DEFENDANT'S VERDICT - BREACH OF CONTRACT - PLAINTIFF CONTENDS DEFENDANT BREACHED CONTRACT TO PAY PLAINTIFF FOR 'BOOK OF BUSINESS' BY MAKING LATE PAYMENTS AND MISMANAGING CLIENTS - DEFENDANT DENIES LATE PAYMENT AND CLAIMS FEWER CLIENTS LEFT AFTER HE TOOK OVER BUSINESS THAN WHEN PLAINTIFF WAS MANAGING ACCOUNTS.

• Pages: 7-8

to a single material term as it relates to settlement. Specifically, there

was a time when both parties were amenable to resolution for

$125,000. The plaintiff claimed that the defendants served a pro-

posed Settlement Agreement, which had several more terms, and

conditionstowhichthepartiesneveragreed.Thecaselawreliedupon

by the defendants was instructive in stating, “qualified or conditional

acceptance containing terms and conditions not in the original pro-

posal may operate as a counter-offer’ and acceptance does not result

in the formation of a valid contract binding upon the parties.” Carlin

v. City of Newark 36 N.J. Super 74, 89 (Law Div. 1955). This is true be-

cause the court determined the “seeming acceptance”from the defen-

dant college was “in fact a counter-offer, containing unmentioned

terms requiring acceptance before the matter could be resolved.”

The plaintiff maintained that the same was true in this matter. The

plaintiff concluded that there was no agreement as the plaintiff had

not agreed to the material terms in the defendants’ counteroffer, and

as with any contract, the agreement was unenforceable because there

was no explicit, affirmative agreement that unmistakably reflects as-

sent and a willingness to be bound. Rather, the plaintiff explicitly re-

fused the terms of the counteroffer, refused toexecute the agreement,

and sought to exercise his constitutional right to prosecute his claims

before a jury. Notably, “when one party... presents a contract for sig-

naturetoanotherparty,theomissionofthatotherparty’ssignatureis

a significant factor in determining whether the two parties mutually

have reached an agreement.” Leodori v. CIGNA Corp., 175 N.J. 293,

305 (2003). The plaintiff requested that the matter be returned to the

trial court, and the defendants’ request to enforce a settlement be

denied.

The court granted the defendants’ motion to enforce the settlement

and denied the plaintiff’s motion to reinstate the case.

DEFENDANT’S VERDICT – BREACH OF CONTRACT – PLAINTIFF CONTENDS

DEFENDANT BREACHED CONTRACT TO PAY PLAINTIFF FOR “BOOK OF BUSINESS” BY

MAKING LATE PAYMENTS AND MISMANAGING CLIENTS – DEFENDANT DENIES LATE

PAYMENT AND CLAIMS FEWER CLIENTS LEFT AFTER HE TOOK OVER BUSINESS THAN

WHEN PLAINTIFF WAS MANAGING ACCOUNTS.

Monmouth County, NJ

This matter involved claims by the plaintiff against

the defendant investment advisers. The

defendants worked with an investment advisory

company located in Colts Neck. The plaintiff and

one of the defendants entered into a contract in

August 2016 pursuant to which the defendant

bought the plaintiff’s then-existing investment

advisory “book of business,” which consisted of

the plaintiff’s client accounts. At the time of the

contract, the plaintiff had an action pending

against him in FINRA, the agency that oversees

and licenses securities broker/dealers. The

pending action would potentially result in

revocation of the plaintiff’s license to work in the

securities industry.

The parties entered into an Asset Purchase Agree-

ment dated August 25, 2016 which provided for the

sale of assets, including brokerage insurance and in-

vestment advisory accounts on which the plaintiff was

the representative of record. The agreement pro-

vided for the sale of 25% of the plaintiff’s book of

business to the defendant and the transfer of the re-

maining 75% upon a “trigger event” defined as the

death or suspension of the plaintiff’s license by FINRA.

The plaintiff’s clients were transferred to the defen-

dant, who at that point, was listed as the representa-

tive of record on those accounts. The agreement

provided that the plaintiff could repurchase the book

of business from the defendant at any time prior to

the final transfer in order that, if he was not sus-

pended, he could buy back the 25% of his book of

business that had been sold to the defendant. The

parties entered into an Adjustable Promissory Note

pursuant to which the defendant would pay the plain-

tiff the total amount of $47,500 for the book of busi-

ness. The defendant paid the plaintiff a $10,000

down payment on August 10, 2016 in the form of a

loan which was treated as repaid in full by the plaintiff

at the time of closing. Under the agreements, the de-

fendant was to make monthly payments to the plain-

tiff in the amount of $1,319 beginning on September

1, 2016. The first three monthly payments were the

basis for part of the plaintiff’s claim in this matter. The

plaintiff argued that the payments were made late,

contrary to the terms of the agreement and note.

The plaintiff’s license was revoked by FINRA on No-

vember 18, 2016. Per the agreement, the defendant

purchased the remaining 75% of the plaintiff’s book

of business following the “trigger event” of the revoca-

tion of the plaintiff’s license. In July 2017, the defen-

dant advised the plaintiff that a particular client with

a large account had left the firm and that the parties

would need to make a downward adjustment on the

amounts being paid by the defendant to the plaintiff.

The plaintiff disagreed and set forth that he believed

the downward adjustment to be inappropriate in a

letter dated August 11, 2017. The plaintiff maintained

that the downward adjustment constituted a breach

of the contract and demanded that the defendant

immediately pay all principal owed under the accel-

eration clause contained in the note signed by the

parties. The plaintiff also included the defendant

owner of the investment firm, of which the defendant

was an employee, as a defendant in the action.

The defendant maintained that all payments made

to the plaintiff were made properly and in confor-

mance with the agreements between the parties. As

to the downward adjustment, the defendant advised

the plaintiff that he was entitled to reduce the

monthly payments to the plaintiff due to the fact that

the GDC had reduced during the adjustment period

by more than 10% and indicated that he was going

to voluntarily provide a higher payment than he was

FEATURED CASES 7

New Jersey Jury Verdict Review & Analysis

Subscribe Now