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Mooney v. City of Atl. City

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION
Aug 9, 2016
DOCKET NO. A-2993-13T4 (App. Div. Aug. 9, 2016)

Opinion

DOCKET NO. A-2993-13T4

08-09-2016

JOHN J. MOONEY, III, Plaintiff-Respondent/Cross-Appellant, v. CITY OF ATLANTIC CITY, Defendant-Appellant/Cross-Respondent, and CITY COUNCIL OF THE CITY OF ATLANTIC CITY AND ITS MEMBERS AS COUNCIL PERSONS, LORENZO T. LANGFORD, MAYOR OF ATLANTIC CITY, and CHRISTINE M. PETERSEN, PUBLIC SAFETY DIRECTOR OF ATLANTIC CITY, Defendants, and CITY OF ATLANTIC CITY, Defendant/Third-Party Plaintiff, v. SCOTT EVANS, Third-Party Defendant.

George G. Frino argued the cause for appellant/cross-respondent (DeCotiis, FitzPatrick & Cole, LLP, attorneys; Mr. Frino, of counsel and on the briefs; Mark A. Bunbury, Jr., Susan E. Volkert, Daniel E. Zwillenberg, Dan Bardzell, and Amanda Miller, on the briefs). John M. Donnelly argued the cause for respondent/cross-appellant (Levine, Staller, Sklar, Chan, & Brown, P.A. and Donnelly & Clark, LLC, attorneys; Mr. Donnelly, David J. Azotea, Mary Beth Clark, and Anthony Morgano, on the briefs).


NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Alvarez, Ostrer, and Manahan. On appeal from the Superior Court of New Jersey, Law Division, Atlantic County, Docket No. L-2047-10. George G. Frino argued the cause for appellant/cross-respondent (DeCotiis, FitzPatrick & Cole, LLP, attorneys; Mr. Frino, of counsel and on the briefs; Mark A. Bunbury, Jr., Susan E. Volkert, Daniel E. Zwillenberg, Dan Bardzell, and Amanda Miller, on the briefs). John M. Donnelly argued the cause for respondent/cross-appellant (Levine, Staller, Sklar, Chan, & Brown, P.A. and Donnelly & Clark, LLC, attorneys; Mr. Donnelly, David J. Azotea, Mary Beth Clark, and Anthony Morgano, on the briefs). PER CURIAM

Plaintiff John J. Mooney, III sued defendant Atlantic City (City) for breach of contract, and for relief under the Conscientious Employee Protection Act (CEPA), N.J.S.A. 34:19-1 to -14. The claims are based on a settlement agreement regarding his employment, and subsequent Memorandum of Understanding (MOU) with the City, and his allegations of adverse employment actions that followed based on his acts of whistleblowing. On October 16, 2013, a jury awarded Mooney, the City's former police chief, the following damages on the cause of action based on the MOU: (1) $815,476 in lost wages, pension, life insurance, use of car, phone, and other benefits until the December 31, 2012 end of his employment contract; (2) $2,704,917 from May 27, 2010, until such time as the jurors determined Mooney would have retired; and (3) $250,000 in non-economic damages. The jury also awarded $815,476 for breach of the settlement agreement. The trial judge thereafter molded the verdict to $2,954,917, thus the aggregate total, including interest, was $3,885,173.01. The City and Mooney now appeal.

Our Clerk's Office inquired regarding the additional defendants: City Council and individuals who were members of Council during the relevant timeframe. The attorneys advised that City Council and the individual members were dismissed by the summary judgment judge in May 2011. No order was signed, and no transcripts were provided for that year. Lorenzo T. Langford, the City's former Mayor, and Christine M. Petersen, the City's former Public Safety Director, were dismissed by the trial judge before the start of trial as he concluded there was no basis for "personal liability."

We affirm the summary judgment granted Mooney on his breach of contract claims, counts four and five. Although we affirm the trial judge's denial of defendant's motion for a directed verdict on Mooney's CEPA claim, we vacate the jury's verdict on the issue because of prejudicial errors in the instructions. We also vacate the jury's verdict on constructive discharge because of prejudicial errors in those instructions. We find, contrary to the City's position, that the relevant count was not dismissed by the summary judgment judge and was therefore properly submitted to the jury for its consideration, albeit with improper instructions. We do not reach the City's remaining points of error on appeal, nor do we reach the issues Mooney raises in his cross-appeal, as they are moot in light of our reversal and remand for a new trial.

I.

A.

The following circumstances are drawn from the extensive trial record. Mooney, a City police officer since 1975, successfully sued the City in 2005, alleging he was improperly passed over for the position of Deputy Chief. Pursuant to the 2007 settlement agreement, he was retroactively promoted and ultimately became Chief. The agreement required the City to execute an MOU outlining the negotiated terms of his employment.

The November 3, 2008 MOU was retroactive to January 1, 2006, and included the following terms: it specified the Chief's responsibilities, contained tenure and termination provisions, a commitment that no "Police Director or Director of Public Safety" would be appointed during the contract term, that the City would "not diminish the duties or authority of the Chief of Police from the levels as they exist on the date of this agreement and that the City shall not change the Chief of Police's current line of reporting."

It is undisputed that the 2007 settlement agreement was negotiated by a former mayor and approved by City Council. The 2008 MOU, finalized with Interim Mayor third-party defendant Scott Evans, was neither approved nor ratified by City Council.

The parties disagree as to whether, when the settlement was reached, it was understood that the MOU would be approved or ratified by City Council. Also in dispute is the extent of the involvement of then-Business Administrator Carol Fredericks in the negotiation as the Mayor's representative. By way of certification, she denied being present or participating in the settlement other than attending an initial meeting at which protocols were discussed and during which she was consulted regarding sick leave policy. She had previously informed City Council that because Mooney's attorney represented her as well, given the potential conflict, she would distance herself from the negotiations.

Some Council members and the solicitor discussed the terms and validity of the MOU at executive sessions on November 12 and 19, 2008. Although it was agreed that the MOU may have been authorized by virtue of Council's prior resolution regarding the settlement, some Council members doubted whether one administration could "put a condition" on future administrations and thus questioned the validity of the MOU provision prohibiting appointment of a Public Safety Director.

