Court Opinion

ID: 8405996
Source: CourtListenerOpinion
Date Created: 2022-10-27 14:05:44.177302+00
Date Added: 2024-06-11T16:47:05.400180
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NOT FOR PUBLICATION WITHOUT THE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-3169-20

ANY GARMENT UNION, LLC
and ELIZABETH BORBOLLA,

          Plaintiffs-Appellants,

v.

DRY CLEAN EXPRESS I, LLC,
TANYA VASQUEZ, MATSAMY
VASQUEZ, PATRIOT BUSINESS
ADVISORS, LLC, LILIANE
TIETJEN, ANY GARMENT
CLEANERS 2, LLC, CARLOS
MARROQUIN, DRY CLEAN
SERVICES, LLC, SALMON,
RICCHEZZA, SINGER & TURCHI,
LLP, RONALD L. DAUGHERTY,
ESQ., ANY GARMENT
CLEANERS 3, LLC, and CHM
DRY CLEANING SERVICE, LLC,

          Defendants-Respondents,

and

ROCCO P. PERATE and
BENEFICIAL BANK,

          Defendants.
______________________________

           Argued September 29, 2022 – Decided October 27, 2022

           Before Judges Sumners, Geiger, and Berdote Byrne.

           On appeal from the Superior Court of New Jersey, Law
           Division, Union County, Docket No. L-4367-18.

           Michael Confusione argued the cause for appellants
           (Hegge & Confusione, LLC, attorneys; Michael
           Confusione, of counsel and on the briefs).

           James Bell argued the cause for respondents Dry Clean
           Express I, LLC, Tanya Vasquez, Matsamy Vasquez,
           Patriot Business Advisors, LLC, Liliane Tietjen, Any
           Garment Cleaners 2, LLC, Carlos Marroquin, Dry
           Clean Services, LLC, Any Garment Cleaners 3, LLC,
           and CHM Dry Cleaning Service, LLC, (Bell & Bell
           LLP, attorneys; James Bell, of counsel and on the
           brief).

           Matthew S. Marrone argued the cause for respondents
           Salmon, Ricchezza, Singer & Turchi, LLP, and Ronald
           L. Daugherty, Esq. (Goldberg Segalla, LLP, attorneys;
           Matthew S. Marrone, of counsel and on the brief).

PER CURIAM

     Plaintiffs Any Garment Union LLC (AGU) and Elizabeth Borbolla appeal

from Law Division orders that granted summary judgment dismissing their

remaining claims against defendants Dry Clean Express I, LLC (DCE I); Tanya

                                                                     A-3169-20
                                    2
Vasquez (Tanya)1; Matsamy Vasquez (Matsamy); Patriot Business Advisors

LLC (PBA); Liliane Tietjen; Any Garment Cleaners 2 LLC (AGC2); Carlos

Marroquin; Dry Clean Services LLC (DCS); Any Garment Cleaners 3 LLC

(AGC3); CHM Dry Cleaning Service LLC (CHM); Salmon, Ricchezza, Singer

& Turchi LLP (SRST); and Ronald L. Daugherty Esq. We affirm in part, reverse

in part, and remand for further proceedings and trial.

                                       I.

      We glean the following facts from the summary judgment record, viewing

them in the light most favorable to the non-moving plaintiffs. See Richter v.

Oakland Bd. of Educ., 246 N.J. 507, 515 (2021).

      In February 2018, Borbolla agreed to purchase a dry cleaning and laundry

business in Union known as Any Garment Cleaner (the Union store) from its

owner, DCE I. DCE I was owned by Matsamy and Tanya. The initial terms of

the agreement were set forth in an offer to purchase (OTP) and addendum.

Borbolla agreed to remit a $100,000 deposit upon acceptance of the agreement

and the balance of $1,900,000 at closing. Paragraph three of the OTP provides:

            In the event the closing does not take place by [April
            15, 2018], either party may thereafter terminate this

1
   Because two defendants share the same surname, we refer to them by their
first names. We intend no disrespect.

                                                                        A-3169-20
                                        3
            agreement unless such party is responsible for the
            delay. Upon such termination, if the delay was the fault
            of the Buyer, the deposit shall be forfeited as provided
            below, otherwise, it shall be returned to the Buyer.

Paragraph nine provides: "The Seller represents and warrants that it has good

and marketable title to the Assets being sold, and will satisfy all taxes, payroll,

liabilities and obligations of the business at or prior to Closing." Paragraph

eleven provides: "Seller shall indemnify and hold harmless Buyer from all

claims, liabilities, or obligations arising out of conduct of the Business prior to

Closing." Paragraph fourteen provides: "Both Buyer and Seller agree that any

information provided by Broker has not been verified by Broker and both parties

shall rely solely on their own due diligence and hold Broker harmless from all

claims regarding this transaction." Paragraph fifteen provides:

            Buyer agrees that if it should fail or refuse to complete
            this transaction within fourteen days after the Closing
            date [April 15, 2018,] unless amended in writing, then
            any funds on Deposit with the Broker will be forfeited
            without notice, and, at the Broker's option, shall be split
            50% to the Seller, and 50% to the Broker."

      The addendum states: "A Definitive Purchase Offer, incorporating the

terms of this Offer to Purchase, shall be agreed to by the Buyer and the Seller.

Both parties shall work cooperatively and expeditiously to complete such

Definitive Purchase Offer."     The addendum sets forth seven contingencies,

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                                        4
which include "review and approval of financials" and "SBA financing approval

at acceptable terms." It also states that the "contingencies shall expire and the

Deposit shall become non-refundable without notice to the Buyer at [3:00 p.m.]

on [April 1, 2018]. The Deposit shall be refunded to the Buyer upon Buyer's

notification to the Seller in writing, via Broker, prior to said date, that the Buyer

is canceling this Offer."

       PBA served as the broker for the transaction. Tietjen was a principal and

agent of PBA. PBA and Tietjen also served as agents of defendants and as

escrow agents for various other transactions involving defendants and their

affiliates.

       SRST is a law firm that represented defendants in related litigation and

transactions. Daugherty is an attorney at SRST. Defendant Rocco P. Perate is

an attorney and employee of defendant Beneficial Bank. While this appeal was

pending, plaintiffs dismissed their claims against Perate and Beneficial Bank

with prejudice.

