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Scerbo v. Midtown Farmers Market

September 20, 2007


On appeal from Superior Court of New Jersey, Law Division, Special Civil Part, Hudson County, Docket No. DC-17939-05.

Per curiam.


Submitted September 10, 2007

Before Judges Cuff and Lihotz.

Defendants Midtown Farmers Market, Inc. (Midtown) and Mario Napolitano appeal from the Law Division judgment in favor of plaintiff, Robert Scerbo, filed after a two-day bench trial on April 18, 2006, and the order denying defendants' motion for a new trial dated July 17, 2006. We affirm.

Scerbo and Napolitano were equal partners in Midtown, which operated a produce market. Initially, Scerbo advanced $30,000, and Napolitano completed the construction to renovate the business premises. Napolitano then performed the day-to-day business functions and Scerbo, who is an accountant, maintained the corporation's books and records. After six months of operation, Napolitano agreed to acquire Scerbo's business interest for $50,000. On May 4, 1995, Napolitano paid Scerbo $14,000 from the business. He also executed two identical promissory notes, individually and as Midtown's president, agreeing to pay Scerbo $36,000, in twenty-four monthly installments. The agreement contained provisions for the payment of interest at the rate of nine percent and a five percent late charge on any late monthly payment. Additionally, defendants pledged four motor vehicles as collateral for the debt.

On October 11, 2005, Scerbo filed an action in the Special Civil Part as a result of defendants' failure to make the required installment payments. At trial, Scerbo presented copies of receipts he gave Napolitano for the payments he received. Each document included "the amount received, date of such receipt, and the signature of plaintiff Scerbo." None of the receipts were executed or retained by Napolitano, however Napolitano acknowledged he had received receipts from Scerbo.

Scerbo also prepared a summary sheet showing his computation of defendants' outstanding obligation. This document tallied the applicable late charges, as no payment was timely made, and the unpaid principal and interest. Scerbo's records reflected nine payments were made following the final due date set forth in the notes, with the last payment of $150 paid on October 14, 1999. Scerbo testified he sent a memorandum to Napolitano on June 15, 1997, which stated:

I have agreed to allow you to continue making payments on our executed promissory note dated May 4, 1995[,] of the agreed amount subsequent to the final due date. I will continue to accept payments . . . on the 10th day of each month thereafter until the obligation is satisfied in full.

Napolitano denied receiving the memorandum and asserted he made no payments after August 17, 1997. Defendants contended Scerbo's suit was barred by the statute of limitations, N.J.S.A. 2A:14-1, because it was filed more than six years after defendants' final payment. In the alternative, defendants argued that the debt had been discharged.

In a comprehensive bench decision, Judge O' Shaughnessy found Scerbo's testimony more credible than Napolitano's, and determined that Scerbo's complaint was timely filed because defendants reaffirmed the debt after the May 10, 1997 maturity date, tendering their last payment on October 14, 1999. The trial judge concluded defendants owed Scerbo $18,306.17, representing principal, interest, and late charges after crediting defendants for the value of the collateral liquidated by Scerbo. Judgment for plaintiff was entered for $15,000, pursuant to Rule 6:1-2(a)(1).

In their motion for a new trial, defendants challenged the trial court's denial of their application to admit as evidence a letter dated July 9, 1998, sent by Scerbo's former attorney Christopher Patella to Napolitano demanding a balance due of $4,633.95, plus late fees. Defendants suggested the document, although hearsay, was an adoptive admission, N.J.R.E. 803(b)(2), or a statement by plaintiff's authorized representative, N.J.R.E. 803(b)(3), and should have been admitted to prove the total debt due. Defendants further maintained that the $4,633.95 debt was satisfied after the liquidation of the collateral.

In reviewing the motion, the trial judge determined defendants failed to lay a foundation for admission of the evidence because Patella was not produced as a witness. Further, he concluded plaintiff had not adopted the Patella letter merely because it was provided in discovery as it had not been relied upon by plaintiff in order to answer interrogatories or otherwise incorporated in a response to a factual inquiry.

Skibinski v. Smith, 206 N.J. Super. 349, 353-54 (App. Div. 1985). The trial judge made no specific ruling regarding the admissibility of the ...

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