In 2009, the City experienced a serious operating deficit of approximately $9,000,000 to $10,000,000. On April 8, 2009, Council nonetheless approved issuance to Mooney of back pay, and related benefits, as called for by the MOU. The document, however, was never formally approved. The City had previously settled lawsuits with employees, and entered into employment contracts with them, without formal approval by Council.

On February 11, 2010, Council passed an ordinance creating a Department of Public Safety, including fire and police divisions. Christine M. Petersen was designated the Director of the department, above Mooney in the chain of command. The City also began a reduction in work force effective June 1, 2010. Two months earlier, the Business Administrator had advised Mooney that he would be laid off from his position as Chief as of May 27, 2010. The notice stated that he "may have the right to displace employees in other positions." Following receipt of the notice, on May 12, 2010, Mooney filed this suit and unsuccessfully sought an injunction restraining all named defendants from deviating from the settlement agreement.

On May 26, 2010, Petersen demoted Mooney to Deputy Chief in command of support services. She established Ernest Jubilee, II, a Deputy Chief, as Operations Commander to "assume the day-to-day operations of the police force" and "be responsible for all personnel assignments." On May 27, 2010, Mooney resigned in a memo to Petersen captioned "constructive termination of employment."

B.

At the trial, Mooney testified to a series of whistleblowing incidents in 2009 and 2010. For example, City traffic control officers are cross-trained and sworn in as school crossing guards. N.J.S.A. 40A:9-154.1 prohibits the hiring of school crossing guards who have been convicted of an offense of moral turpitude. Yet the City hired a traffic control officer who had eight prior convictions including drug offenses, robbery, and burglary. In response to Mooney's letter regarding that individual, the Mayor terminated the crossing guard.

Mooney also testified that he believed the Business Administrator violated N.J.S.A. 40A:14-118 and the Attorney General guidelines pertaining to police internal affairs on numerous occasions. The Business Administrator had directed the activities of subordinate members of the police department, and improperly sought access to internal affairs information without obtaining consent from Mooney, the Attorney General, the county prosecutor, or a court order. Mooney believed the Business Administrator's access to internal affairs records was a continuing violation.

Additionally, in July 2009, while the Atlantic County Prosecutor's Office (ACPO) investigated allegations of serious misconduct by Atlantic City firefighters, it instructed Mooney that directives about the investigation were to come only from the ACPO. Meanwhile, contrary to the ACPO instructions, a City attorney attempted to question personnel regarding the allegations, as the Mayor had initiated a parallel investigation.

In the weeks prior to the mayoral election, Mooney claimed that the Business Administrator ordered him to remove the department's K-9 unit dogs from the streets. The order was issued in response to media reports regarding lawsuits filed by citizens who claimed they were bitten during encounters with police. When Mooney objected that this was an attempt to control day-to-day operations that compromised the safety of officers on the street, the Business Manager accused Mooney of insubordination. Ultimately, Mooney complied and suspended the use of the K-9 units.

The City's reduction in work force proposal included the lay-offs of twenty police officers, and numerous other staff across approximately a dozen other departments. Additionally, the plan called for the demotion of fifteen other police officers. No other "department chiefs" were demoted or laid off.

Demotions affected officers holding the ranks of chief, deputy chief, captain, and lieutenant.

On March 31, 2010, Peterson circulated a memo in which she directed Mooney to authorize police department employees to speak to her directly regarding police matters, without the need to follow the chain of command. Mooney viewed the request as a violation of state law and damaging to the operations of the police department.

On April 20, 2010, Petersen asked Mooney for a copy of all personnel files and sent public employees to the police department office to retrieve them. After refusing Petersen's request, Mooney contacted the prosecutor, who instructed him not to turn the files over until he had the opportunity to redact any internal affairs matters.

On May 26, 2010, Petersen demoted Mooney from chief to deputy chief, demoted two deputy chiefs to captain, and demoted twenty-eight other officers down one rank. Petersen reorganized the police department, merging investigations and special operations into an investigations division to be commanded by Deputy Chief Henry White, Jr. Jubilee was placed in charge of day-to-day operations.

The basis for the change, according to Peterson, was that she and Jubilee had a good working relationship. Mooney was assigned to command a "support services" unit.

The three deputy chiefs reported directly to Petersen. Eventually Jubilee was appointed acting chief of police and then chief, retroactively. Mooney believed his assignment to command a new "support services" unit was meaningless; the unit had not previously existed. Mooney offered to take a pay cut to continue as chief, but the administration would neither negotiate nor consider his alternate proposals. After Mooney resigned, Petersen reassigned his support services duties to a captain.

C.

At trial, David Hopkins testified as Mooney's expert on economic losses he suffered. Hopkins calculated that Mooney suffered a total net loss of $809,018 in salary and benefits from the date he resigned on May 27, 2010, until the end of his contract in 2012, and lost $6200 in cell phone usage and use of a car.

Hopkins also calculated additional damages beyond the term of the contract, which Mooney's attorney characterized as "CEPA" damages. The City's counsel objected that this "formulation," which assigned damages to the CEPA claim, was beyond the scope of Hopkins's report and deposition.

The court sustained the objection, and did not permit Hopkins to allocate damages to the CEPA claim or the breach of contract claim. The court permitted Hopkins to testify, however, regarding a projection of future damages based on Mooney's tenured right to maintain the position until December 31, 2019, when he would be sixty-five years old.

Hopkins also testified that Mooney suffered additional losses of $833,057 in wages, pension and other benefits to the end of 2015, and additional losses of $1,871,941, if he had continued to work until 2019. The City did not object to the testimony.

D.

