SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
A-3254-95T2
DAVID KOPIN,
Plaintiff-Appellant,
v.
ORANGE PRODUCTS, INC.,
Defendant-Respondent.
_________________________________________________________________
Argued: November 19, 1996 - Decided: February 10, 1997
Before Judges Michels, Muir, Jr. and Coburn.
On appeal from the Superior Court of New
Jersey, Law Division, Morris County.
Judson A. Parsons, Jr. argued the cause
for appellant.
James A. Plaisted argued the cause for
respondent (Walder, Sondak & Brogan,
attorneys; Mr. Plaisted, of counsel and
on the brief).
The opinion of the court was delivered by
MICHELS, P.J.A.D.
The plaintiff David Kopin appeals from a summary judgment of
the Law Division in favor of defendant Orange Products, Inc. that
dismissed his action to recover damages on a theory of quantum
meruit for business suggestions he made while employed by
defendant.
Accepting plaintiff's proofs presented on the summary
judgment motion, it appears that defendant was in the business of
manufacturing plastic balls used in roll-on deodorants.
Defendant built its own grinding machines to produce the balls.
Plaintiff's principal responsibility was to make, install,
repair, and replace the various sized grinding wheels used in the
grinders to shape the plastic balls. On occasion, plaintiff made
other parts for the machines and worked as a machinist. While
plaintiff admits that it was part of his job to improve his
efficiency and techniques as a machinist, he claims that before
March 1986 he never created any major improvements or designs for
the grinding machines. Instead, he contends that he only made
minor improvements that increased the quality of his work.
Plaintiff maintains that significant alterations to the grinders
were the engineer's responsibility and never part of his job
requirements.
Plaintiff, however, admits recommending some major changes
regarding the grinding machines prior to March 1986. For
instance, in 1977 plaintiff suggested that certain parts for the
grinders be made of stainless steel so that they would last
longer. Plaintiff notes that at the time he did not expect extra
remuneration because he had never been promised any extra
compensation for his suggestions; he felt that the suggestions
made his position more secure and were actually part of his job.
Additionally, in 1977 or 1978, plaintiff suggested two major
modifications: a new flange design for the big grinders and a
new holder for certain "worm" gears on the grinders. According
to plaintiff, his supervisor told him that he should just worry
about the grinding wheels and let the supervisor worry about the
machines. Plaintiff interpreted the supervisor's comments as
instructing him not to make any more recommendations; hence,
plaintiff stopped making such suggestions after 1978.
In March 1986, defendant was purchased by S. Paul Sachdev
and Mario Verdi. Soon after acquiring defendant, Sachdev and
Verdi held a meeting with plaintiff and other employees.
According to plaintiff, Verdi declared at the meeting that
if anybody . . . come[s] to us [Sachdev and
Verdi] and make[s] an improvement to our
operation, or how we can make more money, or
what we can do with the equipment and we use
it and it works for us [that person will] be
financially remunerated.
According to plaintiff, Verdi motioned to the maintenance
man to emphasize his point, stating, "If Bob[,the maintenance
man,] comes up with the idea . . . he will be rewarded." Diane
Furey Whitehead, a machinist who was at the meeting, reported
that her father, a supervisor with defendant, asked Sachdev if
this promise was true, and Sachdev replied, "Yes, you would be
taken care of." Throughout the remainder of plaintiff's
employment, Sachdev and Verdi never retracted this offer.
Neither owner, however, ever stated what remuneration an employee
would receive for a useful suggestion.
Soon after the meeting, Sachdev and Verdi fired plaintiff
since they believed that plaintiff's work did not require a full-time employee and that such work could be assimilated into
another employee's duties. Yet, it was soon determined that
another person could not be trained to do plaintiff's work and
that no other employee was willing to do it. Thus, defendant
rehired plaintiff.
