Court Opinion

ID: 4536471
Source: CourtListenerOpinion
Date Created: 2020-05-26 14:08:23.836552+00
Date Added: 2024-06-11T08:48:49.254644
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NOT FOR PUBLICATION WITHOUT THE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-4304-18T2

AAR RESTORATIONS,
INC., d/b/a AMERICAN
ARCHITECTURAL
RESTORATION,

          Plaintiff-Respondent,

v.

MARK DONNELLY & SON
CONSTRUCTION, LLC,

     Defendant-Appellant.1
_______________________________

                   Submitted May 12, 2020 – Decided May 26, 2020

                   Before Judges Fisher and Accurso.

                   On appeal from the Superior Court of New Jersey, Law
                   Division, Bergen County, Docket No. L-7792-16.

1
  Numerous submissions, including the notice of appeal, the initial brief, and
the reply brief identify the appellant as Mark Donnelly & Son Construction,
LLC. We assume, however, from the content of those submissions that Mark
Donnelly, in his individual capacity, is the true appellant and that counsel, while
identifying himself in the numerous submissions as counsel for the LLC, appears
only on behalf of Donnelly, since the arguments focus on the judgment against
Donnelly, not the LLC.
             Abrahamsengrant, LLC, attorneys for              appellant
             (Richard J. Abrahamsen, on the brief).

             PinilisHalpern, LLP, attorneys for respondent (William
             J. Pinilis, on the brief).

PER CURIAM

      This action started out simply enough.            In 2016, plaintiff AAR

Restoration, Inc. (plaintiff) filed a complaint against only one defendant – Mark

Donnelly & Son Construction, LLC (the LLC) – seeking damages arising from

the LLC's performance of a construction contract.           While in court for a

conference in August 2018, the parties reached an amicable resolution, and

counsel then placed what they described as their "somewhat preliminary"

agreement on the record with the understanding that their oral description would

"be followed by a written settlement agreement."

      As described in open court, the settlement called for the LLC's payment

to plaintiff of $50,000, at the rate of $10,000 per year, with the first installment

due on September 1, 2018. They agreed that any default would be followed by

"notice and a grace period of five days" and, absent a cure of the default, plaintiff

would have the right "to apply to the [c]ourt, ex parte, for the entry of judgment

. . . in the total amount of the claim, which is $100,000." In open court, counsel

mentioned as well that plaintiff promised additional work for the LLC, and that

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"the settlement is going to be personally guaranteed by the princip[al] of the

defendant," ostensibly meaning Mark Donnelly.

      The parties' representatives – including Mark Donnelly – were in court as

this oral understanding was placed on the record; in fact, plaintiff's counsel

advised the court that "the parties [reached the settlement] themselves, without

really much participation from counsel." The LLC's attorney acknowledged that

his counterpart's description of the settlement constituted "the framework." And

both principals testified briefly that they had indeed agreed to settle their

disputes and that the attorneys' oral description was accurate.

      Soon after, the parties filed a pleading entitled "settlement agreement and

mutual releases."      That document departed in some respects from the

understanding orally described in open court. Instead of September 1, 2018, the

first $10,000 payment was scheduled for thirty days later. The document's third

paragraph required plaintiff, upon a default, to give "written notice" to "counsel

for the [d]efendant" and, absent a cure within ten days, plaintiff could seek a

judgment. But, instead of the $100,000 to which plaintiff would be entitled on

default as orally agreed, the written agreement permitted plaintiff to apply only

for a $75,000 judgment. This third paragraph included an agreement that "any

defaulting party shall be liable for all reasonable attorneys' fees incurred . . . in

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an effort to enforce the terms of this [a]greement," another term not mentioned

when the settlement was described in open court.

      The parties expressed in the fourth paragraph – with emphasis – that the

writing "constitute[d] the entire agreement among parties named herein." That

paragraph also declared that "this agreement shall replace all previous written

or oral negotiations, commitments and writings" (emphasis added).

      The tenth paragraph, entitled "personal guarantees," states that:

            Mark Donnelly & Son Construction, LLC have [sic]
            agreed to personally guarantee full and timely payment
            of the Settlement Agreement and all payments required
            under this Agreement. Any judgment entered pursuant
            to Paragraph 3 above shall be entered against Mark
            Donnelly & Son Construction, LLC.

While the document is signed by Mark Donnelly "individually and for [the

LLC]," neither the tenth paragraph nor any other part of the written document

contained an agreement by Donnelly to personally guarantee the LLC's

performance of the settlement agreement.

      When the LLC failed to make the first payment, plaintiff's counsel served

notice on the LLC's counsel. When the default wasn't cured, plaintiff filed a

motion, on notice to the LLC's attorney, seeking entry of a judgment against

both the LLC and Donnelly. Such a judgment was entered on November 9,

2018; it included a provision which allowed plaintiff to apply for counsel fees

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based on the parties' agreement that the prevailing party would be entitled to

reasonable counsel fees. Donnelly filed a pro se motion to vacate the default

judgment. Plaintiff's counsel responded that the motion was filed in the wrong

court and apparently the court agreed, since it appears the motion was never

decided.

