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Dimmerman v. First Union National Bank

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


June 12, 2008

ROBERT DIMMERMAN AND ROCHELLE DIMMERMAN, INDIVIDUALS, AND MAPLE SHADE MAZDA, PLAINTIFFS-APPELLANTS, AND AMERICAN CASUALTY COMPANY OF READING, PENNSYLVANIA, A CNA COMPANY, AS SUBROGEE OF MAPLE SHADE MAZDA, PLAINTIFF/INTERVENOR
v.
FIRST UNION NATIONAL BANK*FN1 , VINCENT J. FULGINITI, AND DEBORAH A. FULGINITI, DEFENDANTS-RESPONDENTS, AND CORE STATES NATIONAL BANK, DEFENDANT, AND MIRONOV, GOLDMAN, WORTZEL, SLOAN & PARZIALE, LLC, STUART RASKIN, AND THE LOOMIS COMPANY, DEFENDANTS/THIRD-PARTY PLAINTIFFS-RESPONDENTS,
v.
LEONARD J. ALESSI, JR., A.R.C. COMPANY, AND ALCO ROOFING COMPANY, THIRD-PARTY DEFENDANTS.

On appeal from the Superior Court of New Jersey, Law Division, Camden County, L-2077-01.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued April 28, 2008

Before Judges Lintner, Sabatino and Alvarez.

Plaintiffs, Maple Shade Mazda (Maple Shade), a corporation, and Robert and Rochelle Dimmerman, its principals and sole shareholders, sought damages from various defendants, arising out of the admitted embezzlement of both corporate and personal funds between January 1995 and April 1999, by defendant Vincent Fulginiti (Vincent), Maple Shade's controller. In addition to Vincent, plaintiffs' complaint sought damages from First Union National Bank (First Union), and Maple Shade's accounting firm, Mironov, Goldman, Wortzel, Sloan & Parziale, LLC and Stuart Raskin, (collectively, the Accountants), alleging liability for failure to discover forged checks signed by Vincent. In addition, the complaint named Maple Shade's insurance broker, The Loomis Company (Loomis), alleging that it failed to provide adequate insurance to cover Vincent's embezzlement. The complaint also sought to impose a constructive trust on Vincent's wife, Deborah.

American Casualty Company (American Casualty) was permitted to intervene as subrogee in the action and filed a complaint naming all the defendants, seeking recovery of the $200,000 policy limits it paid plaintiffs under its policy issued to Maple Shade insuring against employee infidelity. First Union, Loomis, and the Accountants filed answers denying liability and cross-claiming against one another, as well as Vincent and Deborah, for contribution and indemnification.

Vincent defaulted on plaintiffs' complaint. Defaults were also entered against Vincent on the Accountants' and Loomis's cross-claims. Eventually, summary judgment was entered dismissing plaintiffs' complaint against First Union, Loomis, and the Accountants. Partial summary judgment orders dated September 26, 2003, and January 23, 2004, resulted in the complete dismissal of plaintiffs' claims against First Union. Following oral argument on April 30, 2004, the judge entered summary judgment orders in favor of Loomis and the Accountants. Plaintiffs' motion for reconsideration was denied.

A bench trial was conducted on Deborah's liability. Testimony was also given by way of a proof hearing to determine the damages sustained by plaintiffs as a result of Vincent's forgeries. On April 25, 2005, the judge announced her decision from the bench, awarding plaintiffs $119,700 compensatory damages and $150,000 in punitive damages against Vincent. The judge also imposed a constructive trust of $9200 against Deborah.

On June 9, 2006, after hearing oral argument, the judge denied plaintiffs' motion to modify her findings to increase the amount of the award against Vincent to $973,423.60. At the same time, the judge granted American Casualty's cross-motion to have the judgment reflect its subrogation interest on the compensable damages award against Vincent. On June 28, 2006, the final judgment was entered against Vincent for $119,700 in compensable damages, representing $112,000 of embezzled funds by Vincent, and $150,000 in punitive damages. The $119,700 judgment also included a finding of joint and several liability against both Vincent and Deborah in the amount of $7700 for improvements to their home. Prejudgment interest in the amount of $42,247.11 was assessed against Vincent. The judgment imposed a constructive trust in the amount of $9200.78 against Deborah, representing $1500.78 for two months' principal and interest payments on the Fulginiti home, $6500 for kitchen improvements, and $1200 for a fence around the home, as well as $1441.81 in prejudgment interest. The judge also ordered Deborah to turn over the watch Vincent purchased for her from embezzled and commingled funds. The judgment included an award, in favor of American Casualty, of the compensable damages assessed against Vincent but not the punitive damages.*fn2 Plaintiffs appeal and we affirm.

