Munenzon v. Peters Advisors, LLC
| Decision Date | 11 August 2021 |
| Docket Number | Civ. No. 20-14644 (KM)(JBC) |
| Parties | Mikhail MUNENZON, Munenzon, v. PETERS ADVISORS, LLC d/b/a/ Valentiam Group LLC, and Carl Hoemke, Defendants. |
| Court | U.S. District Court — District of New Jersey |
Aimee Sato Lin, Sato Lin LLC, Chatham, NJ, for Mikhail Munenzon.
Thomas J. Rattay, Ogletree Deakins Nash Smoak & Stewart, Morristown, NJ, Brian R. Ellixson, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Philadelphia, PA, for Defendants.
Plaintiff Mikhail Munenzon brings this employment action against Defendants Peters Advisors, LLC ("Peters Advisors") d/b/a Valentiam Group, LLC ("Valentiam" or the "Company") and Carl Hoemke. Invoking this Court's diversity jurisdiction, Munenzon asserts state-law claims for breach of contract; fraud in the inducement; unjust enrichment; breach of implied contract; violation of the New Jersey Wage Theft Act ("NJWTA") and the New Jersey wage and hour laws, N.J.S.A. 34:11-2, et seq. , N.J.S.A. 34:11-56a, et seq. and N.J.S.A. 34:11-57, et seq. (collectively, the "NJWHL"); retaliation in violation of the NJWHL; violation of the Connecticut Wage Payment Laws, Conn. Gen. Stat. §§ 31-58, et seq. (the "CTWPL"); retaliation in violation of the CTWPL; and retaliation in violation of the New Jersey Conscientious Employee Protection Act, N.J.S.A. 34:19-1, et seq. ("CEPA").
Defendants filed a motion to dismiss certain claims in the Amended Complaint. Munenzon filed his opposition to that motion and a cross-motion to file a second amended complaint. For the reasons provided herein, I will grant Defendants’ motion to dismiss, and will grant in part and deny in part Munenzon's cross-motion to amend.
Defendant Valentiam, a limited liability company whose principal place of business is in Morristown, New Jersey, provides clients with value opinions for business and supports client with expert witness testimony before governmental agencies and in litigation. (Am. Compl. at ¶6, 8.) Valentiam's Valuation Group is involved in "the generation of complex valuation reports for large, blue chip corporations for use in property tax assessments, and, when necessary, litigation." (Id. at ¶9.) Defendant Hoemke is a partner at Valentiam and a resident of Texas. (Id. ¶¶7, 15, 34.)
Plaintiff Munenzon is a resident of Connecticut and former employee of Valentiam. (Id. at ¶ 5.) On November 21, 2016, Economics Partners, LLC ("Economics"), alleged to be Valentiam's predecessor,2 offered Munenzon a position as a Director in the Valuation Group. (Id. at ¶9,13.) Munenzon began employment with Economics on January 2, 2017, and worked remotely from his home in Connecticut from that date until his termination. (Id. ¶13.)
Munenzon negotiated his hiring with Hoemke, who, at the time, was a partner at Economics. (Id. at ¶15.) Munenzon reported to Hoemke throughout his employment with Economics and later with Valentiam. (Id. ) Munenzon was hired "to help grow the business by relieving Hoemke of a substantial amount of the day-to-day work" of "preparing numerous complex reports for clients." (Id. at ¶16.) Additionally, "Hoemke expected Plaintiff to help with existing valuation projects and lead new projects that fit Plaintiff's prior valuation experience." (Id. at ¶17.)
Prior to Munenzon's employment, an outside contractor assisted Hoemke in updating and preparing valuation reports manually, allegedly the usual process in the industry at the time. (Id. at ¶18.) The Amended Complaint alleges that the manual process "was time-consuming and led to high costs, many errors, delays and unhappy clients." (Id. ) Further, the process "was cumbersome" and "made it very difficult" for the Valuation Group, a small team, "to grow while maintaining high quality, timely deliverables at low cost for existing and new clients." (Id. )
On November 30, 2016, Hoemke drafted and shared with Munenzon a "Business Plan" which incorporated compensation amounts orally negotiated by Munenzon. (Id. at ¶20-21.) Those compensation amounts were as follows: $120,000 for 2017; $180,00 for 2018; $279,000 for 2019, and $411,773 for 2020. (Id. at ¶20.) Additionally, Munenzon negotiated a bonus of fifty-percent of his base salary for the years 2018 through 2020 and negotiated a pathway to partnership. (Id. ) The Amended Complaint asserts that Economics and Munenzon came to an oral agreement regarding Munenzon's compensation "based upon the Business Plan." (Id. at ¶23.)
Once hired, Munenzon "designed from scratch a new, custom process to complete and prepare complex valuation reports for clients" and "built custom software tools to automate many key steps." (Id. at ¶24.) He also hired and trained an offshore team to execute his process. (Id. ) The Amended Complaint asserts that Munenzon's custom process enabled him and his team "to prepare over one hundred complex reports annually on a timely basis at low cost and with very high quality and accuracy." (Id. at ¶25.)
