February 20, 2008
PAUL IZZO, PERSONALLY AND ON BEHALF OF THE ESTATE OF CONCETTA IZZO, PLAINTIFF,
LOUIS C. IZZO AND CAROL GUTTERMAN, DEFENDANTS.
JOEL KREIZMAN AS EXECUTOR OF THE ESTATE OF CONCETTA IZZO, PLAINTIFF-RESPONDENT,
PAUL IZZO, INDIVIDUALLY, DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, L-4990-03 & L-5120-03.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued: January 24, 2008
Before Judges Axelrad, Payne and Sapp-Peterson.
Paul Izzo appeals from an order of December 1, 2006, entering judgment against him in favor of the Estate of Concetta Izzo in the amount of $112,000 in accordance with a jury verdict, together with court-ordered prejudgment interest. The judgment arose from appellant's default of a stock purchase agreement, entered into with his retiring parents in 1990, to purchase shares of the family business, and the suit to enforce the obligation filed approximately thirteen years later. Appellant challenges the summary judgment ruling holding the stock purchase agreement enforceable, the trial court's ruling excluding hearsay evidence proffered by appellant, and a variety of other rulings made during the trial. He also contends the trial court awarded excessive prejudgment interest on the jury verdict. We are not persuaded by any of appellant's arguments and affirm.
Appellant's father, Louis Izzo, Sr. (Louis, Sr.), founded Door-Master Corp., a cabinet door manufacturing company, around 1966, and operated it as a family business with his wife Concetta. On May 22, 1990, when his parents decided to retire, appellant and his parents agreed that he would take over the business, and the parties executed a stock purchase agreement for appellant to purchase ninety of the 100 outstanding shares of the business for $261,000. The remaining ten shares were owned by appellant and his three siblings, who each held two and one-half shares. The agreement provided for appellant to make periodic payments over the next ten years as follows: $1,000 to be paid at closing, and beginning on July 1, 1990, appellant would pay interest only at 10% per annum on $260,000 by paying $500 per week for 156 weeks, and beginning July 1, 1993, appellant would begin paying the principal and interest in 364 consecutive weekly payments of $1,000. In connection with the purchase, appellant and his parents also executed a Stock Pledge and Escrow Agreement (stock pledge agreement) that required the newly purchased stock to be held in escrow until the debt was fully paid.
Appellant last made a payment to his parents in November 1991. Appellant claimed he told his father at that time that he could not afford the payments and his father could take back the company, to which Louis, Sr. replied, "don't worry about it," and which appellant interpreted as meaning his father forgave the debt. Neither parent filed suit against appellant during their lifetimes nor did they declare a default under the stock pledge agreement.
Louis, Sr. passed away on December 22, 1998. The terms of his will left his entire estate to appellant and his three siblings. Concetta Izzo died on August 26, 2001, expressly acknowledging in her August 11, 2000 will the existence of appellant's $400,000 obligation to her in connection with the purchase of the family's business. The will also contained conditions for satisfaction of the debt, either through sale of the business or direct payments by appellant, which was ultimately expected to be resolved no later than two years from the date of her death. Appellant did not comply with any of the conditions for satisfaction of the debt under the will.
Appellant and his sister, Carol Gutterman, were named as co-executors of their mother's estate. On October 28, 2003, appellant filed a complaint against Gutterman and his brother, Louis Izzo, Jr. (Louis, Jr.), seeking a declaratory judgment that the six-year statute of limitations barred enforcement of the debt arising out of the stock purchase and pledge agreements (Count I) and further alleging tortious interference with prospective economic advantage (Count II).*fn2
On November 5, 2003, Gutterman and Louis, Jr. filed suit against appellant and Door-Master Corporation, individually and on behalf of their mother's estate, seeking damages for breach of contract and fiduciary duty in violation of the stock purchase and pledge agreements.*fn3
By order of April 23, 2004, appellant was removed as co-executor of the Estate of Concetta Izzo, and Joel Kreizman, Esquire was appointed as substitute executor. By order of June 25, 2004, the two Law Division cases were consolidated under Docket No. L-4990-03. By order of September 24, 2004, Judge Gilroy granted appellant's motion for summary judgment in part, dismissing with prejudice Door-Master Corporation as a defendant in counts one and two of the Gutterman complaint filed against appellant (Docket No. L-5120-03), and finding the statute of limitations barred any payments due prior to November 5, 1997. The court denied the portion of appellant's motion seeking to declare unenforceable the balance of the unpaid debt, finding that 138 payments due after that date were not time-barred.
