August 1, 2007
ATLANTIC CITY PROFESSIONAL BASEBALL CLUB, INC., PLAINTIFF-RESPONDENT,
JEFFREY RODMAN, DEFENDANT, AND MARIO F. PERRUCCI, DEFENDANT-RESPONDENT, AND WILLIAM RODMAN, DEFENDANT-APPELLANT.
On appeal from Superior Court of New Jersey, Law Division, Atlantic County, Docket No. L-1967-04.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued April 24, 2007
Before Judges Skillman, Holston, Jr. and Grall.
Defendant William Rodman (W. Rodman) appeals from final orders enforcing his oral agreements. Defendants Jeffrey Rodman (J. Rodman) and Mario F. Perrucci entered into a contract with plaintiff Atlantic City Professional Baseball Club, Inc. giving them the right to manage the operations of plaintiff's professional minor league baseball team, the Atlantic City Surf ("the Surf"). J. Rodman, who is W. Rodman's son, and Perrucci did not meet their financial obligations to plaintiff. Plaintiff commenced this litigation to recover damages under its written contract with J. Rodman and Perrucci.*fn1 Plaintiff also alleged that W. Rodman made an oral promise to assume responsibility for payment of his son's obligations upon which they relied. In a cross-claim, Perrucci alleged that he relied upon W. Rodman's oral promise to share equally in Perrucci's obligations under the contract and to guarantee J. Rodman's obligations. The jurors determined that plaintiff and Perrucci relied upon W. Rodman's promises, which he made with the main purpose, or leading object, of furthering his own interests.
Frank Boulton and Anton Rosenthal own the Surf. In 2001 Perrucci, who was the Surf's general manager, was interested in purchasing the team. He looked for a partner who could provide the financing. W. Rodman was interested and willing to provide the majority of the funds in return for a majority ownership interest in the Surf. Subsequent negotiations between Perrucci and W. Rodman and Boulton and Rosenthal resulted in a Memorandum of Understanding outlining a purchase agreement. That sale was never completed. W. Rodman was concerned that disclosure of his prior conviction for fraud would preclude him from obtaining approvals required to operate the Surf.
Subsequent negotiations, which included W. Rodman, culminated in a contract under which J. Rodman and Perrucci were to manage the Surf's operations for plaintiff. W. Rodman was not mentioned in that contract and did not sign it.
The contract includes an integration clause declaring the contract to be the "entire agreement between the parties"; acknowledging that there are "no other agreements, undertakings, restrictions, warranties or representations between the parties"; and providing that the contract, which may "be explained or supplemented [only] by a writing signed by an authorized representative of both parties," may "not be contradicted by evidence of any prior Agreement or of a contemporaneous oral Agreement."
The contract also includes a provision for an award of reasonable counsel fees and costs to the "successful or prevailing party" in any litigation to enforce or resolve a dispute about the terms of the contract.
Although W. Rodman was not a party to that contract, according to Boulton, Perrucci and Rosenthal, he promised to assume responsibility for all of J. Rodman's debts and liabilities under the contract. None of them would have entered into a contract with J. Rodman without W. Rodman's guarantee. Perrucci explained that W. Rodman's promise to him was to share equally in all debts he incurred and guarantee J. Rodman's debts and liabilities.
W. Rodman denied making any of the oral promises alleged. According to him, he offered nothing other than to provide his son's share of the initial capital and to make "operating capital" available to his son during the term of the contract.
After J. Rodman and Perrucci assumed responsibility for managing the Surf, W. Rodman became involved in marketing, advertising, soliciting sponsors and investors, and arranging events. Unlike his son, W. Rodman was not on the payroll and did not have an office at the stadium. Nonetheless, he attended staff meetings and meetings with government officials, directed employees, played a role in firing a field manager and had a key to the stadium. Thomas Clark, plaintiff's finance director, considered W. Rodman to be an owner and, for that reason, gave him complimentary tickets to distribute. W. Rodman sold baseball memorabilia at the stadium through a company he owned with J. Rodman. That company retained the profits.
According to Rosenthal, W. Rodman, who held himself out to be the Surf's owner, fulfilled his goal of operating a baseball team. W. Rodman explained that he was interested in owning, not operating, the Surf. He became involved with operations only to help his son and did not receive anything in return. According to W. Rodman, even the profits from the sale of memorabilia were retained by the team.