In late 1986 or early 1987, plaintiff suggested to his
supervisor that the flange design used on smaller grinders be
adopted for the larger grinders. Plaintiff thought that the new
flange design would prevent the water used in operating the
grinders from coming in contact with the bearings, and thereby
prevent the bearings from wearing out as quickly. Plaintiff
presented this idea to his supervisor and one of the owners for
months before they finally decided to try the new flange. First,
the flange was tried on only one large grinder, and defendant
discovered that the bearings lasted about four times longer than
before. Then, after several more months, defendant changed the
flanges on all the large grinders so that by the middle of 1988
each had the new flange.
Plaintiff claims that the new flange produced three benefits
for defendant. First, it reduced labor and parts costs since the
bearings were changed less frequently. Second, it extended the
lives of the grinding wheels. And, third, it increased the
production of plastic balls since the machines did not need to be
fixed as often. Plaintiff contends that as a result of this
suggestion, defendant's sales were greatly increased because
production was dramatically increased.
In 1989, plaintiff recommended to defendant a new feeding
hopper design for the large grinders. The hoppers were devices
attached to the grinders through which plastic blanks, the raw
material which was eventually ground into plastic balls, were fed
into the grinder. The hoppers had seven openings, but the blanks
were slightly larger than the openings, so that blanks would get
caught in them. Consequently, only three to six blanks, rather
than seven, would fall in at a time. As a result, less balls
were produced and the life of the grinding wheels were reduced
due to uneven wear. In addition, the seven openings could not be
further enlarged since they were too close together. Plaintiff
proposed that a new hopper with six larger openings be built.
Defendant adopted plaintiff's suggestion in September of 1989
and, according to plaintiff, was again able to increase its
plastic ball production and profits.
In late 1989 or early 1990, plaintiff suggested that a
mounting device for a worm gear, which frequently broke, be
replaced with an inexpensive, sturdy screw. Plaintiff claims
that this suggestion increased profits by saving substantial
labor and parts costs. Plaintiff also suggested that the large
grinders use heat-treated gear teeth. These sturdier teeth were
used. Plaintiff asserts that this suggestion saved defendant
money because the machines needed less repair.
Further, defendant adopted plaintiff's suggestion that a
silicone compound be spread over the bearings to prevent any
moisture from reaching the bearings. Plaintiff contends that
this advice also helped defendant increase production. Finally,
defendant submitted two further improvements which defendant
accepted. First, he designed a device which made the heads on
the grinders interchangeable and, thus, easier to replace when
broken. Second, he replaced an air mechanism which controlled
the opening and closing of the hoppers with latches, a mechanical
device which was more dependable. There was also evidence that
prior to implementing plaintiff's suggestions, defendant's
maximum output per shift was forty-nine drums of plastic balls,
and that as a result of plaintiff's recommendations, production
increased to seventy-one drums per shift, and saved defendant's
labor and material costs.
Defendant, on the other hand, claims that plaintiff's
suggestions did not lead to any increased profits. Instead,
Sachdev attributes defendant's success to a lapper, a new product
purchased in 1991 which allegedly helped produce more acceptable
plastic balls. Sachdev contends that prior to plaintiff's
suggestions, plaintiff's grinding department accommodated all the
balls produced by the seal-welding and molding departments.
Thus, defendant maintains that any improvements in the grinding
department did not increase its actual output since the grinding
section was already producing more balls than the other sections
could provide prior to plaintiff's recommendations. Sachdev,
however, did add a third shift to the grinding department in
1990. Finally, Sachdev claims that defendant lost more than
$800,000 between 1986 and 1989.
While employed by defendant, plaintiff was paid his agreed
upon wages and received regular pay increases. Plaintiff also
received bonuses at the end of every year in the amount of $100
as well as payments of $1,500 in a few years in lieu of
participating in a pension plan. Plaintiff suggests that most
employees received the same yearly bonuses even though they did
not make helpful recommendations.
Prior to 1991, plaintiff never mentioned to Sachdev or Verdi
that he wanted any financial remuneration for his suggestions.