Pursuant to a motion by appellant, by order of December 16, 2005, the court dismissed with prejudice counts one and two of the Gutterman complaint asserting breach of contract against appellant and provided that Kreizman be permitted to file a new complaint on behalf of the Estate by January 6, 2006. Kreizman timely filed an amended complaint in his representative capacity against appellant, seeking judgment of $138,000 for the outstanding 138 payments, together with prejudgment interest (Count One) and an accounting and constructive trust for appellant's sale of Door-Master Corporation (Count Two).*fn4 By order of February 3, 2006, the court denied appellant's motion to dismiss the amended complaint.
The jury trial commenced on October 25, 2006 before Judge Perri. Appellant, Gutterman and Louis, Jr., and the Estate were each represented by independent counsel. Pertinent to this appeal, following a N.J.R.E. 104 hearing, the court ruled as inadmissible hearsay appellant's testimony about the l99l conversation in which his father purportedly forgave the debt. At the close of the Estate's case, appellant moved for involuntary dismissal pursuant to Rule 4:37-3 on the following grounds: (1) the stock purchase agreement was a negotiable instrument and all parties necessary for its enforcement were not before the court; (2) half the value of the Estate belonged to the heirs of Louis, Sr., who had passed away before Concetta Izzo; (3) the Estate of Concetta Izzo was judicially estopped from claiming more than half the payments not barred by the statute of limitations; and (4) Count II was barred by the statute of limitations. Judge Perri denied the motion. At the close of all evidence, appellant moved for a judgment pursuant to Rule 4:40-1 based upon a laches defense, which the court also denied. The court granted Gutterman and Louis, Jr. involuntary dismissal of the matter initially alleged by appellant under Docket No. L-4990-03, finding that claim was governed by New York law and appellant did not have standing to pursue the claim. That determination has not been appealed.
The Estate's case against appellant for a judgment on the indebtedness was submitted to the jury, with the following interrogatories, as recited by the trial court:
Question One: Did Paul Izzo owe any money to Concetta Izzo under the Door-Master stock purchase agreement at the time of Concetta Izzo's death?
Question Two: What amount of money did Paul
Izzo owe under the Door- Master stock purchase agreement at the time of Concetta Izzo's death?
The jury returned a verdict finding that appellant owed his mother $112,000 under the stock purchase agreement at the time of her death. On December 1, 2006, Judge Perri ordered the entry of a judgment of $150,808 in favor of Kreizman, as executor of the Estate of Concetta Izzo, against appellant, which included the $112,000 jury verdict plus $38,808 in interest accrued at 5.5% for 6.3 years (from July 1, 2000 to October 23, 2006). This appeal ensued.
Appellant asserts the following arguments: (1) laches bars enforcement of the stock purchase and stock pledge agreements; (2) the stock purchase agreement was barred entirely by the statute of limitations; (3) the stock pledge agreement was in default from 1991 and its enforcement is barred by the statute of limitations; (4) judicial estoppel precludes the estate of Concetta Izzo from recovery of more than one-half the value of payments not barred by the statute of limitations; (5) the trial court erred by not allowing appellant to testify before the jury regarding Louis, Sr.'s statement to him in November 1991; (6) the stock purchase agreement is a negotiable instrument and all necessary parties for its enforcement were not before the court; (7) even if the stock purchase agreement is not a negotiable instrument, the Estate of Concetta Izzo cannot recover all monies allegedly owed by appellant; (8) Kreizman's amended complaint filed in January 2006 should have been treated as a new complaint for statute of limitations purposes; and (9) the trial court awarded excessive prejudgment interest.
