SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-3204-15T4

GIGI K COLLECTIONS, INC.

and GIGI K NYC,

Plaintiffs-Appellants,

v.

UNITED MERCHANT SERVICES,

Defendant-Respondent.

_________________________________

Submitted May 16, 2017 – Decided

Before Judges Reisner and Sumners.

On appeal from Superior Court of New Jersey, 

Law Division, Bergen County, Docket No. DC14792-15.

Foley & Foley, attorneys for appellant 

(Timothy J. Foley, on the brief).

Budd Larner PC, attorneys for respondent 

(Philip C. Chronakis, on the brief).

PER CURIAM

In this commercial business dispute, plaintiffs Gigi K 

Collections, Inc. and Gigi K NYC (collectively, Gigi) appeal from 

a Special Civil Part order dismissing their complaint and entering 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

This opinion shall not "constitute precedent or be binding upon any court." 

Although it is posted on the internet, this opinion is binding only on the 

parties in the case and its use in other cases is limited. R.1:36-3.

August 24, 2017
2 A-3204-15T4

judgment for defendant United Merchant Services (UMS). For the 

reasons that follow, we affirm.

We discern the following facts from the evidence adduced at 

the one-day bench trial. Gigi operates retail-clothing stores in 

New York City. To allow its customers to purchase merchandise

with credit cards, Gigi contracted with UMS to obtain Point of 

Service (POS) credit-card processing equipment. As part of the 

contract, UMS would also provide related services – charge the 

customers' credit card accounts, collect the money from the credit 

card company, retain a processing fee, and deposit the remaining 

proceeds in Gigi's bank account. 

In accordance with the parties' contract, Gigi emailed UMS 

that it was providing thirty days' notice to terminate the

contract, and that it did not wish to renew the contract because 

the parties could not agree on renewal terms. Thereafter, a 

dispute arose and Gigi filed suit in the Special Civil Part 

alleging that UMS "breached their agreement[] with [Gigi] by 

failing to pay [Gigi] monies due to [Gigi] by virtue of 

transactions effectuated on [Gigi's] credit card machines[,]" and 

UMS "improperly converted [Gigi's] funds, and has failed to return 

them to [Gigi] after demand[.]"

According to the testimony of Gigi's owner, Gigi Kwon, she 

continued to use the credit card machines supplied by UMS during 
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the thirty-day time span after the termination notice, and expected 

UMS to pay Gigi for the credit card purchases. Kwon stated, 

however, that, despite obtaining approval for the purchases from 

the credit card companies, UMS failed to pay Gigi for the purchases 

processed through UMS. She contended that in order for Gigi to 

be paid by UMS for approved credit card purchases, the credit card 

machines would "batch" the transactions by totaling all of the

signed credit card receipts at the end of each day. Gigi relied 

upon UMS' records to attempt to prove that UMS owed it $9,300.86 

in unpaid credit card transactions. Kwon admitted that she was 

unaware if UMS received payment for the transactions in dispute.

UMS presented the testimony of Seng Yung Lee, who managed

Gigi's accounts with UMS. Lee maintained that UMS ceased 

processing Gigi's credit card transactions upon receipt of Gigi's 

written notice, which terminated the parties' contract. He 

testified that when Gigi complained about not receiving payment 

for credit card purchases, Gigi declined UMS' proposal to reprocess 

American Express transactions that UMS claimed were never 

processed. 

Following the trial, the judge entered an order that same day 

dismissing Gigi's complaint with prejudice, and attached a written 

statement of reasons. The judge found both witnesses credible,

but determined there was no evidence to support Gigi's allegation 
4 A-3204-15T4

that UMS breached their contract by collecting and retaining the 

proceeds from the credit card purchases of Gigi's customers. The 

judge noted:

Ms. [Kwon]'s proofs establish that her

company's failure to batch sales caused her 

losses. Mr. Lee's testimony established that 

Ms. [Kwon] declined to take the opportunity

to recoup at least the [American Express] 

losses a year ago and that, contrary to 

[Gigi's] allegations, [UMS] did not collect 

and retain [Gigi's] sales proceeds.

On these facts, established by a preponderance 

of the evidence, this [c]ourt cannot find that 

[UMS] breached the agreement and is 

responsible to [Gigi] for damages.

This appeal ensued.

Before us, Gigi argues that the trial judge erred in his 

assessment of the evidence. In particular, Gigi contends that UMS 

prematurely terminated their contract by not processing Gigi's 

credit card transactions upon receipt of Gigi's thirty-day notice

that it was not renewing the contract. UMS' conduct constituted 

a breach of contract resulting in losing credit card sales 

proceeds. Gigi maintains that it was not obligated to batch each

day's receipts because it was done automatically by UMS' equipment.