Plaintiff states that he hesitated approaching Sachdev or Verdi
directly because he was afraid of retaliation. Nevertheless,
plaintiff claims that he told his supervisor on several occasions
that he (plaintiff) should receive some reward for his
suggestions. Plaintiff asserts that when he told his supervisor
of his desire for financial compensation, his supervisor
responded, "[T]alk to Paul [Sachdev] about it." The supervisor,
however, denies that plaintiff ever spoke to him about
compensation.
In the spring of 1991, plaintiff confronted Sachdev
regarding remuneration, but Sachdev dismissed the matter
summarily. In the summer of the same year, plaintiff resigned
because defendant relocated to Allentown, Pennsylvania and the
commute was too far. In November of 1991, plaintiff notified
Sachdev in writing that he expected compensation for the
suggestions he had made.
In July 1991, plaintiff filed a wage claim against defendant
with the Department of Labor. Plaintiff claimed that the
overtime he worked entitled him to time-and-half pay, rather than
the straight-time pay he had received. In October 1992,
plaintiff settled with defendant and dismissed the wage claim.
In January 1992, plaintiff instituted this action against
defendant in the Law Division. In the complaint, plaintiff
alleged that defendant breached a contract with him by not paying
him "substantial financial rewards" for his recommendations which
led to defendant's increased productivity. In August 1992, the
trial court granted summary judgment in favor of defendant,
finding that the contract lacked specificity since it did not
indicate the amount to be paid or the method to calculate
payment. Plaintiff appealed but did not challenge the summary
judgment in favor of defendant on the express contract claim.
Rather, plaintiff sought a reversal of the summary judgment and a
remand for trial on the ground that he was entitled to recover
damages under a quantum meruit theory. In March 1994, in an
unpublished opinion, Kopin v. Orange Prod., Inc., No. A-1268-92T3
(N.J. App. Div. March 23, 1994), we remanded the matter to the
trial court to permit plaintiff to amend his complaint to include
a claim of quasi-contract and quantum meruit and afforded the
parties a reasonable time to complete pretrial discovery. In
July 1994, the Supreme Court denied certification. Kopin v.
Orange Prod., Inc.,
137 N.J. 315 (1994).
In March 1994, plaintiff filed an amended complaint,
asserting a quasi-contract and a quantum meruit claim. After
issue was joined, defendant again moved for summary judgment on
the ground that plaintiff's quantum meruit claim was barred by
the shop right rule as discussed in Crowe v. M & M/Mars,
242 N.J.
Super. 592 (App. Div.), certif. denied,
122 N.J. 387 (1990). The
trial court agreed and granted the motion. The trial court
reasoned that the shop right rule was applicable because (1)
plaintiff conceived and developed his improvement to the grinders
primarily during working hours while employed by defendant and
(2) plaintiff used defendant's materials and machinery to develop
the improvements. On plaintiff's motion for reconsideration, the
trial court reaffirmed its prior decision, finding that plaintiff
was paid his salary and bonuses during his employment with
defendant and, therefore, there was no basis to conclude that
defendant was unjustly enriched. The trial court also held that
the claim was barred by laches because defendant had destroyed
some of its records and by the entire controversy doctrine
because plaintiff failed to raise the issue of a right to further
compensation for his suggestions in his prior wage claim against
defendant filed with the Department of Labor. Plaintiff
appealed.
Plaintiff seeks a reversal of the summary judgment and
remand for trial on his quasi-contract/quantum meruit claim. He
contends that (1) he presented sufficient proofs to make a prima
facie case on his quantum meruit claim; (2) his claim is not
barred by the shop right rule because defendant promised to pay
him extra money for his suggestions; (3) his claim is not barred
by laches in that (a) he did not delay unreasonably before making
his claim, (b) defendant should not benefit from destroying its
records, and (c) he had no obligation to keep better records; (4)
his claim is not barred by the entire controversy doctrine; and
(5) he had not completed pretrial discovery of defendant's books
and records and is entitled to do so.
