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Tara Enterprises, Inc. v. Daribar Management Corp.

May 13, 2004

TARA ENTERPRISES, INC., PLAINTIFF-APPELLANT,
v.
DARIBAR MANAGEMENT CORPORATION AND MORRIS KLEIMAN, DEFENDANTS-RESPONDENTS.
KENNETH N. BOOK, PLAINTIFF-RESPONDENT,
v.
TARA ENTERPRISES, INC. AND BINOD SINHA, DEFENDANTS-APPELLANTS.



On appeal from Superior Court of New Jersey, Chancery Division, Middlesex County, MID-C-262-96 (A-438-02T1) and Law Division, Essex County, ESX-L-1897-99 (A-1464-02T2).

Before Judges Wefing, Collester and Fuentes.

The opinion of the court was delivered by: Wefing, J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued March 8, 2004

These two appeals were calendared before us back-to-back. Because they arise out of a related factual background, we consolidate them for purposes of this opinion. In A-438-02, plaintiff Tara Enterprises, Inc. appeals from a trial court order denying its motion to amend a judgment previously entered in its favor in the Chancery Division in Middlesex County. In A-1464-02, defendants Tara and its principal, Binod Sinha, appeal from a trial court order denying their motion seeking reconsideration of an order for judgment entered against them in the Law Division in Essex County. After reviewing the record in light of the contentions advanced on appeal, we affirm the order under review in A-438-02 and affirm in part and reverse in part the order under review in A-1464-02.

I.

In 1995 Sinha commenced discussions with Morris Kleiman about the possibility of opening a convenience store. Kleiman told Sinha that he was the principal of San Francisco Convenience Stores, Inc. and that he was seeking investors to purchase individual convenience stores at a set price. According to Kleiman, this was to be a turn-key operation, that is, upon payment of the purchase price, the investor would receive a ready to function business. Further, the purchaser's only continuing obligation would be to pay a small percentage of the store's gross income to San Francisco, to purchase its inventory through suppliers designated by San Francisco and to pay a portion of the lease expenses.

In September 1995 Sinha and Kleiman, on behalf of San Francisco, executed a letter of intent and Sinha gave Kleiman a deposit of $5,000. In October, Kleiman told Sinha he had located a site for the store in Gillette and Sinha paid Kleiman an additional $11,500. In November, Kleiman identified another site in Chester and Sinha's wife, Renu Sinha, signed a letter of intent with Kleiman for this second location. Sinha gave Kleiman an additional $16,500.

Sinha consulted with an attorney (not his present counsel) who advised him to form a corporation for the purposes of contracting with Kleiman for these purchases and Sinha formed Tara Enterprises, Inc. When the contract was presented, however, it was not with Kleiman or with San Francisco but involved two other corporations controlled by Kleiman, Daribar Management Corporation and Greater North American Funding Corporation.

On February 7, 1996, Tara and Daribar signed a joint venture agreement for the Gillette location which reflected an agreed-upon purchase price of $150,000, with a $65,000 down payment and a promissory note for $85,000. Sinha paid San Francisco $48,500, which together with the $16,500 already paid, satisfied the down payment. Tara executed a promissory note for the remaining $85,000, payable to Greater North American. Payments on that note were to commence on May 8, 1996, the date Kleiman said the Gillette store would be open. The note contained a warrant of attorney to confess judgment in Pennsylvania in the event Tara defaulted on the note.

On February 21, 1996, Tara and Daribar entered a second joint venture agreement, this for the Chester location. The terms were similar. Sinha gave Kleiman an additional $48,500, representing a total down payment of $65,000 for the Chester site, which was to be open by June 1, 1996. In addition, Tara executed another promissory note in favor of Greater North American for $85,000. This note also contained a warrant of attorney to confess judgment in Pennsylvania in the event Tara defaulted.

The following month, in March, Kleiman proposed to Sinha that the Gillette store be substantially expanded in size. Kleiman said the expansion would cost an additional $115,000 and Sinha agreed. He gave Kleiman an additional $30,000 and Tara executed another promissory note to Greater North American for $85,000. Again, the promissory note contained a warrant of attorney to confess judgment in Pennsylvania if Tara defaulted.*fn1

Although Sinha's payments to Kleiman and the landlords totaled more than $200,000, the stores never opened. In September 1996 Sinha's attorney commenced an action in the Chancery Division in Middlesex County alleging breach of contract, theft, and violation of the Consumer Fraud Act, N.J.S.A. 56:8-1 to -135. The complaint sought specific performance of the two joint venture agreements, and, alternatively, damages. The only named plaintiff in that action was Tara, not Sinha, and the only named defendants in that action were Kleiman and Daribar. Ultimately, in December 1996, the Chancery Division judge entered an order for judgment in favor of plaintiff Tara and against Kleiman and Daribar for $208,818.58. All efforts to collect upon that judgment have been unsuccessful.

In January 1997, one month after entry of the MiddleseX judgment, Greater North American, which was not a party to the Middlesex suit, confessed judgment against Tara and Sinha in Bucks County, Pennsylvania for $221,885.75 based upon the promissory notes executed in connection with the Gillette location. Tara and Sinha were both notified of the entry of this judgment and their right to seek relief within thirty days. No steps were taken, however. Sinha asserts he consulted with the attorney and was advised he need not do anything in light of the judgment entered in Middlesex County.

Two years later, in February 1999, Greater North American assigned all of its interest in this judgment to Kenneth N. Book for $44,200. This assignment included the provision that if Sinha were to"vacate the Pennsylvania Judgment, or be able to dismiss the New Jersey suit based upon lack of jurisdiction or insufficiency of service of process in the underlying Pennsylvania action," Greater North American would refund Book's money to him.

Based upon that assignment, Book filed suit against Tara and Sinha in Essex County, seeking to collect upon the Pennsylvania judgment. Sinha returned to his original attorney, who filed an answer and counterclaim. Sinha then turned to another attorney, who filed a petition in Pennsylvania to open or set aside the judgment by confession. Eventually, Sinha retained present counsel. The Pennsylvania court of common pleas denied the application to set aside the judgment and the Pennsylvania Superior Court affirmed. Sinha thus found himself in the position of having paid more than $200,000, receiving nothing in return, and yet subject to a judgment against him in Essex County for an additional $221,885.75.

Through present counsel, he returned to Middlesex County and filed a motion in June 2002 to amend the December 1996 judgment that had been entered in favor of Tara and against Daribar and Kleiman. Specifically, Sinha sought to add himself as a plaintiff and judgment creditor and Greater North American as a defendant and judgment debtor, to have the promissory notes executed by Tara declared of no force and effect as of December 1996 when the Middlesex County judgment was ...


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