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Keywords

contractbreach of contracttrialsummary judgment
contractdefendanttrialsummary judgmentjury trial

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Silvestri v. Optus Software, Inc., 175 N.J. 113, 814 A.2d 602, 19 IER Cases 1011

Facts

Michael Silvestri was hired by Optus Software, Inc. as the Director of Support Services under a two-year employment contract that included a satisfaction clause allowing termination for failure to perform to the company's satisfaction. After nine months, Silvestri was terminated by CEO Joseph Avellino, who cited dissatisfaction with Silvestri's performance based on complaints from clients and resellers. Silvestri contended that the dissatisfaction was unreasonable and filed a breach of contract action against Optus and Avellino.

Optus hired Silvestri for a two-year period commencing January 4, 1999, at an annual salary of $70,000. According to the company's president and chief executive officer, defendant Avellino, Silvestri's duties as a manager in this small business encompassed all tasks assigned to him by the board of directors.

Issue

Whether the employer's satisfaction under a satisfaction clause in an employment contract is subject to an objective or subjective evaluation.

The question presented then is whether the employer's satisfaction is subject to an objective or subjective evaluation.

Rule

In the absence of language to the contrary, a subjective assessment of personal satisfaction applies to satisfaction clauses in employment contracts.

We hold that a subjective test of performance governs the employer's resort to a satisfaction clause in an employment contract unless there is some language in the contract to suggest that the parties intended an objective standard.

Analysis

The court applied a subjective standard to the satisfaction clause, determining that the employer's genuine dissatisfaction with the employee's performance was sufficient for termination. The court found that Silvestri did not provide evidence to show that Avellino's dissatisfaction was not genuine, focusing instead on the reasonableness of that dissatisfaction, which was not the appropriate standard under the subjective test.

Thus, applying the test of genuineness, and not reasonableness, we conclude based on the overwhelming evidence in this record that Silvestri has not demonstrated that a dispute exists requiring submission of the matter to jury trial.

Conclusion

The Supreme Court reversed the Appellate Division's decision and held that the trial court's grant of summary judgment in favor of the employer was appropriate, as Silvestri failed to demonstrate that the employer's dissatisfaction was not genuine.

The judgment of the Appellate Division is reversed and the matter remanded for entry of summary judgment in favor of defendants.

Who won?

Optus Software, Inc. prevailed in the case because the court found that the employer's genuine dissatisfaction with Silvestri's performance justified the termination under the satisfaction clause.

Optus is a small company in the business of customer services, and difficulty with support to resellers and end-users of Optus's products carries the potential for significant consequences in such a business.

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