On appeal, plaintiffs raise the following points:

I. THE TRIAL COURT ERRED IN GRANTING DEFENDANTS' MOTIONS FOR SUMMARY JUDGMENT.

II. THE TRIAL COURT ERRED IN GRANTING FIRST UNION'S MOTION FOR SUMMARY JUDGMENT

III. THE TRIAL COURT ERRED IN GRANTING [THE ACCOUNTANTS'] MOTION FOR SUMMARY JUDGMENT.

IV. THE TRIAL COURT ERRED IN GRANTING LOOMIS'[S] MOTION FOR SUMMARY JUDGMENT.

V. THE TRIAL COURT ERRED IN DENYING THE PLAINTIFFS' MOTION FOR RECONSIDERATION OF ITS APRIL 30, 2004 ORDERS IN FAVOR OF [THE ACCOUNTANTS] AND LOOMIS.

VI. THE TRIAL COURT ERRED IN ITS RULINGS AT TRIAL.

At oral argument before us, counsel for plaintiffs conceded that the points in its appellate brief challenging the entry of summary judgment in favor of First Union, the Accountants, and Loomis would be rendered moot if the judge's compensable damage award against Vincent is sustainable based upon sufficient credible evidence in the record. Plaintiffs also abandoned their opposition to Vincent receiving a credit for the money paid to plaintiffs by American Casualty, conceding that they are not entitled to a double recovery. Indeed, Vincent was not credited with the payments American Casualty made to plaintiffs, as the judgment awarded $119,700 in compensable damages to American Casualty on its subrogation claim. Subrogation substitutes the insurer in the place of the insured, thus giving the insurer all the rights of the person for whom the insurer is substituted. See Perreira v. Rediger, 169 N.J. 399, 408 n.1 (2001) (citing Lee R. Russ & Thomas F. Segalla, Couch on Insurance § 222:5 (3d ed. 2000).

Plaintiffs essentially argued before us that the judge erred by accepting as true Vincent's assertion as to the quantum of money embezzled rather than accepting plaintiffs' contention that it amounted to almost $1 million. Because we are convinced that the judge's award of damages is consistent with the competent, relevant, and reasonably credible evidence elicited at the proof hearing, we limit our discussion to plaintiffs' Point VI contention. Plaintiffs' actual recovery of the total compensable damages resulting from Vincent's intentional wrongdoing renders moot the arguments raised in Points I through V of their appellate brief challenging the entry of summary judgment in favor of co-defendants.*fn3 Accordingly, we decline to consider those issues. Zirger v. Gen. Acc. Ins. Co., 144 N.J. 327, 330 (1996); Oxfeld v. N.J. State Bd. of Educ., 68 N.J. 301, 303-04 (1975); Sente v. Mayor & Mun. Council of Clifton, 66 N.J. 204, 205 (1974).

At the proof hearing, plaintiffs called Vincent, who fully described the embezzlement scheme he engaged in between January 1995 and April 1999. His testimony was in accordance with information contained in the summary-judgment records. He explained how he would forge Robert Dimmerman's name to checks and use the proceeds to fund various investments, including a condominium in Wildwood Crest. He also used the money to buy clothing and pay his brother-in-law for work performed on Vincent's house. Vincent would also sign Robert Dimmerman's name on Maple Shade checks and checks from Robert Dimmerman's personal account to pay legitimate expenses. At times, he would forge Robert's signature on checks, cash them, and give the money to Robert directly. There were times when he made legitimate payments to employees from forged checks.