Appellant's first three arguments were rejected by Judge Gilroy in his ruling on the summary judgment motion, and the laches argument was again rejected by Judge Perri when it was renewed by appellant during trial. According to appellant, the subject claim should be barred by the equitable defense of laches because he made his last payment in 1991, his father died in 1998 without taking any steps to sue him for default, and his siblings did not file suit until 2003. He argues he was prejudiced by this delay as his parents, important witnesses, were both deceased for several years prior to trial, and thus were unavailable to testify.
Judge Gilroy was not persuaded by appellant's argument, finding the statute of limitations applied as an appropriate bar to payments due prior to November 1997, but that the circumstances of the case did not warrant the imposition of the equitable remedy of laches. As the court recognized, laches is an equitable defense that bars a litigant from enforcing stale claims, is aimed at promoting justice, and is applicable where "there is unexplainable and inexcusable delay in enforcing a known right whereby prejudice has resulted to the other party because of such delay." County of Morris v. Fauver, 153 N.J. 80, 105 (1998) (quoting Dorchester Manor v. Borough of New Milford, 287 N.J. Super. 163, 171 (Law Div. 1994)). Judge Gilroy was not convinced the death of appellant's parents created sufficient prejudice under the circumstances to invoke this doctrine, noting their unavailability could as easily inure to appellant's benefit because he could make certain claims they could not refute.
Judge Perri incorporated the motion judge's reasons and also had the benefit of the trial testimony to assess both the "delay" and "prejudice" prongs of appellant's laches defense. The court noted the undisputed evidence that neither parent would have brought suit against appellant during their respective lifetimes out of love of their children, thus there was not an "unexplainable and unexcusable delay" in enforcing their right to payments due subsequent to November 1997 under the stock purchase agreement. Although the trial court had ruled as inadmissible hearsay the purported conversation between appellant and his father in 1991, the trial court considered the proffer in the context of evaluating the prejudice prong of appellant's laches defense. The court noted that appellant did not disclose to anyone his father's 1991 comment that served as the basis for his claim of forgiveness of the debt until "well after the loss of the witness," and, in fact, not until he was deposed in the litigation. Thus, the court concluded that equity should not bar the claim against appellant for the 138 payments due for the stock purchase.
We discern no error in the rulings by the motion and trial judges in declining to apply the equitable defense of laches under the circumstances of this case. We further note that although appellant made no payments on account of the debt since 1991, he was not prejudiced by the delay in seeking enforcement of the terms of the stock purchase and pledge agreements. For thirteen years he had the benefit of controlling Door-Master's operations, ultimately leading to his making the executive decision in or around 2004 to sell the assets of the business, which his siblings acquiesced to, and upon its sale he realized a significant profit as its ninety-two-and-one-half percent shareholder.
Judge Gilroy also correctly analyzed the claim for statute of limitations purposes under the installment contract approach discussed in Fauver, supra, 153 N.J. at 107, applicable for contractual obligations that require regular, periodic payments. Id. at 107-108; see also Metromedia Co. v. Hartz Mountain Assocs., 139 N.J. 532, 535 (1995). Our courts have applied this approach in analyzing a variety of situations, including coupons on county bonds due annually, periodic payments for promissory notes, periodic payments under a divorce settlement, and monthly payments under an equipment lease. Fauver, supra, 153 N.J. at 108 (citing Metromedia, supra, 139 N.J. at 535).
As the Court explained:
Under the installment contract method, claims based on installment contracts or other divisible, installment-type payment requirements accrue with each subsequent installment. In other words, a new statute of limitations begins to run against each installment as that installment falls due and a new cause of action arises from the date each payment is missed. [Fauver, supra, 153 N.J. at 107.]
A plaintiff may sue as each breach occurs because "[t]o hold otherwise would allow a claimant to trigger the statute of limitations upon presentation of a claim rather than having the existence of a claim trigger the statute of limitations." Metromedia, supra, 139 N.J. at 535-36. Moreover, this is a "familiar method for treatment of limitation issues under installment contracts when no acceleration clause is present." Id. at 535.
