is unenforceable. The Law Division judge, relying substantially on our opinion in Jacob v. Norris, McLaughlin & Marcus, 247 N.J.Super. 266, 588 A.2d 1287 (App.Div.1991), held that the agreement was enforceable and granted defendants' motion for summary judgment. This appeal Duri......
-
Jacob v. Norris, McLaughlin & Marcus
...v. Norris, McLaughlin & Marcus, Norris (Richard A.) Supreme Court of New Jersey July 09, 1991 Lower Court Citation or Number: 247 N.J.Super. 266, 588 A.2d 1287 Leave to appeal ...