Prior to trial the parties filed cross-motions for summary judgment. On June 25, 2013, the judge hearing the motions issued an order granting summary judgment to Mooney on his contract claims. The judge held that the City was liable either for breach of the settlement agreement by failing to enter into a valid MOU or alternatively, if the MOU was valid, the City was liable for breaching the MOU. She also found the City could be held liable for breach of the MOU, such as by demoting Mooney, even if the provision prohibiting appointment of a public safety director was invalid. The parties negotiated the MOU in good faith, signed it, the City filed it with the clerk, and, at least initially, Mooney's status and pay was modified accordingly. Furthermore, the judge ruled that the City was estopped from challenging the validity of the MOU because the municipality had the authority under N.J.S.A. 40:69A-29(a) to negotiate the terms and conditions of Mooney's employment. Thus even if the MOU was an ultra vires act, it was ultra vires in the secondary sense, permitting the application of the doctrines of ratification and estoppel. Allowing the City to repudiate the MOU would create an injustice against Mooney, who relied on it in good faith.

The judge also noted that, with the exception of the provision that precluded the City from hiring a public safety director, Council had not questioned the MOU's validity. Mooney's reliance on it was reasonable because multiple other contracts for employees had been honored despite not having been formally ratified by Council. The City clearly had the authority to eliminate Mooney's position, but could be held financially liable for damages caused by the demotion, corresponding pay cut, and deprivation of Mooney's chosen career under the terms of the MOU.

Judgment was therefore granted to Mooney against the City on his contract claims, counts four and five. The judge did not refer to the demotion as a constructive discharge or indicate in any fashion that a jury question remained with respect to that issue in the context of the breach of contract claim. She did, however, dismiss Mooney's claim that the City's action breached the covenant of good faith and fair dealing. The judge granted judgment to Petersen dismissing the breach of contract claims in count six because she was not involved either in the settlement agreement or the MOU.

E.

At the close of the evidence, the City moved for a directed verdict on Mooney's CEPA claims, arguing that he had failed to identify the clear mandate of public policy or laws allegedly violated. Such proof is a necessary element of a CEPA claim pursuant to the relevant statutory language. See N.J.S.A. 34:19-3. The judge reserved decision until after the verdict.

During the charge conference and discussions regarding the verdict sheet, the City's attorney reiterated that the court should have rendered a threshold decision as to whether Mooney had articulated laws, regulations, practices, or policies that the City allegedly violated. Mooney's attorney also argued that the judge was required to instruct the jury that the violation could be a violation of the law, a rule, a regulation, or a clear mandate of public policy.

Mooney contended that the court's proposed instruction erroneously included only language regarding a clear mandate of public policy. He repeatedly and unsuccessfully objected that the court's proposed instructions failed to follow the model jury charges and the state of the law.

Additionally, Mooney's counsel objected to language in the charges stating that the Attorney General's guidelines for K-9s were optional rather than mandatory. Mooney specifically requested that the jury be instructed that the City violated a clear mandate of public policy by removing the K-9 units from the streets during the political season. The court refused.

Moreover, Mooney objected to the judge's proposed language about the applicability of the New Jersey Open Public Records Act (OPRA), N.J.S.A. 47:1A-1 to -13, and Executive Order 69, because it suggested to the jury that Mooney should have released the internal affairs documents despite the prosecutor's direction to the contrary.

Executive Order 69 clarifies which law enforcement records are not considered public information. --------

The City requested that the judge's charge to the jury include language regarding Mooney's duty to mitigate damages. The court did not rule on the objection.

The judge instructed the jury that Mooney claimed he reasonably believed the administration's actions "were incompatible with and/or violated a clear mandate of public policy, in particular, the Police Chief Responsibility Act [(PCRA)]." See N.J.S.A. 40A:14-118. The judge also told the jury he had found that the PCRA controlled many of the issues in the lawsuit.

The judge did not identify the sections of the PCRA that Mooney had cited in his testimony or in written submissions. Instead, he said:

The Act authorizes the City to adopt an ordinance establishing a police department and delegating to others the authority to prepare rules and regulations for the control of that department and the discipline of its members, which the governing body can adopt and subsequently change or modify by resolution. The City's ordinance appointing a director of public safety was valid and consistent with the Act. The Act does not require that the appointment of an appropriate authority be designated in writing. The Act states that the appropriate authority means the mayor, manager, here the business administrator, or such other appropriate executive or administrative officer, such as a full-time director of public safety.

Prior to addressing the elements of CEPA, the judge informed the jury of his "findings": that the City lawfully appointed a public safety director, that no law or public policy controlled the removal of the K-9 units from the streets, and that the Attorney General guidelines were merely "policies and directions for the operation of K-9 units, but do not limit the discretion of a municipality and whether or not to create and maintain a K-9 unit"; and that as a matter of law, the City "had the lawful right to remove the K-9 unit from the streets." The court told the jurors that they must "assess whether plaintiff as . . . police chief had a reasonable belief that he engaged in whistle blowing when he objected to the K-9 unit being removed from the streets" by the administration. He added that the "dispute" had to be more than a personal disagreement.

The judge also told the jury that OPRA and Executive Order 69 strongly favored disclosure of information to the public and that New Jersey's public policy mandated that police records be disclosed unless disclosure is prohibited by statute, law or guideline. He instructed that it was "within the discretion" of the police to disclose even confidential information to the administration "for good cause," and that police could withhold information "only . . . if there is a lawful reason for doing so."

The judge instructed the jury that the Attorney General had published guidelines for internal affairs investigations that permitted a police chief to allow access to an internal affairs file "for good cause" and that the jury should presume a request by the City was "lawful." The police were obligated to make available to the public statistical information regarding the types of complaints filed and their disposition.

The judge said Mooney was required to prove he "reasonably believed that . . . the several issues raised at trial and detailed in his . . . contentions were either (a) in violation of the law or rule or regulation issued under the laws of New Jersey or (b) incompatible with a clear mandate of public policy." Next, he said:

To establish the first element of his claim plaintiff must prove by a preponderance of the evidence that in light of the circumstances facing him and the knowledge possessed by him at the time he formed his belief, he had a reasonable belief that the defendant's actions and decision were in violation of a law, rule, or regulation promulgated pursuant to law. In making such a determination, you are to consider whether or not plaintiff possessed the qualifications necessary to establish a reasonable belief.

In making the determination, the jury was to take into account "plaintiff's educational background and employment responsibilities," and that Executive Order 69 encouraged the "disclosure of information to the public unless otherwise prohibited by law."

