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Shah v. Mehta


December 7, 2007


On appeal from the Superior Court of New Jersey, Law Division, Civil Part, Camden County, L-4596-00.

Per curiam.


Argued: September 17, 2007 (telephonically)

Before Judges A.A. Rodríguez and C.L. Miniman.

Defendant Sherry Mehta appeals a judgment in favor of plaintiff Hemant Shah on an April 7, 1999, promissory note. The trial began as a jury trial but was converted into a bench trial after Mehta became ill. We affirm.

Shah is a board-certified family practitioner in Jersey City. In early 1998 Shah met co-defendant Rohit Jaegeser through Laxmi Sharma, a Hindu cleric who was friendly with both men. Jaegeser needed money for his radio station, RBC Broadcast Systems, the sole Indian radio station in the tri-state area. The radio station was a division of Ripe Records, Ltd. Shah began lending money to Jaegeser, some for the radio station and some for a film project. By December 1998 Shah had loaned Jaegeser $400,000 for his radio station and his film project.

In the meantime, Jaegeser also sought financing from Mehta. Jaegeser met Mehta when she placed some advertising on the radio station. They met in July 1998 and discussed whether Mehta would loan money to the radio station on a monthly basis, ostensibly because Shah was late in advancing money to Jaegeser and the radio station was behind in paying its bills. Another meeting occurred in September 1998 at Sharma's home. Jaegeser asked Mehta for additional loans. Shah was unaware of these requests for financing.

On December 10, 1998, Shah and Jaegeser entered into a formal agreement. RBC Broadcast Systems was to be incorporated as RBC, LLC (RBC). Shah was to have a twenty percent interest and Jaegeser was to have an eighty percent interest in the new corporation. On December 16, 1998, Shah and Jaegeser executed a supplemental agreement pertaining to the film project and other business ventures. Shah was to receive a twenty percent interest in all future ventures, all of which were to "be conducted only under the [aegis] of RBC." The agreement also provided for additional funding from Shah for the movie project. Shah's interest in the movie project would increase to thirty-five percent when the funding was advanced. Sharma witnessed the execution of the agreement. On December 21, 1998, Shah and Jaegeser executed an operating agreement for RBC.

In January 1999 Mehta made two loans by wire transfers. One loan for $25,000 was payable to Sharma and was intended to repay Sharma's loan to Jaegeser. Another loan for $62,000 was paid to Ripe Records Ltd., a company in which Shah had no interest. In all, Mehta loaned $133,000 to Jaegeser and Ripe Records. Jaegeser admitted that he alone was responsible for this $133,000 debt. Although Mehta claimed she understood that Shah was also liable to repay these loans, Jaegeser testified that he solicited these loans without Shah's knowledge.

On March 16, 1999, Shah was introduced to Mehta for the first time at a meeting with Jaegeser and Sharma. Mehta requested the meeting to discuss securing a loan from a bank in Texas. Mehta claimed that she needed $100,000 to secure a $1,000,000 loan from the Texas bank to help Jaegeser finance the film project and RBC. Shah agreed to loan Mehta $100,000 but required that she and Jaegeser sign a $100,000 promissory note in favor of Shah. The note was dated March 16, 1999, and required repayment on or before April 16, 1999. The note provided for a late charge of twelve and one-eighth percent plus reasonable attorney's fees in the event of a default. Shah gave Mehta a $100,000 check for the purpose of securing the Texas loan. Mehta and Jaegeser both signed the promissory note agreeing to repay this loan. However, the $100,000 check given to Mehta was never negotiated by her.

Soon thereafter, Jaegeser faxed Mehta two letters stating that he was unable to meet her March 13, 1999, repayment deadline for the $133,000 she loaned to him and Ripe Records. He acknowledged that the debt was personal to him and that he was arranging full repayment.

On April 7, 1999, Mehta, Shah, Jaegeser and Sharma had a second meeting, this time at Shah's medical office. Mehta informed Shah and Jaegeser that she needed a total of $200,000 to secure the Texas loan, although Mehta denied this at trial. As a result, the promissory note dated March 16, 1999, was redated for April 7, 1999, and required repayment by May 7, 1999. The changes to the date of the note and the date for repayment were initialed by the parties. Additionally, Jaegeser alone signed a second $100,000 note in favor of Shah, although Shah gave the entire $200,000 to Mehta. Shah and Mehta then went to Shah's bank where he obtained four $50,000 checks, which he gave to Mehta, and Mehta returned the $100,000 check that was given to her on March 16, 1999. Mehta did not secure a loan from a Texas bank.

