NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Plaintiff Marylynn Schiavi appeals from the summary judgment in favor of her former employer, defendant AT&T Corporation (AT&T), dismissing her complaint. AT&T cross-appeals from the partial denial of its claim for $19,948 in damages, attorney fees and costs. We conclude that there are several contested issues of material fact that preclude summary judgment. Thus, we reverse and remand to the Law Division for trial. The cross-appeal is dismissed as moot.
These are the material facts, viewed in the light most favorable to Schiavi.
AT&T Human Resources Manager, Maureen Brennan, met with Schiavi to determine which employees were at risk. Schiavi refused to identify them. Eventually, she recanted her statement, stating that her e-mail did not refer to anyone in particular. AT&T terminated Schiavi on August 21, 2000.
After numerous e-mails, Schiavi and Brennan agreed on the terms of a separation agreement (Agreement):
The Agreement also provides that AT&T would pay fifteen weeks of severance pay in the amount of $19,948 and distribute a notice regarding the resignation to Schiavi's former co-workers. Schiavi agreed to release AT&T from any claims arising out of her employment or termination and to return her severance pay, minus $1000, plus attorney fees and costs, if she violated the Agreement.
In May 2003, Schiavi contacted AT&T to ascertain whether she could accept employment with an independent contractor performing work for AT&T. She spoke to C. Michelle Kirk, who replied in writing:
Two years later, Schiavi began a temporary work assignment with Logistics Solutions (Logistics), as an at-will employee. She was assigned to work on-site at AT&T's facility in Bedminster. Her supervisors were AT&T employees, Barbara Laing and Dan Rubin.
Three weeks later, on October 25, 2005, Brennan saw Schiavi in the Bedminster cafeteria and notified human resources personnel that Schiavi should not be working on AT&T's premises. On December 16, 2005, Linda Stoynoff, a human resources manager, advised human resources employee Susan Greschler that Schiavi had been terminated "for cause" and should be added to the "Do Not Hire" list. Laing was told only that Schiavi was "not eligible to work" at AT&T's locations or projects and that "her assignment must be concluded." Laing and Rubin terminated Schiavi on February 22, 2006, without explanation.
In a July 12, 2006, response to an e-mail from Schiavi asking to be reinstated, a Senior AT&T Attorney, Judith R. Kramer, responded that:
After a discussion with Schiavi, Kramer ordered Greschler to change the code for Schiavi's termination to reflect a resignation and delete Schiavi's "name and social security number from any lists pertaining to a no rehire policy based upon termination for cause."
Schiavi sued AT&T, alleging breach of the Agreement, breach of the implied covenant of good faith and fair dealing, tortious interference with contract, intentional infliction of emotional distress, fraud and defamation. Schiavi attached a copy of the confidential Agreement to her complaint.
AT&T answered and counterclaimed. They alleged that Schiavi violated the Agreement and sought damages, costs and attorney fees pursuant to its terms.
Both parties moved for summary judgment. The judge granted AT&T's motion; dismissed Schiavi's complaint; awarded attorney fees to AT&T; and ordered Schiavi to return $19,948 to AT&T. In reaching his decision, the judge refused to consider correspondence from Brennan, Kirk and Kramer relating to the Agreement. Relying on
The judge also found that Schiavi failed to establish a breach of the Agreement because she did not show that she "suffered any loss due to any action to her by AT&T," given that the assignment with Logistics was temporary and at-will. As an at-will employee, Schiavi could have been terminated at any time for any or no reason. Lastly, the judge found that Schiavi had breached the Agreement by disclosing the terms to Laing and Rubin, and ultimately attaching the Agreement to her complaint.
Schiavi moved for reconsideration. AT&T cross-moved, arguing that the motion was frivolous and seeking attorney fees, sanctions and costs pursuant to
On appeal, Schiavi contends that extrinsic evidence of the events surrounding the formation of the Agreement was admissible with or without a finding of ambiguity. Thus, the Agreement was improperly construed, and the undisputed evidence proved that AT&T was in breach of the Agreement. We agree.
In order to establish breach of contract, a claimant must prove a valid contract; defective performance by the other party; and resulting damages.
