Picogna v. Board of Educ. of Tp. of Cherry Hill

• Decision Date: 22 February 1996
• Citation: 143 N.J. 391,671 A.2d 1035
• Parties: , 64 USLW 2628, 107 Ed. Law Rep. 859, 11 IER Cases 774 Joseph Louis PICOGNA, Plaintiff-Respondent, v. BOARD OF EDUCATION OF the TOWNSHIP OF CHERRY HILL and Phillip Esbrandt, Defendants-Appellants, and Barbara Richterman, Eleanor Stofman, Robert Freedman, Jerome Haym, Faith Jerome, James Marino, David Molotsky, Marianne Raphaely, Pat Carroll and William McCargo, individually and/or as agents and/or employees of the Board of Education of the Township of Cherry Hill jointly, severally, and in the alternative, Defendants.
• Court: New Jersey Supreme Court

Page 391

143 N.J. 391

671 A.2d 1035, 64 USLW 2628, 107 Ed.

Law Rep. 859,

11 IER Cases 774

Joseph Louis PICOGNA, Plaintiff-Respondent, v. BOARD OF EDUCATION OF the TOWNSHIP OF CHERRY HILL and Phillip Esbrandt, Defendants-Appellants and Barbara Richterman, Eleanor Stofman, Robert Freedman, Jerome Haym, Faith Jerome, James Marino, David Molotsky, Marianne Raphaely, Pat Carroll and William McCargo, individually and/or as agents and/or employees of the Board of Education of the Township of Cherry Hill jointly, severally, and in the alternative, Defendants.

Supreme Court of New Jersey.

Argued Sept. 27, 1995.

Decided Feb. 22, 1996.

Robert M. Tosti, Morristown, for appellants (Rand, Algeier, Tosti & Woodruff, attorneys; Mr. Tosti and John F. McDonnell, attorneys).

John J. Finnegan, III, Cherry Hill, for respondent (Finnegan and Barth, attorneys).

The opinion of the Court was delivered by

COLEMAN, J.

The critical issue raised in this appeal is whether a plaintiff who institutes litigation for breach of an employment contract is entitled to damages for litigation-induced stress. A second issue is whether an assistant superintendent of schools who is wrongfully terminated during the third year of a three-year employment contract acquired tenure.

We hold that litigation-induced stress is not recoverable as a separate component of emotional distress damages. We also hold that an assistant superintendent of schools does not acquire tenure under N.J.S.A. 18A:28-5(a) after working in a single school district for three consecutive calendar years unless he or she is reemployed by that district for at least one day.

I

Plaintiff, Joseph Picogna, was employed under a written contract with defendant Cherry Hill Board of Education (Board) as Assistant Superintendent for Business and Board Secretary for a three-year period beginning July 1, 1985, and ending June 30, 1988. In that capacity Picogna was responsible for spending district funds, approving the payment of vouchers of Board employees, and bidding and contracting on behalf of the Board. His contract provided that he could be terminated "forthwith" for cause, defined as misconduct, insubordination, or unauthorized absence. The contract also provided that "[o]n or before sixty (60) days prior to June 30, 1988, either party hereto may give written notice of the intention not to renew the employment relationship."

Picogna approached the responsibilities of his job with extreme seriousness and conscientiously supervised Board expenditures and adhered strictly to school policy. The trial court described Picogna as one who insured that the "I's were dotted and the T's were crossed."

At the time Picogna was hired, John McKeon served as Superintendent of Schools. McKeon retired in 1986 and was replaced by defendant Philip Esbrandt. Although Esbrandt's first two evaluations of Picogna's performance were favorable, the relationship between Picogna and Esbrandt quickly deteriorated as Picogna made requests for documentation to support Esbrandt's expenditures and questioned Esbrandt's retention of school consultants. Esbrandt perceived Picogna's behavior as an attempt to interfere with his work and embarrass him personally and professionally.

Shortly after Esbrandt became superintendent, he set out to develop a record supporting a recommendation not to renew Picogna's contract, and ultimately, recommended terminating Picogna's existing contract. Esbrandt made false accusations against Picogna, charging him with various acts of misconduct including theft, conspiracy, and improper expenditure of tax dollars. He also accused Picogna of covering up the facts regarding a fatal school bus accident in the district.

Picogna was promptly notified by letter of Esbrandt's recommendation. A special meeting was held at which Esbrandt again recommended that Picogna's contract be terminated as of April 29, 1988, approximately two months before expiration of the contract. The Board voted accordingly and adopted a resolution ratifying Picogna's termination.

On July 6, 1988, Picogna instituted suit against Esbrandt, the Board, and the individual Board members. He alleged breach of contract, denial of tenure, deprivation of due process, violation of the Conscientious Employer Protection Act (CEPA), N.J.S.A. 34:19-1 to -8, and tortious interference with his contract. Picogna sought reinstatement, an injunction restraining the continued violation of CEPA, compensatory and punitive damages, attorney's fees, and costs.

