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7 HILLS IT, INC. v. BUSINESS INTELLIGENCE SOLUTIONS, INC., A-3494-11T2. (2013)

Court: Superior Court of New Jersey Number: innjco20130220393 Visitors: 2
Filed: Feb. 20, 2013
Latest Update: Feb. 20, 2013
Summary: NOT FOR PUBLICATION PER CURIAM. Defendant Business Intelligence Solutions, Inc. appeals from two Law Division orders. On December 29, 2011, defendant's motion for summary judgment was denied, and on February 3, 2012, summary judgment was granted to plaintiff, 7 Hills IT, Inc. On appeal, defendant argues summary judgment on plaintiff's claim for payment was erroneously granted in light of disputed material facts presented. Also, as a matter of law, defendant argues plaintiff is a "temporary hel
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NOT FOR PUBLICATION

PER CURIAM.

Defendant Business Intelligence Solutions, Inc. appeals from two Law Division orders. On December 29, 2011, defendant's motion for summary judgment was denied, and on February 3, 2012, summary judgment was granted to plaintiff, 7 Hills IT, Inc. On appeal, defendant argues summary judgment on plaintiff's claim for payment was erroneously granted in light of disputed material facts presented. Also, as a matter of law, defendant argues plaintiff is a "temporary help service firm[,]" which is barred from initiating legal action in New Jersey because it failed to comply with the registration requirements under the New Jersey Private Employment Agency Act (the Act),1 N.J.S.A. 34:8-43 to-66, and the judge erred in finding plaintiff was exempt from registration. Following our review, we are not persuaded by defendant's arguments and affirm.

Plaintiff is New York information technology consulting firm "with offices exclusively in New York state[.]" Defendant is a New Jersey services provider, which "contracts with various clients," then engages sub-contractors to "help fill the needs of said [c]lient[s]."

On July 2, 2007, defendant and plaintiff executed a "Sub-Contractor Services Agreement" (the Agreement) setting forth the terms of the parties' relationship. Basically, plaintiff, as defendant's subcontractor, agreed to provide an adapted version of two standard software programs and training in the use of those programs, as set forth in a contract defendant negotiated with its client Abercrombie & Fitch (A&F). The actual technology services were to be performed by plaintiff's Senior Technical Architect, Lakshmi Narayana Chikkala, who was designated a "consultant[]" in the Agreement. Chikkala traveled to A&F's office to perform the designated services, A&F paid defendant for Chikkala's services, and defendant agreed to pay plaintiff a contractual, hourly rate of $70 per hour for each hour Chikkala worked on the assignment, plus approved expenses.

For completeness, we recite several provisions of the agreement pertinent to the arguments presented on appeal, noting the agreement labeled plaintiff as "the SUB-CONTRACTOR" and defendant as "BIS." The agreement stated:

1. Term. BIS has contracts with various clients, hereinafter referred to as "Client[,]" and is desirous [to have] the SUB-CONTRACTOR to help fill the needs of said Client. Therefore, the parties have entered into this Agreement, which Agreement begins as of the date hereof and shall continue until the completion of the SUB-CONTRACTOR's work at the Client and continuing for a period of one year after completion thereafter. .... 4. Compensation. BIS will reimburse SUB-CONTRACTOR according to the attached Exhibit A [FEE & EXPENSE SCHEDULE] for each hour [of] SUB-CONTRACTOR's consultant's work pursuant to BIS' contract with Client.... SUB-CONTRACTOR will only be reimbursed the base hourly rate for hours worked and billed to the client.... 5. Records/Billing. The SUB-CONTRACTOR agrees to keep accurate records, detailing specific time worked for the Client, duly authorized expenses incurred and will submit the timesheet to BIS ON A TIMELY BASIS-WEEKLY. SUB-CONTRACTOR will invoice after the end of each month for services performed. Payment terms are net 45 days from Invoice Date. .... 8. Independent Contractor. It is understood between the parties that the SUB[-]CONTRACTOR is strictly an independent contractor and therefore neither it nor any of its employees has without expressed written authority, the right or ability to bind BIS to any obligation(s) with a third party. It is understood that the SUB-CONTRACTOR will perform as an independent contractor and under its own direction within the parameters set forth by BIS in accordance both with its contract with its Client(s) and its corporate policy[.] .... 10. Termination[.] a) In the event the SUB-CONTRACTOR employee leaves the assignment prior to the completion of Client Engagement, BIS must be given ten working days written notice before such termination is effective. SUB-CONTRACTOR agrees from the inception of this contract that in the event BIS does not receive ten working days written notice, BIS is entitled to receive as liquidated damages an amount equal to the prevailing daily rate then in existence between Client and BIS times the number of days less than ten that notice is given. SUB-CONTRACTOR authorizes BIS to withhold any monies, which may be due to the SUB-CONTRACTOR and apply said monies against the amount due to BIS. .... 11. Restrictive Covenant. SUB-CONTRACTOR agrees during the term of this Agreement or any extension thereof, and for a period of one year thereafter, neither it nor any of its employees will directly or indirectly, or in any capacity, compete or attempt to compete with BIS to provide service for the same Department/Line of Business or manager of "Client" to whom SUB-CONTRACTOR had been introduced, or for whom SUB-CONTRACTOR was providing services pursuant to this Agreement, during their term of this Agreement (or any extension thereof). .... 13. Non-Hire. SUB-CONTRACTOR under-stands and agrees that during the term of its contractual agreement with BIS and for a period of (1) one year following termination thereof, it will not hire or contract for the services of any employee or sub-contractor of Client who is or has been an employee or sub-contractor of Client during the immediate six months preceding the termination of this contract. .... 17. Law of New Jersey. This Agreement shall be construed in accordance with the laws of the State of New Jersey[.]

Attached to the Agreement as "Exhibit A" was a supplemental "FEE & EXPENSES SCHEDULE," executed by the parties, which explained:

1. Relationship of Parties: Client and SUB-CONTRACTOR acknowledge that the relationship created under this Agreement is that of independent contracting parties[.] 2. Compensation: Unless otherwise specified in a Fee and Expense Schedule, each SUB-CONTRACTOR shall provide BIS with an invoice for its BIS or client approved services rendered. For projects billed on an hourly basis, the invoice shall include a detailed description of time spent on specific projects and the Services rendered. BIS shall pay SUB-CONTRACTOR within net 45 days upon the receipt of such invoice. 3. Termination without Cause: SUB-CONTRACTOR [u]pon 2 weeks notice (10 working [d]ays) to the other party.2

Chikkala traveled to A&F's Columbus, Ohio facility in August 2007 and remained there until January 2010. The parties agree Chikkala submitted his time sheets to plaintiff, which used these documents to pay his salary and prepare invoices to defendant. Plaintiff paid Chikkala his salary from which withholding taxes and state assessments were collected. Further, plaintiff maintained Chikkala's health insurance and workers' compensation benefits. At the conclusion of the consulting assignment for A&F, Chikkala continued his employment at plaintiff's principal place of business.

When defendant failed to pay plaintiff's invoices and one of defendant's checks was returned for insufficient funds, plaintiff initiated this collection action. The complaint sought payment of $82,600 for services rendered pursuant to the Agreement, together with interest, attorney fees, and costs of suit. Following the filing of its answer, defendant moved for summary judgment. The motion was denied without prejudice pending discovery.

Defendant filed a second motion for summary judgment on December 6, 2011, arguing plaintiff's failure to be licensed in the State of New Jersey as an employment agency or as a temporary help service firm at the time the cause of action accrued barred recovery under the Act. Plaintiff opposed the motion, arguing "it does not qualify as a temporary help provider or employment agency under the [A]ct" and the parties' Agreement clearly designated Chikkala as a subcontractor, not a temporary employee of defendant. Consequently, plaintiff was exempt from the Act's registration and licensing requirements.

In his review of the motion on January 6, 2012, the trial judge rejected defendant's legal contention, finding plaintiff was not an employment agency within the meaning of the Act. The judge found defendant contracted to obtain specific technical expertise from plaintiff; Chikkala "was neither controlled nor directed by anyone and, in fact, alone was responsible for training both employees of [A&F], as well as those of defendant[]"; plaintiff remained responsible for Chikkala's oversight during the Agreement period. Alternatively, the judge suggested plaintiff would be exempt from the Act's registration requirements pursuant to N.J.S.A. 34:8-46h(1), because it did not "charge a fee or liquidate a charge to any individual employed by the firm or in connection with employment by the firm[.]" Accordingly, defendant's motion for summary judgment was denied.