Appellant and his parents' agreement was clearly an installment contract requiring periodic payments pursuant to an agreement for the purchase of stock. Judge Gilroy properly noted that neither the stock purchase agreement, upon which this claim is based, nor the stock pledge agreement, contains an acceleration provision. Applying the installment contract theory set forth in Fauver, he appropriately concluded that "[f]ailure to make weekly payments as they became due triggered separate events under the statute of limitations [and] [e]ach payment had its own statute of limitations." Accordingly, contrary to appellant's assertion, his parents' choice not to sue him for delinquent payments under the stock purchase agreement did not affect the legal enforceability of the contract. The "enforceable right" arose on a weekly basis, and the only limitation on recovery was for payments due more than six years before suit was commenced. Thus only the payments appellant defaulted on prior to November 5, 1997 were barred by the statute of limitations.
As the jury verdict was based upon the stock purchase agreement, not the stock pledge agreement, we need not address appellant's arguments challenging enforcement of this agreement.
The record is clear that the claim asserted in Count II pertaining to appellant's auction of Door-Master's assets in alleged violation of the stock pledge agreement was not pursued at trial and there is nothing to indicate that the jury considered the auction proceeds in rendering its verdict.
Appellant's fourth argument, that judicial estoppel precludes the Estate of Concetta Izzo from recovering in excess of one-half of the 138 payments, or $69,000, was also properly rejected by the trial judge. Appellant contended that the listing of his obligation at $200,000 on the federal tax return for Concetta's Estate was a clear indication of the Estate's position that Louis, Sr.'s interest passed to his heirs upon his death (the four children) and thus Concetta was only entitled to one-half of the value of the $400,000 set forth in her will.
Judicial estoppel "bars a party who has successfully asserted a position before a court or other tribunal from asserting an inconsistent position in the same or a subsequent proceeding." Bray v. Cape May City Zoning Bd. of Adjustment, 378 N.J. Super. 160, 166 (App. Div. 2005). Judicial estoppel may be invoked in a judicial proceeding where a party asserts a position inconsistent with a position taken in connection with information submitted to the Internal Revenue Service. S & D Envtl. Servs., Inc. v. Rosenberg Rich Baker Berman & Co., P.A., 334 N.J. Super. 305, 314-17 (Law Div. 1999). It is an "extraordinary remedy that courts invoke only when a party's inconsistent behavior will otherwise result in a miscarriage of justice. The doctrine prevents litigants from playing fast and loose with, or otherwise manipulating, the judicial process." State v. Jenkins, 178 N.J. 347, 359 (2004) (internal citations and quotations omitted).
This case does not contain any extraordinary circumstances warranting the application of judicial estoppel. Appellant was co-executor of his mother's estate and in that capacity he and his sister filed an Estate tax return listing $200,000 as the date of death value of appellant's outstanding loan indebtedness. There was no evidence presented of a discussion at that time as to the basis for that figure or any acknowledgement that Concetta owned only half the debt. It is just as possible the figure represented the halfway point between the $400,000 claimed and the zero amount asserted by appellant. Under these circumstances, appellant cannot rely on the compromised figure under the theory of judicial estoppel any more than could the Estate claim appellant was estopped from arguing he owed any amount other than $200,000.
Traditionally, we have granted substantial deference to a trial court's evidentiary rulings. Benevenga v. Digregorio, 325 N.J. Super. 27, 32 (App. Div. 1999), certif. denied, 163 N.J. 79 (2000). We are not persuaded that the trial judge abused her discretion in excluding as hearsay under Rule 804(b)(6) appellant's testimony relative to his father's statement in November 1991, or that such ruling prejudiced appellant's case, particularly in light of the clear expression of appellant's mother's intent relative to the debt as reflected in her will. The judge properly conducted an N.J.R.E. 104 hearing and afforded appellant a full opportunity to make his proffer. Appellant did not assert that his father said anything more definitive than "don't worry about it" in response to appellant's statement that he could no longer make the payments and his father could take back the business.