       Borbolla remitted the $100,000 deposit, which was to be held in escrow

pending closing. PBA and Tietjen served as the escrow agents. The deadline

for closing was extended several times.

                                                                               A-3169-20
                                         5
        Borbolla subsequently formed AGU and signed an asset purchase

agreement (APA) on behalf of AGU with DCE I that reaffirmed the essential

terms of the transaction outlined in the OTP, added additional terms, and set

July 27, 2018, as the tentative closing date. The APA states it is a valid and

binding agreement that "supersedes all prior agreements and understandings."

It also specifically addresses the $100,000 deposit, placing it in escrow.

        Plaintiffs engaged in due diligence. Title and judgment searches revealed

liens and encumbrances affecting the marketability of title of the Union store

and real estate. In addition, investigation revealed a fraudulent conveyance

lawsuit involving the property on which the Union store is located. As a result,

the sale did not close, and the seller terminated the contract on September 27,

2018.

        More specifically, a judgment search uncovered liens against CHM, the

former owner of the Union store. CHM sold the Union store to DCE I on January

15, 2015. The stated consideration for that transfer was the assumption by DCE

I of $1,053,000 in secured debt. At the time of the sale, DCE I also executed a

$1,361,132 consulting agreement with CHM's owner, Marroquin. Marroquin is

the brother of DCE I's owner, Matsamy.

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                                        6
      Two judgments against CHM were uncovered. On July 2, 2015, the

Division of Employer Accounts obtained judgment against CHM for $20,606.

On May 5, 2016, the United States of America obtained judgment against CHM

for $180,609. In addition, UCC financing statements were filed against CHM's

assets on November 17, 2006, March 19, 2013, and March 26, 2013.

      The searches also uncovered six judgments against Marroquin. On April

8, 2009, September 10, 2013, and August 23, 2017, the United States of America

obtained judgments of $52,646, $62,697, and $27,691 against Marroquin. On

September 19, 2013, the Division of Taxation obtained judgment against

Marroquin for $29,390. On September 19, 2014, Blinds to Go obtained a

judgment against Marroquin for $911,413. Finally, on January 19, 2015, Green

Lago, LLC (Green Lago) obtained judgment against Marroquin for $542,250,

which was docketed on February 24, 2015.

      The Green Lago judgment arose from Marroquin's failure to pay a

promissory note. On November 17, 2017, after still not being paid, Green Lago

filed a complaint, alleging that Marroquin and CHM's 2015 transfer of the Union

store to DCE I "was totally without adequate consideration and was made with

the intent and purpose to hinder, delay and defraud [Green Lago] from the

collection of the indebtedness owed by Marroquin." The complaint sought to

                                                                         A-3169-20
                                      7
void the conveyance as a fraudulent transfer. On July 26, 2018, a writ of

execution was issued against DCE I. On May 20, 2019, the Law Division

updated the writ of execution issued against Marroquin to account for post-

judgment interest. The amount then owed, including interest, was $931,881.

The court also ordered that DCE I "remit payment . . . owed to . . . Marroquin

under [the c]onsulting [a]greement . . . in an amount of no less than $931,881."

The full balance owed under the consulting agreement as of the court order was

$1,065,000. Finally, the court ordered that "in the event [DCE I] . . . sell[s] the

Union dry cleaning business, the balance owed on the [Green Lago] judgment

at that time shall be paid from the closing proceeds."

      During the Green Lago dispute, notices of federal tax liens were sent to

Marroquin in the amount of $27,691 and $108,072, respectively.

      Plaintiffs' concerns regarding the marketability of title resulted in the

closing date being mutually extended multiple times. Plaintiffs' counsel sought

clarification "regarding the liens and judgments against [Marroquin] and CHM."

DCE I's counsel, Daugherty, replied by stating that the request was "ridiculous."

Daugherty maintained "[t]he equipment and business ha[d] no liens on them,"

and that "Marroquin ha[d] nothing to do with th[e] sale." In his opinion, "there

[were] no risks." The parties could not resolve the issue, and on September 27,

                                                                             A-3169-20
                                        8
2018, Daugherty sent a letter terminating the agreement because of plaintiffs'

failure to close.

        On October 18, 2018, plaintiffs' counsel contacted Tietjen, demanding

return of the $100,000 deposit. Tietjen responded that at DCE I's request, "the

funds were released."

        On December 27, 2018, plaintiffs filed this action against defendants to

recover the deposit and for other relief.      The complaint alleged breach of

contract against DCE I, Matsamy, Tanya, PBA, and Tietjen. It also asserted

causes of action under the New Jersey Racketeer Influenced and Corrupt

Organizations Act (RICO), N.J.S.A. 2C:41-1 to -6.2, civil conspiracy to commit

fraud, aiding and abetting fraud, unjust enrichment, and constructive trust

against all defendants. Lastly, it alleged breach of escrow and conversion

against PBA and Tietjen.

        Defendants moved to dismiss plaintiffs’ claims for failure to state a claim

upon which relief could be granted pursuant to Rule 4:6-2(e). On July 5, 2019,

the court denied the motion in its entirety as to DCE I, Matsamy, Tanya, PBA,

Tietjen, CHM, SRST, and Daugherty.2 The court granted the motion in part,

dismissing the claims against AGC 2, AGC 3, and DCS for violating RICO, civil

2
    The record does not reveal any ruling as to Marroquin.
                                                                             A-3169-20
                                         9
conspiracy to commit fraud, and aiding and abetting fraud, without prejudice.

Plaintiffs do not appeal from those rulings.

      Defendants, except Marroquin, filed answers.        Following discovery,

defendants moved for summary judgment. Trial was scheduled for May 17,

2021. SRST and Daugherty's motion was returnable on May 14, 2021. The

other defendants' motions were returnable on May 28, 2021. Plaintiffs opposed

the motions as untimely because they were returnable less than thirty days before

the scheduled trial date in violation of Rule 4:46-1. Plaintiffs asserted that

defendants did not establish good cause to excuse the late filings.

