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Basile v. Prudential Securities, Inc.

A-5516-02T2 (N.J. Super. App. Div. 2004) (Unpublished)

EMPLOYER-EMPLOYEE; CONTRACTS—If an employer’s benefit program requires an employee to make an affirmative election in order to be covered, it isn’t a grant of an option to the employee to be exercised after the employee leaves the company.

A securities broker violated his employer’s written policy by signing a customer’s name to securities that were to be sold by his employer. As a result, he was given the option to voluntarily retire or be terminated by the company. He voluntarily retired and filed several claims against the brokerage firm, including a breach of contract action alleging that the company failed to pay him in accordance with the company’s Client Continuity Plan. The Plan allowed a retiring broker to designate a replacement broker and receive a percentage of the commissions earned by the replacement broker for three years. The trial court granted the company’s summary judgment motion, dismissing the employee’s claims. The former employee appealed.

On appeal, the former employee argued that the Client Continuity Plan was an option contract entitling him to receive benefits because he substantially performed all of its pre-conditions by being a long-standing employee and retiring in “good standing.” The Appellate Division rejected the employee’s claim and upheld the lower court’s ruling on several grounds. First, the Court noted that the former employee admitted that he never enrolled in the company’s Plan or applied to be a participant. The Court also noted that the former employee did not meet any of the requirements to be eligible for the Plan. The employee had not provided his employer with the required six months’ notification under the Plan prior to retiring and didn’t designate an approved successor broker. The Court rejected the former employee’s contention that the Plan was an option contract. It reasoned that even if the Plan was deemed an option contract, an option contract requires a “notice of unqualified acceptance.” The Court ruled that there never was an unqualified acceptance because the former employee failed to comply with the substantial requirements of the Plan.


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