Court Opinion

ID: 9965770
Source: CourtListenerOpinion
Date Created: 2024-05-03 14:10:18.702154+00
Date Added: 2024-06-11T08:25:38.696937
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE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.

                                                        SUPERIOR COURT OF NEW JERSEY
                                                        APPELLATE DIVISION
                                                        DOCKET NO. A-0142-22

GALEN PUBLISHING, LLC,

          Plaintiff-Respondent,

v.

ASIM HOLDINGS, LLC, ASIM
CE, LLC, ERADIMAGING, LLC,
ELI GLOBAL, LLC, and GREG
E. LINDBERG, individually,

     Defendants-Appellants.
____________________________

                   Submitted December 11, 2023 – Decided May 3, 2024

                   Before Judges Gilson and Berdote Byrne.

                   On appeal from the Superior Court of New Jersey, Law
                   Division, Somerset County, Docket No. L-0579-20.

                   Law Offices of Charles A. Gruen, and William G.
                   Whitehill (Condon Tobin Sladek Thorton Nerenberg,
                   PLLC) of the Texas bar, admitted pro hac vice,
                   attorneys for appellants (Michael Korik and William G.
                   Whitehill, on the briefs).
             DiFrancesco, Bateman, Kunzman, Davis, Lehrer &
             Flaum, PC, attorneys for respondent (Stephen Osgood
             Davis, on the brief).

PER CURIAM

       Defendants, buyers of a medical education business and subscription-

based, continuing education service for radiologic technologists, appeal from

the trial courts' orders of December 30, 2021 and August 4, 2022,1 granting

summary judgment to plaintiff for a sum certain and awarding attorney's fees

and costs. Defendants claim the trial court erred in granting summary judgment

because a genuine issue of material fact exists regarding defendants' affirmative

defense of fraud in the inducement, and the trial court erred in finding

defendants were required to pay plaintiff's attorney's fees.2

       We conclude defendants failed to present any material fact precluding

summary judgment. We also conclude the trial court properly analyzed and

awarded attorney's fees and, therefore, affirm both orders.

1
    The August 4, 2022 order amended a July 14, 2022 order.
2
  Defendants also argue plaintiff failed to prove it was the holder of the note
and guaranties in due course. However, that issue was not raised before the trial
court, and we decline to address it. State v. Robinson, 200 N.J. 1, 18-19 (2009);
Selective Ins. Co. v. Rothman, 208 N.J. 580, 586 (2012).

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                                        2
                                           I.

      On March 21, 2017, plaintiff Galen Publishing, LLC (Galen) entered into

an Asset Purchase Agreement (APA) with defendants, ASiM Holdings, LLC

(ASiM), ASiM CE, LLC, (ASiM CE), and eRADIMAGING, LLC, (eRAD) for

the sale of plaintiff's business assets. ASiM, ASiM CE, and eRAD purchased

the business assets for $12,858,192.86, pursuant to the terms of the APA. The

terms required the buyers to pay $10 million at closing. ASiM gave Galen a

$2,091,885.12 promissory note, which required the buyers to make four

additional annual payments of $522,971.28. Defendant, Greg E. Lindberg,

(Lindberg), signed the APA as a representative of all three defendant-buyers,

signed the promissory note as a representative of ASiM, and signed two

guaranties of the promissory note. Lindberg signed one guaranty on behalf of

Eli Global, LLC (Eli Global), the buyers' holding company, and signed the

second guaranty in his individual capacity.

      The terms and conditions of the promissory note state, in relevant part:

            If an Event of Default (as defined below) under the
            terms of this Note shall occur, the entire unpaid
            Principal Amount, together with all sums due hereunder
            shall immediately become due and payable. The term
            "Event of Default" shall mean the occurrence of any
            one or more of the following events: (i) failure by
            Maker [ASiM] (and/or Guarantor) in the payment of
            any and all sums due under this Note and such failure

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                                       3
      continues for more than ten (10) business days
      following written notice thereof from the Holder; (ii) if
      by order of a court of competent jurisdiction, a trustee,
      receiver, custodian, liquidator, agent or other similar
      office of Maker's or either Guarantor's property or any
      part thereof, shall be appointed and such other shall not
      be discharged or dismissed within ninety (90) days after
      such appointments; . . . ; or (v) any breach by either
      Guarantor under the terms and conditions of the
      Guaranties. If an Event of Default occurs or this Note
      is not fully paid by, or on, the Maturity Date, whether
      as regularly scheduled or through acceleration, the
      unpaid Principal Amount shall thereafter bear interest
      until fully paid computed at the rate of the lesser of (i)
      fifteen (15%) percent per annum or (ii) the maximum
      rate permitted by applicable law to be charged and
      payable immediately upon demand by Holder (the
      "Default Interest").