As alleged, "Hoemke's time significantly freed up" as a result of Munenzon's more efficient process. (Id. at ¶16.) However, rather than spending his newfound time growing Economics’ business, Hoemke devoted his time to growing his other business, CrowdReason, LLC, which offers tax software. (Id. at ¶26-28.) The Amended Complaint alleges that over the last few years, CrowdReason's tax software business "has grown significantly faster" than Economics’ valuation business. (Id. at ¶29.) Munenzon contends that "Hoemke left Economics Partners (and later Valentiam) to fend for itself, sometimes spending 50% or more of his time on CrowdReason." (Id. at ¶30.) At Munenzon's request, Hoemke promised to focus on the valuation business, but "ultimately ignored Munenzon's pleas." (Id. ) Consequently, the "Valuation business development has suffered greatly." (Id. )
Regarding Munenzon's compensation, the Amended Complaint concedes that Economics, and later Valentiam, paid Munenzon his base salary as agreed in the Business Plan for the years 2017 and 2018. (Id. at ¶31.) However, in 2018, Valentiam delayed payment of Munenzon's bonus "until after it successfully coerced [him] into signing an employment agreement as a condition of receiving his earned and accrued 2018 bonus." (Id. ) Munenzon refers to that agreement as the "Sham Agreement"; I will refer to it as the "2018 Agreement."3 (Id. at ¶43.)
Additionally, in 2019, Valentiam paid Munenzon a base salary of $225,000, which was less than the $279,000 promised under the oral agreement. (Id. at ¶38.) According to Munenzon, Hoemke "disingenuously" cited Valentiam's and Munenzon's underperformance as the reason for refusing to pay Munenzon the previously agreed upon salary and bonus. (Id. at ¶39.) However, "Valentiam's underperformance was largely due to Hoemke's neglect of the business development of the Company's Valuation Group." (Id. at ¶39.) Munenzon asserts that his own "tangible contribution to Valentiam's Valuation business remained critical and at a very high level." (Id. at ¶40.) Further, "the Valuation business grew despite Hoemke's lack of attention to it and it remained very profitable through the years of Munenzon's employment." (Id. ) Additionally, Munenzon asserts that "project work had remained stable even during COVID-19." (Id. at ¶41.)
The Amended Complaint alleges that the 2018 Agreement did not contain any of the compensation terms of the prior oral agreement. (Id. at ¶44.) Instead, the agreement established a base salary of $225,000 without any mention of an annual bonus. (Id. )
Munenzon submits that Valentiam coerced him to sign the 2018 Agreement by holding hostage his earned and accrued bonus, to which he was already entitled. That tactic, he alleges, constitutes duress and invalidates the purported contract. (Id. at ¶45.) Munenzon alleges that he was made to "feel that he had no choice other than to sign the 2018 Agreement in order to receive the bonus he had already earned with his excellent performance throughout 2018." (Id. ) Further, Hoemke presented the 2018 Agreement as a mere formality which was "somehow not a binding agreement. (Id. at ¶46.)
Munenzon signed the 2018 Agreement in the hope that he would still be paid under the terms of the prior oral agreement. (Id. ) However, the Amended Complaint asserts that Hoemke "never intended" to honor the compensation terms of the oral agreement and, instead, merely used that agreement to lure Munenzon into working for Economics. (Id. at ¶47.)
Munenzon asserts that he "received very strong positive feedback" and that, "through all the years" he worked with Hoemke, Hoemke never gave Munenzon "a single negative written review." (Id. at ¶59.) Nevertheless, in March 2020, "Hoemke again reneged on promises by refusing to pay Munenzon his earned and accrued bonus for 2019 and refusing to increase his salary for 2020 to $411,773 as agreed." (Id. at ¶54.) This time, Hoemke cited the 2018 Agreement as well as Munenzon's purported underperformance as the basis for the allegedly reduced compensation. (Id. )
Recently (the Amended Complaint does not further specify the date), Hoemke announced that he had discovered a third party software vendor ("Vendor X") whose software system would replace a significant portion of Munenzon's system (Id. at 56.) Munenzon alleges, however, that Vendor X's software lacks "significant functionality" that Valentiam's client reports require and which they received through Munenzon's system. (Id. at ¶57.) The new software is also "very expensive" and requires manual entry of existing reports, which increases the time to complete and the chance of error. (Id. at ¶60.) Despite those deficiencies, "Hoemke was misrepresenting to clients that the new platform was without these grave shortcomings." (Id. at ¶62.) The Amended Complaint alleges that Hoemke's misrepresentations, and his failure "to make relevant disclosures to clients in connection with Vendor X's platform, could materially harm Valentiam clients by causing...
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