      Substantively, plaintiffs asserted that searches revealed outstanding

judgments, pending litigation, and unpaid taxes affected the marketability of

title. Plaintiffs argued their concerns regarding the marketability of title were

legitimate. Plaintiffs maintained that while "either side" could terminate the

transaction if closing did not occur on time, the APA was "quite clear" that

plaintiffs' deposit would not be forfeited under these circumstances. Plaintiffs

alleged that DCE I, Matsamy, Tanya, PBA, and Tietjen "totally disregarded" the

terms of the APA. Plaintiffs also alleged that Daugherty represented DCE I,

Matsamy, Tanya, CHM, and Marroquin in Green Lago's fraudulent transfer

                                                                           A-3169-20
                                      10
lawsuit and other cases, knew about, and was "concealing," the docketed

judgments, UCC financing statements, tax liens, and contested title.

      Defendants argued that the deposit was non-refundable because plaintiffs

had failed to close by the OTP's July 6, 2018 deadline. Defendants contended

that even if the APA was controlling, plaintiffs' deposit was forfeited pursuant

to the APA's terms. Defendants specifically cited to Section 10.1.2 of the APA.

Defendants also stated that none of the liens that were discovered impacted the

assets plaintiffs were purchasing.

      As to specific parties, defendants argued that AGC 2, AGC 3, DCS, CHM,

and Marroquin "ha[d] nothing to do with the failed Union [store] sale." They

also argued that "Daugherty never had possession or control over th[e] deposit,

[and] never instructed anybody to do anything with [it]."        Defendants also

pointed out that Daugherty was not a party to the contract, but merely a

representative of his client.   Finally, defendants argued the claims against

Matsamy, Tanya, and Tietjen must be dismissed because they were involved

only through their corporate entities, not in an individual capacity.

      Following oral argument on May 14 and May 28, 2021, the trial court

issued oral decisions and orders that rejected plaintiffs' procedural and

                                                                          A-3169-20
                                       11
substantive arguments and granted summary judgment to defendants, dismissing

plaintiffs' remaining claims.

      Regarding the timing of the motions, the court noted that while virtual

trials were being conducted, this action did not lend itself to a virtual format,

and the case would not be tried "in the near future."

      As to SRST and Daugherty, the court stated:

             [Daugherty’s] responsibility in this transaction was to
             draft . . . an asset purchase agreement regarding the
             business. And that’s what he did and that was the
             beginning and the end of his involvement in this matter.
             He never took the deposit . . . and he said he didn’t
             represent these other parties in these other transactions.

      In relation to the remaining defendants, the court stated that forfeiture of

the deposit was proper, and therefore, plaintiffs’ claims must be dismissed. The

court reasoned that the APA superseded only "prior agreements between the

seller and the purchaser." The OTP identified DCE I and Borbolla as the seller

and purchaser, while the APA identified DCE I and AGU as the seller and

purchaser. Because the purchasers were different in the two agreements, the

court reasoned that the OTP was not a "prior agreement[] between the purchaser

and seller." Therefore, the APA did not supersede the OTP.

      The court reasoned that even if Borbolla signed the APA, she paid the

deposit pursuant to the OTP, "which specifically states [that it] is a legal, binding

                                                                               A-3169-20
                                        12
document [and] [e]ven if that statement was not included in the [OTP], the

document satisfies the requirement[s] of [a] legally, binding document." The

court found the OTP was enforceable and the deposit became non-refundable

when the sale did not close by July 6, 2018.3 The court noted that it had not

been shown any documents suggesting that DCE I was not "ready, able and

willing" to fulfill the agreement.

      The court found the "heart" of plaintiffs' action was "a breach of contract

allegation." It noted that "[w]hile performing due diligence" plaintiffs' attorney

"noticed what he believed were certain financial irregularities." Because it

found there was no breach of contract, the court concluded it was "hard . . . to

find that there would be any of these other causes of action." According to the

court, there "can't be a conversion of the money if it was forfeited pursuant to

the agreement." The court also found there was no unjust enrichment if there

was no breach of contract since there was no wrongful taking of plaintiffs'

money. The court further found that "without a breach of contract the fraud and

the RICO [claims] are also completely defeated."

3
  Contrary to the trial court's finding, the September 27, 2018 termination letter
states the termination is due to the buyer's failure to close on September 24,
2018.
                                                                            A-3169-20
                                       13
      This appeal followed.      Plaintiffs raise the following points for our

consideration:

            POINT ONE

            THE TRIAL COURT SHOULD HAVE DENIED THE
            SUMMARY     JUDGMENT     MOTIONS    AS
            UNTIMELY.

            POINT TWO

            THE EVIDENCE SUBMITTED ON SUMMARY
            JUDGMENT WAS SUFFICIENT TO PERMIT A
            REASONABLE JURY TO FIND IN PLAINTIFFS'
            FAVOR.

                                        II.

      Rule 4:46-2(c) provides that a motion for summary judgment shall 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 issu e

as to any material fact challenged and that the moving party is entitled to a

judgment or order as a matter of law." The court must "consider 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).

                                                                             A-3169-20
                                       14
      "To decide whether a genuine issue of material fact exists, the trial court

must 'draw[] all legitimate inferences from the facts in favor of the non -moving

party.'" Friedman v. Martinez, 242 N.J. 449, 472 (2020) (alteration in original)

(quoting Globe Motor Co. v. Igdalev, 225 N.J. 469, 480 (2016)). "The court's

function is not 'to weigh the evidence and determine the truth of the matter but

to determine whether there is a genuine issue for trial.'" Rios v. Meda Pharm.,

Inc., 247 N.J. 1, 13 (2021) (quoting Brill, 142 N.J. at 540). Summary judgment

"should ordinarily not be granted where an action or defense requires

determination of a state of mind or intent, such as claims of waiver, bad faith,

fraud or duress." Pressler & Verniero, Current N.J. Court Rules, cmt. 2.3.4 on

R. 4:46-2 (2023); see also Auto Lenders v. Gentilini Ford, 181 N.J. 245, 271-72

(2004).

      Appellate courts review the trial court's grant or denial of a motion for

summary judgment de novo, applying the same standard used by the trial court.

Samolyk v. Berthe, 251 N.J. 73 (2022). We afford no deference to the trial

court's legal conclusions.