The second element that Mooney was required to establish was that he objected to or refused to participate in the City's decisions or actions "that he reasonably believed were in violation of law, rule, or regulation promulgated pursuant to law." In contrast to the immediately preceding section, this portion of the charge made no reference to clear mandates of public policy. It did not identify the law, rule, or regulation the City allegedly violated.

After listing the elements of a CEPA claim, the judge described the type of circumstantial evidence jurors could consider to determine whether "the reduction in force" and Mooney's demotion were undertaken in good faith or were a pretext to hide a retaliatory purpose. Then the court provided the jury with an instruction on what it called "[e]lements of constructive discharge."

After the constructive discharge instruction, the court added that "the threshold question in analyzing plaintiff's CEPA claim" was:

Were there multiple situations in which the plaintiff strongly opposed actions of officials employed in the City Administration? Instances of whistle blowing as to what he reasonably believed was illegal conduct or part of a series of
disputes over who had authority for the overall direction of the Atlantic City Police Department?

The court next iterated Mooney's "contentions," including that he was "entitled to compensatory damages . . . based up on [sic] the Court's finding that the City breached the Memorandum of Understanding." The judge did not explain how the jury should determine compensatory damages for breach of contract and, instead, continued to summarize Mooney's contentions regarding his CEPA claim. He then described the "actions, policies, and practices of defendants" that Mooney alleged to have reasonably believed "were in violation of the laws, rules, or regulations promulgated under the law or were incompatible with clear mandates of public policy concerning public health, safety and welfare." The judge said that Mooney:

contends he was a whistle blower because he disclosed to his supervisor, including the Atlantic County Prosecutor, objected to or refused to participate in the City, Langford and Petersen's (1) hiring of felons, particularly Daniel Smith as a crossing guard; (2) ordering a specific police officer from the Internal Affairs Unit to attend a City Council meeting in June 2009; (3) investigation of the firehouse incident during the pendency of a . . . criminal investigation by the county; (4) ordering all K-9 units off the street; (5) demanding access to and release of Internal Affairs and criminal investigation files and information concerning the K-9 units, Captain Black, and ongoing criminal investigations; (6) ordering immediate
removal of secondary personnel files from the police department without allowing for a review; (7) interference with and usurping the day-to-day operations of the police force pertaining to officer discipline, K-9 dogs, officer assignments, overtime, overreaching directives, and eight multiple designations and non-designation of non-delegation of appropriate authority.

With respect to damages from the breach of Mooney's MOU and settlement agreement, the judge said "another court," referring to the summary judgment judge, had determined that Mooney had been "deprived of his chosen career and the financial benefits that stem therefrom, and he is entitled to be made whole if you find he was constructively discharged." He added: "To be entitled to damages, plaintiff must prove his termination was the result of a constructive discharge."

The court did not differentiate between damages to be awarded for breach of contract and those to be awarded on Mooney's CEPA claim; nor did it provide the jury with guidelines regarding the calculation of damages for breach of the MOU. The jury was not charged on whether it should determine the constructive discharge issue only in relation to the CEPA claim.

F.

The verdict sheet included four questions pertaining to Mooney's CEPA claim. Question one whether Mooney was demoted "as part of a good faith reduction in force." The jury checked "No."

Question two asked whether Mooney had

proven that he reasonably believed that any of the actions, decisions, policies and practices taken or implemented by the Defendants with regard to the administration of the Police Department which he complains of or objected to, were in violation of the law, or were incompatible with a clear mandate of public policy concerning the role of a Police Chief under [sic] New Jersey?
The jury checked "Yes."

Question three asked whether Mooney had

proven that he either (a) disclosed to a supervisor (including the Atlantic County Prosecutor); or (b) objected or refused to participate in actions, decisions, policies or practices of the Defendants that he reasonably believed were in violation of a law, rule or regulation issued under the law or were incompatible with the clear mandate of public policy concerning the public health, safety or welfare? In other words, did he actually blow the whistle?
The jury again checked "Yes."

Question four asked whether Mooney had "proven that his demotion was an adverse employment action which was caused by, and was in retaliation for the complaints or objections that Plaintiff made regarding Defendant's actions, decisions, policies and practices?" The jury checked "Yes."

Question five asked what amount would fairly compensate Mooney for his damages "as a result of Defendant's violation of CEPA? (Such losses, separate and apart from breach of the M.O.U.)." The categories of damages were designated as follows:

A. Loss of wages, loss of pension, loss of life insurance, loss of use of car and phone and other benefits until the end of his contract on December 31, 2012?

B. Loss of wages, loss of pension, loss of use of car and phone and other benefits from May 27, 2010 until such time as you determine he would have retired?

C. Compensation for, [sic] loss of reputation, humiliation, mental anguish, embarrassment[,] diminished earning capacity, emotional distress, and being deprived of his chosen career?

This portion of the verdict sheet on the CEPA claim did not ask the jury to determine whether Mooney had been constructively discharged or otherwise subject to an adverse employment action.

The jury was initially confused with the wording of question five, because it was unsure whether it should answer only one or all of the parts. The judge instructed the jury to answer all of them. The jury returned with another question on this issue, asking whether the three parts of question five would be aggregated, "or should we do it ourselves? (We don't want to double dip)."

The court and the attorneys understood that the jurors were concerned that any award for Part B, from May 27, 2010, until retirement, would necessarily overlap with an award for damages until the end of Mooney's contract on December 31, 2012. The judge resolved the jury issue by indicating he would mold the verdict after the jury answered the questions as written.

A separate section of the verdict sheet addressed the claim for breach of the MOU:

Prior to an award of damages for breach of the M.O.U., you must assess the circumstances of Plaintiff's separation from employment with the City.

If you answered "Yes" to Questions 2, 3, and 4, proceed to Question 6. If you answered "No," to any of those Questions cease deliberations.

6) Has the Plaintiff proven that the conditions of his employment following his demotion to Deputy Chief were a "constructive discharge" as the Court has defined it, such that a reasonable person would have been forced to end his employment?

If you answered "Yes," proceed to Question 7. If you answered "No," cease deliberations.

[The jury answered "Yes".]