Regarding attorney's fees, the note stated:

      In the event this Note is placed in the hands of an
      attorney for collection or if collected by suit, or should
      Holder need to protect or enforce its rights under this
      Note in any bankruptcy proceedings, then the Maker
      shall pay, in addition to all other amounts due and
      owing hereunder, the reasonable attorney['s] fees and
      all other costs of collection of Holder.

Each guaranty agreement stated:

      [u]pon failure of [ASiM] to pay all or any portion of the
      Guaranteed Obligations (as defined below) when due
      (and after giving effect to any applicable notice and
      cure period set forth in the Note), Guarantor hereby
      unconditionally, absolutely and irrevocably guarantees
      to Secured Party [plaintiff]: (a) the full, prompt and
      complete payment when due of the Guaranteed

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                                  4
            Obligations, as the same shall become due and payable
            under the Note, whether at stated maturity, by
            acceleration or otherwise, and any and all sums of
            money that, at the time, may have become due and
            payable under the provisions of the Note, whether
            secured or unsecured, direct or indirect, absolute or
            contingent, including payment of principal, interest,
            expenses and fees (including counsel fees) chargeable
            to or due from [ASiM] under the Note, due or to become
            due, now existing or hereafter arising or contracted,
            including, without limitation, payment when due of all
            amounts outstanding respecting any of the Note
            Documents and (b) if Secured Party brings a legal
            action against the Guarantor, or otherwise incurs
            expenses with respect to a good faith enforcement of
            the terms and conditions of this Guaranty and prevails,
            the full, prompt and complete payment of any and all
            out-of-pocket expenses that may be paid or actually
            incurred by Secured Party in the collection of all or any
            portion of the Guarantor's obligations hereunder or the
            exercise or enforcement of any one or more of the other
            rights, powers, privileges, remedies and interests of
            Secured Party under the Note Documents including,
            without limitation, reasonable attorney['s] fees, and
            whether or not such expenses constitute part of the
            Makers' obligations (collectively, the "Guaranteed
            Obligations").

      The agreements also stipulated, in the event plaintiff made a demand for

the

            full, prompt and complete payment of the Guaranteed
            Obligations and [Eli Global and Lindberg] actually
            makes the full and indefeasible payment so demanded
            to Secured Party within twenty (20) days of demand and
            without any reservation, condition, defense or claim of
            any kind or nature, Secured Party agrees that the

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                                       5
            Guaranteed Obligations will be limited to the amounts
            then due and payable under the Note plus all accrued
            but unpaid interest thereon.

Lastly, both guaranties were "absolute, unconditional, present, and continuing

guaranty of payment of the Guarantee Obligations."

      Defendants paid the required annual payments in March 2018 and March

2019, but failed to remit the $522,971.28 payment in 2020. On April 2, 2020,

plaintiff sent one letter to defendants, consistent with the agreements, notifying

them of the missed payment and demanding immediate payment of the overdue

balance. In the letter, plaintiff informed defendants they were required to remit

payment within ten days of the letter, and if they failed to comply, plaintiff

would consider it a default and proceed with the permitted remedies pursuant to

the promissory note and APA.

      On April 15, 2020, plaintiff informed defendants that their failure to remit

payment was an act of default and accelerated all payments of amounts owed.

Plaintiff stated immediate payment of all sums guaranteed by the note, including

both the March 21, 2020, and March 21, 2021, payments of $522,971.28 each,

and fifteen percent (15%) interest per year on the full unpaid principal amount

of $1,045,942.56 were due. The demand letter stipulated the payment of the

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                                        6
guaranty obligations must be made within ten days of April 15, 2020.

Defendants did not respond to either letter.

      On May 18, 2020, plaintiff sued defendants, alleging defendants defaulted

under the terms of the promissory note and guaranties of the promissory note.