Plaintiff moved for summary judgment. Defendant opposed the motion reasserting the previously presented licensure argument and maintaining plaintiff breached the Agreement because Chikkala "abruptly, without proper notice, and in violation of the Agreement abandoned the project causing [d]efendant to lose revenue generated pursuant to the terms of the... project with [A&F.]"

The same judge considered the summary judgment record and granted plaintiff's motion. Judgment was entered requiring defendant to pay plaintiff $83,327.72, together with costs and statutory attorney's fees. Defendant's appeal of these two orders ensued.

Our review of the trial court's decision granting summary judgment pursuant to Rule 4:46-2(c) is governed by well-established principles. When reviewing the grant of summary judgment, the court must "`view the facts in the light most favorable to plaintiff.'" Livsey v. Mercury Ins. Grp., 197 N.J. 522, 525 (2009) (quoting Sciarrotta v. Global Spectrum, 194 N.J. 345, 348 (2008)). "[W]hen the evidence is so one-sided that one party must prevail as a matter of law, the trial court should not hesitate to grant summary judgment." Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995) (internal quotation marks and citations omitted).

To defeat a motion for summary judgment, the non-moving party must "come forward with evidence that creates a `genuine issue as to [a] material fact challenged.'" Id. at 529 (quoting R. 4:46-2). The trial court's task is not to weigh the credibility of the evidence as a factfinder would, but rather "`to determine whether there is a genuine issue for trial.'" Id. at 540 (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2511, 91 L. Ed. 2d 202, 212 (1986)). This requires the motion judge to analyze and sift through evidential materials and "determine `the range of permissible conclusions that might be drawn[.]'" Id. at 531 (quoting Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 596, 106 S.Ct. 1348, 1361, 89 L. Ed. 2d 538, 558 (1986)).

Our review is guided by the same standards governing the trial court on a motion for summary judgment. LVNV Funding, LLC v. Colvell, 421 N.J.Super. 1, 6 (App. Div. 2011) (citation omitted). We first determine whether the moving party demonstrated there were no genuine disputes as to any material facts, and then decide whether the motion judge's application of the law was correct. Atl. Mut. Ins. Co. v. Hillside Bottling Co., Inc., 387 N.J.Super. 224, 230-31 (App. Div.), certif. denied, 189 N.J. 104 (2006). No special deference is accorded to the motion judge's "interpretation of the law and the legal consequences that flow from established facts[,]" Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995), which we review de novo. Dep't of Envtl. Prot. v. Kafil, 395 N.J.Super. 597, 601 (App. Div. 2007).

Defendant argues the judge erroneously interpreted the Act, and maintains it was entitled to summary judgment dismissal of plaintiff's complaint as a matter of law. We disagree.

"The Act is a regulatory measure intended to alleviate abuses in the employment-agency industry." Data Informatics, Inc. v. AmeriSOURCE Partners, 338 N.J.Super. 61, 74 (App. Div. 2001) (internal quotation marks and citations omitted). "The Act provides for the Division of Consumer Affairs' regulation and oversight of mandated practices... and registration requirements for private agencies which provide employment services, ... and prohibits regulated agencies from engaging in `deceptive or otherwise unfair practices[.]'" Id. at 71 (citations omitted).

In furtherance of the Legislature's remedial objectives, the Act requires employment services providers, including employment agencies, consulting firms, and temporary help service firms, to "`comply with the provisions of... [the Consumer Fraud Act, N.J.S.A. 56:8-1 to-97,]'" id. at 76 (quoting N.J.S.A. 34:8-43), including the annual registration requirements set forth in N.J.S.A. 56:8-1.1a.3 Id. at 73. While employment agencies must be licensed, consulting firms and temporary help service firms need only be registered. Id. at 71-72 (citing N.J.S.A. 34:8-52; N.J.S.A. 56:8-1.1). See also N.J.S.A. 34:8-64a (providing "[e]very consulting firm operating within this State shall... annually... register"). To assure compliance with the these provisions, the Act states no person or entity

shall bring or maintain an action in any court of this State for the collection of a fee, charge or commission for the performance of any of the activities regulated by this act without alleging and proving licensure or registration, as appropriate, at the time the alleged cause of action arose. [N.J.S.A. 34:8-45b.]