Further, in determining whether a genuine issue of material
fact exists, the motion judge should engage in an analytical
process essentially the same as that used in ruling on motions
for judgment made under R. 4:37-2(b), R. 4:40-1, and R. 4:40-2.
Id. at 535-37. The only difference between motions for judgment
and motions for summary judgment is that the summary judgment
motions are generally decided on documentary evidence, rather
than on evidence presented at trial. Id. at 536. However, the
essential issue remains the same: "[W]hether the evidence
presents a sufficient disagreement to require submission to a
jury or whether it is so one-sided that one party must prevail as
a matter of law." Ibid. (quoting Anderson v. Liberty Lobby,
Inc.,
477 U.S. 242, 251-52,
106 S. Ct. 2505, 2512,
91 L. Ed.2d 202, 214 (1986)).
Nevertheless, the motion judge does not make credibility
determinations and must afford the opponent of the summary
judgment motion all favorable inferences. Id. at 536, 540. If a
case, however, presents no material factual disputes, the court
simply applies the appropriate law to the facts. Id. at 537.
In addition, in determining the summary judgment motion, the
motion judge must use the same evidentiary standard of proof that
would apply at trial on the merits. Id. at 533-34. On appeal,
we apply the same standards. McClelland v. Tucker,
273 N.J.
Super. 410, 415 (App. Div. 1994).
In the light of these standards, we are satisfied that
there were genuine issues of material fact raised that precluded
the grant of summary judgment as to plaintiff's quasi-contract/quantum meruit claim. Quasi-contracts are imposed by
law to bring about justice, without reference to the parties'
intent. St. Paul Fire and Marine Ins. Co. v. Indemnity Ins. Co.
of N. Am.,
32 N.J. 17, 22 (1960). See also Bloomgarden v. Coyer,
479 F.2d 201, 210 (D.C. Cir. 1973) ("The quasi-contract . . . is
not really a contract, but a legal obligation closely akin to a
duty to make restitution. . . . [A] quasi-contract . . . will be
recognized in appropriate circumstances, even though no intention
of the parties to bind themselves contractually can be
discerned." (footnotes omitted)). "They `rest on the equitable
principle that a person shall not be allowed to enrich himself
unjustly at the expense of another . . . .'" St. Paul Fire and
Marine Ins. Co. v. Indemnity Ins. Co. of N. Am., supra, 32 N.J.
at 22 (citation omitted). "In the case of actual contracts the
agreement defines the duty, while in the case of quasi-contracts
the duty defines the contract." Callano v. Oakwood Park Homes
Corp.,
91 N.J. Super. 105, 108 (App. Div. 1966).
Whenever a quasi-contract theory has been successfully
advanced, it has been shown "that the plaintiff expected
remuneration from the defendant, or if the true facts were known
to plaintiff, he would have expected remuneration from defendant,
at the time the benefit was conferred." Id. at 109.
Accordingly, a plaintiff presents a successful quasi-contract
claim if he/she can demonstrate "that defendant received a
benefit from plaintiff which it is unjust for [defendant] to
retain without compensation, and that plaintiff, in conferring
the benefit, expected remuneration." Cohen v. Home Ins. Co.,
230 N.J. Super. 72, 82 (App. Div. 1989).
Thus, in a quasi-contract claim, defendant must have been
unjustly enriched. As the Callano court emphasized: "The key
words are enrich and unjustly. To recover on the theory of
quasi-contract the plaintiffs must prove that defendant . . .
received a benefit, and that retention of the benefit without
payment therefor would be unjust." Callano v. Oakwood Park Homes
Corp., supra, 91 N.J. Super. at 109. See also Shalita v.
Township of Washington,
270 N.J. Super. 84, 90 (App. Div. 1994)
("[A] quasi-contract rests on the equitable principle that a
person should not be allowed to enrich himself unjustly at the
expense of another."). In addition, the party conferring the
benefit must have expected remuneration. See Cohen v. Home Ins.
