Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.

Coniglo v. Wenrich


January 25, 2008


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

Per curiam.


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 for Wenrich because he had been under the impression that the products had already been shipped, so the news that the shipments had not been made was a surprise to him.

As a result, Wenrich claims that his business suffered. His sales personnel faced increased pressure from their customers because the customers perceived that Siren had caused the problem and this situation would seriously hurt Wenrich's future sales prospects. Furthermore, Wenrich testified that his entire business was in serious danger of being shut down by his largest customers because he was facing extremely large fines due to his customers' lost sales.

At this point, the parties' contentions diverged. Coniglio testified that as of September 1, 2004, Wenrich's old debt amounted to approximately $538,000. Coniglio sought security and/or additional assurances from Wenrich that the old debt would be paid before any additional goods would be shipped.

By contrast, Wenrich testified that at the time Coniglio demanded additional assurances, Wenrich's companies did not owe any past due amounts. Further, Wenrich testified that his companies had been making significant payments throughout the parties' business relationship and there was also sizeable inventory and invoices in dispute, including cash that had been sent to Coniglio's companies but not applied to valid invoices.

Testimony at trial supports Wenrich's contention that Coniglio, through his employees, told Wenrich that he was purposely holding up the drugstore shipments because he wanted Wenrich to sign a promissory note in the amount of $496,000. According to Wenrich, when he informed Coniglio's agent of his concerns with the delivery delay and the risks and hardships it created to his firm, Coniglio's agent simply responded by telling Wenrich to "sign the note."

Wenrich testified that he did not understand the relationship between the missed shipments and the note. Nonetheless, he signed a promissory note in the amount of $496,000 on September 2, 2004 (Note 1). Wenrich testified that he did not learn how Coniglio arrived at the amount for Note 1 until after Coniglio commenced this lawsuit.

Coniglio testified that he personally loaned the Note 1 proceeds to Wenrich and applied the proceeds to the bulk of the old debt owed by Wenrich's companies. Wenrich testified that he eventually learned that the Note 1 proceeds related to a combination of two invoices purportedly issued by one of Coniglio's companies.

In his defense, Wenrich took issue with these invoices for several reasons. First, these specific invoices were billed to Maverick, Wenrich's warehouse operation, but the invoice numbers do not appear in either Maverick's or Siren's accounting systems. Second, Wenrich never ordered the product shown on these invoices and never issued a purchase order. Third, Coniglio admitted that there is no purchase order associated with either invoice. Finally, Coniglio agreed that his duties under the promissory note included paying down "valid invoices" owed by Siren. The record suggests that Wenrich did not owe Coniglio any money on these invoices.

The Note 1 terms specified that Wenrich was to pay twelve monthly installments of $4786.51 commencing October 1, 2004, and a final lump sum principal payment of $487,792 on September 1, 2005. Attached to Note 1 was a written authorization which included language authorizing the proceeds to be used to pay accounts payable to Coniglio's companies that were "presently due." According to Wenrich, there were no payables "presently due" from Wenrich to Coniglio at the time Wenrich signed Note 1, and Coniglio's agent told Wenrich that Coniglio would hold the note for future security. Therefore, Wenrich was surprised when Coniglio sent him an invoice for a payment due under Note 1. Notwithstanding, Wenrich made all of the payments required under Note 1, except for the last interest payment of $4,786.51 and the final lump sum principal payment of $487,792.

The discord continued between Wenrich and Coniglio. As a result, the parties stopped doing business in late 2004. However, there were still outstanding purchase orders with commissions due to Wenrich. Specifically, in or around November 2004, Coniglio's agent informed Wenrich that Coniglio had a receivable in the amount of approximately $38,000 for product that Coniglio's companies had shipped to Walgreens through the commission relationship with Siren.

Wenrich testified that he did not yet owe any money to Coniglio under the commission agreement because Walgreens had not yet paid the invoices. Furthermore, Wenrich learned that Coniglio or his agents had called Walgreens and insisted that Walgreens send Coniglio any amount owed by it to Wenrich. At that time, Walgreens owed Wenrich approximately $301,000 for product unrelated to Coniglio.

When Wenrich sought to resolve the issue of Walgreens' receivables, Coniglio's agent informed Wenrich that the only way to resolve the situation was for Wenrich to wire Coniglio the $38,000 or "[he] won't get on the phone . . . and call the [Accounts Payable] manager at Walgreens and have them release the checks." In order to receive the $301,000 from Walgreens promptly, Wenrich agreed to pre-pay Coniglio. Thus, Wenrich wired Coniglio a payment in the amount of $38,824.44 on November 23, 2004.

