Potter v. Village Bank of New Jersey

• Decision Date: 09 June 1988
• Citation: 543 A.2d 80,225 N.J.Super. 547
• Parties: , 3 IER Cases 1076 Dale G. POTTER, Plaintiff-Respondent, Cross-Appellant, v. VILLAGE BANK OF NEW JERSEY, a banking corporation of the State of New Jersey, and Em Kay Holding Corporation, a New Jersey bank holding company, Defendants- Appellants, Cross-Respondents, Mory Kraselnick, Defendant-Cross-Respondent, New Jersey Department of Banking, Intervenor, and Allan M. Bart, Moises Kroitoro, Em Kay, Inc. and Em Kay Financing Corp., Defendants.
• Court: New Jersey Superior Court — Appellate Division

Page 547

225 N.J.Super. 547

543 A.2d 80, 3 IER Cases 1076

Dale G. POTTER, Plaintiff-Respondent, Cross-Appellant, v. VILLAGE BANK OF NEW JERSEY, a banking corporation of the State of New Jersey, and Em Kay Holding Corporation, a New Jersey bank holding company Defendants- Appellants Cross-Respondents Mory Kraselnick, Defendant-Cross-Respondent New Jersey Department of Banking, Intervenor, and Allan M. Bart, Moises Kroitoro, Em Kay, Inc. and Em Kay Financing Corp., Defendants.

Superior Court of New Jersey, Appellate Division.

Argued April 25, 1988.

Decided June 9, 1988.

Brian N. Lokker, Wayne, for defendants-appellants, cross-respondents (Williams, Caliri, Miller & Otley, attorneys).

Bernard F. Conway, Morristown, for plaintiff-respondent, cross-appellant (Giblin, Combs, Cooney & Conway, attorney; Catherine M. Langlois, of counsel, and on the brief).

Barbara S. Goldsmith, Deputy Atty. Gen., for intervenor (W. Cary Edwards, Atty. Gen., attorney; James J. Ciancia, Asst. Atty. Gen., of counsel; Barbara S. Goldsmith on the brief).

Before Judges J.H. COLEMAN, O'BRIEN and STERN.

The opinion of the court was delivered by

J.H. COLEMAN, P.J.A.D.

The crucial question raised in this appeal is whether a bank president and chief executive officer who blows the whistle on suspected laundering of Panamanian drug money is protected from retaliatory discharge by the public policy of this State. We answer in the affirmative. We also hold that the retaliatory discharge in this case constituted an intentional tort which exposed defendants to compensatory and punitive damages. We affirm the judgment.

A

Plaintiff Dale G. Potter became the president and chief executive officer of the Village Bank of New Jersey (Village Bank) on November 15, 1982. His employment was terminated in May or June 1984. On June 13, 1984 plaintiff filed a complaint in the Chancery Division against Village Bank alleging that his job had been wrongfully terminated. Plaintiff sought reinstatement to his position as chief executive officer and president of the bank.

The same day, the Chancery Judge issued an order to show cause with temporary restraints which required Village Bank to continue paying plaintiff's salary and other benefits. By order of June 27, 1984 the bank was required to pay plaintiff's salary and benefits until November 15, 1984, the termination date under plaintiff's employment contract. The Chancery Judge transferred the case to the Law Division.

After the matter was transferred to the Law Division, plaintiff filed an amended complaint against Village Bank, Mory Kraselnick, Allan Bart, Moises Kroitoro, Em Kay Inc., Em Kay Holding Corporation and Em Kay Financing Corporation. In the four-count amended complaint plaintiff sought compensatory and punitive damages based on (1) fraudulent inducement, (2) breach of contract, (3) tortious interference with the employment relationship and (4) wrongful termination.

The case was tried to a jury over a four-day period. During trial, plaintiff voluntarily dismissed the case against Bart, Kroitoro, Em Kay Inc. and Em Kay Financing. At the end of plaintiff's case, the trial judge granted defendants' motion for involuntary dismissal of plaintiff's claims of fraudulent inducement, breach of contract and wrongful interference with the employment relationship. The only remaining claim was for wrongful discharge. The trial judge held that Kraselnick was not named as a defendant in the count alleging wrongful discharge and dismissed the complaint against him.

The claim of wrongful discharge was submitted to the jury as to the remaining defendants, Village Bank and Em Kay. The jury answered the following special interrogatories:

Q1. Did the Defendants wrongfully discharge the plaintiff?

A. Yes.

Q2. Was the plaintiff damaged by such wrongful discharge?

A. Yes.

Q3. What amount of compensatory damages, if any, should the plaintiff be awarded for such wrongful discharge?

A. $50,000.

Q4. What amount of punitive damages, if any, should the plaintiff be awarded for such wrongful discharge?

A. $100,000.

After the trial judge denied defendants' motion for judgment notwithstanding the verdict, final judgment was entered in the sum of $162,575.40, which consisted of $100,000 in punitive damages, $50,000 in compensatory damages plus $12,575.40 in prejudgment interest on the compensatory damages.