In recognition of appellant's claim that the statement was the centerpiece of his defense of forgiveness of the loan, the trial court conducted a thorough analysis under N.J.R.E. 804(b)(6)*fn5 and, emphasizing its casual nature and the unclear intent of such a statement, the judge found it to be ambiguous, untrustworthy and unreliable. The judge provided ample basis for her ruling as follows:
As I pointed out to [appellant's attorney], I do draw distinction between forgiveness and forbearance. It's clear from the testimony and I don't believe that it's disputed by any of [the] parties that neither Louis Izzo nor Concetta Izzo sought legal action to compel payment by Paul under the agreements or that they took any action consistent with an intention to pursue payment or recover the stock or basically disturb the status quo.
That is not the same, that kind of forbearance in a decision not to actively pursue payment perhaps with the option of deferring enforcement to a later date which may well be what happened. That is different from a definitive statement forgiving a loan and the actions are not, subsequent actions do not indicate an affirmative intent to forgive the loan.
This is why I focused on the issue of relevance. If I were to admit this testimony, the jury would be left with the statement "don't worry about it" in the context of a demand for, if I remember the testimony correctly, it was a payment that the expectation of Mr. Izzo was that he was going to receive a payment when Paul stopped by that day.
My difficulty with it is if the jury is provided with that statement, what is the relevance? And how can the jury speculate as to what the statement "don't worry about it" meant? The inability to cross examine Louis Izzo about his intention to my mind goes to the heart of the matter of trustworthiness.
In order for hearsay to be permissible, it must be relevant to the issues in the case. I am also concerned about the totality of the circumstances where not only does Mr. Izzo ask the jury to speculate about what might have been meant when his father said don't worry about, but also the suggestion that his mother's body language indicated affirmative assent to forgive the loan.
There's no way that this jury can be presented with competent testimony regarding Louis Izzo's intent when he made the statement, "don't worry about it." This is not a circumstance where we have a sworn statement. It's not a circumstance where we have any independent corroboration of a statement.
Essentially, we have an equivocal statement made during a casual conversation that is now offered by Paul Izzo to serve as the foundation of a claim that there was an affirmative intention on the part of his father to forgive a debt of over $200,000.
Relevance also comes into play on whether or not even if the statement were admitted, whether Louis Izzo had the capacity to forgive the debt owed to Concetta Izzo as a joint owner of the corporation.
I am mindful of the importance of this particular statement to the overall disposition of this case and that it is the centerpiece of Paul Izzo's defense of forgiveness of the loan. I cannot find, however, in all the totality of the circumstances, that this statement meets the standard of trustworthiness required under the rule.
There's no indication that the statement was made in an atmosphere consistent with an intent to abandon multiple, formal agreements that were entered.
At best, it is a casual conversation that takes place spontaneously in the living room of the home and is not in any way clarified or verified at any point in the future. My concern is also that if it were to be admitted, the jury would have no basis upon which to determine Louis Izzo's intent in making that equivocal statement. On that basis, I grant the plaintiff's application to bar the testimony.
The trial judge also properly rejected appellant's argument that because the Estate of Concetta Izzo made a claim for money due in part to Louis, Sr., the statement was admissible as a statement of a party opponent under N.J.R.E. 803(b)(1). The judge was not persuaded there was "any transmutation of the [amount of money] owed to the estate of Louis Izzo such as he would become a party to this litigation where obviously he has never been named [and] [h]is interests have never been pursued as part of this litigation."
Nor can the purported statement be analyzed and admitted under N.J.R.E. 803(b)(2) as an adoptive admission of Concetta Izzo. Under N.J.R.E. 803(b)(2), "a statement is not excluded by the hearsay rule if offered against a party, where the statement is one 'whose content the party has adopted by word or conduct or in whose truth the party has manifested belief.'" A.S. Goldstein Co. v. Bloomfield Plaza Assocs., 272 N.J. Super. 59, 66 (App. Div.), certif. denied, 137 N.J. 309 (1994). Concetta Izzo never affirmatively adopted the statement. Even if, as appellant claims, she had been only about ten feet away when Louis, Sr. made the statement, after which she looked at appellant without objecting to it, that is insufficient evidence of adoption, particularly when contrasted with the clear expression in her will distinguishing the debt due her by appellant and a statement to her accountant that the debt had not been forgiven.