7) Considering all the evidence presented at trial, what sum of money would fairly compensate Plaintiff for lost pay, lost health insurance, lost life insurance, lost sick leave buyout, lost pension benefits and entitlements due under his contract that
were lost from May 28, 2010 to December 31, 2012 as a result of the City's breach of his contract?

The jurors did not answer questions 6 and 7, initially, because they had answered "No" to question 1. A typographical error in the initial verdict sheet had directed them to stop if they answered "No" to any of the previous questions.

When the error was discovered, the City requested that the jurors be asked whether their question 5 awards contemplated an award for breach of contract. The court had previously instructed jurors that the losses to be considered in question 5 were "separate and apart from the breach of the [MOU]." The court asked the jurors whether their award for question 5 was "intend[ed] to compensate plaintiff for breach of the MOU" and, rather than query each juror, it directed them to discuss the answer in the jury room.

The jurors returned with a note that said the new question "has further confused us with where we stand with 5A, B, and C, MOU versus CEPA." Mooney again objected that he should not have to prove constructive discharge to obtain damages for breach of the MOU. The court merely directed the jury to answer questions 6 and 7, after the correction of the typographical error.

The City objected that the jurors should be told to deduct any amount they had already assessed for breach of the MOU in question 5. The court declined, opining that such an instruction would cause further confusion and that the better solution would be to mold the verdict. The jury awarded Mooney $815,476 in response to Question 7, the same amount of money awarded on Question 5(A).

After the jury returned its verdict, the court instructed them as to punitive damages. Although the jury determined that the retaliation Mooney suffered for his whistleblowing was "wantonly [sic] reckless or malicious," it awarded no additional damages. The court molded the verdict to $2,954,917, finding that "5A is subsumed by 5B and that 7 is subsumed by 5B[.]"

G.

After the verdict, the City renewed its motion for a directed verdict. The City reiterated that the court should have identified the law, statute, rule, or public policy allegedly violated prior to the case being submitted to the jury. Further, the City argued that no law was violated despite Mooney's allegations and that therefore its application should have been granted. The court did not respond, focusing instead on the City's failure to request more specific instructions or to previously object to the charge. The judge said that during the charge conference the City's attorneys had "never once suggested" that the jury charge was inadequate. The City's attorney responded he had been denied the opportunity to proffer any argument on the issue and that the judge had declined to consider the motion for directed verdict in which the issue was raised.

The court denied the application. Although the judge discussed Mooney's reasonable belief that he was being retaliated against, and cited to testimony in which it was reported that the administration wanted to get rid of him, the judge again failed to identify a specific law, rule, regulation, or public policy.

The City also filed a motion for a new trial on damages. It asserted that at a minimum, the amounts should be reduced because they were entirely at variance from the experts' figures and the jury may have been confused by the verdict sheet. The court entered judgment on the verdict stating, "you can treat it as a remittitur, and you can reject it and we'll give you a new trial . . . . [I]f you think I got it wrong and you feel that strongly about it, I'll grant you a new trial." The record does not indicate that the City had filed a motion for remittitur.

II.

By way of points on appeal, the City raises the following:

POINT I
THE TRIAL COURT ERRED BY GRANTING PLAINTIFF SUMMARY JUDGMENT ON HIS CONTRACT CLAIMS;
THIS DECISION FATALLY TAINTED THE TRIAL ON PLAINTIFF'S REMAINING CLAIMS.

A. The motion court erred by viewing the facts in the light most favorable to Plaintiff.

B. Plaintiff's MOU was never effective because it was never approved by the City Council.

C. Materials issues of fact precluded the award of summary judgment to Plaintiff on a theory of estoppel.

D. The motion court's reliance on prior agreements was misplaced.

E. The City never breached the 2006 Settlement Agreement.

F. The motion court's improper grant of summary judgment irreparably tainted the remainder of the case.

G. Reversal of the motion court's grant of summary judgment on the contract claims will require disqualification of Plaintiff's counsel.

POINT II
PLAINTIFF HAD NO COGNIZABLE CEPA CLAIM AGAINST THE CITY OF ATLANTIC CITY OR CHRISTINE PETERSEN AND HIS ACTION SHOULD HAVE BEEN DISMISSED AS A MATTER OF LAW.

A. Plaintiff's failure to identify the source of a clear mandate of public policy barred his CEPA claim from jury consideration.

B. The jury should not have considered any alleged whistleblowing activity that could have not been causally related to any purported retaliation.
A) Removal of the Police Department Personnel Files (April 2010)

B) Investigation of Captain Black (May 2010)

C. Plaintiff failed to establish an objectively reasonable belief regarding any alleged violations of clear mandates of public policy.

D. Plaintiff's mere performance of his whistleblowing job duties cannot establish a CEPA cause of action.

POINT III
THE TRIAL COURT ERRED IN SUBMITTING THE ISSUES OF CONSTRUCTIVE DISCHARGE TO THE JURY.

A. As a matter of law, Plaintiff could not establish a claim for constructive discharge.

B. The Law of the Case was that Plaintiff had not been constructively discharged.

POINT IV
THE TRIAL COURT ERRED BY FAILING TO CHARGE MITIGATION OF DAMAGES.

POINT V
REVERSAL IS REQUIRED BECAUSE THE JURY INSTRUCTIONS AND VERDICT SHEET CONFUSED THE JURY.

POINT VI
REVERSAL IS REQUIRED BECAUSE THE JURY VERDICT WAS AGAINST THE WEIGHT OF THE EVIDENCE.

By way of points on appeal, plaintiff raises the following:

I. THE COURT ERRED IN ALLOWING LANGFORD'S ATTORNEY TO GIVE CLOSING ARGUMENTS WHICH WERE IMPROPER.
II. THE COURT ERRED IN LIMITING PLAINTIFF'S FEE AWARD.

A. Plaintiff Established His Entitlement To A Fee Enhancement.

B. The Court Erred In Reducing Counsel Fees For OPRA Requests.

III.

The City contends that the summary judgment judge erred in holding it was estopped from repudiating the MOU, or that its conduct violated the MOU's terms. The City anchors the argument on the fact the MOU was not formally adopted by Council, and also argues that the application of equitable estoppel was inappropriate.