      We first address the timing of the motions.       Rule 4:46-1 states that

"motions for summary judgment shall be returnable no later than [thirty] days

before the scheduled trial date, unless the court otherwise orders for good cause

                                                                           A-3169-20
                                      15
shown . . . ." Here, the motions were not timely filed as they were returnable

three days before and eleven days after the scheduled trial date, respectively.

While the court did not expressly find good cause allowing the late filings, that

finding was implicit in its ruling.

      The trial date was clearly affected by the impact of the COVID pandemic.

The trial court found that the trial would not go forward on the scheduled trial

date or soon thereafter given its complexity. The number of defendants and

causes of action did not lend themselves to a virtual trial. We concur. This case

would not have been tried until long after the scheduled trial date. Moreover,

defendants provided the twenty-eight-days' notice required by Rule 4:46-1.

Plaintiffs do not claim that they suffered additional costs due to the late filings.

Accordingly, they were not prejudiced by the untimely filings. We discern no

abuse of discretion in considering the merits of the motions.

      Turning to the merits of the summary judgment motions, we reiterate that

the trial court found plaintiffs' remaining claims must be dismissed because the

deposit was nonrefundable under the terms of the OTP. The court determined

that the APA superseded only "prior agreements between the seller and the

purchaser."   The OTP identified DCE I as the seller and Borbolla as the

purchaser, while the APA identified DCE I as the seller and AGU as the

                                                                              A-3169-20
                                        16
purchaser. On that basis, the court reasoned that the OTP was not a "prior

agreement[] between the purchaser and seller." Therefore, the APA did not

supersede it. The court went on to state that even though Borbolla signed the

APA, she paid the deposit pursuant to the OTP, which was a "legally binding

document." Accordingly, the deposit became non-refundable on the OTP’s July

6, 2018 closing deadline.

      For the following reasons, we disagree in large part with the court's

findings, analysis, and decision. For purposes of clarity, we address each cause

of action separately.

      The Governing Contract

      We first address whether the OTP or APA governs the transaction.

"[C]ourts should interpret a contract considering 'the objective intent manifested

in the language of the contract in light of the circumstances surrounding the

transaction.'" Lederman v. Prudential Life Ins. Co. of Am., 385 N.J. Super. 324,

340 (App. Div. 2006) (alteration in original) (quoting Biovail Corp. Int'l v.

Hoechst Aktiengesellschaft, 49 F. Supp. 2d 750, 774 (D.N.J. 1999)). Intent is

not defined by the subjective expectations of the parties. Ibid. It is "revealed

by the language [of the contract]." Globe Motor, 225 N.J. at 483. "[W]ords and

phrases are not to be isolated but [instead should be] related to the context and

                                                                            A-3169-20
                                       17
the contractual scheme as a whole . . . ." Republic Bus. Credit Corp. v. Camhe-

Marcille, 381 N.J. Super. 563, 569 (App. Div. 2005) (quoting Newark

Publishers' Ass'n v. Newark Typographical Union, 22 N.J. 419, 426 (1956)); see

also Lederman, 385 N.J. Super. at 339 ("[T]he intention of the parties to [a]

contract [is] revealed by the [contractual] language . . . taken as an entirety."

(quoting Biovail, 49 F. Supp. 2d at 774)).

      With these guiding principles in mind, we conclude that the APA

superseded the OTP. First, the language of the OTP itself contemplated a

subsequent agreement when stating that a definitive purchase order still needed

to be executed. The parties then executed the anticipated definitive purchase

order, i.e., the APA, which provided that it "embodie[d] the entire agreement

and understanding, and supersedes all prior agreements and understandings[]

between the [s]eller and the [p]urchaser relating to the subject matter hereof."

These contractual provisions reflect a clear intent for the APA to be controlling.

      The fact that the OTP listed the purchaser as Borbolla and the APA listed

the purchaser as AGU does not alter this conclusion. In both agreements, th e

property, purchase price, deposit, and seller were the same. Moreover, at the

time that the OTP was signed, AGU did not exist yet. Borbolla formed it

afterward to finalize the transaction. She is the sole owner of AGU, and signed

                                                                            A-3169-20
                                       18
the APA in that capacity. Under these circumstances, it is abundantly clear that

the OTP and APA governed the same transaction between the same parties at

different times. Upon its execution, the APA superseded the OTP and governed

the transaction.

      Breach of Contract

      "To establish a claim for breach of contract, a plaintiff must provide proof

of 'a valid contract between the parties, the opposing party's failure to perform

a defined obligation under the contract, and a breach causing the claimant to

sustain[] damages.'" Nelson v. Elizabeth Bd. of Educ., 466 N.J. Super. 325, 342

(App. Div. 2021) (quoting EnviroFinance Grp., LLC v. Env't Barrier Co., 440

N.J. Super. 325, 345 (App. Div. 2015)). Generally, "the construction of a

contract is a question of law" and therefore "[t]he interpretation of a contract is

subject to de novo review by an appellate court." Kieffer v. Best Buy, 205 N.J.

213, 222-23 (2011) (quoting Jennings v. Pinto, 5 N.J. 562, 569-70 (1950)).

"Accordingly, we pay no special deference to [a] trial court's interpretation and

look at the contract with fresh eyes." Id. at 223.

      We recognize that generally, "[a]n issue regarding interpretation of a

contract clause presents a purely legal question that it is particularly suitable for

decision on a motion for summary judgment." Pressler & Verniero, cmt. 5 on

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                                        19
R. 4:46-2. However, when deciding legal issues, the trial court "cannot grant

summary judgment where material facts are in dispute." Driscoll Constr. Co. v.

State, Dep't of Transp., 371 N.J. Super. 304, 314 (App. Div. 2004).

      Plaintiffs assert breach of contract against DCE I, Matsamy, Tanya, PBA,

and Tietjen. As an initial matter, the trial court correctly dismissed the breach

of contract claims against PBA and Tietjen. Neither were parties to the OTP or

APA. In contrast, DCE I was the identified seller in both the OTP and APA.

Matsamy signed the OTP and Matsamy and Tanya signed the APA on behalf of

DCE I.