Co., supra, 230 N.J. Super. at 82.
Quantum meruit is a form of quasi-contract, Weichert Co.
Realtors v. Ryan,
128 N.J. 427, 437-38 (1992), which means "`as
much as he deserves[.]'" La Mantia v. Durst,
234 N.J. Super. 534, 537 (App. Div.), certif. denied,
118 N.J. 181 (1989).
Quantum meruit enables the performing party to recover the
reasonable value of services he/she rendered. Weichert Co.
Realtors v. Ryan, supra, 128 N.J. at 437-38. In quantum meruit
"[i]t is well settled that where one performs services for
another at his request, but without any agreement or
understanding as to wages or remuneration, the law implies a
promise on the part of the party requesting the services to pay a
just and reasonable compensation . . . ." Conklin v. Kruger,
79 N.J.L. 326, 328 (Sup. Ct. 1910). See also Lehrer McGovern Bovis,
Inc. v. New York Yankees,
615 N.Y.S.2d 31, 34 (App. Div. 1994)
("In order to state a claim in quantum meruit, the plaintiff must
assert: the performance of services in good faith; the
acceptance for those services by the entity to which they were
rendered; an expectation of compensation therefor; and the
reasonable value of the services.").
Applying these principles, the New Jersey Supreme Court in
Weichert Co. Realtors v. Ryan, supra, 128 N.J. at 441 held that a
real estate agent was entitled, based on a theory of quantum
meruit, to the reasonable value of his services rendered in
connection with the purchase of property. Although the real
estate agent and the buyer never agreed upon the amount of any
commission to be paid, thereby precluding a binding contract, the
Court reasoned that the agent was the "procuring cause" of the
sale and that both the agent and the buyer intended that the
agent be compensated for his services. Ibid. The Court stated:
The record clearly establishes, however,
that Tackaberry[the real estate agent,] is
entitled to recover in quantum meruit for the
reasonable value of his services. The trial
court's factual finding that Tackaberry was
the procuring cause of the sale is supported
by substantial evidence. Further, the proofs
adduced at trial firmly establish that
Tackaberry furnished Ryan[the buyer] with
information about the Pitt property with an
expectation that Ryan would pay a brokerage
fee, and Ryan himself admitted throughout the
trial that he had always intended to
compensate Tackaberry for his services.
Given those circumstances, to deny Tackaberry
compensation for services rendered would
unjustly enrich Ryan and Saunders. See
Shapiro, supra, 42 N.J. Super. at 383-84,
126 A.2d 654.
[Ibid.]
The Eighth Circuit Court of Appeals in Cool v. International
Shoe Co.,
142 F.2d 318, 319-20 (8th Cir. 1944), upheld an
employee's claim for "just compensation," or quasi-contract,
against his employer. There, the defendant employer posted a
placard which notified employees that it "would compensate any of
them for valuable suggestions for improvements in methods of
manufacture." Id. at 319. After reading the placard, the
plaintiff, an employee, approached management about a machine
attachment he developed which would greatly reduce expense.
Ibid. The defendant responded that if successful, the plaintiff
would be compensated, but the defendant never stated a specific
amount. Ibid. The plaintiff's suggestion was successful. Id.
at 319-20. While noting that the agreement was too indefinite to
constitute an enforceable contract, the Cool court determined
that the employee was entitled to reasonable compensation for his
efforts, stating:
It is true that no contract between the
parties resulted from plaintiff's offer to
devise the appliances and attachments for
defendant's machines and defendant's
agreement that, if the appliances were made
and were found valuable by defendant and used
by it, the plaintiff would receive just
compensation for their use. At this stage,
the promises of the parties were too
uncertain and indefinite for either to
enforce them against the other. But when the
appliances were made by the plaintiff, tried
by the defendant, found successful, and
accepted and thereafter used from day to day
and year to year, the offer of the plaintiff
was made certain by performance, and the
liability of the defendant to pay, definite
and certain by reason of its acceptance of
the performance. So much is alleged in the
complaint and admitted by the motion to
dismiss. Only the amount of plaintiff's
compensation and the time or times of its
payment remain to be ascertained, and,
therefore, are uncertain, but the law
supplies the standard of reasonableness by
which all of these uncertain matters can be
made certain. The amount of payment and the
time of payment under the allegations of the
complaint became questions of fact to be
determined on the evidence.