Sometime after the April 7, 1999, meeting, Shah met again with Mehta and Jaegeser at an Indian restaurant in Edison. Mehta told Shah that she was unable to secure the Texas loan. Mehta also told Shah that she had used the $200,000 for purposes related to her rental properties. Jaegeser reassured Shah that Mehta would repay the $200,000. However, that did not occur. About a year later Shah met with Mehta at Sharma's home. Mehta assured Shah that she intended to repay the $200,000 and she gave him $1,000 in cash as a "good faith" payment. Mehta never repaid the balance of the $200,000 as promised. On July 13, 2000, Shah sued Mehta and Jaegeser on the promissory note in the amount of $200,000. Mehta counterclaimed against Shah and cross-claimed against Jaegeser to recover the $133,000 in loans she made to Jaegeser.

Mehta claimed at trial that the $200,000 was for repayment of the $133,000 in loans she made to Jaegeser and Ripe Records. Mehta claimed that she had no idea what she was signing and did not review the promissory note. She asserted that she relied on the alleged representations of Shah and Jaegeser that she was only acting as a "witness" for Jaegeser. She also claimed that Jaegeser was signing as a "guarantor" and even though she was given a copy, she "didn't need it for anything." She denied that there was any Texas loan or that she was ever trying arrange any funding in addition to the $133,000 she advanced to Jaegeser. Mehta also claimed that, after receiving the March 1999 faxed communication from Jaegeser, she assumed their business relationship was over and she would be repaid on April 7, 1999. Finally, Mehta claimed that she assumed the $200,000 given to her on April 7, 1999, was repayment on her loan, and the additional $67,000 represented interest on her loan and repurchase of an alleged 20% interest in the film project.

On April 26, 2005, the trial judge found that Mehta's loans totaling $133,000 were made to Jaegeser and to entities in which Shah had no interest. He credited Shah's testimony that he did not know that Jaegeser had solicited money from Mehta in support of RBC. The judge also found that the money orders tendered by Mehta were payable to Sharma and the record company, not RBC.

He held that Shah had no obligation to repay these loans and that Mehta was entitled to a judgment against Jaegeser alone.

As to the loans from Shah, the judge compared the March 16, 1999, promissory note and the second promissory note dated April 7, 1999, and found that the March 16, 1999, promissory note was in fact originally prepared on that date and that it was indeed amended on April 7, 1999. The judge explained:

In comparing the three documents . . ., I'm not a handwriting expert. But, it appears to me that the basic writings on [the March 16, 1999, promissory note] was done at a time different than the basic writing on [the April 7, 1999, promissory note]. For instance, in paragraph 3 on [the March 16, 1999, promissory note], where the interest is set forth, the number 12 is different than the number 12 upon [the April 7, 1999, promissory note]. The 1-8 is written with a 1 and a slash then the 8. On [the April 7, 1999, promissory note], it is a 1 and then a dash with the 8 underneath.

So, even if it's the same person, -- we all write a little differently at different times -- that writing appears to be different. And, from that, I conclude, as well as from the testimony of the witnesses that I find to be credible, that the promissory note, [March 16, 1999], was originally executed on March the 16th, 1999 and signed by [] Mehta on that date. And, I also conclude that she was given the check for $100,000 on that date, which she did not negotiate.

I further conclude that she met with [] Shah on [April] the 7th and the second promissory note was prepared. She returned the $100,000 check and was given the four $50,000 certified checks which is not disputed.

On August 19, 2005, the trial judge entered a judgment awarding $100,000 in favor of Shah against Jaegeser and Mehta jointly and awarding Shah $200,000 against Jaegeser individually. The judge also awarded Shah $38,500 in counsel fees and a $12,125 late fee in lieu of interest jointly and severally against Mehta and Jaegeser. On September 6, 2005, the trial judge entered a judgment in favor of Mehta against Jaegeser in the amount of $133,000, together with $21,910.38 in prejudgment interest. Mehta's motion for reconsideration was denied on November 9, 2005, and this appeal was timely filed.