This court has expressly stated the Act is both "regulatory and penal" in nature; consequently, a plaintiff performing activities regulated by the Act but failing to comply with its registration requirement is barred from enforcing agreements within the State. Data Informatics, supra, 338 N.J. Super. at 78 (internal quotation marks and citations omitted). Therefore, given the Act's purpose "to preclude unlicensed [or unregistered] agencies... from benefiting from unlawful conduct[,]" agreements entered into by non-compliant plaintiffs "are void as illegal, and unenforceable as a matter of public policy." Id. at 78. See also Accountemps Div. of Robert Half, Inc. v. Birch Tree Grp., Ltd., 115 N.J. 614, 626 (1989) (holding "[o]ur courts have consistently held that public policy precludes enforcement of a contract entered into in violation of [the State's] licensing statute[s]").

On appeal, defendant does not suggest plaintiff is an employment agency. Rather, relying solely on the statutory definition, defendant argues plaintiff falls within the scope of the Act as a "temporary help service firm." Plaintiff maintains the nature of the parties' agreement and its responsibilities for Chikkala's employment belie defendant's contention.

Data Informatics is the lone authority interpreting provisions of the Act; however, it is of little assistance in reviewing this matter because Data Informatics focused on the Act's regulation of employment agencies, not temporary help service firms. Supra, 338 N.J. Super. at 71-76. No reported authority has considered the Act's definition of a temporary help service firm.

In undertaking our review of whether plaintiff qualifies as a temporary help service firm, we are guided by the rules of statutory construction, which mandate we first examine the "clear and unambiguous" statutory language to discern the Legislature's intent. DiProspero v. Penn, 183 N.J. 477, 492 (2005) (internal quotation marks and citations omitted).

Interpretation of a statute begins with "the plain meaning of the provision at issue." Burns v. Belafsky, 166 N.J. 466, 473 (2001). When "the statutory language is clear and unambiguous, and susceptible to only one interpretation, courts should apply the statute as written without resort to extrinsic interpretative aids." In re Passaic C[nty.] Utils. Auth., 164 N.J. 270, 299 (2000) (citing Bergen Commercial Bank v. Sisler, 157 N.J. 188, 202 (1999)). However, if two interpretations of the language are plausible, a reviewing court must interpret the statute to effectuate the legislative intent, utilizing extrinsic evidence when it is helpful. Burns, supra, 166 N.J. at 473. [Lozano v. Frank DeLuca Constr., 178 N.J. 513, 522 (2004).]

The Act defines temporary help service firms to include

any person who operates a business which consists of employing individuals directly or indirectly for the purpose of assigning the employed individuals to assist the firm's customers in the handling of the customers' temporary, excess or special work loads, and who, in addition to the payment of wages or salaries to the employed individuals, pays federal social security taxes and State and federal unemployment insurance; carries worker's compensation insurance as required by State law; and sustains responsibility for the actions of the employed individuals while they render services to the firm's customers. [N.J.S.A. 34:8-43.]

See also N.J.A.C. 13:45B-1.2 (repeating statutory definition of temporary help service firm). Any individual or entity, which is a temporary help service firm, must comply with the registration requirements of N.J.S.A. 56:8-1.1a. Data Informatics, supra, 338 N.J. Super. at 73 (citing N.J.A.C. 13:45B-7.2; N.J.A.C. 13:45B-13.2a).

This definition describes companies who recruit and hire individuals to perform the "temporary, excess or special work loads" of and for third parties that contract with the temporary staffing firm for this temporary help. N.J.S.A. 34:8-43. In colloquial terms, the definition describes a staffing agency.

