January 24, 2008
GEORGE AND ANN RIENZO, PLAINTIFFS-APPELLANTS,
FREDERIC PARISI, DEFENDANT, AND MARCIA PARISI, DEFENDANT-RESPONDENT.
On appeal from the Superior Court of New Jersey, Law Division, Bergen County, L-3310-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted January 8, 2008
Before Judges Winkelstein and Yannotti.
Plaintiffs, Ann and George Rienzo, appeal from a December 1, 2006 summary judgment dismissing their complaint, and from a January 24, 2007 order denying their motion for reconsideration. We affirm.
Plaintiffs are husband and wife. They filed suit against defendants, Marcia Parisi and her husband, Frederic Parisi, who is Ann Rienzo's brother, alleging that Frederic Parisi failed to repay a debt to them. Frederic Parisi has since filed for bankruptcy and the bankruptcy court entered a stay against his creditors. Ann Rienzo filed a proof of claim with the bankruptcy court in the amount of $100,000.
Frederic Parisi was the owner of an automobile repossession business, United States Auto Task Force, Inc. (U.S. Auto). According to Ann Rienzo, in February 2004, her brother asked her to work in the U.S. Auto office. Later that month, federal law enforcement officers raided the office and arrested him. At Frederic Parisi's request, she and her husband loaned him $20,000 to retain a criminal defense lawyer. At that time, Frederic Parisi signed over the titles to three motor vehicles to plaintiffs that they sold for $10,000. Marcia Parisi was not involved in any of the dealings between plaintiffs and her husband, nor was she involved with U.S. Auto.
Ann Rienzo claims that after Parisi was arrested, he asked her to become the record owner of U.S. Auto. She helped him form a new company that he would operate from "behind the scenes." Her brother gave her "complete assurances" that she and her husband would be repaid and would receive a profit from the new business. Her brother had agreed to continue working at the business, but he was "secretly diverting" business away from the company for his own personal gain. She and her husband assumed the debts of U.S. Auto, U.S. Auto ceased operations, and over a one year period, plaintiffs lost over $100,000 in the business. Frederic Parisi disputed his sister's version of events. He claims that in the spring of 2004, she offered to take over his business because she was looking for a new job and her husband had capital to invest. She offered to pay off the business's existing debts, pay him a salary, and provide him with medical coverage. Plaintiffs did not pay him a salary, or pay his bills, except the $20,000 retainer for his attorney. In exchange for the $20,000, he signed over the title to three vehicles worth $42,000. He quit after six weeks.
After the claims against Frederic Parisi were stayed by the bankruptcy court, Marcia Parisi moved for summary judgment. In opposition, plaintiffs argued that under the "doctrine of necessaries," they were entitled to recover form Marcia Parisi the $20,000 they paid as a retainer for Frederic Parisi. They acknowledge that they had no agreement with Marcia for her to be responsible for her husband's debts.
Judge Robert Wilson granted summary judgment, concluding that the doctrine of necessaries was not applicable. He said:
[T]he [c]court is mindful that just because you're married, there is no right to then assume that the spouse is obligated to repay that debt unless it can be shown that she was in agreement with the borrowing, and there's nothing in this case to show that; or in the event that there are necessary expenses, but necessary expenses don't come out of private debt.
The cases such as Jersey Shore Medical Center v. The Estate of Baum, 84 N.J. 137 (1980) talk about a creditor who provided the necessary services . . . . That's not the case at bar.
This is a private debt, albeit as in any private debt, when someone borrows money . . . they will probably be using that money for lots of important, necessary expenses unless it can be shown that they are direct. This is the situation that is barred pursuant to the common law that a spouse is not liable for the debts of the other spouse unless it can be shown . . . that the debt was incurred from a creditor who provided necessary services to that other party and that has not been shown here . . . .
The doctrine of necessaries is a common law rule imposing liability on both spouses for the debt of one spouse, provided that the debt was incurred for "necessaries" for the family, and the debtor spouse is unable to pay the debt. Jersey Shore Med. Ctr. v. Baum, 84 N.J. 137, 141 (1980). A necessary is a good or service provided to one spouse that benefits both. Id. at 141- 49. The doctrine derived from the common law rule requiring a husband to support his wife. Id. at 141. The duty to support imposes liability on the husband for necessaries furnished to the wife because the expenses incurred by the wife presume a failure on the part of the husband to provide necessaries for her. Id. at 142. The doctrine is applied equally to both husbands and wives. Id. at 148-49. It provides:
[B]oth spouses are liable for necessary expenses incurred by either spouse in the course of the marriage. . . . [T]he financial resources of both spouses should be available to pay a creditor who provides necessary goods and services to either spouse. . . . [A] judgment creditor must first seek satisfaction from the income and other property of the spouse who incurred the debt. If those financial resources are insufficient, the creditor may then seek satisfaction from the income and property of the other spouse. [ Id. at 141.]
Applying these criteria to the facts here, the trial court properly granted summary judgment. Plaintiffs did not provide necessaries to Frederic Parisi. While legal services qualify as necessaries, see Dubois, Sheehan, Hamilton, and Dubois v. Delarm, 243 N.J. Super. 175 (App. Div. 1990) (wife liable to law firm for husband's legal defense fees), the liability of the non-debtor spouse is only to the provider of the services, not to a general creditor.
Underlying the doctrine of necessaries is that one spouse has the implied authority to pledge the other spouse's credit for certain services. Sillery v. Fagan, 120 N.J. Super. 416, 423 (Cty. Ct. 1972). A purpose of the doctrine, therefore, is to provide assurances to the service provider. As the Court explained in Jersey Shore, supra, a creditor who provides "necessaries to one spouse can assume that the financial resources of both spouses are available for payment." Id. at 151. Thus, based on that assumption, a creditor may be more inclined to perform the necessary services, which is ultimately to the benefit of both spouses. That is not what happened here.
Our research has disclosed no case law that applies the doctrine of necessaries other than when the creditor is the direct provider of the necessary services and seeks payment from the non-debtor spouse. No case has applied the doctrine to a general creditor whose funds are used by the debtor to purchase necessaries as is the case here. "The imposition of liability based on marital status alone is an exception" to the rule that "normally a person is not liable for the debt of another in the absence of an agreement." Ibid. Here, no dispute exists that Marcia Parisi never agreed to be responsible to plaintiffs for the $20,000 they loaned to Frederic Parisi for his legal expenses. Plaintiffs were simply Frederic Parisi's general creditors; they loaned money to Frederic Parisi who used it to hire a lawyer. We perceive no reason to depart from the general rule under these circumstances. We conclude, therefore, as did the trial judge, that the doctrine of necessaries is inapplicable.
Yet another reason exists to dismiss plaintiffs' claim. For the supplier of necessaries to seek recourse from the non-debtor spouse's resources, the creditor "must first seek satisfaction from the income and other property of the spouse who incurred the debt." Id. at 141. Here, though Frederic Parisi has filed for bankruptcy, plaintiffs have provided no evidence of whether his debt to them has been discharged, or whether the bankruptcy trustee will pay the debt.
Plaintiffs' remaining arguments, that Marcia Parisi is responsible for repayment of advances they made to cover her husband's business debts, telephone bills, and various other expenses, are without sufficient merit as to warrant additional discussion. R. 2:11-3(e)(1)(E).
© 1992-2008 VersusLaw Inc.