Plaintiff demanded judgment, with interest and attorney's fees pursuant to the

default rate in the APA and note.       Plaintiff further alleged the guarantors

breached the terms of their executed guaranty agreements and requested the

same judgment.

      On July 17, 2020, defendants filed an answer and four affirmative

defenses, claiming (1) plaintiff's complaint failed to state a claim upon which

relief may be granted; (2) plaintiff's claims were barred, in whole or in part,

based on fraud; (3) plaintiff's claims were barred, in whole or in part, based on

failure or lack of consideration; and (4) plaintiff's claims were barred, in whole

or in part, based on the doctrine of estoppel.

      On May 20, 2021, plaintiff filed a motion for summary judgment . In

opposition, defendants filed a certification from ASiM and Eli Global's portfolio

manager, Scott Hall (Hall). Hall stated plaintiff provided a 2016 profit and loss

statement to defendants, during the due diligence period prior to the acquisition

of the business, that showed a 2016 net income of $1,498,253. Hall contended

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                                        7
plaintiffs made material omissions regarding the statements in breach of

accounting standards and the statements were not accurate. Hall alleged the

business' net income was negative in 2017, 2019, and 2020, which indicate d a

material omission must have been made. Hall also asserted that had plaintiff

accurately represented the financial status of the business, defendants would not

have agreed to the terms of the APA, promissory note, or guaranties. Lastly,

Hall stated ASiM could no longer afford to make annual note payments because

of the disastrous effects of plaintiff's fraud and the COVID-19 pandemic.

      On October 8, 2021, the trial court heard oral argument regarding the

motion for summary judgment and defendant's motion to extend discovery. In

an order and oral statement of reasons issued on December 30, 2021, the trial

court granted summary judgment to plaintiff.

      The court noted defendants made three arguments.         First, defendants

argued during the due diligence period, plaintiff made misrepresentations about

the health of the business.    They claimed they were fraudulently induced,

specifically claiming there were inaccurate financial representations from

plaintiff by "pointing to a . . . dramatic loss of value in the subsequent years

after the sale." Second, defendants claimed the pandemic prevented them from

making the annual payments and "even if a contract does not expressly provide

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                                       8
[a] force majure [sic] clause, if an unfor[e]seen condition arises that makes

performance impractical, a court can relieve a party of that duty of performance

[as it] unexpectedly bec[a]me impossible, pointing to Facto v. Pantagis, 390 N.J.

Super. 227[, ]231 (App. Div. 2007)." Third, ASiM CE and eRad were not parties

to the promissory note or guaranties and should be dismissed entirely.

      The court determined there were "no facts alleging fraud, or ple[a]d with

particularity, as required, nor [were facts] set forth in the opposition papers with

particularity." Rather, it found, defendants made "[j]ust a general statement

repeating the income loss." The court held that the terms and conditions of the

promissory note were clear and unequivocal. Specifically:

            [plaintiff] received a promissory note from ASiM in the
            principal amount of $2,091,885.12, securing the
            balance of the purchase price of assets, which were the
            subject of the asset purchase agreement. The note
            between [plaintiff] and ASiM contains straightforward
            financial payment obligations, with specific time
            frames. The note clearly identifies that any deviation
            from the time that payments are due is a breach of the
            agreement.

                  The record is clear that after the asset purchase
            agreement was entered into, in accordance with the
            terms of . . . the agreement, payments were made to
            [plaintiff], under the terms of the note, up and until
            March of 2020. Clearly, at that point, [defendants]
            stopped making payments and failed to satisfy its
            obligations under the note.

                                                                              A-0142-22
                                         9
        In its analysis, the court determined there was no material dispute of fact

regarding the guaranties, no factual dispute defendants breached their

obligations, and defendants did not provide a legal or factual basis for failing to

make the required payments. Defendants did not respond to the demand for

immediate payment and the note terms were clear. Additionally, it concluded

the guarantors executed valid guaranties and were clearly in breach. The court

found there was no material dispute of fact and defendants did not have a valid

defense "other than general denials and some vague unspecified fraudulent

claim, without any facts whatsoever."

        The court held plaintiff was entitled to summary judgment against ASiM,

Eli Global, and Lindberg 3 and ordered defendants to pay the remaining unpaid

principal amount of $1,045,942.50 and fifteen percent (15%) interest.

Additionally, the trial court held defendants were obligated to pay plaintiffs'

attorney's fees and costs and directed plaintiff to submit an affidavit of its fees.