[Id. at 320.]
Similarly, in Matarese v. Moore-McCormack Lines, Inc.,
158 F.2d 631, 633-35 (2d Cir. 1946), the Second Circuit Court of
Appeals found that the plaintiff stevedore, who developed a cargo
loading device at his home which the defendant shipping company
adopted, established a quantum meruit claim. The Matarese court
found that the defendant was unjustly enriched by plaintiff's
invention since it used the plaintiff's idea, after promising to
pay plaintiff for its use, without compensating him for it. Id.
at 634-35.
Here, the proofs on the summary judgment motion show that
Verdi stated at a company meeting attended by defendant's
employees, including plaintiff, that anyone who made any
suggestion to improve the operation of the company would be
financially rewarded. Plaintiff made suggestions which were
adopted by defendant, and, as a direct result of these
suggestions, defendant's production and profits increased.
Plaintiff claimed that he reasonably expected compensation from
defendant for making these suggestions.
Although defendant denied plaintiff's claims, the proofs
presented on the critical issues involved are in dispute. For
example, there are genuine issues of material fact as to whether
plaintiff's suggestions for improving the equipment were part of
his normal work requirements; whether plaintiff reasonably
expected remuneration for the suggestions; whether the bonuses
plaintiff received for his work satisfied defendant's promise of
financial remuneration for the suggestions; and whether defendant
was unjustly enriched by the suggestions. In sum, the critical
factual issues raised precluded the grant of summary judgment.
equity entitled to use that which embodies
his own property and to duplicate it as often
as he may find occasion to employ similar
appliances in his business. But the employer
in such a case has no equity to demand a
conveyance of the invention, which is the
original conception of the employee alone, in
which the employer had no part. This remains
the property of him who conceived it . . . to
exclude all others than the employer from the
accruing benefits.
[Citations omitted.]
See also Annotation, Application and Effect of "Shop Right Rule"
or License Giving Employer Limited Rights in Employees'
Inventions and Discoveries,
61 A.L.R.2d 356, 360-63 (1958).
The shop right rule gives an employer only a non-exclusive
right to the employee's invention. The employee retains the
right to market his/her invention to others. See Kinkade v. New
York Shipbuilding Corp.,
21 N.J. 362, 369 (1956); Crowe v. M &
M/Mars,
242 N.J. Super. 592, 594-95 (App. Div.), certif. denied.
122 N.J. 387 (1990). The shop right rule was developed to
prevent spurious claims by employees against employers, alleging
that they developed inventions or novel ideas while working.
Kinkade v. New York Shipbuilding Corp., supra, 21 N.J. at 370.
A shop right does not arise simply because of the employer-employee relationship. Instead, an express agreement between the
employer and employee can create a shop right or it can arise by
implication from circumstances surrounding employment. A shop
right can arise by implication if the employee uses the
employer's resources....such as the employer's machinery or
materials, aid from fellow employees, or the employer's time....to
develop his/her invention. Id. at 369; Crowe v. M & M/Mars,
supra, 242 N.J. Super. at 599; Clerke v. Beck,
13 N.J. Super. 73,
76 (Ch. Div. 1951).
At least one New Jersey court has noted that an employee's
acquiescence to the employer using the employee's invention is a
factor giving rise to a shop right. See Eustis Mfg. Co. v.