Appellant renews the argument, rejected by the trial court, that the stock purchase agreement is a negotiable instrument under the Uniform Commercial Code (U.C.C.), N.J.S.A. 12A:3-104, which required the complaint to have been brought by all of his siblings as the heirs of his father's estate and co-owners of his share of the note under N.J.S.A. 12A:3-110(d).*fn6 The U.C.C. defines a negotiable instrument as "an unconditional promise or order to pay a fixed amount of money . . ." if it:
(1) is payable to the bearer or to order at the time it is issued or first comes into possession of a holder; (2) is payable on demand or at a definite time; and (3) does not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money . . . . [N.J.S.A. 12A:3-104a.]
Judge Perri found the stock purchase agreement clearly not to be a negotiable instrument, which "may not include other undertakings or instruction by the person promising or ordering payment," because it "imposed upon [appellant] additional liabilities in conjunction with the maintenance of the business and other obligations." She is correct. In addition, the stock purchase agreement is not payable to bearer or to order as required by N.J.S.A. 12A:3-104(a). Rather, it is a contract, expressing an offer to purchase ninety shares of Door-Master Corporation stock and acceptance of the terms by appellant for $261,000. See Friedman v. Tappan Dev. Corp., 22 N.J. 523, 531 (1956) (a contract is "a voluntary obligation proceeding from a common intention arising from an offer and acceptance" containing definite terms).
In Point VII, appellant argues that the inurement clause of the stock purchase agreement binding the parties' successors in interest limited the award of damages to Concetta's Estate to one-half of the 138 payments because Louis, Sr. left his entire estate to his four children. In Point VIII, appellant contends that Kreizman's complaint filed in January 2006 should have been treated as a new complaint for statute of limitation purposes. These arguments are without sufficient merit to warrant further discussion. R. 2:11-3(e)(1)(E).
Following the jury verdict, Judge Perri heard argument on the executor's motion to fix the amount of prejudgment interest. The Estate sought prejudgment interest in the amount of ten percent per annum commencing July 1, 2000, when appellant's indebtedness was to have been paid in full, totaling $70,560. Appellant urged the court to utilize its discretion to deny the motion in its entirety or, alternatively, to award interest from January 6, 2006, when interest was first requested by the Estate in Kreizman's complaint, up until March 2006, when the Estate requested an adjournment of the trial date, and further contended the rate should be substantially less than requested by the Estate.
After reciting the law on prejudgment interest, the court set interest at 5.5% for 6.3 years, from July 1, 2000 to October 23, 2006, for a total of $38,808. Judge Perri provided the following explanation for the award:
In this matter [appellant] has had the benefit of the money owed to his parents and then to his mother's estate since 1991. Judge Gilroy previously found that any claims by the Estate for amounts due prior to November 1997 were time barred. As prejudgment interest in contract cases is an equitable principle intending to disgorge the party's money which he wrongfully maintained possession of, it appears equitable to charge interest on the money owed by [appellant].
The Court notes that the agreement prohibited prepayment during Concetta Izzo's lifetime. Concetta Izzo died in 2002. The Court finds the July 1, 2000 is a reasonable and appropriate date from which to fix the running of prejudgment interest since it was the date that the final installment was to have been paid, and also again, because there was a prepayment prohibition that was in place, at least for a certain period of time.
The Court finds that the compromise between 1997 and the date of Concetta Izzo's death in 2001 or 2002 appropriately takes into consideration all of the relevant factors in terms of the amount of time that plaintiff might have claimed, the amount of time that the plaintiff actually claimed, and the fact that the issue of the date of death for Concetta was not raised by the defendant.
