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Schulman Wiegmann & Associates, Inc. v. S.E. Manno & Associates

May 27, 2008


On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, L-3586-05.

Per curiam.


Submitted December 19, 2007

Before Judges Parker, R. B. Coleman and Lyons.

Plaintiff Schulman Wiegmann & Associates, Inc. (SWA) appeals from an order entered on September 29, 2006 granting summary judgment in favor of defendant Charles Manno,*fn1 dismissing with prejudice all claims asserted by plaintiff against defendant Charles Manno*fn2 . After reviewing the record in light of the contentions advanced on appeal and in light of applicable law, we affirm the dismissal of claims predicated on theories of breach of contract and unjust enrichment, substantially for the reasons articulated by the trial court, but we reverse the dismissal of plaintiff's claims based on allegations of fraud and fraud in the inducement. We remand such claims for trial or for other proceedings in the Law Division.

Plaintiff is a court reporting and litigation support services company. Defendant S.E. Manno & Associates, Inc. (SEMA) is a Pennsylvania corporation, now bankrupt, that engaged in the business of serving as an intermediary/liaison between entities that provide court reporting and litigation support services and entities or individuals who utilize such services. Defendant Susan E. Manno was the president and owner of SEMA. Her husband, defendant Charles Manno, was employed as a videographer for SEMA. According to the statement of material facts submitted to the court, Charles Manno is not an owner and not an officer of SEMA. He received a $900 weekly salary along with payment of car and household expenses, and he was afforded the use of a Mercedes station wagon and video equipment.

In late 2001, plaintiff SWA entered into an arrangement with SEMA whereby SWA agreed to provide court reporting and litigation support services to SEMA's clients, who were billed by SEMA, which in turn was to pay SWA the invoiced amount discounted by fifteen percent for the service or referral fee. According to the complaint, plaintiff provided services to various SEMA clients who paid SEMA, but SEMA failed to pay plaintiff as agreed. Although SEMA began having difficulty making timely payments to SWA, it continued to receive court reporting services from SWA. According to the October 2, 2005 certification of Barry Wiegmann, a principal of SWA, beginning in October 2003, both Susan and Charles Manno made repeated assurances to him that the Mannos were in the process of getting a home equity loan. The proceeds of that loan were to be used to pay SWA the money owed to it. Wiegmann certified that these assurances were made to induce SWA to continue providing services on behalf of SEMA.

In December 2003, SEMA made a partial payment of the monies owed to SWA in the amount of $7,800, but by January 2004, the outstanding balance owed to SWA totaled more than $227,000. Still, Wiegmann alleged that defendant repeatedly made assurances that the debt would be paid from the proceeds of the home equity loan, which the Mannos would be receiving shortly. Eventually, however, on April 22, 2004, Charles Manno informed Wiegmann that no payment would be made, and there would be no home equity loan.

At that time, plaintiff ceased doing business with SEMA on credit and expressed concern about doing business with them at all. However, on or about May 7, 2004, Susan Manno and SEMA executed a Non-Negotiable Promissory Note (Note) to SWA in which she agreed that SEMA owed SWA $212,507.64, which was to be repaid to SWA together with interest at a rate of eight percent. Under the terms of the Note, SEMA agreed to repay the loan in monthly installments beginning July 1, 2004 and ending May 1, 2006. SWA agreed not to take any legal action against SEMA or the Mannos. Susan Manno personally guaranteed the full amount of the loan. Although Wiegmann had asked both Susan and Charles to execute promissory notes, Charles Manno refused to sign any note, and he refused to state in writing that he would assume any debts owed by SEMA to SWA.

Between July and November 2004, SEMA made the monthly payments contemplated by the promissory note and SWA continued to provide court reporting services to SEMA. Then, in November 2004, SEMA ceased making payments to SWA. SEMA made a partial payment in late December, but a debt of over $190,000 remained outstanding. Thereafter, plaintiff filed its original complaint in the Law Division, Middlesex County, on May 14, 2005 against SEMA, Susan E. Manno and Charles Manno.*fn3 The complaint asserted claims against all defendants, including Charles, on theories of breach of contract (first count), reasonable value of services (second count), unjust enrichment (third count), fraud in the inducement (fourth count), fraud (fifth count) and theft of services (seventh count). The sixth count of the complaint, based upon the personal guarantee of Susan Manno, did not purport to assert a claim against Charles.

The record indicates that on April 13, 2006, the trial court entered an order granting partial summary judgment in favor of defendant Charles Manno that dismissed certain claims against Charles Manno, however, the appendices do not contain a copy of the April 13 order. We note that, according to defendants' subsequent August 16, 2006 memorandum in support of motion for summary judgment or for clarification, the April 13 order does not specify which counts were dismissed. Because the September 29, 2006 order dismisses all claims against defendant Charles Manno, we find any uncertainty regarding the scope of the April 13 order to be of no moment.

On August 16, 2006, defendant Charles Manno filed his notice of motion for summary judgment on the remaining counts after his earlier motion. The trial court heard oral arguments on September 29, 2006, and rendered its decision from the bench. The court found the Statute of Frauds, N.J.S.A. 25:1-15, and the absence of any ownership interests in SEMA on the part of Charles Manno were dispositive. As to the Statute of Frauds, the court observed: "The statute of fraud exists and it says, again, very succinctly that, unless there is a writing as it concerns oral promises and money, that that promise cannot be enforced." Regarding Charles' relationship to SEMA, the court stated, in pertinent part:

[t]he argument by the plaintiff is that there are issues of fact because there are disputes with regard to, he said one thing one time and he said something else another time. But I believe that the law says, there must be substantial genuine issues of material fact. And in light of the fact that there is no opposition or no dispute with regard to Mr. Manno being an owner of this company, it would appear to this Court that there is no genuine issue of fact with regard to his being liable for the debts of that company.

So, as a matter of law, I find that there has been no prima facie showing that Manno has any direct or indirect ownership of SWA [sic] that would require the Court to attach responsibility for SEMA debts and, ...

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