Village Bank and Em Kay Holding Corporation have appealed from the entire judgment. Plaintiff has cross-appealed from the involuntary dismissals at the end of plaintiff's evidence.

The pivotal issue presented to the jury was whether plaintiff resigned or was discharged in violation of a clear mandate of public policy. Based on the evidence presented, the jury concluded he was fired contrary to a clear mandate of public policy. The following evidence supports that finding. Em Kay Holding Corporation (Em Kay) owns 93% of the stock of Village Bank. The remaining 7% is distributed among other shareholders. Em Kay is owned by the Em Kay Group which has its headquarters in Panama City, Panama. Em Kay Group is owned by Mory Kraselnick and Moises Kroitoro.

Bart and Kraselnick negotiated with plaintiff for employment at Village Bank. In September 1982 when the president of Village Bank suffered a heart attack, plaintiff was offered and accepted a position with the bank as a "holding company consultant." Plaintiff became president and chief executive officer of Village Bank two months later. Between then and January 1983, Kraselnick frequently telephoned plaintiff to request that Village Bank make large loans to companies that did business with Kraselnick and companies owned by Kraselnick. With few exceptions, plaintiff refused these requests.

After a January 21, 1983 meeting Kraselnick told plaintiff: "[I]f I ever ask you to do anything wrong, I'll stand up in front of you." At the time, plaintiff did not understand the meaning of the statement. Over the next couple of months, however, many cash deposits of between $8,000 and $9,300 were made into the accounts of Kraselnick, Bart, Noel Kinkella (office manager of Em Kay Equities whose president was Bart) and several of the companies in the Em Kay Group.

On March 24, 1983 plaintiff learned that Village Bank was advertising his job in the Wall Street Journal. When plaintiff confronted Kraselnick about this, he was told "You're not as outspoken and enthusiastic as I want you to be when you meet me." After plaintiff defended his position, the two temporarily reconciled.

On March 31, 1983 Kinkella went to Village Bank with a shopping bag filled with money. She made seven $9,000 deposits to accounts held by Kraselnick, Bart, Kinkella and four Em Kay related companies. Plaintiff became suspicious that drug money was being laundered so he called the New Jersey Commissioner of Banking and reported the transactions and requested advice. Before plaintiff could meet with the Commissioner, Kinkella deposited another package of about $50,000 in cash. When plaintiff asked Bart about the money, Bart told him that it was for lease payments between two related aeronautical companies in the Em Kay Group. Plaintiff became more suspicious that the large cash deposits were related to laundering of Panamanian drug money. When the Commissioner eventually met with plaintiff, he told plaintiff to maintain anonymity and that a full investigation would be undertaken. The jury was not informed about the details of plaintiff's suspicions.

Audits of the bank were conducted starting around the end of April or the beginning of May 1983. On June 28, 1983 plaintiff advised Village Bank's board of directors of the examination, but not of his meeting with the Commissioner. In July 1983 plaintiff filed currency transaction reports with the Department of the Treasury reporting the cash deposits.

In September 1983 Village Bank's board of directors raised plaintiff's salary from $65,000 to $75,000. Kraselnick also offered plaintiff a $10,000 bonus in cash so he "wouldn't pay income taxes" on it. When plaintiff refused to accept the bonus in cash, the bonus was not paid. In December 1983 the United States Attorney's Office for New Jersey issued subpoenas to the bank for the production of documents "on a list of accounts" related to the Em Kay Group. Plaintiff was also interviewed by representatives from that office.

On January 6, 1984 plaintiff executed his first written employment contract with Village Bank. The term was for one year beginning November 15, 1983. The contract provided for a base salary of $75,000, with a bonus at the discretion of the board of directors.

At some time between July and December 1983, plaintiff told Steven S. Radin, secretary to the Village Bank board of directors, that he "had gone to the Commissioner and reported the [cash] transactions." In January 1984 Radin informed Bart and Kraselnick of what plaintiff had told him. This angered Kraselnick. At the next scheduled board meeting, the directors were informed.

Immediately after the board meeting, Kraselnick asked plaintiff why he went to the Commissioner of Banking. When plaintiff responded "I thought that it was drug money," Kraselnick stated "you're probable right." From that point on, plaintiff contended that he was isolated from running the bank effectively since his subordinates in the bank were ordered not to talk to him. Further, there were several instances where Kraselnick questioned plaintiff's judgment and accused him of doing things incorrectly.

Plaintiff testified that Radin and at least two of Village Bank's directors advised him that he was about to be fired before plaintiff wrote a letter on May 22, 1984. The letter was written to Kraselnick which stated in pertinent part:

I wanted to be able to communicate directly with you and since my requests for a face to face meeting with you have been rejected, I am using this as my only recourse. At this point in time, I am considering myself "de facto"...