The trial court granted partial summary judgment, dismissing all claims against the Board except the breach-of-contract claim on the ground that plaintiff had failed to file a notice of claim required by the New Jersey Tort Claims Act, N.J.S.A. 59:8-8. The trial court also granted summary judgment in favor of the Board on the claim of tenure denial.

At the conclusion of a bench trial, the trial court dismissed all claims against the individual Board members, finding that they acted in good faith reliance on Esbrandt's evaluations when they voted to terminate plaintiff's contract. The trial court also found no CEPA violation. In addition, the trial court found that the Board terminated Picogna's contract without cause and that Esbrandt tortiously interfered with Picogna's contract. It found that Esbrandt, acting as agent, servant and employee of the Board, acted intentionally and maliciously to injure Picogna. Judgment for compensatory damages was entered against the Board and Esbrandt for economic damages of $750,000 and emotional distress damages of $560,000, which included recovery for Picogna's litigation-induced stress. The court assessed $50,000 in punitive damages against Esbrandt. In computing the economic damages, the trial court considered that Picogna would have received tenure but for defendants' actions, and arrived at a figure representing what Picogna would have earned until retirement reduced by variables such as the possibility of death, unemployment or early retirement.

The Board appealed, and the Appellate Division affirmed the trial court's finding of liability and the award of punitive and emotional distress damages but declined to discuss litigation-induced stress as a component of damages. A majority of the panel reversed and remanded the award of economic damages, finding that the calculation of damages over plaintiff's projected working life based on anticipated tenure was improper and that the lost wages awarded should have been based on net income rather than gross income. One member dissented, concluding that plaintiff was wrongfully deprived of tenure and that the trial court's calculation of economic damages was proper.

We granted defendants' petition for certification to address the appropriateness of an award of litigation-induced stress damages. 139 N.J. 443 (1995). Although plaintiff did not submit a cross-appeal based on the dissent, we will nonetheless address the issue of whether plaintiff obtained tenure because of its importance to school districts throughout the State.

II

Defendants argue that the trial court and the Appellate Division erred in compensating plaintiff for distress caused by the litigation itself. They assert that stress is a normal part of the litigation process and that only emotional distress associated with pretermination and termination events should be compensable. Plaintiff contends that because the present litigation was engendered by defendants' bad faith, any stress induced thereby should be compensable.

The trial court's award of $560,000 in emotional distress damages was based on many factors, including the stress resulting from the litigation. The court reasoned: "[T]he litigation was necessary because of the actions of the defendants. So they certainly can't be heard to argue that [plaintiff] shouldn't be compensated for the pain and suffering as a result of their conduct.... [P]art of that pain and suffering was generated as a result of the litigation."

As a preliminary matter, New Jersey recognizes the compensability of litigation-induced economic damages in the form of expenses in limited circumstances. Absent a court rule or an express statutory or contractual provision, a party may not recover litigation expenses in an action for damages. N.J.S.A. 2A:15-59.1; R. 4:42-9; Cohen v. Fair Lawn Dairies, Inc., 86 N.J.Super. 206, 212, 206 A.2d 585 (App.Div.), aff'd, 44 N.J. 450, 210 A.2d 73 (1965); Jersey City Sewerage Auth. v. Housing Auth., 70 N.J.Super. 576, 584, 176 A.2d 44 (Law Div.1961), aff'd, 40 N.J. 145, 190 A.2d 870 (1963). As a matter of policy, it is generally the responsibility of each litigant to pay the costs incurred in utilizing the judicial system.

Although New Jersey permits recovery for emotional distress damages in some cases, the potential for fabricated claims justifies a requirement of enhanced proof to support an award of such damages. Under contract law, recovery is permitted where the breach of contract involves conduct that is both intentional and outrageous and proximately causes severe, foreseeable emotional distress. Buckley v. Trenton Saving Fund Soc'y, 111 N.J. 355, 364-66, 544 A.2d 857 (1988); Fiore v. Sears, Roebuck & Co., 144 N.J.Super. 74, 76-77, 364 A.2d 572 (Law Div.1976); Restatement (Second) of Contracts § 353 (1981); 5 Arthur L. Corbin, Corbin on Contracts, § 1076, at 427 (1964). The "court decides whether as a matter of law such emotional distress can be found, and the jury decides whether it has in fact been proved." Buckley, supra, 111 N.J. at 367, 544 A.2d 857; see Strachan v. John F. Kennedy Memorial Hosp., 109 N.J. 523, 538, 538 A.2d 346 (1988) (permitting recovery of emotional distress damages against hospital for mishandling corpse); Portee v. Jaffee, 84 N.J. 88, 95-98, 417 A.2d 521 (1980) (permitting mother to recover emotional distress damages for witnessing her child's death); Berman v. Allan, 80 N.J. 421, 434, 404 A.2d 8 (1979) (permitting...