Mehta contends that she received no consideration for the promissory note she executed. She asserts that she was entitled to a set off against the judgment in Shah's favor for the loans she made to Jaegeser. Finally, she urges that the attorney's fees awarded to Shah were unreasonable.

When an appellant challenges a judge's fact-finding, our review is limited. "The standard of review of a trial court's fact-finding is one of deference, requiring only that the facts as found are supported by adequate competent evidence in the record." Pressler, Current N.J. Court Rules, comment 6.1 on R. 2:10-2 (2007).

Considering first the scope of our appellate review of judgment entered in a non-jury case, as here, we note that our courts have held that the findings on which it is based should not be disturbed unless "they are so wholly insupportable as to result in a denial of justice," and that the appellate court should exercise its original fact finding jurisdiction sparingly and in none but a clear case where there is no doubt about the matter. That the finding reviewed is based on factual determinations in which matters of credibility are involved is not without significance. Findings by the trial judge are considered binding on appeal when supported by adequate, substantial and credible evidence. It has otherwise been stated that "our appellate function is a limited one: we do not disturb the factual findings and legal conclusions of the trial judge unless we are convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice," and the appellate court therefore ponders whether, on the contrary, there is substantial evidence in support of the trial judge's findings and conclusions. [Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 483-84 (1974), (citations omitted).]

We do not review the record to determine "how we would have decided the matter if we were the court of first instance." Sebring Assocs. v. Coyle, 347 N.J. Super. 414, 424 (App. Div.), certif. denied, 172 N.J. 355 (2002). We only determine "'whether the findings made could reasonably have been reached on sufficient credible evidence present in the record.'" Ibid. (quoting State v. Johnson, 42 N.J. 146, 162 (1964). We are not in a good position to judge credibility and ordinarily do not make new credibility findings. Trusky v. Ford Motor Co., 19 N.J. Super. 100, 104 (1952); Dolson v. Anastasia, 55 N.J. 2, 7 (1969). It is only where we are "thoroughly satisfied that the finding is clearly a mistaken one and so plainly unwarranted that the interests of justice demand intervention and correction . . . [that we] appraise the record as if [we] were deciding the matter at inception and make [our] own findings and conclusions." Johnson, supra, 42 N.J. at 162.

After carefully reviewing the record in the light of the written and oral arguments advanced by the parties, we conclude that the issues presented by Mehta respecting consideration for the note and her entitlement to set-off are without sufficient merit to warrant extensive discussion in this opinion, R. 2:11-3(e)(1)(A), (E), and we affirm substantially for the reasons expressed by the trial judge in his oral opinion delivered on April 26, 2005. The findings and conclusions of the judge are supported by substantial, credible evidence in the record. See Rova Farms Resort, supra, 65 N.J. at 483-84.

In addition, we note that the credibility of Mehta was a significant issue clearly determined adversely to her. The weight of the testimonial and documentary evidence supported the fact-findings made by the trial judge. The monies Mehta received on April 7, 1999, were full consideration for the note she clearly signed on March 16, 1999, and modified on April 7, 1999. Other than Mehta's discredited testimony, no evidence established any obligation on the part of Shah to repay Mehta any monies she loaned Jaegeser.

The decision to award counsel fees is committed to the sound discretion of the trial court. Maudsley v. State, 357 N.J. Super. 560, 590 (App. Div. 2003). We review an award of fees under the mistaken exercise of discretion standard. Ibid.; see also Packard-Bamberger & Co., Inc. v. Collier, 167 N.J. 427, 443-44 (2001) (attorney-fee determination by trial court is only disturbed upon a clear abuse of discretion). Hence, "fee determinations by trial courts will be disturbed only on the rarest of occasions, and then only because of a clear abuse of discretion." Rendine v. Pantzer, 141 N.J. 292, 317 (1995).

We do not find a mistaken exercise of discretion here. Although Mehta complains about excessive billing, the trial judge did not make a full award of fees. Mehta has failed to demonstrate on appeal that the fees as reduced by the trial judge were still excessive. Mehta also complains that the fees as a percentage of debt are excessive. However, the promissory note did not fix fees as a percentage of debt. Rather, Shah was entitled to recover reasonable fees and Mehta has failed to demonstrate that the fees were not reasonable. The fees would have been much less had Mehta not counterclaimed against Shah and adopted the defense she presented.



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