Court Opinion

ID: 6496488
Source: CourtListenerOpinion
Date Created: 2022-06-29 20:10:23.97296+00
Date Added: 2024-06-11T09:08:07.637601
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NOT FOR PUBLICATION WITHOUT THE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-3698-20

FRANKEL AND RUBINSON,

          Plaintiff-Appellant,

v.

RAYMOND ZOLA, individually
and trading as ROCK
FOUNDATION, LLC,

     Defendant-Respondent.
___________________________

                    Argued June 9, 2022 – Decided June 24, 2022

                    Before Judges Haas and Mitterhoff.

                    On appeal from the Superior Court of New Jersey, Law
                    Division, Camden County, Docket No. L-3742-20.

                    Michael J. Ward, IV, argued the cause for appellant.

                    Jo-Leo W. Carney-Waterton argued the cause for
                    respondent.

PER CURIAM
       Plaintiff Frankel and Rubinson appeals from a July 9, 2021 order

dismissing its claim for fraud and denying its request for prejudgment interest.

We affirm in part and reverse and remand in part.

       We discern the following facts from the record. On May 6, 2009,

plaintiff, a general partnership, entered into a commercial lease agreement with

defendant Raymond Zola and Rock Foundation LLC 1. The lease agreement

included the following statement: "I, Raymond M. Zola, do hereby personally

guarantee the performance by[], Rock Foundation, LLC[,] a Limited Liability

New Jersey Corporation of all its obligations, duties[,] and covenants, without

limitation,[]under the aforesaid Building Lease Agreement." Defendant signed

the lease agreement twice, once as the tenant acknowledging the terms of the

lease and once as himself acknowledging the personal guarantee.           After

defendant signed the lease, he began to operate his automobile lubrication

business, Cornerstone Quick Lube, in the leased building.

       Over the years, defendant experienced problems with his ability to pay

rent as exhibited by his bank returning several checks to plaintiff due to

insufficient funds. On June 13, 2014, plaintiff notified defendant that he was

in default of the lease agreement and owed $16,745.65.

1
    The record also refers to the LLC as Solid Rock Foundation LLC. See e.g.
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      In 2017, plaintiff heard that defendant was attempting to sell his

automobile lubrication business. In or around April 2018, defendant told

plaintiff he found a buyer and that he wanted to terminate his lease early. In

the interim, his rent arrearages continued to increase.

      On May 1, 2018, the parties entered into a termination agreement. In

the agreement, "Ray Zola T/A Rock Foundation LLC" agreed to pay

$38,177.24. Defendant signed the termination agreement and tendered check

number 3961 for $38,177.24. Defendant claimed plaintiff would not sign the

termination agreement unless he tendered a signed check. Plaintiff asserted

that at the time defendant tendered the check, he asked plaintiff to wait to cash

it until he could insure that sufficient funds were available in his bank account.

Defendant allegedly told plaintiff there would be sufficient funds after the sale

of his business.

      During negotiations for the sale of defendant's business, a dispute arose

between defendant and the buyer, which resulted in a lawsuit. The matter

settled in March 2019, and the buyer paid defendant $34,830. Defendant

claimed plaintiff was present for the settlement and heard how much money

defendant would receive and when the money would be deposited. Defendant

alleged he never told plaintiff that he would notify the partn ership when

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sufficient funds would be available, and he eventually paid off other debts

owed by Rock Foundation and closed the business.

      Plaintiff alleged defendant called plaintiff to inform the partnership that

he did not get all the money from the sale of his business, and that even if the

money from the settlement was not enough to satisfy the amount owed, he

would still have sufficient funds from his insurance settlement to pay the check

in full. Plaintiff alleged he never received payment despite patiently waiting

for defendant to have sufficient funds, periodically checking in with defendant

and his bank, and continually being assured of payment. Defendant denied

telling plaintiff he would pay the rent arrearages from the proceeds of an

insurance settlement and denied offering to pay the debts of Rock Foundation.

      On November 10, 2020, plaintiff filed a complaint alleging breach of

contract and fraud. On May 28, 2021, following discovery, plaintiff moved for

summary judgment on the issue of defendant's liability in the amount of

$38,177.44 plus the loss of interest that accrued subsequent to May 1, 2018. On

June 15, 2021, defendant cross-moved for summary judgment, arguing

defendant was not personally liable and plaintiff's liability claim was barred by

waiver and estoppel.

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      On July 9, 2021, the parties appeared before the motion judge. After

hearing from the parties, the judge first found defendant's waiver and estoppel

arguments to be without merit. The judge reasoned there was no waiver because

defendant "did not send a letter, did not send any communication whatsoever in

which he could rely upon that there was a waiver or that . . . the money was

being foregone." The judge stated that plaintiff did not wait an unreasonable

period of time to file the lawsuit, especially given the pandemic. The judge

explained the case was "a very straightforward . . . breach of contract claim

where one party owes the other party money, and the other party didn't pay."

The judge found defendant personally liable because defendant personally

signed the termination agreement and did not sign it as a member only. The

judge did not see any facts to support a fraud claim.

      Accordingly, the judge partially granted plaintiff's motion for summary

judgment as to the liability issue in an order and oral decision. The judge found

defendant and Rock Foundation LLC jointly and severally liable in the amount

of $38,177.24. The judge also dismissed, with prejudice, plaintiff's fraud claim,

and she did not award prejudgment interest.       Finally, the judge dismissed

defendant's cross-motion for summary judgment. This appeal followed.

