NEW JERSEY SUPREME COURT PERMITS PLAINTIFF TO SEEK RELIANCE DAMAGES UNDER THE THEORY OF PROMMISSORY ESTOPPEL FOR A RESCINDED JOB OFFER.
By Allison J. Vogel, Esq., March 1, 2021
The New Jersey Supreme Court recently affirmed, as modified, the liability judgment of the Appellate Division and remanded for a new damages trial on a promissory estoppel claim where the plaintiff’s prospective employer allegedly reneged on an oral promise of employment after he left his prior employer to accept the position. Goldfarb v. Solimine, 2021 WL 626991 (App. Div. Feb. 18, 2021).
The plaintiff, Jed Goldfarb, asserted a claim for promissory estoppel against his prospective employer, David Solimine, seeking payment for wages lost in reliance on promises of employment.
Goldfarb, a research analyst, was employed by a brokerage firm, analyzing financial markets in order to offer investment advice and earning between $308,000 and $466,000 in annual commissions. Goldfarb alleged that Solimine orally offered him a position managing his family’s sizable investment portfolio, promising him a base salary and return on investments. The agreement was never memorialized in writing. In reliance on the position, Goldfarb left the brokerage firm and began providing Solimine with stock tips and financial advice. Shortly afterwards, Solimine told Goldfarb that he would not employ him.
Goldfarb subsequently sued, asserting, in relevant part, a claim for promissory estoppel. Solimine moved for summary judgment, arguing that the claim was barred by the Uniform Securities Law due to the absence of a written agreement between the parties. The trial court denied Solimine’s motion and the matter proceeded to trial. The trial judge also denied Goldfarb’s pre-trial motion to recuse herself due to an appearance of impropriety. At trial, the court barred the testimony of Goldfarb’s economic expert, denied Solimine’s motion for dismissal, and limited Goldfarb’s potential recovery to expectation damages. The jury found for Goldfarb on liability and awarded him damages. Solimine then moved for judgment notwithstanding the verdict, which was denied. Goldfarb appealed and Solimine cross-appealed.
At the Appellate Division, Goldfarb appealed the denial of his recusal motion and sought a new trial only on damages. Solimine cross-appealed, arguing that the parties’ agreement was barred by the Securities Act and its writing requirement. The Appellate Division reversed the trial judge’s refusal to recuse herself, affirmed the jury finding of liability, and concluded that Goldfarb was entitled to present evidence of his reliance damages and expert testimony on his claim. The Appellate Division remanded for a new trial on the issue of reliance damages. Solimine petitioned for certification, which was granted.
The Supreme Court affirmed the judgment of the Appellate Division, upholding the jury’s finding of liability against Solimine on the promissory estoppel claim. In relevant part, the Supreme Court found that the Securities Law does not prohibit the pursuit of a promissory estoppel claim for reliance damages. The Supreme Court also affirmed the Appellate Division’s remand for a new trial on reliance damages only, leaving the determination on the admissibility of experts to the remand court. The Supreme Court, however, rejected the “family office” exception to the Securities Law because a factual finding on the issue was never presented to the jury. Justice Albin dissented, finding the grant of reliance damages on a promissory estoppel claim to be in contravention of the Securities Law.
This decision is significant as it provides guidance on the differences in recovery between contract and promissory estoppel claims in situations where a prospective employer rescinds an offer of employment. While the plaintiff was statutorily barred from recovering expectation damages under the oral employment agreement, he was permitted to seek damages for wages lost in reliance on the promise of employment. Employers, however, should be prepared to defend against both types of claims and should seek guidance from counsel whenever they are rescinding a meaningful job offer.
Please contact NFC if you have any questions regarding this decision.