Wenrich testified that even though he wired Coniglio money that was not due and owing, Coniglio, through his agents, notified Wenrich that the issue would not be resolved unless Wenrich signed a second promissory note. Wenrich also testified that he was told by one of Coniglio's employees that "Coniglio wants me to have you sign another note." According to Wenrich, Coniglio's employee admitted that it was wrong, but stated that he had to do "what the guy that pays my salary told me to do."

Wenrich testified that he was shocked at the prospect of having to sign yet another promissory note. However, he felt he had no choice but to comply because there was no other way to obtain the $301,000 payment from Walgreens in a timely manner. This second promissory note (Note 2) was signed by Wenrich in the amount of $42,621.37 on November 24, 2004. The Note 2 terms required payment of ten monthly installments of $4,459.92 commencing on December 1, 2004.

Coniglio's testimony surrounding the circumstances behind Note 2 differed from that of Wenrich. Similar to his testimony with regard to Wenrich's $200,000 cash payment to Coniglio to assist with the acquisition of Siren, Coniglio suggested that Note 2 was also executed to provide security for money paid into Coniglio's companies by Coniglio personally on behalf of Wenrich's companies' old debt.

Here, too, Wenrich paid all of the installments due under Note 2 except for the last one, due on September 1, 2005. As with Note 1, Wenrich only learned the identity of the invoices that were purportedly paid by the proceeds of Note 2 after this litigation began. These invoices included four invoices issued by one of Coniglio's companies, Abacus. All four of these invoices had been partially or wholly disputed previously by Wenrich.

Wenrich testified that he continued to make payments under the promissory notes because as long as there was a chance that his companies owed Coniglio's companies money, he had no problem making good on that obligation. When Wenrich discovered not only that the proceeds were credited to invalid payables but also that he had paid Coniglio over $295,790 individually, and his companies had overpaid Coniglio's companies by $1.7 million,*fn1 he ceased payments on the notes.

On September 21, 2005, Coniglio filed a complaint against Wenrich alleging breach of contract and unjust enrichment. Following a three-day trial, the jury found that Wenrich executed both notes under duress and that he had not been unjustly enriched. Plaintiff argues that Judge Joseph Conte erred in denying plaintiff's motion for judgment notwithstanding the verdict because the finding that defendant executed the promissory notes under duress is against the weight of the evidence. Plaintiff also contends that defendant's payment of all but the last installment of each note must be considered affirmation or ratification of the notes and the judge erred by omitting an instruction to this effect. Finally, plaintiff argues that the finding that defendant was not unjustly enriched is against the weight of the evidence.

A trial court's decision on a motion for a new trial on the basis that the jury verdict is against the weight of the evidence will not be reversed "unless it clearly appears that there was a miscarriage of justice under the law." R. 2:10-1; R. 4:49-1; Johnson v. Scaccetti, 192 N.J. 256, 280 (2007); Caldwell v. Haynes, 136 N.J. 422, 431 (1994); Baxter v. Fairmont Food Co., 74 N.J. 588, 596 (1977). In correcting any clear error or mistake of the jury, the trial judge may not substitute his judgment for that of the jury merely because he would have reached the opposite conclusion. Dolson v. Anastasia, 55 N.J. 2, 6 (1969). Thus, a trial judge must "'canvass the record, not to balance the persuasiveness of the evidence on one side as against the other, but to determine whether reasonable minds might accept the evidence as adequate to support the jury verdict.'" Ibid. (quoting Kulbacki v. Sobchinsky, 38 N.J. 435, 445 (1962)); Baxter, supra, 74 N.J. at 597.

Therefore, "'[t]he standard for appellate review of a trial court's decision on a motion for a new trial is substantially the same as that controlling the trial court except that due deference should be made to its 'feel of the case,' including credibility.'" Caldwell, supra, 136 N.J. at 432 (quoting Feldman v. Lederle Lab., 97 N.J. 429, 463 (1984)); Johnson, supra, 192 N.J. at 282; Dolson, supra, 55 N.J. at 6-7. Beyond these "intangibles," an appellate court is to make its own independent determination of whether a miscarriage of justice occurred. Carrino v. Novotny, 78 N.J. 355, 360 (1979). It is within this context that this court should consider Coniglio's argument.

We have recited the facts adduced at trial at some length to demonstrate that the facts surrounding the execution of the notes and defendant's performance following execution were sharply contested. The factual recitation also highlights the extreme economic pressure applied by Coniglio to Wenrich at the time he executed both notes.