Evidence of J. Rodman's involvement was limited. He had an office in the stadium and was on the payroll. Boulton acknowledged, however, that Jersey Shore Professional Baseball Club was a company set up by Perrucci and J. Rodman to operate the Surf under their management agreement with plaintiff.
Before the end of the second season under the contract, Rosenthal and Boulton assumed responsibility for the Surf's operations and paid the debts incurred during the term of the contract. The amount in issue was stipulated at trial, and the quantum of damages on the separate claims was not disputed.
Boulton approached W. Rodman about his promise to cover J. Rodman's share of the obligations, but W. Rodman refused to pay anything. When Perrucci contacted W. Rodman to collect on the promises made to him, W. Rodman said, "[L]et them chase me."
As noted above, the jurors found that W. Rodman had made all three promises and that plaintiff and Perrucci relied upon them. They also found that W. Rodman's principal purpose, or leading object, in making the promises was to further his own interests, not to benefit his son.
The trial court entered judgment in the amount to which the parties stipulated at trial. In addition, the court included an award for counsel fees and costs incurred by plaintiff in the litigation. The court reasoned that J. Rodman's contractual obligations, which W. Rodman agreed to assume, included a promise to pay litigation costs in the event that plaintiff prevailed in litigation involving a dispute under the contract. The court denied Perrucci's request for fees.
W. Rodman raises the following issues on appeal:
I. THE TRIAL COURT ERRED BY FAILING TO EXCLUDE EVIDENCE OF AN ALLEGED VERBAL DISCUSSION AND ORAL AGREEMENT . . . TO FULFILL THE FINANCIAL OBLIGATIONS OF HIS SON . . . PURSUANT TO THE PAROL EVIDENCE RULE.
II. THE TRIAL COURT ERRED BY DENYING DEFENDANT'S MOTION IN LIMINE TO DISMISS THE CASE BASED UPON N.J.S.A. 25:1-15 WHICH STATES THAT A PROMISE TO BE LIABLE FOR THE OBLIGATION OF ANOTHER PERSON IN ORDER TO BE ENFORCEABLE SHALL BE IN A WRITING BY THE PERSON ASSUMING THE LIABILITY.
III. A NEW TRIAL SHOULD BE GRANTED BASED UPON THE CONFUSING, MISLEADING AND ERRONEOUS JURY CHARGES.
IV. THE TRIAL COURT ERRED BY MAKING CERTAIN PREJUDICIAL EVIDENTIAL RULINGS.
V. THE TRIAL COURT ERRED BY DENYING DEFENDANT'S MOTION TO DISMISS THE CASE AT THE CLOSE OF THE PLAINTIFF'S CASE AND AT THE CONCLUSION OF THE RECEIPT OF ALL EVIDENCE.
VI. THE TRIAL COURT ERRED BY AWARDING COUNSEL FEES TO THE PLAINTIFF BASED UPON A CONTRACT TO WHICH [W.] RODMAN WAS NEVER A PARTY.
After review of the record and the arguments presented, we conclude that the issues raised lack sufficient merit to warrant discussion in a written opinion beyond the brief discussion of the parol evidence rule and the statute of frauds that follows.
Judge Perskie determined that the parol evidence rule did not bar evidence about W. Rodman's oral promises because he was not a party to the written contract, and the evidence did not modify or contradict its terms. We agree.
The parol evidence rule "is a rule of substantive law" that has no application in this case. See Conway v. 287 Corporate Ctr. Assocs., 187 N.J. 259, 268 (2006) (citing Restatement (Second) of Contracts § 213 comment a (1981)). The rule applies when there is an integrated agreement, and it "renders inoperative prior written agreements as well as prior oral agreements" that are inconsistent with the written agreement. Restatement, supra, § 213 comment a. W. Rodman's promises to plaintiff and Perrucci were in no way in conflict or inconsistent with the written contract between plaintiff, J. Rodman and Perrucci. W. Rodman's oral promises were to assume responsibility for his son's obligations under the contract. That promise was dependent upon, not inconsistent with, the contract terms.
The integration clause included in the written contract does not apply to W. Rodman's separate oral promise. It declares that the contract is the "entire agreement between the parties" and forecloses reliance on any "other agreements, undertakings, restrictions, warranties or representations between the parties." W. Rodman was not a party to and is not even referenced in the written contract.
