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Jentar Trucking, Inc. v. Tun

July 15, 2008


On appeal from the Superior Court of New Jersey, Law Division, Hunterdon County, L-177-06.

Per curiam.


Argued February 25, 2008

Before Judges Stern, A.A. Rodríguez and Collester.

Plaintiffs, Jentar Trucking, Inc. (Jentar) and CRS Distribution, Ltd. (CRS), appeal from the December 7, 2006 amended judgment dismissing their complaint in light of the forum selection clause (FSC) in a contract with defendants Nelson Tun, Quadstar, Inc. and Anthony Manganelli, and from an order of January 23, 2007, denying reconsideration.*fn1 The Law Division found no jurisdiction to hear the matter because of the parties "Confidentiality/Non-Circumvention Agreement" (CNCA), which required litigation regarding it in California.*fn2

Plaintiffs argue that defendant Tun "waived" the FSC provision of the agreement, plaintiff Jentar was not a party to the agreement, it would be "unfair and unreasonable" to enforce the clause, that the matter was decided based on improper submissions to the trial court, that there was no agreement or "meeting of the minds" regarding the FSC, California may not accept or entertain the case (which might have to come back to New Jersey anyway - at least if California resident Gerald Newman is not made a party), the trial court misunderstood the parties' intent, and there was no evidentiary basis for the trial court's decision.


On November 17, 2003, plaintiff Jentar entered into an "Intermediary Consulting and Non-Circumvention Agreement" (ICNC) with plaintiff CRS, a Canadian entity. Under the agreement, CRS was to act as broker on behalf of Jentar in a sale of Jentar. Jentar is a New Jersey corporation based in New Jersey.

On August 12, 2004, defendant Nelson Tun, president of defendant Quadstar, Inc. (Quadstar), a prospective buyer of Jentar, executed a "Confidentiality/Non-Circumvention Agreement" (CNCA) with CRS in order to obtain information regarding Jentar in order to facilitate a potential purchase.*fn3 Quadstar is a New Jersey corporation, and Tun is a New Jersey resident.*fn4 The form CNCA used by CRS was drafted for CRS by Gerald Newman, a California attorney. Paragraph 12 of the CNCA contains a forum selection and choice of law clause providing that:

This Agreement shall be governed by and construed in accordance with the laws of the State of California. The parties hereby irrevocably consent to the jurisdiction of the state and federal courts located in Los Angeles, California, in any action arising out of or relating to this Agreement, and waive any other venue to which either party might be entitled by domicile or otherwise.

Although not a party to the CNCA, Jentar attempts to enforce its provisions against defendants in terms of asserting a breach by them. Jentar further points out that Tun and Jentar had conducted extensive negotiations on a "Sale and Purchase Agreement" that contained a governing law provision that provided the "Agreement shall be construed by the laws of the state of New Jersey and jurisdiction shall be in New Jersey." However, that Agreement was never executed by Quadstar or Tun, as Tun withdrew the offer to purchase Jentar before the agreement was executed.

In their complaint plaintiffs allege interference with plaintiffs' contractual and economic relations, interference with their economic advantage, conversion, conspiracy and breach of contract.*fn5 In support of the claim of interference with contractual and economic relations, plaintiffs allege that Tun used information that was gained from the inspection of Jentar records during the purchase negotiations and due diligence investigation to the detriment of plaintiffs and in violation of the CNCA. Specifically, they allege that Tun obtained the records of Jentar, pursuant to the CNCA, by misrepresenting financial information as Quadstar never had the ability to purchase Jentar. Plaintiffs further allege that Tun entered into the purchase negotiations solely to gain information about Jentar clients and to use the information in violation of the CNCA, and to obtain its business opportunities to the detriment of Jentar.

Plaintiffs claim that subsequent to Quadstar's failure to purchase Jentar, CRS obtained a commitment from a third party, Louis Biron, to purchase the Jentar company for $1,350,000 and Biron signed a "Letter of Intent to Negotiate Transaction in Good Faith" to that end. However, an important consideration for that sale was that defendant Anthony Manganelli, the former sole proprietor of two companies then recently acquired by Jentar, would remain as a consultant and manager for Jentar after the acquisition. Plaintiffs further allege, however, that Tun used information he had gained pursuant to the CNCA to solicit Manganelli to work for Quadstar and the departure of Manganelli decreased the value of Jentar to Biron from $1,350,000 to $1,000,000.

In support of its claim of interference with economic advantage, CRS claims that it would have received a $135,000 commission as the result of the sale of the company to Biron at the original contract price, but that Tun's actions resulted in a commission of only $25,000. CRS claims that this reduction was due to the fact that Tun's actions in soliciting Manganelli reduced the purchase price of Jentar in addition to the fact that Tun told Jentar that CRS "had done little work and otherwise ...

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