      Defendants argue if the APA controls, plaintiffs' deposit was forfeited

pursuant to Section 10.1.2 of the APA, which provides the agreement "may be

terminated . . . [b]y the [s]eller if there has been a breach of any covenant,

representation [or] warranty of the [p]urchaser, provided that the [s]eller shall

give written notice of such breach and such breach shall not be cured within ten

(10) days of the notice." In turn, Section 12.1.3 states "[i]n the event that . . .

this [a]greement is terminated in accordance with Section 10.1.2 by reason of a

default by [p]urchaser . . . the [e]scrow [a]gent shall deliver the [d]eposit

[m]onies to [s]eller."

                                                                             A-3169-20
                                       20
      Defendants have not demonstrated that plaintiffs breached any "covenant,

representation [or] warranty" of the APA. Rather, defendants have asserted that

plaintiffs "refused to close." This basis for termination is governed Section

10.1.4, not Section 10.1.2.    Section 10.1.4 provides that "either party" can

terminate the agreement in the event closing does not occur by the stated

deadline. Section 10.2 then states that "[i]n the event that this [a]greement shall

be terminated [] in accordance with Section 10.1.1 or 10.1.4 . . . [p]urchaser

shall receive the immediate return of the [d]eposit [m]onies." If the agreement

is breached by the failure to return the deposit, Section 10.2 states "the non-

breaching party may pursue all remedies available to it in law and equity." Since

the sale did not close because of the unresolved marketability of title issues, and

not due to any breach by the buyer, these sections required the deposit monies

to be returned to the buyer. Accordingly, plaintiffs had the right to pursue their

claim to the deposit.

      Matsamy and Tanya argue they were involved in the transaction through

the LLC, not in an individual capacity. They contend that the breach of contract

claim is viable only against the LLC.

      Generally, the debts, obligations, and liabilities of a limited liability

company are not the debts, obligations, and liabilities of its members or

                                                                             A-3169-20
                                        21
managers. N.J.S.A. 42:2C-30(a). Nevertheless, the power to look beyond the

corporate form is well established. Stochastic Decisions, Inc. v. DiDomenico,

236 N.J. Super. 388, 393 (App. Div. 1989). Piercing the corporate veil is an

equitable remedy whereby "the protections of corporate formation" are forfeited.

Verni ex rel. Burstein v. Harry M. Stevens, Inc., 387 N.J. Super. 160, 199 (App.

Div. 2006). "[T]he purpose of the doctrine of piercing the corporate veil is to

prevent an independent corporation from being used to defeat the ends of justice,

to perpetrate fraud, to accomplish a crime, or otherwise to evade the l aw."

Richard A. Pulaski Const. Co., Inc. v. Air Frame Hangars, Inc., 195 N.J. 457,

472 (2008) (quoting State, Dept. of Env't Prot. v. Ventron Corp., 94 N.J. 473,

500 (1983)).

      "The issue of piercing the corporate veil is submitted to the factfinder,

unless there is no evidence sufficient to justify disregard of the corporate form."

Verni, 387 N.J. Super. at 199. Before piercing the corporate veil, "evidence

must first establish an independent basis to hold the corporation liable." Sean

Wood, L.L.C. v. Hegarty Group, Inc., 422 N.J. Super. 500, 518 (App. Div.

2011). Failure to observe formalities is a significant factor in determining

whether to pierce a corporation's veil.      See, e.g., Canter v. Lakewood of

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                                       22
Voorhees, 420 N.J. Super. 508, 519 (App. Div. 2011) (discussing failure to

observe corporate formalities).

      A different standard applies to limited liability companies.      N.J.S.A.

42:2C-30 provides that "[t]he failure of a limited liability company to observe

any particular formalities relating to the exercise of its powers or management

of its activities is not a ground for imposing liability on the members or

managers for the debts, obligations, or other liabilities of the company."

Nevertheless, personal liability of a member or manager of a limited liability

company can be established where extraordinary circumstances, such as fraud

or injustice, warrant piercing the corporate veil.

      In addition to alleging that Matsamy and Tanya breached the contract,

plaintiffs claim Matsamy and Tanya engaged in civil conspiracy to commit fraud

and aiding and abetting fraud. To establish a claim of actionable fraud, "a

plaintiff must demonstrate that: (1) defendant made a material misrepresentation

or omission of fact; (2) knowing the misrepresentation to be false or

the omission to be material, and intending the other party to rely on it; and (3)

the other party did in fact rely on the misrepresentation or omission to its

detriment." Zorba Contractors, Inc. v. Hous. Auth., 362 N.J. Super. 124, 139

(App. Div. 2003) (quoting Varacallo v. Mass. Mut. Life Ins. Co., 332 N.J. Super.

                                                                           A-3169-20
                                       23
31, 43 (App. Div. 2000)). "The representation may consist of a present intention

to act or not act in the future." Stochastic, 236 N.J. Super. at 395-96. "This

intention may be derived from circumstantial evidence." Id. at 396.

      There are genuine issues of material fact in dispute with respect to these

claims that preclude summary judgment.          In 2015, Green Lago obtained

judgment against Marroquin for $542,250. The judgment remained unpaid, and

in 2017, Green Lago filed a complaint to set aside CHM and Marroquin's

allegedly fraudulent transfer of the Union store to DCE I. Matsamy and Tanya

were both named as defendants in that action, and Matsamy was deposed. These

facts were not disclosed to plaintiffs. Defendants assert that the Green Lago

litigation did not "threaten[] the assets being sold under the 2018 asset purchase

agreement." However, on May 20, 2019, the Law Division entered an order in

aid of Green Lago's collection efforts, which required DCE I to "remit payment

. . . owed to . . . Marroquin" under the parties' consulting agreement and stated

that in the event DCE I "sell[s] the Union dry cleaning business, the balance

owed on the [Green Lago] judgment at that time shall be paid from the closing

proceeds." The order also updated the amount due on the judgment to $931,881

to account for interest.   Several other sizable judgments against CHM and

                                                                            A-3169-20
                                       24
Marroquin were not disclosed, which could also impact marketability of the

Union store.

      Additionally, UCC financing statements were filed against CHM's assets.