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      On appeal, plaintiff presents the following argument for our

consideration:

            POINT I

            THE AVAILABLE EVIDENCE BEFORE THE
            MOTION JUDGE CONFIRMED THAT PLAINTIFF
            WAS INDUCED TO RELY UPON, AND DID
            REASONABLY RELY UPON TO PLAINTIFF'S
            DETRIMENT, THE FALSE AND KNOWINGLY
            MISLEADING STATEMENTS OF DEFENDANT . . .,
            AND THEREFORE, THE COURT ERRED BY (1)
            DISMISSING PLAINTIFF'S CLAIM THAT IT WAS
            DEFRAUDED BY DEFENDANT . . ., AND (2) NOT
            AWARDING PLAINTIFF HIS REQUEST FOR
            PRE[]JUDGMENT INTEREST.

      Appellate review of a trial judge's grant or denial of summary judgment is

de novo. Branch v. Cream-O-Land Dairy, 244 N.J. 567, 582 (2021). We

consider, as the motion judge did, "whether the competent evidential materials

presented, when viewed in the light most favorable to the non-moving party, are

sufficient to permit a rational factfinder to resolve the alleged disputed issue in

favor of the non-moving party." Brill v. Guardian Life Ins. Co. of Am., 142 N.J.

520, 540 (1995).     Summary judgment must be granted "if the pleadings,

depositions, answers to interrogatories and admissions on file, together with the

affidavits, if any, show that there is no genuine issue as to any material fact

challenged and that the moving party is entitled to a judgment or order as a

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matter of law." Templo Fuente De Vida Corp. v. Nat'l Union Fire Ins. Co. of

Pittsburgh, 224 N.J. 189, 199 (2016) (quoting R. 4:46-2(c)).

      "To establish common-law fraud, a plaintiff must prove: '(1) a material

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

the defendant of its falsity; (3) an intention that the other person rely on it; (4)

reasonable reliance thereon by the other person; and (5) resulting damages.'"

Banco Popular N. Am. v. Gandi, 184 N.J. 161, 172-73 (2005) (quoting Gennari

v. Weichert Co. Realtors, 148 N.J. 582, 610 (1997)). "Fraud is not presumed; it

must be proven through clear and convincing evidence." Stochastic Decisions,

Inc. v. DiDomenico, 236 N.J. Super. 388, 395 (App. Div. 1989).

      Guided by these principles, we reject plaintiff's argument that the judge

erred in dismissing plaintiff's fraud claim because the judge correctly found that

plaintiff did not prove the elements of fraud. The parties completed discovery,

and plaintiff, by its own admission, presented all the evidence it wanted to

present. Based on the record provided, it is clear that plaintiff failed to establish

through clear and convincing evidence that defendant made any material

misrepresentations with knowledge or belief of its falsity or that plaintiff

reasonably relied on defendant's alleged misrepresentations.          As the judge

pointed out, this is a simple contract matter in which defendant is liable to pay

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the rent arrearages the parties contracted for. Thus, we affirm the judge's

dismissal of plaintiff's fraud claim.

      The judge, however, erred in declining to award plaintiff prejudgment

interest. We review an award of prejudgment interest and the calculation thereof

for abuse of discretion. Litton Indus., Inc. v. IMO Indus., Inc., 200 N.J. 372,

390 (2009). A trial court decision will constitute an abuse of discretion where

"the decision [was] made without a rational explanation, inexplicably departed

from established policies, or rested on an impermissible basis." Saffos v. Avaya

Inc., 419 N.J. Super. 244, 271 (App. Div. 2011).

      "[T]he award of prejudgment interest on contract and equitable claims is

based on equitable principles." Cnty. of Essex v. First Union Nat. Bank, 186

N.J. 46, 61 (2006). "The equitable purpose of awarding prejudgment interest is

compensatory, 'to indemnify the claimant for the loss of what the moneys due

[to] him would presumably have earned if the payment had not been delayed.'"

Cnty. of Essex v. Waldman, 244 N.J. Super. 647, 667 (App. Div. 1990) (quoting

Busik v. Levine, 63 N.J. 351, 358 (1973)).

            In awarding prejudgment interest, "[t]he basic
            consideration is that the defendant has had the use, and
            the plaintiff has not, of the amount in question; and the
            interest factor simply covers the value of the sum
            awarded for the prejudgment period during which the

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                defendant had the benefit of monies to which the
                plaintiff is found to have been earlier entitled."

                [First Union Nat. Bank, 186 N.J. at 61 (quoting Rova
                Farms Resort, Inc. v. Invs. Ins. Co., 65 N.J. 474, 506
                (1974)).]

      Here, despite properly finding that defendant was liable for the breach of

contract claim, the judge denied plaintiff's request for prejudgment interest

without making any findings as required by Rule 1:7-4. See also Salch v. Salch,

240 N.J. Super. 441, 443 (App. Div. 1990) ("Meaningful appellate review is

inhibited unless the judge sets forth the reasons for his or her opinion.").

Because defendant benefited from money that rightfully belonged to plaintiff,

the judge mistakenly exercised her discretion.        Therefore, we reverse and

remand to the trial court for an award of prejudgment interest to be added to the

judgment.

      Affirmed in part, reversed and remanded in part.         We do not retain

jurisdiction.

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