        On March 3, 2022, plaintiff filed an affidavit of services and documents

in support of its application for attorney's fees. On March 4, 2022, the court

awarded plaintiff attorney's fees and costs in the amount of $75,436 and

$2,535.38 respectively. On March 24, 2022, defendants filed a motion for

3
    Plaintiff filed a motion stipulating to the dismissal of ASiM CE and eRad.
                                                                              A-0142-22
                                        10
reconsideration of the court's order and the court granted the motion and

scheduled a hearing.

        The court's final order was entered on July 14, 2022, and later amended

on August 4, 2022. After careful analysis, the court ordered defendants to pay

plaintiff's attorney's fees in the amount of $72,696 and costs in the amount of

$2,535.38. First, it considered the calculation of reasonable attorney's fees it

may award, based on the lodestar analysis. 4 The court then explained it reviewed

the affidavit of services in consideration of defendants' objections to certain

billing entries and made reductions to the entries. The reductions were what the

court considered "the possibility of double billing or in [the] very minor instance

of excessive billing." The court made reductions to nine dates between March

2020 and September 2021 and reduced "the requested attorney’s fees by the

amount of $2,740." It concluded the final amount of attorney’s fees of $72,696

and the costs of $2,535.38 were appropriate.

        This appeal followed.

                                         II.

        We review de novo orders granting summary judgment, applying the same

standard that governed the trial court's ruling. Lee v. Brown, 232 N.J. 114, 126,

4
    Litton Indus., Inc. v. IMO Indus., Inc., 200 N.J. 372, 386, 389 (2009).
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                                        11
(2018); see also Bhagat v. Bhagat, 217 N.J. 22, 38 (2014). Summary judgment

will be granted if, viewing the competent evidential materials in the light most

favorable to the non-moving party, "there is no genuine issue of material fact

and 'the moving party is entitled to a judgment or order as a matter of law.'"

Conley v. Guerrero, 228 N.J. 339, 346 (2017) (quoting Templo Fuente De Vida

Corp. v. Nat'l Union Fire Ins. Co. of Pittsburgh, 224 N.J. 189, 199 (2016));

Crisitello v. St. Theresa Sch., 255 N.J. 200, 218 (2023).

      We are mindful "[a]n issue of fact is genuine only if, considering the

burden of persuasion at trial, the evidence submitted by the parties on the

motion, together with all legitimate inferences therefrom favoring the non -

moving party, would require submission of the issue to the trier of fact." R.

4:46-2(c); see also Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540

(1995). "The practical effect of this rule is that neither the motion court nor an

appellate court can ignore the elements of the cause of action or the evidential

standard governing the cause of action." Bhagat, 217 N.J. at 38. "When no

issue of fact exists, and only a question of law remains, this [c]ourt affords no

special deference to the legal determinations of the trial court." Templo Fuente,

224 N.J. at 199.

                                                                            A-0142-22
                                       12
      A. Defendants' Fraudulent Inducement Defense.

      Defendants argue they alleged a material issue of fact regarding plaintiff's

financial statements that precluded summary judgment. Specifically, defendants

contend plaintiff made financial misrepresentations regarding the financial

health of the business that induced them to enter the APA and sign the note and

guaranties.   Defendants allege plaintiff represented the business's financial

position was strong prior to the acquisition, with a net income of $1,498,253.

However, after the acquisition, the net income immediately diminished in the

following years. Defendants argued the drastic loss in value is an indication

plaintiff "made material omissions regarding its 2016 financial statements in

breach of [accounting] standards and that such statements were not accurate."

As a result, defendants conclude they were fraudulently induced into the Note

and guaranties, and that fraud precluded summary judgment.

      "In all allegations of misrepresentation [or] fraud . . . particulars of the

wrong, with dates and items, if necessary, shall be stated insofar as [is]

practicable." R. 4:5-8(a). To prevail on a claim of fraudulent inducement, a

defendant must demonstrate the five elements of common-law fraud: "(1) a

material misrepresentation of a presently existing or past fact; (2) knowledge or

belief by the [party asserting fraud] of its falsity; (3) an intention that the other

                                                                               A-0142-22
                                        13
[party] rely on it; (4) reasonable reliance thereon by the other [party]; and (5)

resulting damages."    Gennari v. Weichert Co. Realtors, 148 N.J. 582, 610

(1997).

