NOT FOR PUBLICATION

PER CURIAM.

In this appeal, we examine whether the trial judge properly dismissed defendant's defamation counterclaim during the course of plaintiff's case-in-chief in this nonjury trial. We also are asked to review the judge's findings of fact, which were rendered at the trial's conclusion. We conclude that the trial judge erred in dismissing the counterclaim without permitting defendant an opportunity to call witnesses and elicit testimony relevant to overcoming plaintiff's assertion of a qualified privilege for his allegedly defamatory statements; we therefore reverse and remand for a trial on the counterclaim. We otherwise affirm because the findings made by the judge at the conclusion of the trial are entitled to our deference.

Plaintiff Patrick J. Caputo, and defendant Frank Scaccia, were members of Riverside Plastic Surgery and Sinus Center, L.L.C. (Riverside), as were defendants Karl E. Kado and Phillip J. Passalanqua.1 Caputo was terminated, purportedly for cause, less than three years after becoming a member.

Caputo brought suit, alleging, among other things, that compensation due him at the time he separated from Riverside was wrongfully withheld. The parties proceeded to mediation but were unable to resolve their disputes. The day after their mediation session, Caputo sent an email to Kado and Passalanqua2 commenting on the mediation and accusing Scaccia of engaging in "an ongoing trend... of fraud, harassment and deception," as well as other misconduct.3 Scaccia moved for and was eventually granted leave to file a counterclaim alleging defamation.

During the nonjury trial, before Caputo had concluded his case-in-chief, the judge dismissed Scaccia's defamation counterclaim. A few days after the trial's conclusion, the judge issued a written opinion, in which he ruled in Caputo's favor on his claim for compensation.

Scaccia's appeal requires that we consider whether the judge erred in dismissing his counterclaim and in awarding damages to Caputo.

I

The transcript of the trial's first morning reveals that the parties had filed a number of in limine motions that the judge then considered before the trial commenced. The colloquy among the judge and counsel suggests that the relief Scaccia sought in his pretrial motions4 related to how or whether evidence relating to defamation would be put before the jury; Caputo, on the other hand, appeared to argue, for the most part, that the defamation claim was not actionable. The court adjourned for lunch without having resolved any of the issues raised in these motions.

When the matter resumed in the afternoon, the parties expressed their agreement to waive their right to a jury trial. When asked what would then become of the in limine motions, the judge stated that he had researched the questions regarding "defamation, qualified privilege, and things of that nature," and, due to the waiver of a jury trial, would "deal with those issues as they c[a]me along" and would "advise counsel how [he was] going to rule on it."

Caputo was the first witness called to testify. In the midst of direct examination, Caputo's attorney asked him about his off-the-record conversation with a representative of the Bloom Organization, which had been hired by Riverside to advise how Riverside might increase its business. At that point, Scaccia's attorney sought a proffer on the content of the answer to that question; counsel also asserted that "if we're going to get into the alleged salacious conduct, I'm going to raise the objection now" but also suggested, in light of the fact that the matter was being tried without a jury, that "Your Honor can hear it, I just want to put the objection on for the record." Caputo had not provided the testimony that his attorney was attempting to elicit about a discussion with a Bloom representative when, in the course of the colloquy, the judge announced he was prepared to rule with regard to "defamation, qualified privilege."

The judge referred to the concept of qualified privilege discussed in Erickson v. Marsh & McLennan Co., Inc., 117 N.J. 539, 544 (1990), where the Court considered "whether an employer, in responding to inquiries from prospective employers concerning a former employee, has a qualified privilege protecting it from a libel action." The Erickson Court concluded that

Viewing the circumstances of the claim of qualified privilege in this case — as to which no witness had yet testified — to be similar to what occurred in Erickson, the trial judge dismissed Scaccia's defamation counterclaim, as well as the defamation claim asserted by Caputo in his amended complaint.5 The trial judge's disposition of Scaccia's defamation claim is flawed for a number of reasons.

