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Sea v. DFH Environmental Services

June 26, 2008


On appeal from the Superior Court of New Jersey, Law Division, Essex County, L-7034-04.

Per curiam.


Submitted March 31, 2008

Before Judges Lintner and Alvarez.

Plaintiff, Julius Sea, appeals from a jury verdict in favor of defendant, DFH Environmental Services, Inc. Plaintiff's complaint sought reimbursement of $40,000 paid on account of a contract to replace underground gasoline and oil tanks at his service station. For the reasons that follow, we affirm.

The parties signed the agreement, which called for scheduled payments, on September 1, 1998: $20,000 upon execution of the contract, $20,000 after new tanks were ordered, $20,000 when "site mobilization" was completed, and $60,000 at completion. During negotiations, defendant agreed to allow plaintiff to make the final $60,000 payment in installments, secured by a mortgage, a promissory note, and assignment of rents generated by the gas station. To induce plaintiff to make the final payment in a lump sum, the contract provided that plaintiff could make the last installment by paying $55,000 and not the $60,000 originally quoted. The terms of defendant's proposed mortgage called for the $60,000 to be paid at the rate of $2500 monthly payable over two years. It also stated, "[a] service charge of 1.75% per month will be charged to all overdue installment payments." The proposed promissory note contained the following proviso:

In the event any payment due hereunder shall not be paid on the date when due, such payment shall bear interest at the lesser of twenty-one percent per annum or the highest lawful rate permitted under applicable law, from the date when such payment was due until paid. This paragraph shall not be deemed to extend [or] otherwise modify or amend the date when such payments are due hereunder. The obligations of Maker under this Note are subject to the limitation that payments of interest shall not be required to the extent that the charging of or the receipt of any such payment by the holder of this Note would be contrary to the provisions of law applicable to the holder of this Note limiting the maximum rate of interest which may be charged or collected by the holder of this Note.

Although the contract was signed, the financing documents were not. Plaintiff objected to a number of terms contained in the proposed mortgage and promissory note, including his understanding of the documents that interest would accrue on the entire unpaid balance.

It is not clear from our review of either the financing documents, the briefs or the trial transcripts, whether defendant intended to charge interest only if monthly payments were late, or on the entire unpaid balance. The language in the financing documents refers to a "service charge" on late monthly payments, yet plaintiff testified that he did not want to pay interest of more than twenty percent per year on the unpaid balance.

Over the next six years, the parties engaged in fruitless ongoing negotiations, and the financing documents were never signed. Early on, plaintiff paid $40,000 to defendant, and defendant, in turn, obtained new tanks and moved the necessary equipment for installation to the gas station, "site mobilization," on two separate occasions. Each time, plaintiff called off the work, in part because the mortgage, promissory note, and assignment of rents had not been signed.

When negotiations finally stalled completely, and plaintiff demanded a refund, defendant refused to reimburse anything. Plaintiff initially sued defendant pro se. Thereafter he retained counsel, and an amended complaint was filed seeking damages, in addition to the reimbursement, for breach of contract, tortious interference with business relations, misrepresentation, fraud, and violations of the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -166.*fn1 Presumably, defendant filed a counterclaim seeking payment for work performed, although no copy of an answer and counterclaim was provided. Although no copy of the jury verdict sheet was included either, our review of the transcript reveals that the jury found plaintiff in breach of the contract due to his failure to pay the third $20,000 installment upon site mobilization. The jury further found that plaintiff was not entitled to any refund, and that defendant was not owed payment for work performed over and above $40,000.

During his direct testimony at trial, plaintiff sought to introduce a copy of a letter to defendant dated March 5, 1999, demanding either a refund of the $40,000, or that the funds be placed in an interest-bearing escrow account. The letter had not been provided in discovery, and accordingly, the judge barred its admission. After the ruling, plaintiff attempted to answer a question by reference to the letter, at which point the trial judge instructed the jury as follows:

- - ladies and gentlemen, I'm going to put this to bed finally.

There is an allegation that there was a letter sent in 199[9]. That document was never provided to the defense in discovery. Therefore, . . . there are questions as to whether or not ...

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