The financing statements potentially encumbered the Union store's assets, which

were part of the sale.      See N.J.S.A. 12A:9-310(a) (providing a financing

statement is used "to perfect [a] security interest"). Finally, there were sizable

outstanding federal and state tax liens against CHM and Marroquin, which

potentially affect the Union store's assets. See 26 U.S.C. § 6321 ("If any person

liable to pay any tax neglects or refuses to pay the same after demand, the

amount . . . shall be a lien in favor of the United States upon all property and

rights to property, whether real or personal, belonging to such person."); see also

N.J.S.A. 54:44-2 ("[A New Jersey tax] debt . . . shall be a lien 4 on all the property

of the debtor.").    Plaintiffs allege defendants, through counsel, steadfastly

refused to provide information or clarification about the liens upon request.

      Whether Matsamy and Tanya knew about and concealed these tax liens is

unclear, but there is sufficient evidence in the record to raise a factual dispute

4
   N.J.S.A. 54:44-2 further states that the lien is not enforceable against an
"innocent purchaser for value in the usual course of business." Whether
Borbolla would have qualified as such a purchaser is not relevant here. Viewed
in the light most favorable to plaintiffs, the tax judgment was undisclosed, and
defendants refused to provide related information or clarification upon request.
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                                         25
for trial. Matsamy and Tanya knew about the Green Lago litigation but did not

disclose it.

      In conclusion, the record contains evidence that DCE I may be liable for

breach of contract.   The record also contains circumstantial evidence that

Matsamy and Tanya may have participated in a fraud against the buyer, thereby

providing a potential basis to pierce the corporate veil and impose individual

liability upon them. Since there are material facts in dispute and Matsamy and

Tanya have not shown they are entitled to judgment as a matter of law, summary

judgment should not have been granted to them dismissing the fraud-based

claims.

      Breach of Escrow

      Plaintiffs assert a breach of escrow claim against PBA and Tietjen. "A

fiduciary relationship is created by and inherent in the nature of an escrow

agreement." Innes v. Marzano-Lesnevich, 224 N.J. 584, 598 (2016) (quoting

Colegrove v. Behrle, 63 N.J. Super. 356, 366 (App. Div. 1960)). "An escrow

agreement imports a legal obligation on the part of the [escrow agent] to retain

[] money or documents until the performance of a condition or the happening of

an event, at which time the money or documents are to be delivered in

accordance with the terms of the agreement." Colegrove, 63 N.J. Super. at 365.

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                                      26
"[L]iability attaches to [an escrow agent] if he improperly parts with his

deposit." Cooper v. Bergton, 18 N.J. Super. 272, 277 (App. Div. 1952).

      Here, even assuming DCE I was entitled to the deposit under Sections

10.1.2 and 12.1.3, the escrow agreement provides:

            Notwithstanding [Sections 10.1.2 and 12.1.3] . . . the
            [e]scrow [a]gent shall not make delivery of the
            [d]eposit monies . . . unless it has first received the
            written approval of both parties hereto.          If any
            controversy should arise among the parties to this
            Agreement . . . [e]scrow [a]gent shall not be required to
            determine the same . . . but rather [e]scrow agent shall
            await the settlement or resolution of any such
            controversy by final, appropriate legal proceedings.

      By immediately releasing the $100,000 security deposit upon the seller's

request, PBA and Tietjen may have breached this provision. Moreover, there is

evidence suggesting that Tietjen should not be protected by PBA's corporate

status. As stated above, piercing the corporate veil can be established through

a showing of fraud. Here, Tietjen represented that she would hold the escrow

funds according to the terms of the APA and would be neutral in that role. There

are material facts in dispute as to whether this representation was false,

intentional, and detrimentally relied upon.

      Tietjen is the principal of PBA and has a direct financial stake in the

business. The OTP provided PBA would keep fifty percent of the deposit if it

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                                      27
was forfeited, and plaintiffs allege this division of funds occurred. Moreover,

Tietjen's deposition in the Green Lago litigation indicated she has known

Marroquin since 2006, and has brokered multiple deals on his and Matsamy's

behalf. This relationship places material facts in dispute as to whether Tietjen

disregarded the APA's clear terms to benefit herself and her clients. This

arguably rendered her previous representation of neutrality intentionally false.

See Stochastic, 236 N.J. Super. at 395 (stating that the intent to make a

fraudulent representation "may be derived from circumstantial evidence").

Given these disputed material facts, Tietjen should not have been released from

personal liability.

      Conversion

      Plaintiffs allege PBA and Tietjen converted the deposit monies.

"Conversion is an intentional exercise of dominion or control over a chattel

which so seriously interferes with the right of another to control it that the actor

may justly be required to pay the other the full value of the chattel." Meisels v.

Fox Rothschild LLP, 240 N.J. 286, 304 (2020) (quoting Chi. Title Ins. Co. v.

Ellis, 409 N.J. Super. 444, 456 (App. Div. 2009)). "[C]onversion applies to

money, provided that 'the money ha[s] belonged to the injured party and that it

be identifiable.'' Ibid. (quoting Ellis, 409 N.J. Super. at 455-56).

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                                        28
      PBA and Tietjen may have violated Section 12.1.4 of the APA by

releasing plaintiffs' deposit before there was "resolution of [the] controversy by

final, appropriate legal proceedings." There are disputed facts as to whether the

deposit should have been returned to plaintiffs pursuant to Sections 10.4.1 and

10.2. Because PBA and Tietjen’s actions may have deprived plaintiffs of their

contested right to these funds, the conversion claims against PBA and Tietjen

should not have been dismissed.

      Constructive Trust

      Plaintiffs seek imposition of a constructive trust against all defendants.

"A constructive trust is a remedial device through which the 'conscience of

equity' is expressed." Thompson v. City of Atl. City, 386 N.J. Super. 359, 375

(App. Div. 2006). It is imposed "when a person has acquired possession of or

title to property under circumstances which, in good conscience, will not allow

the property's retention." Id. at 375-76. "[A] court must find that a 'wrongful

act' caused the property to come into the hands of the recipient and that the

recipient will be 'unjustly enriched' if it is not returned." Id. at 376 (quoting

Flanigan v. Munson, 175 N.J. 597, 608 (2003)). "In that circumstance, the court

of equity converts the recipient into a trustee and requires that he account for

the res in whatever manner the court deems fair and just." Ibid.

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                                       29
      Plaintiffs do not allege that CHM, Marroquin, SRST, Daugherty, AGC 2,

AGC 3, or DCS ever took possession of the deposit. Consequently, there are no

material facts in dispute precluding summary judgment as to these defendants.