The doctrine of equitable estoppel "provides that 'the effect of the voluntary conduct of a party'" is that the party is "absolutely precluded, both at law and in equity," from asserting rights that he or she might have had against another person "who has in good faith relied upon such conduct, and has been led thereby to change his position for the worse." Segal v. Lynch, 211 N.J. 230, 254 (2012) (quoting Carlsen v. Masters, Mates & Pilots Pension Plan Tr., 80 N.J. 334, 339 (1979)). The triggering conduct need not amount to a definitive promise. Ibid. Equitable estoppel may be invoked when conduct that is express or implied reasonably misleads another into reliance upon that conduct to the person's detriment, such that the interest of justice and common fairness preclude its repudiation. Winters v. N. Hudson Reg'l Fire & Rescue, 212 N.J. 67, 86 (2012); Knorr v. Smeal, 178 N.J. 169, 178 (2003).

The doctrine of equitable estoppel is rarely invoked against a governmental entity. McDade v. Siazon, 208 N.J. 463, 480 (2011). Only in the most compelling circumstances will it be applied to prevent a manifest injustice. Cty. of Morris v. Fauver, 153 N.J. 80, 104 (1998). The court must examine whether the nature of the governmental action at issue is ultra vires and, if it is, whether the act was ultra vires in the primary sense or ultra vires in the secondary sense. Middletown Twp. Policemen's Benevolent Ass'n Local No. 124 v. Twp. of Middletown, 162 N.J. 361, 368 (2000). Acts that are utterly beyond the jurisdiction of a municipality's power are ultra vires in the primary sense and therefore void. Ibid. But those acts that are within the basic power of a municipality, although that power was exercised in an irregular manner, are ultra vires only in a secondary sense that does not preclude either ratification or the application of the doctrine of estoppel. Ibid.

The determination is fact-sensitive. In re Johnson, 215 N.J. 366, 386 (2013). The outcome, however, must not prejudice essential government functions. Twp. of Middletown, supra, 162 N.J. at 367.

The mayor-council form of government under which the City operates reserved to Council the power to approve a "contract presented by the mayor." N.J.S.A. 40:69A-36; Mun. Council v. James, 183 N.J. 361, 366 (2005). But it is within the power of the mayor to "[s]ign all contracts, bonds or other instruments requiring consent of the municipality," N.J.S.A. 40:69A-40(g), and to "[n]egotiate contracts for the municipality, subject to council approval," N.J.S.A. 40:69A-40(j). See also James, supra, 183 N.J. at 364-65.

The Mayor had the authority to negotiate and sign the MOU given the City's form of government. Thus it was not beyond his jurisdiction, or ultra vires in the primary sense.

Moreover, the City's argument ignores Council's authorization of the settlement agreement which specified that Mooney's employment terms would be memorialized in an MOU. Even if the provision banning a future administration's ability to hire a public safety director was unenforceable, Council by official action nonetheless approved the essential remaining terms of the settlement, doing so in a manner no different from other settlements reached with other employees.

We agree with the City that in deciding the summary judgment motions, the facts should not have been viewed in the light most favorable to Mooney. When both parties move for summary judgment, the court may assume that the matter is ripe for adjudication. Liberty Surplus Ins. Corp. v. Nowell Amoroso, P.A., 189 N.J. 436, 450 (2007). That cross-motions are made does not preclude the existence of factual issues that must be resolved by a factfinder. O'Keeffe v. Snyder, 83 N.J. 478, 487 (1980); Great Atl. & Pac. Tea Co. v. Checchio, 335 N.J. Super. 495, 502 (App. Div. 2000).

A party may assert, simultaneously, that the facts are undisputed according to his or her theory of the case, while contending that genuine issues of fact remain if the court adopts the opponent's theory. O'Keeffe, supra, 83 N.J. at 487; Horizon Blue Cross Blue Shield of N.J. v. State, 425 N.J. Super. 1, 31-32 (App. Div.), certif. denied and appeal dismissed, 211 N.J. 608 (2012).

In deciding cross-motions for summary judgment, however, a judge may not accept one of two conflicting versions of material facts and render a decision on that basis. O'Keeffe, supra, 83 N.J. at 487. Summary judgment is granted on cross-motions because "one of the moving parties is entitled to judgment as a matter of law." Ibid.

When both sides seek summary judgment, and the trial court grants judgment to one party, on appeal we view the evidence in the light most favorable to the party who lost. Liberty Surplus Ins. Corp., supra, 189 N.J. at 445. Our inquiry remains essentially the same: whether that evidence presents a genuine issue of material fact that must be submitted to a fact-finder or whether it is so one-sided that one party is entitled to judgment as a matter of law. Id. at 445-46.

Even viewing the facts in the light most favorable to the City, the record nonetheless supports the grant of summary judgment to Mooney as a matter of law on the breach of contract claims. It is clear that the City was equitably estopped from challenging the validity of the MOU based on the undisputed evidence and relevant precedent.

While certain facts may have been controverted by the parties' certifications, the facts material to the finding that the City was equitably estopped from challenging the MOU were not. The facts in controversy were separate from and immaterial to whether Mooney relied in good faith upon the City's conduct in accordance with the MOU. Although the City contends the negotiations leading to the settlement were tainted by incurable conflicts, for example, that Mooney's attorney represented the then-Business Administrator, the City does not identify the connection between the alleged conflicts and any purported nullifying effect on specific provisions of the agreement. The argument lacks merit.

It is undisputed that Mooney worked as Police Chief for a year and a half after the MOU was signed, and that his employment was controlled by the terms and conditions found in that document. Conversely, throughout that period, the City also acted as if the agreement were valid by honoring its terms. These facts, when viewed in the light most favorable to either party, do not change.

Furthermore, Mooney had no right to bring the matter to Council for approval; only the Mayor's office had that authority. Regardless of whether the MOU went before Council, Mooney and the City complied with the terms of the agreement as if the document were legitimate and enforceable for over a year.