Eustis,
51 N.J. Eq. 565, 571 (Ch. 1893) ("If one employed by
another, whilst receiving wages, experiments at the expense of
his employer, and constructs an invention, which he permits his
employer to use without compensation paid or demanded . . . a
license to the employer to use the patent will be presumed."
(emphasis added)). Nevertheless, in determining whether a shop
right exists by implication, New Jersey courts have seemingly
focused on whether the employee used the employer's resources,
not whether the employee acquiesced in the employer's use of the
invention. See, e.g., Crowe v. M & M/Mars, supra, 242 N.J.
Super. at 599 ("The most significant factor triggering
application of the shop right rule is the inventor's permitted
use of paid time and plant personnel, [and] materials and
machinery . . . .").
The shop right rule, however, does not apply where the
parties have excluded the creation of such a right by (1) express
contract to that effect or (2) by an express or implied agreement
between the employer and employee that the employer will pay
compensation for the use of the employee's suggestion or
invention. See Annotation, Application and Effect of "Shop
Right Rule" or License Giving Employer Limited Rights for
Employees' Inventions and Discoveries, supra,
61 A.L.R.
2d at 384-85. Where a quantum meruit claim has been established, the
latter exclusion applies to preclude the shop right rule. For
example, in Deye v. Quality Engraving & Electrotype Co.,
100 N.E.2d 310, 317 (Ohio Ct. C.P. 1950), rev'd on other grounds,
106 N.E.2d 584 (Ohio Ct. App. 1951), appeal dismissed,
105 N.E.2d 873
(Ohio 1952), the court announced that the shop right can be
precluded where the "employer and the employee by contract or by
other clear cut expression of intention enter into arrangements
whereby the employer agrees to compensate the employee for any
invention which he may develop . . . then such agreement is
effective and determines the relationship of the parties with
regard to the invention." (Emphases added.) Similarly, in Toner
v. Sobelman,
86 F. Supp. 369, 373-75 (E.D. Pa. 1949), an employee
went to his employer with an invention, a mechanical grain
cutter, which the employer agreed to market and pay the employee
a proportionate share of any profits. The Toner court found that
a shop right would not arise "in the face of an understanding to
the contrary" between the employer and employee. Id. at 378.
The court then noted that there was "an express promise on the
part of [the employer] to pay the [employee] a proportionate
share of the profits to be derived form the use of the grain
trimmer . . . ." Ibid. The court concluded that it would
"enforce a promise to pay for the use of the invention despite
the fact that such promise [was] indefinite to amount." Ibid.
In sum, a quantum meruit claim based on an express promise
by an employer to his or her employee to provide compensation for
business suggestions bars the application of the shop right rule.
Plaintiff's proofs on the summary judgment motion showed that
defendant promised financial remuneration to any employee who
made a profitable recommendation or improved defendant's
equipment. That promise to pay, and plaintiff's subsequent
reliance thereon, were sufficient to establish a prima facie
quantum meruit claim, thereby precluding the application of the
shop right rule. The trial court, therefore, erred in holding as
a matter of law that the shop right rule barred plaintiff's
claim.
. . . ."). See also St. Paul Fire and Marine Ins. Co. v.
Indemnity Ins. Co. of N. Am., supra, 32 N.J. at 22; Cohen v. Home
Ins. Co., supra, 230 N.J. Super. at 82.