However, the trial court incorrectly dismissed the constructive trust claim as to

DCE I, Matsamy, Tanya, PBA, and Tietjen. There are sufficient material facts

in dispute as to whether these defendants committed a wrongful act by taking

the deposit and were unjustly enriched by keeping it. On remand, the court shall

consider whether a constructive trust should be imposed against DCE I,

Matsamy, Tanya, PBA, and Tietjen.

      Unjust Enrichment

      Plaintiffs allege unjust enrichment against all defendants. "The doctrine

of unjust enrichment rests on the equitable principle that a person shall not be

allowed to enrich himself unjustly at the expense of another." Goldsmith v.

Camden Cnty. Surrogate's Off., 408 N.J. Super. 376, 382 (App. Div. 2009)

(quoting Assocs. Com. Corp. v. Wallia, 211 N.J. Super. 231, 243 (App. Div.

1986)).    "To establish a claim for unjust enrichment, 'a [party] must

[demonstrate] both that [the opposing party] received a benefit and that retention

of that benefit . . . would be unjust.'" Iliadis v. Wal-Mart Stores, Inc., 191 N.J.

                                                                             A-3169-20
                                       30
88, 110 (2007) (quoting VRG Corp. v. GKN Realty Corp., 135 N.J. 539, 554

(1994)).

      Again, CHM, Marroquin, SRST, Daugherty, AGC 2, AGC 3, and DCS

never took possession of the deposit.        Consequently, the claim of unjust

enrichment fails against them. In relation to DCE I, Matsamy, Tanya, PBA, and

Tietjen, however, we are conclude there are material facts in dispute as to

whether these defendants were unjustly enriched by retaining the deposit.

satisfied that the events fit squarely within the doctrine of unjust enrichment.

See Kutzin v. Pirnie, 124 N.J. 500, 518 (1991) (discussing whether retaining a

deposit unjustly enriched the defendants).

      Civil Conspiracy to Commit Fraud

      Plaintiffs alleged civil conspiracy to commit fraud against all defendants.

The trial court dismissed the claim as to AGC 2, AGC 3, and DCS. A civil

conspiracy occurs when "two or more persons act[] in concert to commit an

unlawful act, or to commit a lawful act by unlawful means, the principal element

of which is an agreement between the parties to inflict a wrong against or injury

upon another, and an overt act that results in damage." Banco Popular North

America v. Gandi, 184 N.J. 161, 177 (2005).

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                                      31
      Because civil conspiracy requires "an underlying wrong," we have

recognized that a claim of civil conspiracy to commit fraud is untenable if the

underlying claim of fraud fails. Rezem Fam. Assocs. v. Borough of Millstone,

423 N.J. Super. 103, 122 (App. Div. 2011) (quoting Banco,184 N.J. at 177-78).

      Here, there is no evidence that CHM or Marroquin committed fraud in

relation to the instant transaction. They were not involved in the deal and did

not receive any portion of the deposit. As stated above, however, there are

material disputed facts as to whether DCE I, Matsamy, Tanya, PBA, and Tietjen

intentionally made material misrepresentations or omissions. There is also

evidence that these parties acted in concert and split the deposit amongst

themselves.

      We also find there is a genuine factual issue as to whether SRST and

Daugherty participated in this alleged fraud. Plaintiffs have presented evidence

that SRST and Daugherty represented Marroquin and Matsamy during the 2015

Green Lago litigation and thus knew about the $542,250 judgment entered

against Marroquin. As stated above, this judgment may have affected the

marketability of the Union store and its assets. Plaintiffs contend SRST and

Daugherty did not disclose the judgment or provide information regarding the

litigation when requested to do so. Plaintiffs contend that in a series of emails,

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                                       32
Daugherty insisted that there were "no open issues" or "liens or encumbrances"

affecting marketability, and repeatedly pressured plaintiffs to close on

transaction. There are genuine issues of material fact in dispute with respect to

these claims that preclude summary judgment.

      Aiding and Abetting Fraud

      Plaintiffs asserted an aiding and abetting fraud claim against all

defendants. The trial court dismissed this claim as to AGC 2, AGC 3, and DCS.

To prove that a defendant was aiding and abetting fraud, the following elements

must be met:

            (1) the party whom the defendant aids must perform a
            wrongful act that causes an injury; (2) the defendant
            must be generally aware of his role as part of an overall
            illegal or tortious activity at the time that he provides
            the assistance; [and] (3) the defendant must knowingly
            and substantially assist the principal violation.

            [State, Dep't of Treasury ex rel. McCormac v. Qwest
            Commc'ns Int'l, Inc., 387 N.J. Super. 469, 483-84 (App.
            Div. 2006) (quoting Tarr v. Ciasulli, 181 N.J. 70, 84
            (2004)).]

      For the same reasons given for civil conspiracy to commit fraud, the

aiding and abetting fraud claim was properly dismissed as to CHM and

Marroquin, but should not have dismissed as to DCE I, Matsamy, Tanya, PBA,

Tietjen, SRST, and Daugherty.

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                                      33
      RICO

      Lastly, plaintiffs asserted RICO claims against all defendants. The trial

court initially dismissed the RICO claims as to AGC 2, AGC 3, and DCS.

      "The RICO Act, generally, makes it a crime for a person to be employed

by or associated with 'an enterprise' and to engage or participate or become

involved in the business of the enterprise 'through a pattern of racketeering

activity.'" State v. Ball, 141 N.J. 142, 151 (1995) (quoting N.J.S.A. 2C:41-2(b)

and 2(c)). "The Act also makes it a crime for a person to conspire to engage in

such conduct." Ibid. (citing N.J.S.A. 2C:41-2(d)).

      "Racketeering activity" includes "fraudulent practices." Mayo, Lynch &

Assocs., Inc. v. Pollack, 351 N.J. Super. 486, 495 (App. Div. 2002) (citing

N.J.S.A. 2C:41-1(a)(1)(o)).    "A 'pattern of racketeering activity' requires

'[e]ngaging in at least two incidents of racketeering conduct' that 'embrace

criminal conduct' and are interrelated." Ibid. (quoting N.J.S.A. 2C:41-1(d)(1)

and (2)). "Under [RICO] an 'enterprise' includes 'any . . . group of individuals

associated in fact although not a legal entity . . . .'" Ibid. (quoting N.J.S.A.