First, the procedure adopted is not expressly permitted by or consistent with our Court Rules, which limit the court's power to dispose of issues absent the parties' consent. Once a trial has commenced beyond opening statements, the next opportunity a trial judge has to dismiss a claim, without the parties' expressed or implied consent, accrues upon the close of the plaintiff's case-in-chief. See R. 4:37-2(b). Here, plaintiff had not rested; plaintiff was the first witness and his direct examination had not been completed when the trial judge ruled. Moreover, in that setting, Rule 4:37-2(b) could be applied only to plaintiff's claims; here, the judge ostensibly applied the limited authority granted by that Rule to reach out and dismiss Scaccia's counterclaim. The trial judge had yet to hear any part of Scaccia's case, let alone Scaccia's or his witnesses' testimony; indeed, Caputo, the only witness to testify by the time the judge dismissed the counterclaim, had not even testified about the circumstances that might have justified the application of a qualified privilege.

Second, the trial judge misunderstood the nature of Scaccia's defamation claim in applying a qualified privilege. The trial judge assumed that the alleged defamatory statements were Caputo's responses to inquiries of the Bloom Organization and, thus, similar to the inquiries made by the prospective employer in Erickson. It may be that part of the claim related to statements made to the Bloom Organization but Scaccia also urged, as defamatory, statements contained in an email sent by Caputo to Kado and Passalanqua. In rendering his oral decision dismissing Scaccia's counterclaim, the judge appears not to have considered whether Caputo's statements to these other Riverside members were invited in the sense that the allegedly defamatory statements in Erickson were invited.

Third, the judge misapprehended Erickson by failing to permit Scaccia to elicit testimony regarding the circumstances surrounding the allegedly defamatory statements. The qualified privilege described in Erickson "extends to an employer who responds in good faith to the specific inquiries of a third party regarding the qualifications of an employee." Erickson, supra, 117 N.J. at 562 (emphasis added). To the extent the defamation claim extended to whatever Caputo might have said to the Bloom Organization, the trial judge was still obligated to consider whether the statements were responsive to a specific inquiry and were made in good faith. The existing factual record — abbreviated by the trial judge's precipitous ruling — does not contain evidence on these points. As we said in Bainhauer v. Manoukian, 215 N.J.Super. 9, 36-37 (App. Div. 1987) (quoted with approval in Erickson, supra, 117 N.J. at 564):

This very description demonstrates that the qualified privilege cannot be safely applied without a full understanding of the circumstances in which it was made. The judge's premature ruling prevented Scaccia from offering evidence upon which the surrounding circumstances, as well as Caputo's intentions, could have been understood.

For these reasons, we reverse and remand for further proceedings on Scaccia's defamation claim.

II

Scaccia also argues that the trial judge erred in awarding compensation to Caputo. We disagree.

In refusing to compensate Caputo upon his departure from the business, Riverside took the view that Caputo had acted as a consultant for another ambulatory surgery center in violation of Riverside's operating agreement. Upon such an event, the agreement called for the forfeiture of a member's position with Riverside as well as the member's capital account and capital contributions.

The judge found that Caputo's actions could not be viewed as acts of disloyalty that would permit the forfeiture required by the operating agreement but merely represented appropriate steps taken by any employee looking to leave one business opportunity for another. See, e.g., Lamorte Burns & Co., Inc. v. Walters, 167 N.J. 285, 303 (2001); Auxton Computer Enters., Inc. v. Parker, 174 N.J.Super. 418, 424 (App. Div. 1980). In his written opinion, the trial judge outlined his findings in this regard:

The judge's findings regarding the scope of Caputo's activities and communications and his conclusion that they did not meet the forfeiture terms of the operating agreement — but instead were more appropriately viewed as Caputo's exploration of a new business opportunity in contemplation of leaving Riverside — are entitled to our deference. Klumpp v. Borough of Avalon, 202 N.J. 390, 412 (2010); Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 483-84 (1974).

To summarize, we vacate and remand for further proceedings as to that part of the judgment that dismissed Scaccia's counterclaim. The judgment is otherwise affirmed. We do not retain jurisdiction.