Thus, whether or not this action is time-barred should have
been determined on the basis of the applicable statute of
limitations. While there does not appear to be any New Jersey
case directly on point, there are several New York decisions
which apply the statute of limitations to quasi-contract and
quantum meruit causes of action. See, e.g., German v. Pope John
Paul, II, 621 N.Y.S.2d 311, 312 (App. Div. 1995) (finding that
statute of limitations barred action based on breach of contract,
unjust enrichment, and quantum meruit theories); Wint v. Fields,
576 N.Y.S.2d 266, 267 (App. Div. 1991) (holding that the evidence
was insufficient for the statute of limitations to bar recovery
of a quantum meruit cause of action); Moors v. Hall,
532 N.Y.S.2d 412, 415-16 (App. Div. 1988) (affirming trial court's ruling that
quantum meruit claim for certain period was barred by six-year
statute of limitations); Bank Leumi Trust Co. of N.Y. v. John
Malasky, Inc.,
485 N.Y.S.2d 868, 870 (App. Div. 1985) ("We . . .
find no merit to plaintiff's contention that [the lower court]
erred in dismissing the complaint as time barred because, if read
liberally, the complaint makes out a cause of action in implied
or quasi[-]contract and, thus, a six-year [s]tatute of
[l]imitations was applicable . . . .").
The applicable statute of limitations in New Jersey is
N.J.S.A. 2A:14-1 which, in part, provides:
Every action at law for . . . recovery
upon a contractual claim or liability,
express or implied, not under seal, or upon
account other than one which concerns the
trade or merchandise between merchant and
merchant, their factors, agents and servants,
shall be commenced within 6 years next after
the cause of any such action shall have
accrued.
This section shall not apply to any
action for breach of any contract for sale
governed by section 12A:2-725 of the New
Jersey Statutes.
Since plaintiff's quantum meruit action was instituted
against defendant within six years after the cause of action
accrued, it was not time-barred.
The purpose underlying the doctrine is the avoidance of
waste, delay, and fragmented litigation while providing fairness
to the parties to the action and those with a material interest
in the action. Cogdell v. Hospital Ctr. at Orange, supra, 116
N.J. at 23. Yet, it is also an equitable doctrine predicated
upon "judicial fairness and will be invoked in that spirit."
Crispin v. Volkswagenwerk, A.G.,
96 N.J. 336, 343 (1984), appeal
after remand,
248 N.J. Super. 540 (App. Div. 1991), certif.
denied,
126 N.J. 385 (1991).
Here, we hold that the entire controversy doctrine should
not apply to bar plaintiff's quantum meruit claim simply because
plaintiff had previously filed a wage claim with the Wage
Collection Division of the Department of Labor pursuant to
N.J.S.A. 34:11-57 et seq. While the quantum meruit claim may
fall within the broad definition of wages set forth in N.J.S.A.
34:11-57, plaintiff would not have had a fair and reasonable
opportunity to fully litigate such a claim against defendant in
the Department of Labor. The jurisdictional limits of wage
claims in such proceedings is $10,000. See N.J.S.A. 34:11-58.
In the present matter, plaintiff is seeking damages in excess of
the $10,000 limit. Consequently, the doctrine should not have
been applied to bar plaintiff's quantum meruit claim in the
circumstances of this case.
Beyond this, even if the entire controversy doctrine were
applicable, defendant waived that defense. The entire
controversy doctrine is an affirmative defense. See Brown v.
Brown,
208 N.J. Super. 372, 384 (App. Div. 1986). R. 4:5-4
provides in part that "[a] responsive pleading shall set forth
specifically and separately a statement of facts constituting an
avoidance or affirmative defense . . . ." "[A]n affirmative
defense is waived if not pleaded or otherwise timely raised."
Brown v. Brown, supra, 208 N.J. Super. at 384 (citing R. 4:6-7).
In addition, a party's conduct can estop him/her from relying on
an affirmative defense. Ibid.
Defendant did not raise the entire controversy doctrine
defense in its answer to plaintiff's amended complaint. Nor did
defendant raise or argue the doctrine in its primary and reply
briefs filed in support of the summary judgment motion. In fact,
in its opinion granting summary judgment, the trial court noted
that the entire controversy doctrine was only "briefly alluded
to[.]" Defendant defended this case for over three years without
raising or even mentioning the doctrine. Cf. Brown v. Brown,
supra, 208 N.J. Super. at 383 (noting that the defendant, who was
barred from invoking the entire controversy doctrine, vigorously
defended case for two-and-a-half years before raising the
defense). Consequently, defendant waived the entire controversy
defense.