At the time [appellant] and his parents entered their agreement, they determined that 10 percent was a reasonable interest rate. No doubt based upon the prevailing interest rates at the time. Had the plaintiff had access to the money during the period from 2000 to 2006, a return of 10 percent per annum would have been highly unlikely on any reasonably secure investments. As Kreizman acknowledged in his deposition and in his letter interest rates had fallen substantially since that time.
The Court finds that the interest rate of 5.5 percent which was the rate applied for tort actions under the rules of court, reflects a reasonable rate of return for the estate, had it had the benefit of the money as of July 2000. The Court also acknowledges that although interest rates have declined since that time and the prevailing rate charged for prejudgment interest is approximately 2 percent, the Court believes that that 5.5 percent figure reflects the fact that the money should have been due and owing in full as of that date, and that the fixed rate of 5.5 should be applied.
Clearly this was a protracted matter. [Appellant] made one payment only under this agreement . . . [and] he made no real effort to attempt to repay the loan, certainly during his father's lifetime, also during his mother's lifetime, and even after his mother's death, when it was clear that her intention was that the note should be repaid to her estate he still made no effort whatsoever. So the Court is moved by all of these considerations.
A trial judge may grant prejudgment interest at his or her discretion. County of Essex v. First Union Nat'l Bank, 186 N.J. 46, 61 (2006); see also Meshinsky v. Nichols Yacht Sales, Inc., 110 N.J. 464, 478 (1988). In awarding prejudgment interest,
[t]he basic consideration is that the defendant has had the use, and the plaintiff has not, of the amount in question; and the interest factor simply covers the value of the sum awarded for the prejudgment period during which the defendant had the benefit of monies to which the plaintiff is found to have been earlier entitled. [Rova Farms Resorts, Inc. v. Investors Ins. Co., 65 N.J. 474, 506 (1974).]
An appellate court should not interfere with the trial court's award unless the award represents a manifest denial of justice. County of Essex, supra, 186 N.J. at 61.
It is "settled that prejudgment interest may be awarded on contract claims." Meshinsky, supra, 110 N.J. at 478. Prejudgment interest in contract actions is not subject to the mandates of R. 4:42-11, which apply only to tort actions, but rather are "assessed on a discretionary basis as the result of the application of equitable principles." DialAmerica Marketing, Inc. v. KeySpan Energy Corp., 374 N.J. Super. 502, 508 (App. Div.), certif. denied, 184 N.J. 212 (2005). We have routinely affirmed a trial judge's ordering of prejudgment interest based on the contract between the parties. See, e.g., R. Jennings Mfg. v. N. Elec. Supply Co., 286 N.J. Super. 413 (App. Div. 1995).
It is also within the trial court's discretion to choose the date on which prejudgment interest will begin to run on the basis of equitable principles. County of Essex, supra, 186 N.J. at 61-62. The trial judge should set forth the particular point from which prejudgment interest is calculated. See R. Jennings Mfg., supra, 286 N.J. Super. at 415.
Appellant concedes that the award of prejudgment interest is at the trial court's discretion, but argues the court should have considered the twelve-year delay between his default and the filing of suit. Alternatively, he contends that even if prejudgment interest should have been awarded, five and one-half percent was excessive and the rate should have been the two percent prevailing rate recognized by the court.
We are satisfied the prejudgment interest rate set by the trial court and the time period for which the interest was fixed did not constitute a manifest denial of justice. The judge carefully considered the facts and equities of the case and appropriately concluded that prejudgment interest was warranted on this contract dispute. She set the clock on prejudgment interest on July 1, 2000, nearly three years after appellant's liability began accruing, and explained her reasoning. Judge Perri's reference to the two-percent rate for tort actions was for comparison to the ten-percent contractual rate sought by the Estate; she was clearly not bound by the tort rate and appellant advances no reason why the court should have used that rate for this breach of contract claim. The trial court acted well within its discretion, and we discern no basis to second-guess any aspects of the award of prejudgment interest calculated on the $112,000 jury verdict.