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Coniglo v. Wenrich

January 25, 2008

ROSARIO CONIGLIO, PLAINTIFF-APPELLANT,
v.
SCOTT WENRICH, DEFENDANT-RESPONDENT.



On appeal from the Superior Court of New Jersey, Law Division. Bergen County, Docket No. L-6621-05.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued: December 5, 2007

Before Judges Cuff and Lisa.

Plaintiff Rosario Coniglio filed a complaint to recover $497,038.90, with interest and late fees, following default by defendant Scott Wenrich. A jury found defendant executed the two promissory notes under duress. Therefore, plaintiff's complaint was dismissed. Plaintiff appeals and we affirm.

This matter arises out of a dispute between Coniglio and Wenrich over amounts owed under two promissory notes. Wenrich resides in California and is the sole owner of Siren, Inc. (Siren), a wholesale distributor of health and beauty care products to drugstores and grocery chains, and Maverick Enterprises, Inc. (Maverick), a warehouse that supports Siren's sales operation. Together, Siren and Maverick employ nine individuals, including Wenrich. Coniglio is a wholesale distributor of non-perishable food products to supermarket chains. He is the owner of several business entities, including Triboro, Inc. (Triboro), Abacus Sales Company, Inc. (Abacus), and Paramount Freight Systems (Paramount).

In or around 2002, Wenrich and Coniglio met and discussed a potential business relationship. They believed that their businesses complemented one another and would benefit by doing business together. Further, such a relationship would allow Coniglio's companies to sell their non-perishable groceries to Wenrich's companies, which would, in turn, sell them to their drugstore accounts.

At some point, Coniglio and Wenrich began to discuss a potential business deal in which Siren would become part of Coniglio's business organization. To successfully accomplish this initiative, Coniglio asked Wenrich to expand Siren's inventory and to assist disposition of "dead" inventory. Wenrich was able to accomplish this task in two ways. First, Wenrich, through Siren, purchased products directly from some of Coniglio's companies. Second, Wenrich sold Coniglio's inventory directly to Siren's customers on Coniglio's behalf without first purchasing the product. Pursuant to this arrangement, goods were sold under Siren's name and Siren received payment directly from the customer before tendering all proceeds within a day or two to Coniglio minus a one to two percent commission. Both Wenrich and Coniglio benefited from this arrangement. Wenrich earned thousands of dollars in commissions and Coniglio gained access to new customers which allowed him to turnover his inventory more quickly.

In addition to moving inventory, Wenrich provided other benefits to Coniglio. For example, Wenrich allowed Coniglio to use the Maverick warehouse to store inventory, exclusive and apart from Siren's own inventory. Siren's inventory was listed on Siren's Inventory Valuation Report as stored in "Warehouse 100," while Conigilo's inventory was listed as stored under "Warehouse 000."

Further, Wenrich testified that he assisted Coniglio, personally, by sending him $200,000 in cash upon Coniglio's request to assist with the acquisition of Siren. According to Wenrich, the purpose of this payment was to help Coniglio improve his bank ratios and offset his outstanding receivables. In fact, Coniglio testified under oath at deposition that the $200,000 from Wenrich was to help repay a loan which Coniglio had personally received from his own companies, although his testimony changed at the time of trial whereby he suggested that the payment was applied to a loan made to Wenrich for past due receivables.

Eventually, the business relationship between Coniglio and Wenrich began to sour. On several occasions, Wenrich asserted he received invoices from Coniglio's companies for millions of dollars of product that was never ordered. Wenrich did not pay these invoices, but contacted Coniglio or his agents to inform them of the discrepancy. Wenrich testified that Coniglio did not apply payments in the manner he requested, which resulted in misapplied cash, unapplied cash, invoices paid related to product Wenrich had never seen, and other discrepancies.

The problems between Wenrich and Coniglio came to a head during the summer of 2004. The parties disagree on the underlying circumstances behind the downfall of their relationship. At trial, Coniglio testified that by late August 2004 Wenrich's companies owed Coniglio's companies more than $2 million and payment terms were getting stretched. According to Congilio, these circumstances began to affect his companies' ability to obtain credit and financing and he could no longer continue to do business with Wenrich's companies as he did in the past unless the accumulated debt was paid.

By contrast, Wenrich testified that Coniglio caused difficulty to Wenrich's companies by refusing to ship goods that had been promised to Wenrich's customers under the commission relationship. Specifically, Wenrich testified that he was informed by two of his largest customers, Walgreens and Rite Aid, that the drugstores were not receiving products which they had ordered specifically to market pursuant to targeted, time-sensitive advertisements.

By the time Wenrich learned of the problem, the shipments were already one to three weeks delayed. When Wenrich and his employees contacted Coniglio's companies with regard to the shipping problem, they were informed that Coniglio's agents had removed the orders from the truck on instructions received from Coniglio and his sales agents. According to Wenrich, the problem was not limited to a single order. He and his employees became aware of a number of purchase orders that had not been received by their customers. Coniglio and his agents informed Wenrich that none of the orders would be shipped. The situation proved to be particularly troublesome ...


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