The contract's integration clause precludes any effort to "explain or supplement[ the contract terms] by [means other than] a writing signed by an authorized representative of both parties." It also prohibits any attempt to "contradict[ the contract terms] by evidence of any prior Agreement or of a contemporaneous oral Agreement." But W. Rodman's promises to assume responsibility for contract debts neither explains, supplements nor contradicts the writing. To the contrary, the scope of W. Rodman's oral promises is entirely dependent upon the terms of the contract as written. Cf. Atl. N. Airlines, Inc. v. Schwimmer, 12 N.J. 293, 301 (1953) (a third party may assert the parol evidence rule to bar a claim inconsistent with a release agreement); Filmlife, Inc. v. Mal "Z" Ena, Inc., 251 N.J. Super. 570, 576 (App. Div. 1991) (allowing a third party to invoke the rule to preclude evidence offered to vary the terms of a lease). Thus, W. Rodman may have been able to assert the integration clause and the parol evidence rule to bar an effort to assign responsibility to J. Rodman greater than that assigned in the written contract, but he may not assert the rule to bar evidence of his separate and consistent promises.
We also conclude that Judge Perskie properly permitted the jurors to consider whether W. Rodman's oral promises to assume responsibility for his son's debts were enforceable because his leading object, or main purpose, was to benefit himself.
N.J.S.A. 25:1-15 provides: "A promise to be liable for the obligation of another person, in order to be enforceable, shall be in a writing signed by the person assuming the liability or by that person's agent." The Supreme Court has recognized an exception to the bar against enforcement that applies "'when the leading object of the promisor is to subserve some interest or purpose of his own . . . .'" Howard M. Schoor, Assocs., Inc. v. Holmdel Heights Constr. Co., 68 N.J. 95, 101-06 (1975) (recognizing the exception under the prior statute of frauds and concluding that the shareholder's purpose to further his own business interest was adequate) (quoting 2 Corbin on Contracts § 366, at 273-74 (1950)); see Walder, Sondak, Berkeley & Brogan v. Lipari, 300 N.J. Super. 67, 74-78 (App. Div.) (concluding that the "leading object" exception survived subsequent amendment of the statute of frauds and that the evidence was adequate to permit a finding that the corporations assumed responsibility for an associate's debt to further their own interests), certif. denied, 151 N.J. 77 (1997).
The evidence in this case was adequate to permit a finding that W. Rodman's main purpose and leading object was to further his own business interests and his ultimate goal of team ownership. W. Rodman's company acquired the right to sell its memorabilia at the stadium. In addition, he held himself out as the owner of the team, viewed involvement with the team as a means of acquiring ownership, and received complimentary tickets for distribution.
W. Rodman argues that the "leading object" must be an economic interest and that the jury instruction improperly permitted the jurors to find an adequate leading purpose based on a non-economic personal interest. In Walder we found the corporations' interest in protection of their reputation sufficient. 300 N.J. Super. at 78. We see no significant difference between the interest in business reputation at issue in Walder and the evidence of W. Rodman's personal interests at stake in this case -- profit from sales of memorabilia by his company, complimentary tickets, holding himself out as an owner and furthering his chances of ownership in the future. The basis for the leading object exception is that the oral promise to assume another's obligation is given primarily for the benefit of the promisor rather than the benefit of the person whose obligation is assumed. See Schoor, supra, 68 N.J. at 101- 06; 4 Corbin on Contracts § 16.2, at 329-31 (1997) (explaining that where consideration provided by the promisee is shown to be of such an advantage to the promisor that the consideration, not a desire to benefit the principal debtor, induced the promisor's guarantee, then the exception is warranted); cf. Restatement, supra, § 116 (referencing only "economic" interests).
This jury instruction clearly precluded the jury from relying on any interest W. Rodman might have had in helping his son. Judge Perskie directed the jurors to decide whether W. Rodman's "principal object . . . was to further his own agenda and his own interests, economic or otherwise, or rather whether his principal objective was to further [J. Rodman's] interest in acquiring an interest in the business." Given the evidence about the nature of the personal interests that W. Rodman sought to further, we are satisfied that this instruction did not permit the jurors to find a qualifying leading object based on
W. Rodman's interest in helping his son or seeing him succeed.