Vincent admitted stealing $225,000. He testified that he repaid Dimmerman $117,000 from the sale of his investments. Vincent further stated that everyone at Maple Shade, including Peter Janis, the Parts and Service Manager, knew that he signed corporate checks. Margaret Donovan is an office employee at Maple Shade who testified at her deposition that Vincent signed corporate checks to pay various vendors. At trial, it was stipulated by counsel that if Donovan testified she would testify that she was aware that Vincent was signing Dimmerman's name on checks and believed he had authority to do so.

Leonard Alessi, Vincent's brother-in-law and owner of Alco Roofing, testified that he had received forged checks, but that many of the checks shown to him were for work done at Maple Shade's two locations, the Dimmermans' home, and Dimmerman's mother's home. He asserted that those checks were for legitimate services. Janis confirmed that work was done at the dealership, and at Dimmerman's and Dimmerman's mother's home.*fn4

Both Vincent and Deborah testified that Deborah never knew about the scheme or about the many different personal bank accounts, mutual funds, and retirement accounts that Vincent had opened in his own name and in her name with the money he had taken, even though she regularly paid the couple's monthly bills. She did not keep records, she did not get receipts for the work Alessi did on the house, and she shredded financial records after the case began. She conceded that she noticed that Vincent was dressing better during the period of time he embezzled funds.

Neither Robert nor Rochelle Dimmerman appeared at trial. Except for Janis, no other Maple Shade employees were called as witnesses for plaintiffs. Plaintiffs presented no witness to analyze the bank records or the forged checks, nor did they produce any testimony as to what amount of money Vincent kept for himself versus the amount of forged checks used to pay Maple Shade's corporate or Dimmerman's personal expenses. Finally, plaintiffs' counsel conceded that Vincent repaid plaintiffs $113,000.

In reaching her findings, the judge reviewed all the relevant testimony. She arrived at her totals based upon the evidence elicited at the proof hearing. Arriving at total compensable damages of $119,700, the judge credited Vincent's repayment, subtracting the repaid $113,000 from the $225,000 Vincent admitted taking, finding Vincent liable for a net sum of $112,000. She found Vincent and Deborah joint and severally liable for $7700 in embezzled money used for specific improvements to their home. She assessed Vincent $150,000 in punitive damages.*fn5

Initially, we note that it was plaintiffs who elicited the testimony from Vincent upon which the judge relied. Beyond that, as previously noted, plaintiffs offered no other affirmative or documentary proof as to the actual amount taken by Vincent, only the total number of checks signed by him. Vincent not only embezzled money for his personal use from checks he forged but also signed Dimmerman's name to checks used to pay legitimate Maple Shade expenses and Dimmerman's personal expenses. Although judges are obliged to view the plaintiff's proofs "indulgently" in a default-judgment proof hearing, Heimbach v. Mueller, 229 N.J. Super. 17, 20 (App. Div. 1988), plaintiffs are nevertheless required "to furnish proof on the issue of damages as well as liability." Johnson v. Johnson, 92 N.J. Super. 457, 464 (App. Div. 1966); accord Slowinski v. Valley Nat'l Bank, 264 N.J. Super. 172, 183 (App. Div. 1993). In fact, "judgment should not ordinarily be entered without a proof hearing, although the question of what proofs are necessary is inherently within the judge's discretion."

Chakravarti v. Pegasus Consult. Group, Inc., 393 N.J. Super. 203, 210 (App. Div. 2007) (citations omitted).

We will not disturb the factual findings and legal conclusions of the trial judge unless they are "'so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice.'" Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974) (quoting Fagliarone v. Twp. of N. Bergen, 78 N.J. Super. 154, 155 (App. Div.), certif. denied, 40 N.J. 221 (1963)). In our view, plaintiffs failed to demonstrate through competent proof which forged checks represented embezzled funds and which ones were used to pay legitimate expenses. Stated simply, the proof as to the amount actually embezzled by Vincent for his and Deborah's use came from Vincent. There was no competent proof, other than plaintiffs' conclusory assertion, to support plaintiffs' claim that Vincent's forgeries resulted in a loss approaching $1,000,000. The judge's determination was supported by substantial credible evidence in the record. Ibid.

Affirmed.


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