New Jersey Employment Attorneys Blog
Following a trial at the Law Division and an appeal to the Appellate Division, the New Jersey Supreme Court was asked to resolve whether a plaintiff could recover damages under a promissory estoppel theory of liability because he relied on defendant’s promise in quitting his prior employment. Goldfarb v. Solimine, 2021 N.J. LEXIS 161, 245 A.3d 570, 2021 WL 626991 (decided February 18, 2021). In Goldfarb, Plaintiff Jed Goldfarb claimed 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. In response, Solimine argued that because an employment contract was never reduced to writing as required by New Jersey’s Uniform Securities Law of 1997 (the Securities Law) Goldfarb was barred from pursing an action against him. The Securities Law intends to forbid the enforcement of an investment advisory contract that has not been reduced to writing. In resolving the issue before it in favor of plaintiff Goldfarb, the Court distinguished between a breach of contract claim where the Court found Goldfarb could not pursue a claim because of the Securities Law’s requirement that contracts be writing, and the reliance-based doctrine promissory estoppel open to Goldfarb because it had no such requisite.
To begin its analysis, the Court pointed to well established case law instructing that “[a] contract is an agreement resulting in obligation enforceable at law.” Borough of West Caldwell v. Borough of Caldwell, 26 N.J. 9, 24 (1958). “[T]he basic features of a contract” are “offer, acceptance, consideration, and performance by both parties.” Shelton v. Restaurant.com, Inc., 214 N.J. 419, 439 (2013). “A contract arises from offer and acceptance, and must be sufficiently definite ‘that the performance to be rendered by each party can be ascertained with reasonable certainty.'” Weichert Co. Realtors v. Ryan, 128 N.J. 427, 435 (1992) (quoting Caldwell, 26 N.J. at 24-25). For a viable breach of contact claim a party may pursue benefit-of-the-bargain or expectation damages, that is, damages that plaintiff would have earned had the contact not been breached. See Coyle v. Englander’s, 199 N.J. Super. 212, 214 (App. Div. 1985) (characterizing expectation damages, “i.e., loss of the benefit of the bargain,” as the “traditional” form of damages for breach of contract). The purpose of such compensating damages “is to put the injured party in as good a position as if performance had been rendered.” Totaro, Duffy, Cannova & Co., L.L.C. v. Lane, Middleton & Co., L.L.C., 191 N.J. 1, 13 (2007) (ellipsis omitted) (quoting Donovan v. Bachstadt, 91 N.J. 434, 444 (1982)). [*23]
A promissory estoppel claim is different than a breach of contract claim. Promissory estoppel is made up of four elements: (1) a clear and definite promise; (2) made with the expectation that the promisee will rely on it; (3) reasonable reliance; and (4) definite and substantial detriment.” Toll Bros., Inc. v. Bd. of Chosen Freeholders of Burlington, 194 N.J. 223, 253 (2008); see Model Jury Charges (Civil), 4.10K “Promissory Estoppel” (approved May 1998). It has been long recognized that promissory estoppel is “a departure from the classic doctrine of consideration that the promise and the consideration must purport to be the motive each for the other,” providing instead that the operative “reliance is on a promise.” [*24], Friedman v. Tappan Dev. Corp., 22 N.J. 523, 536 (1956). Under promissory estoppel a successful plaintiff is entitled to reliance damages. In contrast to contract-based expectation damages, reliance damages look backward.
Here, a trier of fact would look back to determine what losses plaintiff Goldfarb suffered as a result of his relying on defendant’s later-broken promise, i.e., what he would have earned had he not quit his job to work for defendant. Therefore, 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 promissory estoppel 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. [*12] Hence, Goldfarb’s promissory estoppel claim for reliance damages did not violate the Securities Law contract-in-writing requirement because it is a claim separate and apart from a contract-based claim that would be barred under the Securities Law. Id. In so holding, the Supreme Court remanded the case for a new trial on damages consistent with its ruling.
If you believe you may have a viable breach of contract or promissory estoppel claim, do not hesitate to call the attorneys at Mashel Law at (732) 536-6161 or fill out the contact form on this page for immediate help. At Mashel Law, LLC, located in Marlboro, New Jersey, we are dedicated to protecting the rights of employees.