The City also contends that the motion court improperly relied upon the Mayor's failure to submit other employment contracts to Council to support the finding that the City's failure to act on Mooney's MOU did not negate his reasonable reliance. In support, the City relies upon an unpublished Law Division decision issued in 2012. The case lacks precedential value as it is an unpublished opinion. See R. 1:36-3. The case is also significantly different factually from the circumstances at issue here and is therefore not relevant.

In a somewhat perplexing portion of its brief the City argues that the motion court's decision should be overturned because the City met its obligations under the settlement agreement by executing a valid MOU. That claim is directly contrary to the City's other arguments on appeal which contend that the MOU was not valid. In any event, the argument is without merit.

The court correctly held that if the MOU was invalid then the City breached the settlement by failing to execute a valid MOU; alternatively, if the MOU was valid, the City breached the terms of the MOU by demoting Mooney. The City was liable either under the MOU or for breach of the settlement agreement. Therefore, the motion court's decision to grant summary judgment on the MOU or alternatively, breach of the settlement, was not improper. We affirm summary judgment on the breach of contract claims raised in counts four and five.

IV.

A.

In order to establish a prima facie case under CEPA, a plaintiff must show that:

(1) he or she reasonably believed that his or her employer's conduct was violating
either a law, rule, or regulation promulgated pursuant to law, or a clear mandate of public policy; (2) he or she performed a "whistle-blowing" activity described in N.J.S.A. 34:19-3c; (3) an adverse employment action was taken against him or her; and (4) a causal connection exists between the whistle-blowing activity and the adverse employment action.

[Irick v. State, 184 N.J. 70, 78 (2005) (quoting Dzwonar v. McDevitt, 177 N.J. 451, 462 (2003)).]

CEPA is a remedial statute and should be liberally construed to effectuate its social goal of protecting employees from retaliation when they report workplace misconduct. Lippman v. Ethicon, Inc., 222 N.J. 362, 378 (2015). A CEPA plaintiff need not show that the employer actually violated the law, only that he or she reasonably believed that the employer was violating the law or clear mandate of public policy. Dzwonar, supra, 177 N.J. at 462.

But a plaintiff's proofs must "begin[] with the identification of the relevant legal authority or public policy the plaintiff believes his or her employer violated." Hitesman v. Bridgeway Inc., 430 N.J. Super. 198, 211 (App. Div. 2013), aff'd, 218 N.J. 8 (2014). The mandate of public policy must be clearly identified, firmly grounded, and not "vague, controversial, unsettled [or] otherwise problematic." Hitesman, supra, 218 N.J. at 34 (quoting Mehlman v. Mobil Oil Corp., 153 N.J. 163, 181 (1998)).

A plaintiff must point to a law, rule, regulation, declaratory ruling, professional code of ethics, or other authority that provides a definite standard by which a jury can measure an employer's conduct. Hitesman, supra, 218 N.J. at 32-33. If none is advanced, the court must enter judgment for the employer. Id. at 32; Dzwonar, supra, 177 N.J. at 463.

Whether a plaintiff has established a clear mandate of public policy is a question of law to be decided by the judge, not the jury. Mehlman, supra, 153 N.J. at 187. In this case, Mooney testified regarding the City's alleged violations of law and of public policy but the judge made no findings about the testimony, nor did he offer the jury explicit instructions on the subject.

In deciding a motion for judgment at the close of evidence, the court must accept as true all evidence that supports the position of the non-moving party and must accord that party all favorable legitimate inferences that can be deduced from the evidence. Dolson v. Anastasia, 55 N.J. 2, 5-6 (1969); Pressler & Verniero, Current N.J. Court Rules, comment 1 on R. 4:40-2 (2015). The motion should be denied if reasonable minds could differ. Dolson, supra, 55 N.J. at 5.

The court may reserve decision on a motion for judgment made at the close of all the evidence and, instead, submit the case to the jury. R. 4:40-2(a). The motion should be decided either before the verdict, or within ten days of the jury's decision. Ibid. At that time, the court may enter judgment in accordance with the application or order a new trial. Ibid.

B.

The City contends that the trial court erred by denying its motion for a directed verdict dismissing Mooney's CEPA claims. The City, however, had not established that it was entitled to judgment as a matter of law. The City also contends the trial court erred by declining to render threshold determinations of whether there was a substantial nexus between any public policy and the complained of conduct. On this point, we agree. That is the error that requires reversal of the verdict on Mooney's CEPA claim.

Once having denied the motion for dismissal, the court was obliged to inform the jury of the applicable law, rule, regulation, or clear mandate of public policy that Mooney relied upon. The trial judge never did that, instead informing the jury of tangentially related findings and incorrectly stating the law. Although we affirm the judge's denial of the motion for a directed verdict, we reverse the jury's verdict because of prejudicial errors in the jury instructions.

We begin our discussion by observing that Mooney proffered ample testimony regarding his perceptions of the City's repeated violations of the PCRA, the Attorney General's Guidelines, and other laws. In addition, he moved into evidence letters and memoranda he addressed to the City citing specific provisions of various statutes and Attorney General Guidelines.

Mooney made reference, for example, to the PCRA. Ironically, that law was enacted to vest in police chiefs the authority to prescribe the duties and assignments of police officers and personnel as a means "to avoid undue interference by a governing body into the operation of the police force." Falcone v. Difuria, 103 N.J. 219, 222 (1986). The law was intended to prevent the situations Mooney described in his communications to the City.

Mooney also testified regarding the City's conduct that he believed violated the Attorney General's Guidelines, which have the full force and effect of law on the administration of police departments. See O'Shea v. Twp. of W. Milford, 410 N.J. Super. 371, 382 (App. Div. 2009); accord North Jersey Media Grp., Inc. v. Twp. of Lyndhurst, 441 N.J. Super. 70, 102 (App. Div.), leave to appeal granted, 223 N.J. 553 (2015).

When a defendant contends that, as a matter of law, a plaintiff's belief that the employer's conduct violated the law or public policy "was not objectively reasonable, the trial court must make a threshold determination that there is a substantial nexus between the complained-of conduct and a law or public policy identified by the court or the plaintiff." Dzwonar, supra, 177 N.J. at 464. If the court finds a substantial nexus exists between the conduct and an identified law or public policy, "the jury then must determine whether the plaintiff actually held such a belief and, if so, whether that belief was objectively reasonable." Ibid.

