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Gerard v. Licari

C-308-04 (N.J. Super. Ch. Div. , 2005) (Unpublished)

EMPLOYER-EMPLOYEE; WORKERS COMPENSATION—An individual who, in an unemployment hearing, asserts he or she is an employee should not later be allowed to assert in a different proceeding that he or she had was a shareholder pursuant to a provision of his or her employment agreement that would have given the employee company stock upon the occurrence of specified events.

An employee’s promotion resulted in a new employment agreement. This new agreement provided that the employee would receive a ten percent equitable interest in his employer. According to the employee, this interest was to take effect immediately. The employee also maintained that, upon the death of one of the company’s two majority shareholders, he would receive a salary increase. When one of the majority shareholders died and the employee did not receive a pay increase, he sued, alleging that: his employer had breached the contract, he (the employee) was an “oppressed shareholder,” his employer misrepresented facts, his employer was unjustly enriched by his (the employee’s) labor, his employer breached an implied promise to act fairly and in good faith, and his employer could not deny him the benefits that were purportedly stipulated by the new employment agreement.

He also claimed that one of the majority shareholders frequently described him as a partner of the company, and that the two shareholders also assured him that he was a ten percent owner. The lower court dismissed the complaint since the new employment agreement contained a provision that all disagreements between employee and employer were to be settled by arbitration. The court also found that, as indicated by the terms of the new employment agreement, the employee would not be entitled to the ten percent share in the company until the company was either sold or liquidated.

The employee appealed unsuccessfully because, according to the Appellate Division, he failed to show that the lower court’s decision was blatantly irrational or incorrect or that the lower court failed to consider or appreciate competent, probative evidence. Additionally, the Court held that since the employee claimed during his unemployment hearing that he was an employee of the company, he could not change his position by telling the Court that he was now a shareholder; doing so would unfairly damage his employer’s legal rights.


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