Here, plaintiff held expertise in the technology area, which defendant could not accommodate for the purpose of fulfilling its obligations under its contract with A&F. Therefore, it hired plaintiff as a subcontractor to perform the specific technological tasks. The Agreement defines this relationship as "independent contracting parties," noting plaintiff, as a subcontractor, "will perform as an independent contractor and under its own direction[.]"4

Plaintiff was not in the business of providing employees to fulfill tasks for others. The fact that plaintiff's employee, Chikkala, performed services on A&F's site is not determinative. The record makes clear Chikkala was not providing temporary aid for A&F to accomplish its internet technology operations, nor was Chikkala supervised or directed by A&F. It is important to note A&F was not plaintiff's customer, it was defendant's. Chikkala was working on a discrete project and designed the system, managed its implementation, and trained A&F and defendant's employees regarding its use, based on the contract between plaintiff and defendant.

We conclude plaintiff is not a temporary help service firm, and, therefore, was not subject to the Act. Its purpose and function pursuant to the terms of the Agreement were as a subcontractor to provide the services sought by defendant. This conclusion obviates the need to examine the judge's comments regarding achieving exemption from the Act's registration requirements as set forth in N.J.S.A. 34:8-46h. We decline to address the issue and our affirmance of the judge's order denying defendant's motion for summary judgment is not to be construed as concurring with the determination made on this issue.

In opposition to plaintiff's motion, for the first time, defendant alleged plaintiff had breached the Agreement. Defendant had not raised breach of contract in either its answer or its prior motions for summary judgment. Defendant contends the plaintiff abruptly abandoned the project without providing the required notice. To support this assertion, defendant relied on a certification of an employee, Krishna Ghanta, included in its responsive pleadings. The certification merely stated Chikkala "abruptly, without proper notice, and in violation of the Agreement, abandoned the project" causing defendant damages. Defendant identified no additional evidential support for its newly asserted claim.

After considering the entire record, the judge agreed with plaintiff that defendant's newly raised argument had not been raised in prior pleadings and defendant had not identified evidential support to warrant its consideration. Finding the allegation of breach amounted to a bare conclusion without factual support, the judge rejected defendant's assertion of material factual disputes required determination by a factfinder.

"The law is well settled that `[b]are conclusions in the pleadings without factual support in tendered affidavits, will not defeat a meritorious application for summary judgment.'" Brae Asset Fund, L.P. v. Newman, 327 N.J.Super. 129, 134 (App. Div. 1999) (quoting U.S. Pipe & Foundry Co. v. Am. Arbitration Ass'n, 67 N.J.Super. 384, 399-400 (App. Div. 1961)). We discern no error in the judge's review of the evidence or his application of the law.

Viewing the facts in the light most favorable to defendant, we determine defendant failed to provide competent proofs of a breach. Brill, supra, 142 N.J. at 540. Moreover, plaintiff's evidentiary materials, including invoices to defendant for the months of July 2009 through January 2010, totaling $82,600, along with defendant's returned check provided for services invoiced in August 2009, and email communications evincing its efforts to obtain payment proved its claim, entitling plaintiff to entry of summary judgment.

Affirmed.

FootNotes


1. Following amendments, the Act is no longer titled; however, we retain use of the title for ease in our opinion.
2. A February 1, 2008 modification was executed, which contained identical provisions as the initial Agreement, except it provided an estimated project end date of August 31, 2009.
3. N.J.S.A. 56:8-1.1a provides: Each temporary help service firm operating within the State of New Jersey shall, prior to the effective date of this act or commencement of operation and annually thereafter, notify the Attorney General as to its appropriate name, if applicable; the trade name of its operation; its complete address, including street and street number of the building and place where its business is to be conducted; and the names and resident addresses of its officers. Each principal or owner shall provide an affidavit to the Attorney General setting forth whether such principal or owner has ever been convicted of a crime.
4. The Agreement is on defendant's letterhead, suggesting it was drafted by defendant. If this were the case, the doctrine of contra proferentem, which construes contract language "to adopt the meaning that is most favorable to the non-drafting party[,]" Pacifico v. Pacifico, 190 N.J. 258, 267 (2007), would require us to construe any possible ambiguity in the Agreement's use of the term "consultant" as interpreted by plaintiff to mean an independent contractor. However, the record fails to address this issue.
Source:  Leagle

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