The trial court here failed to initially determine whether there was a substantial nexus between the conduct that Mooney challenged and the law or public policy he identified. For example, with respect to the City's demand for internal affairs files, the judge made no determination at all regarding the applicable law or policy. Nor was the jury asked whether Mooney held an objectively reasonable belief that the request was unlawful. Id. at 464-65.

Mooney testified that the demand that he remove the K-9 units from the streets was a violation of the Attorney General's Guidelines and contrary to N.J.S.A. 40A:14-118. The evidence provided a substantial nexus between that directive and the public policies that reserved operational decisions regarding K-9 units to a police chief. Given that substantial nexus, as a matter of law, the jury should have decided whether Mooney held an objectively reasonable belief that the order violated a clear mandate of public policy. However, the trial judge concluded that no law or policy was even applicable.

Lacking guidance on this essential element of a CEPA cause of action, the jury's verdict must be vacated. The court not only failed to determine which laws or public policies were implicated in Mooney's claims, the jury never heard them identified, nor were they asked to make findings about them. In fact, the judge incorrectly advised the jury that no such law or policies existed with regard to the use of K-9s. If no law or public policy applied, the court should never have presented that allegation to the jury. Hitesman, supra, 218 N.J. at 32.

The court's omission required the jurors to speculate about the law or public policy against which they were to measure the City's conduct, and as to Mooney's beliefs regarding the conduct. The instructions fundamentally under-informed the jury about Mooney's CEPA claim. However, there was sufficient evidence in the record to survive a motion for directed verdict. Thus we affirm the denial of a directed verdict, but are constrained to vacate the jury's award granting Mooney judgment on his CEPA claim.

V.

The City also contends that the CEPA verdict should be reversed because the court improperly permitted the jury to consider claims of whistleblowing activity that occurred after it had submitted its layoff/demotion plan to the Civil Service Commission in 2009. In essence, the City claims that the whistleblowing activity could not have been the cause of Mooney's demotion given that the demotion plan preceded certain instances of alleged whistleblowing. The record does not support this argument.

Although the plan was earlier submitted, it was not until May 26, 2010, that Mooney was notified that his job duties were being transferred. Mooney tendered his resignation the following day. The demotions affected numerous positions across several divisions, however, the transfer of responsibility from Mooney to a lower ranking officer was a distinct and separate instance of an adverse employment action taken only against him occurring after his whistleblowing activities. The plan did not seek to demote, lay off, or otherwise terminate the position of any department chiefs.

VI.

The City also contends that the issue of whether Mooney had been constructively discharged should not have been submitted to the jury. The basis for this argument is twofold: that the motion court had already decided no constructive discharge had occurred and the decision was the law of the case, see Lanzet v. Greenberg, 126 N.J. 168, 192 (1991) ("Under the law-of-the-case doctrine, decisions of law made in a case should be respected by all other lower or equal parts during the pendency of the case"), and that no reasonable jury could have found that he was constructively discharged.

Briefly, the motion court did not decide this issue. The motion court did dismiss count seven of Mooney's complaint alleging he was the subject of a hostile work environment based on race. That conclusion, however, did not preclude a finding that Mooney had been constructively discharged. The motion judge simply failed to rule.

The City also contends that the facts demonstrate that Mooney was not constructively discharged because a reasonable person would have merely accepted the demotion and remained employed in anticipation of being reinstated to his prior position along with all the other officers. The record does not support this argument either.

Mooney's primary duties were reassigned to someone else altogether. He was not merely demoted one rank as were other officers. Mooney was relegated to a support services position. After his resignation, his duties were eventually reassigned to a lower ranked captain, rather than another deputy chief. The issue of whether this conduct was severe enough to constitute a constructive discharge was a proper jury question. See Sheppard v. Hunterdon Developmental Center, 174 N.J. 1, 28-29 (2002).

A CEPA claim is based on the existence of adverse employment action, rather than the nature of the work environment. N.J.S.A. 34:19-2(e). Constructive discharge is only one of the potential retaliatory adverse actions which affect employment for which an employee may obtain damages under the statute. Sheppard, supra, 174 N.J. at 28.

However, the trial court failed to instruct the jury that in the process of considering Mooney's claim for damages based on CEPA, it should determine whether Mooney suffered an adverse employment action to the extent that he was constructively discharged. That the jury initially returned the verdict sheet with an award of CEPA damages without having answered breach of contract questions, including the constructive discharge question in that section, suggests that it never made that determination in the context of CEPA.

The court only instructed the jury to consider the constructive discharge issue in the context of Mooney's damages for breach of contract and, furthermore, that it could award Mooney damages for breach of contract only if it first determined that he had been constructively discharged. There was no legal basis for this instruction, which effectively overruled the summary judgment judge's determination that Mooney was entitled to damages on the contract claim. Moreover, the instructions never differentiated between the calculation of damages for Mooney's CEPA claim and his breach of contract claim. Hence the instructions were also misleading on this issue.

VII.

We reverse the jury's awards and remand the matter for a new trial, and accordingly do not address the following issues: (1) mitigation of damages; (2) confusing jury charge on damages; and (3) that the damages verdict was against the weight of the evidence. Nor do we address Mooney's cross-appeal that the closing argument was improper, or the counsel fee award.

Affirmed in part, reversed in part. I hereby certify that the foregoing is a true copy of the original on file in my office.

CLERK OF THE APPELLATE DIVISION


Summaries of

Mooney v. City of Atl. City

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION
Aug 9, 2016
DOCKET NO. A-2993-13T4 (App. Div. Aug. 9, 2016)
Case details for

Mooney v. City of Atl. City

Case Details

Full title:JOHN J. MOONEY, III, Plaintiff-Respondent/Cross-Appellant, v. CITY OF…

Court:SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION

Date published: Aug 9, 2016

Citations

DOCKET NO. A-2993-13T4 (App. Div. Aug. 9, 2016)