2C:41-1(c)).

      The RICO Act establishes both criminal penalties, N.J.S.A. 2C:41-3, and

civil remedies, N.J.S.A. 2C:41-4, for conduct that violates N.J.S.A. 2C:41-2.

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                                      34
"Any person damaged in his business or property by reason of a violation of

N.J.S.A. 2C:41-2 may sue therefor in any appropriate court and shall recover

threefold any damages he sustains and the cost of suit, including a reasonable

attorney's fee, cost of investigation and litigation." N.J.S.A. 2C:41-4(c).

      "In order to establish standing to institute a civil action under RICO, it

must be shown that 'plaintiff's harm was proximately caused by the RICO

predicate acts alleged, i.e., that there was a direct relationship between plaintiff's

injury and defendant's conduct." Interchange State Bank v. Veglia, 286 N.J.

Super. 164, 178 (App. Div. 1995) (quoting First Nationwide Bank v. Gelt

Funding Corp., 27 F.3d 763, 769 (2d Cir. 1994)). "This requires a showing not

only that the defendant's alleged RICO violation was the 'but for' cause or cause-

in-fact of his injury, but also that the violation was the legal or proximate cause."

Ibid. (citing Holmes v. Sec. Inv. Prot. Corp., 503 U.S. 258, 265 (1992)). "If a

plaintiff is harmed only in an indirect way by the predicate acts, the plaintiff

does not have standing to pursue a RICO claim." Id. at 180 (citing Prudential

Ins. Co. of Am. v. U.S. Gypsum Co., 828 F. Supp. 287, 296 (D.N.J. 1993));

accord Franklin Med. Assocs. v. Newark Pub. Sch., 362 N.J. Super. 494, 514-

15 (App. Div. 2003). In Veglia, we noted "[t]he 'general rule in fraud cases . . .

is that you are liable only to an intended victim." 286 N.J. Super. at 182 (quoting

                                                                               A-3169-20
                                         35
In re EDC, 930 F.2d 1275, 1279 (7th Cir. 1991)). "The victim need not be the

primary victim, only an intended victim." Ibid. (citing EDC, 930 F.2d at 1279).

      Plaintiffs allege at least two fraudulent actions. First, they allege the 2015

transfer from CHM and Marroquin to DCE I, Matsamy, and Tanya was

fraudulent because the purpose of the transaction was to avoid paying the Green

Lago judgment. Plaintiffs also assert that the instant transaction was fraudulent.

We conclude there is a genuine issue of material fact as to whether these

transactions were fraudulent, however, not all the defendants were involved in

both transactions.

      CHM and Marroquin were involved in the 2015 transfer only. And, while

SRST and Daugherty represented certain defendants during the 2017 Green

Lago litigation, there is no evidence that SRST and Daugherty facilitated the

2015 transfer. As a result, these defendants did not engage in a "pattern of

racketeering." Additionally, plaintiffs were not the intended victims of the 2015

fraudulent conveyance. Therefore, plaintiffs do not have standing to pursue a

RICO claim against CHM, Marroquin, SRST, and Daugherty. Accordingly, the

RICO claims against CHM, Marroquin, SRST, and Daugherty were properly

dismissed.

                                                                             A-3169-20
                                       36
      We reach a similar conclusion as to DCE I, Matsamy, Tanya, PBA, and

Tietjen, even though they were involved in both transactions.5 If proven at trial,

the evidence supports "two incidents" of "fraudulent practices" among a "group

of individuals." Again, however, plaintiffs were not the intended victims of the

2015 fraudulent conveyance. Nor were plaintiffs the intended victims of the

other events that preceded the 2018 OTP that affected marketability of title.

Therefore, plaintiffs do not have standing to pursue RICO claims against DCE

I, Matsamy, Tanya, PBA, and Tietjen. Accordingly, the RICO claims against

DCE I, Matsamy, Tanya, PBA, and Tietjen were properly dismissed.

                                       III.

      We summarize our rulings as follows. We affirm the dismissal of the

breach of contract claims against PBA and Tietjen and reverse the dismissal of

the breach of contract claims against DCE I, Matsamy, and Tanya.

      We reverse the dismissal of the breach of escrow and conversion claims

against PBA and Tietjen.

5
    During her deposition in the Green Lago litigation, Tietjen admitted
"involvement" in the 2015 transfer. While there may be a disputed material fact
as to whether her involvement was fraudulent, this does not end our analysis.
                                                                            A-3169-20
                                       37
      We affirm the dismissal of the civil conspiracy to commit fraud claims

against CHM and Marroquin and reverse the dismissal of those claims against

DCE I, Matsamy, Tanya, PBA, Tietjen, SRST, and Daugherty.

      We affirm the dismissal of the aiding and abetting claims against CHM

and Marroquin and reverse the dismissal of those claims against DCE I,

Matsamy, Tanya, PBA, Tietjen, SRST, and Daugherty.

      We affirm the dismissal of unjust enrichment claims against CHM,

Marroquin, SRST, Daugherty, AGC 2, AGC 3, and DCS, and reverse the

dismissal of those claims against DCE I, Matsamy, Tanya, PBA, and Tietjen.

      We affirm the dismissal of the constructive trust claims against CHM,

Marroquin, SRST, Daugherty, AGC 2, AGC 3, and DCS, and reverse the

dismissal of those claims against DCE I, Matsamy, Tanya, PBA, and Tietjen.

On remand, we direct the trial judge to consider whether a constructive trust

should be imposed against DCE I, Matsamy, Tanya, PBA, and Tietjen.

      We affirm the dismissal of the RICO claims against CHM, Marroquin,

DCE I, Matsamy, Tanya, PBA, Tietjen, SRST, and Daugherty.

      In so ruling, we express no opinion as to the ultimate merit of plaintiffs'

remaining causes of action. That determination will be made by the factfinder.

                                                                           A-3169-20
                                      38
      Affirmed in part, reversed in part, and remanded for further proceedings

consistent with this opinion and trial. We do not retain jurisdiction.

                                                                         A-3169-20
                                       39