In addition, Gigi argues that its refusal to accept UMS' offer to

re-process American Express transactions related to a "discounted 

settlement offer," which under N.J.R.E. 408 was not admissible to 

prove liability or damages. 
5 A-3204-15T4

Our standard of review of the trial court's determinations 

following a non-jury trial is a limited one. Petrozzi v. City of 

Ocean City, 433 N.J. Super. 290, 316 (App. Div. 2013), certif. 

denied, 217 N.J. 623 (2014) (citing Rova Farms Resort, Inc. v. 

Inv'rs Ins. Co., 65 N.J. 474, 484 (1974)). We must "give deference 

to the trial court that heard the witnesses, sifted the competing 

evidence, and made reasoned conclusions." Griepenburg v. Twp. of 

Ocean, 220 N.J. 239, 254 (2015) (citing Rova Farms Resort, Inc., 

supra, 65 N.J. at 483-84). Reviewing courts "should 'not disturb 

the factual findings and legal conclusions of the trial judge' 

unless convinced that those findings and conclusions were 'so 

manifestly unsupported by or inconsistent with the competent, 

relevant and reasonably credible evidence as to offend the 

interests of justice.'" Ibid. (quoting Rova Farms Resort, Inc., 

supra, 65 N.J. at 484). Review on appeal "does not consist of 

weighing evidence anew and making independent factual findings; 

rather, our function is to determine whether there is adequate 

evidence to support the judgment rendered at trial." Cannuscio 

v. Claridge Hotel & Casino, 319 N.J. Super. 342, 347 (App. Div. 

1999) (citing State v. Johnson, 42 N.J. 146, 161 (1964)). 

We, however, owe no deference to the trial court's 

"interpretation of the law and the legal consequences that flow 

from established facts." Manalapan Realty, L.P. v. Twp. Comm. of 
6 A-3204-15T4

Manalapan, 140 N.J. 366, 378 (1995) (citations omitted). We review 

such decisions de novo. 30 River Court E. Urban Renewal Co. v. 

Capograsso, 383 N.J. Super. 470, 476 (App. Div. 2006) (citing Rova 

Farms Resort, Inc., supra, 65 N.J. at 483-84; Manalapan Realty, 

supra, 140 N.J. at 378).

Guided by these principles, Gigi's complaint was properly 

dismissed. Although we have some reservations concerning the 

trial judge's finding that Gigi caused its own losses because it 

failed to batch its credit card transactions, we nevertheless 

conclude there is sufficient credible evidence to support the 

trial judge's order entering judgment in favor of UMS. Gigi did 

not allege that UMS was negligent in failing to process Gigi's 

credit card transactions, but claimed that UMS improperly 

converted its funds. However, Gigi presented no evidence to 

support its allegation that UMS collected Gigi's credit card sales 

proceeds and failed to give it to Gigi. 

Moreover, we do not view the judge's admission of UMS' 

proposal to re-process the American Express purchases as evidence 

of a settlement offer in violation of N.J.R.E. 408. Under the 

rule, "offers of compromise or any payment in settlement of a 

related claim, shall not be admissible to prove liability for, . 

. . or amount of the disputed claim." N.J.R.E. 408. Here, UMS' 

proposal was not a settlement offer, but was evidence of Gigi's 
7 A-3204-15T4

failure to mitigate its damages. A party alleging a breach of 

contract has "a common law obligation to take reasonable steps to 

mitigate their damages." State v. Ernst & Young, L.L.P., 386 N.J. 

Super. 600, 617-18 (App. Div. 2006) (citations omitted). The 

doctrine of mitigation of damages embodies the principle that a 

claimant should not be entitled to damages that reasonably could 

have been avoided. Covino v. Peck, 233 N.J. Super. 612, 617 (App. 

Div. 1989) (citing Ostrowski v. Azzara, 111 N.J. 429, 437 (1988)). 

The judge properly considered Gigi's refusal to accept UMS' 

proposal to re-process American Express purchases by Gigi's

customers, and reasonably determined that Gigi failed to fulfil 

its obligation to mitigate its damages. See Ingraham v. Trowbridge 

Builders, 297 N.J. Super. 72, 84 (App. Div. 1997) (quoting 

Fanarjian v. Moskowitz, 237 N.J. Super. 395, 406 (App. Div. 1989) 

("the proper standard in a non-jury case regarding the judge's 

decision on mitigation of damages 'is whether the judge's findings 

are supported by sufficient, credible evidence in the record.'").

Affirmed.