PER CURIAM.
Plaintiff Maxine Diakos, individually and as administratrix of the Estate of Nicholas E. Diakos, her late husband, appeals from two separate court orders. The first, a June 30, 2014 Chancery order, granted summary judgment to defendants Brent Rudnick, Mo-Ni-B, Inc., Barbara Lichtman, John J. Lichtman, and Steven Pechter and dismissed plaintiff's claims of an ownership interest in the Pilgrim Diner. The second, a January 8, 2016 Law Division order, granted defendants' motion for summary judgment dismissing plaintiff's amended claims of failure to receive overtime pay in violation of the federal Fair Labor Standards Act (FLSA), 29
Plaintiff argues that Nicholas Diakos (decedent) acquired a partial ownership in Mo-Ni-B through the terms of an Employment and Stock Purchase Agreement (Agreement). She claims that decedent equalized his financial position with respect to the two other shareholders, Morton Pechter
Plaintiff argues that defendants are equitably estopped from denying that the Agreement was a binding contract because Rudnick made verbal assurances to decedent, and later to plaintiff, that decedent was a part owner of the business and made $5,000 profit payments to decedent on at least three occasions. Alternatively, plaintiff argues that if decedent was not an owner of the business, then plaintiff was an employee of the Pilgrim Diner and is entitled to overtime pay.
Plaintiff commenced the initial action in the Chancery Division on September 30, 2013, raising only claims that the decedent was an owner of Mo-Ni-B and entitled to profits from the business. Defendants filed a motion to dismiss, arguing that plaintiff's claims were time-barred by the applicable six-year contract statute of limitations and that laches also applied. Because both parties relied on documents outside of the pleadings, the Chancery court treated the motion as a summary judgment motion.
Plaintiff's amended complaint alleged that defendants violated the FLSA and NJWHL by not paying plaintiff overtime during her employment with the Pilgrim Diner. The Law Division ruled that plaintiff was a manager of the Pilgrim Diner and was thus exempt from receiving overtime pay. It granted defendants' summary judgment motion, denied plaintiff's cross-motion for summary judgment, and dismissed plaintiff's complaint.
Defendant Mo-Ni-B, Inc. was formed on November 25, 1997, for the purpose of purchasing the Pilgrim Diner. In January 1998, decedent and Morton, both individually and as president of Mo-Ni-B, executed the Agreement, which stated that Morton and Rudnick were both fifty-percent shareholders of Mo-Ni-B. The Agreement further stated that decedent would become the manager of the Pilgrim Diner and run the business with full authority to make decisions concerning the operation of the business, it being "the intention of the parties that each shall become a 1/3 owner of said restaurant business."
Although named in the Agreement, Rudnick did not sign it. Rudnick claims he refused to sign because he never intended decedent to become a partner.
With regard to the payment of profits, the Agreement states:
Regarding the sale of a shareholder's stock, the Agreement states that "it is agreed between the parties, that the remaining stockholder, or stockholders shall have a right of first refusal."
The lawyer who drafted the Agreement certified that decedent became the manager of the Pilgrim Diner because of Rudnick's oral assurances that "notwithstanding Mr. Rudnick's refusal to sign the Agreement their business arrangement would proceed exactly as it was set forth in that Agreement." Decedent worked as the manager of the Pilgrim Diner until his death on December 23, 2011. Plaintiff worked as the assistant manager earning $750 per week until her husband's death.
Plaintiff claims that decedent fulfilled his financial obligation to Morton and Rudnick, as per the Agreement, prior to Pechter's death in 2004. As evidence, she asserts that prior to Morton's 2004 death, Rudnick paid decedent $5,000 in profits on at least three occasions. Plaintiff claims that since 1999, the business has earned "significant profits" and "virtually none of those profits have been shared with [plaintiff] and [decedent]." No profit payments were made to decedent after Morton died, in spite of requests by decedent.
After Morton's death, his shares in Mo-Ni-B, which had passed to Katherine Pechter, were sold in 2005 to defendants Barbara and John J. Lichtman and Steven Pechter without an offer of first refusal to decedent.
According to decedent's daughter, Pauline,
After decedent's death in December 2011, plaintiff certified that she "had to assume [her] husband's responsibilities." Plaintiff claims that "two weeks after [decedent] passed away, Mr. Rudnick brought a potential buyer into Pilgrim Diner without asking [her] or even telling [her] in advance." Plaintiff told Rudnick that he "seem[ed] to forget that [plaintiff] had an interest," to which Rudnick yelled back "I said if there was profit." With the understanding that Rudnick was close to selling the Pilgrim Diner, plaintiff filed a complaint against defendants in the Chancery Division in 2013.
Our review of a ruling on summary judgment is de novo, applying the same legal standard as the trial court.
Plaintiff certifies that the court "may read certain statements [she] made in [her] certification dated September 30, 2013 . . . to mean that [decedent] and [plaintiff] were aware in 2004 that [they] should have gone to court at that time." Plaintiff claims that neither she nor decedent "had any such awareness at that time" and that decedent only "became aware sometime in 2009 that [] Rudnick may not honor the many promises that he made to [decedent] over the years" when Rudnick began to bring prospective buyers to the diner without telling decedent.