An otherwise enforceable contract may be invalidated on the grounds that it was entered into under economic duress. Cont'l Bank of Pa. v. Barclay Riding Acad., Inc., 93 N.J. 153, 175 (1983). In Continental Bank, the Supreme Court, referencing Willison on Contracts, discussed the doctrine of economic duress as it applies to arm's length business transactions, and stated that economic duress is comprised of two basic elements: (1) "[t]he party alleging economic duress must show that he has been the victim of a wrongful or unlawful act or threat, and (2) [s]uch act or threat must be one which deprives the victim of his unfettered will." Continental Bank, supra, 93 N.J. at 176 (citing 13 Williston on Contracts, § 1617 at 704 (3d ed. 1970)). The Court quoted Williston, and explained that "the party threatened must be compelled to make a disproportionate exchange of values or to give up something for nothing." Ibid. Further, the Court held that the "decisive factor" in analyzing the doctrine of duress is the "wrongfulness of the pressure exerted." Id. at 177. Wrongful conduct, the Court recognized, includes conduct that may be legal but is still oppressive, including morally oppressive. Ibid.

Here, the evidence allowed the jury to find defendant was not in default of his obligation to pay credible invoices at the time plaintiff insisted that he execute both notes. The evidence also allowed the jury to find that plaintiff's refusal to ship product and his attempt to direct payment to him from one of defendant's major clients was wrongful. Such actions interfered with defendant's business relationships, threatened the continuation of those relationships, and brought defendant's business close to collapse. Such behavior is not only wrongful but precipitates decisions a businessman would not otherwise make. Under these circumstances, the verdict cannot be considered against the weight of the evidence.

Plaintiff's contention that defendant's conduct constitutes affirmation of the obligations and that the trial judge should have instructed the jury that it could consider defendant's conduct as affirmation of the debt faces a formidable hurdle. Plaintiff did not raise this issue at trial; therefore, these contentions are considered against the plain error standard. R. 2:10-2.

Plain error in the context of a jury charge is "[l]egal impropriety in the charge prejudicially affecting the substantial rights of the defendant sufficiently grievous to justify notice by the reviewing court and to convince the court that of itself the error possessed a clear capacity to bring about an unjust result." State v. Torres, 183 N.J. 554, 564 (2005) (citing State v. Jordan, 147 N.J. 409, 422 (1997)).

"Ordinarily, the failure to object to jury instructions when given constitutes a waiver of the right to challenge the instruction on appeal." Ewing v. Burke, 316 N.J. Super. 287, 293 (App. Div. 1998). Furthermore, the absence of an objection to the charge suggests that trial counsel perceives no error or prejudice and, in any event, prevents the trial judge from remedying any possible confusion in a timely fashion. Ibid. Finally, an erroneous charge not objected to will be upheld if it is incapable of producing an unjust result and does not prejudice any substantial rights. Boryszewski v. Burke, 380 N.J. Super. 361, 374 (App. Div. 2005), certif. den. 186 N.J. 242 (2006).

In this case, plaintiff's counsel agreed to the final verdict sheet and to the jury instructions presented by the court. To Judge Conte's inquiry whether there were any exceptions to his charge upon conclusion of charging the jury, plaintiff's counsel responded, "No, Your Honor." Plaintiff neither requested an instruction by the trial judge on affirmance nor ratification, nor asked that an affirmance or ratification question be added to the verdict sheet. Such failure to timely object or request an instruction on ratification on the part of plaintiff resulted in a waiver of his right to challenge the jury instructions on appeal. See Ewing v. Burke, supra, 316 N.J. Super. at 293 (stating same); Domurat v. Ciba Specialty Chems. Corp., 353 N.J. Super. 74, 93 (App. Div.) (finding that the failure to object to a jury charge and verdict sheet requires plaintiff to make a showing of plain error on appeal), certif. denied, 175 N.J. 77 (2002). As Judge Conte aptly noted, "[b]y permitting the verdict sheet to proceed to the jury without a question or instruction regarding ratification, plaintiff waived same as a defense to duress."

Plaintiff cannot satisfy the plain error standard. Notably, several of the payments bear notations that defendant paid the monthly installment under protest. Such notations are not indicative of a willing payment to a just debt. See 28 Williston on Contracts § 72.39 at 779-80 (4th ed. 2003) (stating "a debtor may make an absolute tender, while nonetheless protesting . . . the amount . . . thereby indicating that the payment is not voluntary . . . .")

Finally, the jury verdict that defendant was not unjustly enriched is not against the weight of the evidence. Defendant adduced considerable evidence that questioned the existence of any debt, the proper application of the note proceeds, and the authenticity of invoices. We, therefore, discern no basis to disturb the verdict and judgment in favor of defendant.


Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.