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JPMorgan Chase Bank, N.A. v. University Donut


February 9, 2009


On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, L-7080-07.

Per curiam.


Argued January 20, 2009

Before Judges Reisner and Alvarez.

Defendants Abdul and Mazeena Jaleel appeal from a trial court order dated February 1, 2008, granting summary judgment in favor of plaintiff JPMorgan Chase Bank, N.A. for $26,650.55.*fn1

They also appeal from an order dated March 20, 2008, denying their motion for reconsideration. Because we conclude that defendants' submissions created material issues of fact, we reverse the orders on appeal and remand this matter to the trial court.*fn2

On August 17, 2007, plaintiff filed a complaint against University Donut, Inc. and the Jaleels, seeking to collect a business loan based on a line of credit which the Jaleels had personally guaranteed. The Jaleels (hereafter, defendants) filed a pro se answer to the complaint on September 13, 2007, together with an affidavit attesting in some detail that they had paid off the loan balance and told the bank to close the account.

According to defendants, they owned University Donut, Inc., a business located in New York. They contended that they sold the business to Liaqat Khan and Niazi Ahmad (buyers) on May 2, 2006. On that date, defendants and the buyers "went to the branch of JPMorgan Chase" located next door to the business and "we [defendants] surrendered the responsibility of the business account for 'University Donut Inc.' to [the buyers]." According to the affidavit, defendants "clearly told the bank employees to relieve us of any responsibilities to this account" and they presented the bank with a document from the buyers "stating that they will . . . be responsible for this account." Defendants contended that they "surrendered [our] ATM card for this account to the bank employees on this date" and the bank employees gave the buyers a new ATM card for the account. Defendants also attested that they paid off the outstanding balance on the account in May 2006 and did not withdraw any funds thereafter.

Plaintiffs filed a motion for summary judgment, supported by a certification from a bank employee, who attested to plaintiff's business records. Plaintiff sought $26,150 in principal, interest, late fees and counsel fees. Attached to the certification was defendants' application for a $25,000 business line of credit, which included their personal guarantee and a provision that the guarantee would continue until defendants gave written notice to the bank terminating their future liability under the guarantee. The application was approved.

In their opposition to the summary judgment motion, defendants, still acting pro se, submitted a certification which essentially tracked the affidavit attached to their answer. They contended that they paid off the loan balance, surrendered their ATM card and "requested the bank to relieve [us] from all responsibilities related to the business accounts." They attached proof that they had sold the business on May 2, 2006, as well as a receipt for $2,792.14, which they contended was the balance remaining when they asked plaintiff to transfer the line of credit to the buyers. They also attached a written notice, signed by defendants and the buyers, attesting that "from May 2nd 2006" defendants were replaced by the buyers, who would be responsible for the account. They contend they supplied this notice to the bank.

In reply, plaintiff submitted a certification from the same bank employee, attesting that the bank did not "receive written notice of termination of the [a]ccount" or "written revocation of the guarantees on this [a]ccount." The motion judge entered an order dated February 1, 2008, granting summary judgment.

Defendants, now represented by counsel, filed a motion for reconsideration.*fn3 The motion was supported by an affidavit from Abdul Jaleel attesting that defendants bought the business in 1997 but decided to sell it after Mrs. Jaleel was brutally assaulted and robbed in November 2005. They finalized the sale in writing on May 2, 2006 and so advised plaintiff: "On May 2, 2006, the day the sale was solemnized, we went to Chase with [the buyer]. There, we informed the Chase representative that we had sold the business and wished to close our account . . . .

[W]e requested the final payment of any outstanding balance for our line of credit. Our Chase representative herself filled out a payment receipt for $2,792.14." Mr. Jaleel further attested that defendants paid off the amount due, "informing the Chase representative that we wished to close our account." They also relinquished their ATM card, and introduced the new buyer to the Chase representative, who ran a credit check and approved the buyer for a line of credit. Defendants therefore believed that the line of credit for which they were liable had been "closed."

The motion judge denied reconsideration by order dated March 20, 2008. In a written statement of reasons issued with the March 20 order, the judge found that defendants personally guaranteed a bank loan to their business, and they were still obligated on the loan after they sold the business. He found that they never terminated the loan in writing or gave the bank written notice of their intent to assign the loan to the new owners. Therefore, he concluded that defendants were still obligated on the loan of funds extended after they sold the business.

Our review of the trial court's summary judgment decision is de novo:

In deciding a motion for summary judgment, the trial court must determine whether the evidence, when viewed in a light most favorable to the non-moving party, would permit a rational fact-finder to resolve the dispute in the non-moving party's favor. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). The trial court cannot decide issues of fact but must decide whether there are any such issues of fact. Ibid.; R. 4:46-2(c). Our review of a trial court's summary judgment decision is de novo, applying the Brill standard. Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998).

[Agurto v. Guhr, 381 N.J. Super. 519, 525 (App. Div. 2005).]

In deciding a summary judgment motion, the evidence must be viewed in the light most favorable to the non-moving party. Ibid.

After reviewing the entire record with this legal standard in mind, we conclude that summary judgment should not have been granted. Defendants' proofs would support a finding that they had an ongoing relationship with a branch of plaintiff's bank, located next to their business. When they sold the business, they went to the bank in person, explained that they wanted to transfer the line of credit to the new owners, and followed the instructions of the bank's representative as to how to accomplish that. Viewed most favorably to defendants, their submissions could support a finding that defendants gave plaintiff's employee clear notice that they intended to pay off the balance of the loan, hand in their ATM card, terminate their guarantee, and transfer the line of credit to the new owner.

Even if defendants did not provide the bank with a writing specifically stating that they were "terminating their guarantee," their proofs, if believed, would support a finding that they clearly communicated that intent to the bank's employee. The proofs could also support a finding that the bank's employee led defendants to believe that by taking certain actions (paying off the loan balance, handing in their ATM cards, providing written proof of the sale, and getting the buyers qualified for the line of credit), they would be released from the guarantee. While we intimate no view as to how the case should ultimately be decided, we do conclude that defendants are entitled to a trial on the merits.

We, therefore, reverse the orders on appeal and remand this matter to the trial court for further proceedings consistent with this opinion.

Reversed and remanded.

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