The statute of limitations on a breach of contract claim is six years from the date of accrual.
Rudnick refused to sign the Agreement. According to Pauline's certification, "Rudnick and [decedent] never had an easy relationship." According to plaintiff, after Morton's death, Rudnick made no further profit payment to decedent. Decedent was also not offered a right of first refusal when Morton's shares were sold to defendants Barbara and John J. Lichtman and Steven Pechter in 2005.
When taken together, these undisputed facts demonstrate that decedent's relationship with Rudnick after Morton's death was contentious and adversarial, and if an enforceable agreement did exist, decedent was aware that Rudnick was not honoring that agreement. Thus, the cause of action accrued at the latest in 2005 when the stock transaction took place.
Equitable estoppel does not arise under these facts. "To establish a claim of equitable estoppel, the claiming party must show that the alleged conduct was done, or representation was made, intentionally or under such circumstances that it was both natural and probable that it would induce action."
Plaintiff argues the Agreement was a continuing contract, similar to an installment agreement, and that the trial court erred in rejecting the doctrine of continuing breach. Plaintiff states the Agreement called for continuing performance by decedent in exchange for, initially, credits toward his stock ownership, followed by the installment payment of dividends to the extent that the corporation turned a profit. The Agreement does not call for a monthly or annual payment of profits or any other set periodic payment structure, but rather a payment of profits to the extent there is any profit, thus it is not an installment contract, where a new cause of action arises from the date each payment is missed.
Decedent received profit payments prior to Morton's death in 2004, which, according to the Agreement, should only occur after decedent paid sufficient funds into Mo-Ni-B to obtain a one-third interest in the business. If decedent had acquired an ownership interest in the business pursuant to the Agreement, he could have asserted his ownership claim either after Rudnick stopped making profit payments to decedent in 2004, or at the latest after decedent was denied his right of first refusal before Morton's shares were sold in 2005. The complaint was not filed within six years of 2005.
In plaintiff's certification from September 30, 2013, she states she is "currently employed as the manager of the Pilgrim Diner" and works more than 90 hours per week. She had to "assume [decedent's] responsibilities when he passed away in late December 2011." Plaintiff states that until his passing, decedent "was an owner and the manager of the Pilgrim Diner."
Plaintiff filed a cross-motion for summary judgment with regard to her overtime-pay claims, arguing that the facts were not in dispute. "The filing of a cross-motion for summary judgment generally limits the ability of the losing party to argue that an issue raises questions of fact, because the act of filing the cross-motion represents to the court the ripeness of the party's right to prevail as a matter of law."
During plaintiff's deposition, when asked about her title and role in the business, plaintiff answered "[d]oing managerial, you know, what every diner owner does, that they have somebody on the floor. They walk the people, they make coffee if they have to, they take cash, I do everything." She sets her own hours of work and does not ask anyone for permission to leave. She keeps track of employee hours and "call[s] them in [to] payroll." Plaintiff has also hired waitresses without asking Rudnick and "made sure they did their side work." If an employee calls out sick, plaintiff is "the one that will have to come in and see if [she] can find somebody else to fill in." Plaintiff also closes out the diner's cash registers and sets the weekly schedules for the waitresses.
Under both Federal and New Jersey law, employees who work "in a bona fide executive, administrative, or professional capacity," are exempt from receiving overtime compensation.
The federal regulations define an "employee employed in a bona fide executive capacity" as an employee:
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The application of an exemption under the FLSA is a matter of affirmative defense on which the employer has the burden of proof.
Plaintiff argues that she is a non-exempt employee and that her title as manager did not reflect her actual responsibilities, which plaintiff argues make her more akin to a hostess or waitress entitled to overtime compensation under the Federal FLSA and the NJWHL. The New Jersey Department of Labor and Workforce Development regulations look to the federal guidelines for determining which employees work "in a bona fide executive, administrative, or professional capacity."
Regarding the first prong under 29
Regarding the second prong, plaintiff argues she spent "approximately 93%" of her time on non-managerial functions, such as bussing, cleaning, and waiting tables. Time spent on non-exempt work is a factor, but not dispositive.
Regarding the third prong, whether plaintiff customarily and regularly directs the work of two or more employees, she has authority to set weekly schedules, tracks employee hours and manages the activities of the others when she is at the diner.
Regarding the fourth prong, whether plaintiff has authority to hire or fire employees, plaintiff admitted she has the authority to hire waitresses without Rudnick's permission.
Even giving her the benefit of all reasonable favorable inferences, plaintiff fits well within the criteria for a manager and is therefore not entitled to the protections of the FLSA or the NJWHL. She also waited too long to institute suit against defendants seeking to enforce the Agreement, thus falling afoul of the six-year statute of limitation. Both the Chancery and the Law Division dismissals were appropriate.
Affirmed.