      Defendants failed to plead this defense with particularity, pursuant to R.

4:5-4 and R. 4:5-8, and failed to put forth specific facts in opposition to summary

judgment.    Hall's certification contained only unsupported opinions and

conclusory statements.     Hall's statements and defendants' argument do not

specify what the misrepresentations were, which representative made them,

which accounting standards were violated, how those violations fraudulently

induced defendants, or how those misrepresentations were relied upon by

defendants, who had their own obligation to conduct due diligence.

      Defendants did not produce evidence to the trial court that would defeat a

summary judgment motion and fail to show, on appeal, any particular facts in

the record to support their defense. Defendants simply argue the net income

loss is an indication there must have been misrepresentation. To demonstrate

the existence of a "genuine issue [of] material fact" and survive a summary

judgment motion, "the opposing party [must] do more than 'point[ ] to any fact

in dispute.'" Globe Motor Co. v. Igdalev, 225 N.J. 469, 479 (2016) (emphasis

omitted) (quoting Brill, 142 N.J. at 529). Defendants failed to sustain their

                                                                             A-0142-22
                                       14
burden of presenting a genuine issue for trial or asserting a defense with

specificity; mere allegations will not suffice.

      B. Defendants' Breaches.

      Defendants do not dispute that ASiM, ASiM CE, and eRAD executed the

APA with Galen for the purchase of the business. They do not dispute the

promissory note is in default. Nor do they contest the existence of the guaranties

executed by Lindberg and Eli Global. Defendants fail to present any evidence

to the contrary and do not contend otherwise on appeal.

      To enforce a promise to be liable for the obligation of another person, the

agreement "shall be in a writing signed by the person assuming liability or by

that person's agent." N.J.S.A. 25:1-15. "Generally, a guarantor is a different

person from the maker or, if the same person, signs in different capacities when

signing as maker and guarantor (e.g., an individual may sign as an officer of a

corporate maker and also sign individually as a guarantor of the corporate

obligation)." Ligran, Inc. v. Medlawtel, 86 N.J. 583, 589 (1981). "A guaranty

is a separate and independent contract. The guarantor is not a party to the

contract between the principal obligor and the guarantee, and the principal

obligor is not a necessary party to the contract of guaranty." Great Falls Bank v.

Pardo, 263 N.J. Super. 388, 398 n.5 (Ch. Div. 1993), aff'd, 273 N.J. Super. 542

                                                                            A-0142-22
                                       15
(App. Div. 1994). The terms of a guaranty must be read like any other contract,

according to its clear terms to manifest the objective expectations of the parties.

Housatonic Bank & Tr. Co. v. Fleming, 234 N.J. Super. 79, 82 (App. Div. 1989).

Pursuant to the terms of their respective guaranties, Lindberg and Eli Global are

liable for the outstanding obligations.

      C. Award of Attorney's Fees and Costs.

      Defendants argue the trial judge erred by failing to make all required fact

findings needed to support an award of attorney's fees. Defendants acknowledge

the court discussed the reasonableness of the attorney's rates, "the types of

services provided," and other RPC 1.5(a) factors, but argue that the trial court

did not specify those factors. Defendants also argue plaintiff's affidavit of

services did not address all the factors enumerated by RPC 1.5(a) requiring

remand. We disagree.

      An appellate court accords significant deference to the trial judge's

determinations of fee awards and will "disturb[] [those awards] only on the

rarest of occasions, and then only because of a clear abuse of discretion."

Packard–Bamberger & Co. v. Collier, 167 N.J. 427, 444 (2001) (quoting

Rendine v. Pantzer, 141 N.J. 292, 317 (1995)). The trial court correctly found

the parties' agreements provided for attorney's fees and costs in the event of a

                                                                             A-0142-22
                                          16
breach. It calculated the lodestar and multiplied it by a reasonable hourly rate.

Litton, 200 N.J. at 386 (citing Furst v. Einstein Moomjy, Inc., 182 N.J. 1, 21

(2004)). It reviewed plaintiff's counsel's affidavit of services addressing the

factors enumerated by RPC 1.5(a). The trial court took pains to address each

objection raised by defendants and adjusted the fees where it found it was

appropriate. We discern no abuse of discretion and affirm the award of counsel

fees and costs.

      Affirmed.

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