Here, the terms of the Agreement are ambiguous as to whether it was the parties' intent to prohibit Schiavi's future employment by a third party at an AT&T facility. The Agrement provided that Schiavi would "not apply for or seek employment with the Company at any time." Extrinsic evidence should have been permitted here as an interpretative aid to determine whether this provision was intended to address Schiavi's employment by Logistics and AT&T's internal coding of Schiavi's termination. The correspondence from Brennan, Kirk and Kramer could have established that the parties understood that Schiavi's termination would be recorded as a resignation rather than a termination for cause, and that she was permitted to work for an independent contractor working for AT&T. This interpretation is even supported by the Agreement which provides that AT&T would report Schiavi's termination as a resignation to other prospective employers.
Therefore, the judge misinterpreted the Conway holding, as the extrinsic evidence Schiavi offered was not intended to contradict or enlarge the terms of the writing. Rather, the parol evidence was offered to shed light on the intent of the parties to determine the meaning of the words of the Agreement.
Schiavi also contends that there was sufficient evidence that AT&T breached the Agreement and the implied contractual covenant of good faith and fair dealing. She argues that AT&T, both through its actions and the actions of its employee, Brennan, tortiously interfered with her employment relationship with Logistics. After a review of the proofs, we conclude that there are material issues of fact that preclude summary judgment as to these claims.
Whether AT&T breached the Agreement by requiring that Logistics terminate Schiavi, and disclosing that Schiavi was terminated for cause and was on the Do Not Hire list depends on a jury's resolution of disputed facts. The covenant of good faith and fair dealing is implied in every contract in New Jersey, and it requires that neither party shall do anything which interferes with the ability of the other party to enjoy the fruits of the contract.
Here, Schiavi alleged that Kirk had interpreted the contract as permitting Schiavi to work for Logistics. Assuming this to be true, Brennan's actions to have Schiavi terminated, included on the Do Not Hire list and coded as terminated for cause, would conflict with AT&T's interpretation of the Agreement. We hold that the veracity of these allegations must be resolved by a jury.
The judge found that Schiavi could not establish that AT&T did not tortiously interfere with Schiavi's contractual rights because Schiavi did not show any evidence that AT&T's conduct was intentional. This finding is based on the judge's conclusion, not on the record, which reveals a dispute on this point. To succeed on a claim for tortious interference, a claimant must have some reasonable expectation of economic advantage and the interference must be malicious and intentional.
Schiavi argues that she presented proof that she was told by Logistics that her assignment might last for a year or two. Therefore, according to Schiavi, she had a reasonable expectation of economic gain through her employment with Logistics which AT&T, through Brennan, intentionally interfered with when it forced Logistics to terminate her after only six months. According to Schiavi, the termination was malicious because AT&T, through Kirk, had explained that her employment with Logistics was permissible. Thus, the judge's resolution of the issue of AT&T's intent on summary judgment was improper.
There is also a factual dispute as to whether Brennan had acted individually or as an employee of AT&T. If the jury finds that Brennan's conduct constituted tortious interference, it will have to determine whether Brennan was acting for herself or within the scope of her employment with AT&T.
Because we reverse the summary judgment, we decline to address Schiavi's contention that even if she had breached the Agreement, "the court should have invalidated the Clawback provision as an unlawful penalty clause." However, for the guidance of the judge at trial, we note the following. There is an important distinction between permissible "liquidated damages" clauses and impermissible "penalty" clauses. Liquidated damages are the amount a party agrees to pay for a breach of contract, based on a good faith estimate of actual damages.
We also note that the judge's conclusion that Schiavi had breached the Agreement's confidentiality provision by making disclosures to Rubin and Laing and by attaching the Agreement to her complaint is incorrect. First, the record does not establish that Schiavi showed the agreement or disclosed its contents to Laing and Rubin. Rather, Schiavi stated that she had signed an agreement, and disclosed the circumstances of her leaving AT&T in 2000. The confidentiality provision did not preclude Schiavi from discussing the circumstances of her departure from AT&T. Rather, the confidentiality provision related to disclosure of the contents of the Agreement itself.
Second, based on the motion record, a jury could find that AT&T had already breached the Agreement by disparaging her to Logistics and interfering with her employment with Logistics. When a breach of contract is material, the non-breaching party may treat the contract as terminated and refuse to continue to perform.
AT&T cross-appeals contending that it is entitled to $19,948 plus attorney fees and costs attributable to Schiavi's breach of the Agreement; the judge improperly awarded damages only under paragraph 8 of the Agreement; AT&T is entitled to sanctions against Schiavi; and the judge misapplied
Reversed on the appeal and remanded to the Law Division for trial. The cross-appeal is dismissed as moot.