       Plaintiff later moved for an order in aid of its efforts to execute on the

judgment, seeking, among other things, an order compelling Donnelly to comply

with an information subpoena. In response, Donnelly – through counsel – cross-

moved to vacate the judgment. Despite plaintiff's counsel's acknowledgement

that the written agreement's personal guarantee provision did not impose such

an obligation on Donnelly, the judge apparently – and without an evidentiary

hearing – determined that the agreement counsel described previously in open

court superseded whatever the parties expressed in their written agreement, even

though the written agreement stated that it superseded all prior "oral . . .

commitments."

       Donnelly appeals,2 arguing the judge erred in denying his motion to vacate

the judgment against him, first, because the process employed by plaintiff

violated the written settlement agreement and deprived him of due process.

2
    See n.1, above.
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Donnelly also contends that the judge erred in enforcing the oral description of

the settlement agreement rather than the written agreement, which by its very

terms negated the relevance of the previous oral description of the agreement.

We agree that the judge erred in determining on this record that Donnelly had

agreed to personally guarantee the LLC's performance of the settlement

agreement.

      First, let's get out of the way the rubric that the settlement of lawsuits

"ranks high in our public policy." Nolan v. Lee Ho, 120 N.J. 465, 472 (1990)

(quoting Jannarone v. W.T. Co., 65 N.J. Super. 472, 476 (App. Div. 1961)).

That is certainly true but not particularly relevant here. No one questions that

the parties settled the disputes pleaded in the complaint. The question that was

before the trial court – and now before us – concerns only the terms of their

settlement agreement.

      Settlement agreements are to be treated and enforced like any other

contract.    See Brundage v. Estate of Carambio, 195 N.J. 575, 601 (2008)

(declaring that "[a]n agreement to settle a lawsuit is a contract, which like all

contracts, may be freely entered into and which a court, absent a demonstration

of 'fraud or other compelling circumstances,' should honor and enforce as it does

other contracts," quoting Pascarella v. Bruck, 190 N.J. Super. 118, 124-25 (App.

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Div. 1983)). On being asked to enforce or provide a remedy for a party's breach,

a court must first ascertain whether the contract permits the relief sought. When

the parties announced to the trial judge that they had resolved their differences,

they concededly placed on the record only generalities and some material terms ,

all the while recognizing the need for a written contract. Indeed, the contract

drafted by plaintiff's counsel declared that it superseded all prior "oral . . .

commitments."

      That written contract, as plaintiff recognized during oral argument on the

motion to vacate, lacks a promise by Donnelly to personally guarantee the LLC's

performance, and did not provide a mechanism – like it did for the LLC – by

which plaintiff might seek relief against Donnelly short of filing and serving a

summons and complaint against him.          So, we agree with Donnelly that a

judgment could not be entered against him in the manner that occurred here. He

was never served with process and, despite his awareness of the proceedings

against the LLC, the written settlement agreement – which expressly constitutes

the parties' "entire" agreement – does not provide a shortcut for entry of

judgment against Donnelly individually. For that reason alone, we reverse the

denial of Donnelly's motion to vacate the default judgment.

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      The parties' settlement agreement also lacks Donnelly's personal

guarantee of the LLC's performance. Plaintiff, in fact, acknowledges this,

claiming its absence was an oversight. Because such an obligation may have

originally been intended – as suggested by the oral understanding placed on the

record – it may be that plaintiff has a viable claim for reformation of the written

settlement agreement.    We neither offer nor intimate any view of whether

plaintiff is entitled to reformation; we conclude only that such relief could not

be granted in an action in which the party against whom that relief was sought

– Donnelly, individually – was not properly served or notified. Nor could

reformation be granted in light of the stark conflicts between the oral description

of the parties' agreement and the formal contract, without an evidentiary hearing.

      Because we conclude that the process adopted to obtain a judgment

against Donnelly was flawed, and because the question the judge actually if only

implicitly resolved – whether the written agreement requires reformation – was

fact-sensitive and could not be determined without an evidentiary hearing, we

reverse the order denying Donnelly's motion to vacate, and we direct the entry

of an order vacating the judgment insofar as it awarded relief against him. 3

3
  No argument has been made to suggest any error in the entry of the judgment
against the LLC.
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Indeed, because Donnelly was never named as a party and never served with

process, and because a claim for reformation of the contract – assuming the

parties truly intended to render Donnelly liable for the LLC's performance of the

settlement agreement and assuming that intention was merely left out due to a

mutual mistake – exceeds the boundaries of the settled action, we conclude that

any claim for relief against Donnelly must proceed by way of a separate suit.

      Reversed and remanded for entry of an order in conformity with this

opinion. We do not retain jurisdiction.

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