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Winograd v. Karpo


May 29, 2009


On appeal from Superior Court of New Jersey, Law Division, Burlington County, Docket No. L-3382-04.

Per curiam.


Submitted October 22, 2008

Before Judges Stern and Waugh.

Defendants, husband and wife Sanford Karpo ("Sanford") and Rita Karpo ("Rita"), appeal from an order of October 31, 2007 that enters judgment in favor of plaintiff Scott Goldstein ("Goldstein") against defendants, individually and trading as College Financial Aid Services of Cherry Hill ("CFAS"), in the amount of $19,100 plus pre-judgment interest, totaling $22,690.80, for breach of contract incident to the loss of a student loan from American University ("AU"). Plaintiffs' Goldstein and his mother, Audrey Winograd ("Winograd"), cross-appeal challenges the dismissal of the counts of the complaint for negligence, common law fraud and consumer fraud.

Plaintiffs assert that defendants, who were engaged in assisting with college admission and financial aid applications, were negligent in filing Goldstein's application for financial aid at AU where Goldstein was accepted, that Goldstein lost $16,000 in aid his freshman year and, as a result, he was ineligible for $3,500 in aid for his second year. According to plaintiffs, they proved their claims of breach of contract, negligence, fraud and consumer fraud based on defendants' failure to file on time and to advise of the "deadline" for filing for financial aid at AU, and because defendants sent a false letter to AU asserting that Goldstein's mother was seriously ill with brain cancer.

Defendants argue that the trial judge erred "by allowing the entire deposition testimony of the director of financial [aid] of [AU] to be put into evidence without being able to cross[-]examine the witness," the claims against defendant Rita should have been dismissed "since Defendant Sanford Karpo was the sole-proprietor of his company," plaintiffs "failed to follow the instructions set forth in the Defendant's newsletter," the court improperly failed to dismiss the claims, the court improperly determined "that there was a breach of contract" and the court erred in not considering plaintiffs' failure to mitigate damages. On their cross-appeal, plaintiffs assert that "the trial court erred in dismissing the count for consumer fraud [and] the common law fraud count."

Our careful review of the record convinces us that defendants' contentions warrant only the following discussion and that the record warrants the judge's findings. R. 2:11-3(e)(1)(A), (E); Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 483-84 (1974). However, we remand on the cross-appeal.

Defendants' brief lacks an adequate statement of facts and does not adequately refer to the record in making factual claims such as plaintiffs' alleged failure to follow defendants' oral instructions and newsletter. The evidence includes the following. Plaintiff Winograd retained defendants to assist her son, Goldstein, in preparing and filing applications for college admissions and financial aid. She paid defendants $350 of the $750 retainer. Defendant Sanford told Goldstein not to contact AU without conferring with him. The defendants' literature noted that CFAS will "prepare and file all financial aid forms." AU was Goldstein's first choice, and Sanford told him and his mother "that they would file the form" and that he could not. When Goldstein was accepted into AU, its admissions package indicated that any financial aid application had to have been received by then. Goldstein was advised by the school's financial aid officer that he lost $16,000 to $17,000 in financial aid for which he qualified. AU denied Goldstein's appeal seeking late consideration of his request for financial aid, and because Goldstein did not receive financial aid his freshman year, he could only receive $12,500 in aid his sophomore year.

The deposition testimony of Brian Lee Sang ("Sang"), Director of AU's Financial Aid Office, was read into evidence and included the following:

Q: Did you receive -- and when I say you, I mean American University -- did you receive a financial aid application for Scott Goldstein?

A: Yes, I did.

Q: And, do you know when you received that?

A: We received it the 11th of March.

Q: And did Scott receive a grant for his freshman year?

A: No, he did not.

Q: And why not?

A: Because he filed late. The Institutional application was late.

Q: Okay. Do you have his financial material here, financial aid material here?

A: No, I don't have it here.

Q: All right. Do you know how much would have been granted if he filed on time?

A: Yes. Yes. Approximately $16,000.

Q: And he was. Do you know how much he was granted in his sophomore year, the grant?

A: Yes, approximately $12,500.

Q All right. And can you explain to us why the difference between $16,000 and $12,500?

A Well, the difference normally is attributed to eligibility. In his particular case because he did not receive Institutional funding in his freshman year, the amount of need that met the Institutional fund was a lot less.

Q Do you know how much he was granted this year, his junior year?

A Yes, $16,000.

Q And, did -- strike that. Did Mr. Goldstein, Scott Goldstein, file an appeal or whatever you would call it, request for reconsideration, his freshman year when he was advised that he was not eligible?

A Yes, he did.

Q Okay. And, I'm going to show you a document which is dated April the 21st, 2003 which I will designate it as Lee Sang One, and do you recognize the signature on that document?

A Yes, I do.

Q And, whose signature is that?

A That's my signature.

Q All right. And this document, would you tell us what it is, what it represents?

A The document is a response to a particular appeal. In this particular case it is -- it notified the family that we reviewed the appeal and was unable to grant the request.

After Goldstein was advised that his application for financial aid could not be considered because it was time barred, Sanford wrote a letter in the name of Winograd to AU's Office of Enrollment Services. It included the following:

According to my understanding, college financial aid is based on Need. If that is the case, here are the calculations:

total college costs: $36,655 minus EFC: 10,108 Need: $26,547 Amount of award: 9,625 Un-met Need: $16,922

We don't want to sound greedy or unreasonable, but the gap is too great for me to handle at this time of my life. Unfortunately, life has dealt me with health blows. I am currently on disability, fighting another battle with cancer and I was recently diagnosed with a brain tumor. Fortunately, according to the doctor, it is not cancer related. The doctor said it can be surgically removed, however, my medical coverage tells me, the type of brain surgery that is required is not covered.

Sanford testified that he received the information about Winograd's medical condition directly from her. However, while Winograd had lymphatic cancer, she never had a brain tumor.

In his testimony, Sanford acknowledged that he lied about his background and experience. He was not a tax accountant as he purported to be. Rather, Sanford's experience included traveling with a "pool hustler" and working in the family shoe business, among other things, before starting CFAS.

It is uncontested that defendants never entered into a written contract with plaintiffs, and there is no claim that Winograd paid defendants more than $350.

Defendants' principal claim of error is that the trial court permitted plaintiffs to introduce Sang's deposition testimony. The defendants assert that the testimony was premised on unchallenged and unproven financial information embodied in the questions without any proof of same or ability to cross-examine. In conclusory terms, defendants also assert the complaint should have been dismissed against Rita since Sanford was a sole proprietor and that plaintiffs did not mitigate their damages because they did not read defendants' newsletter about being mindful of financial aid deadlines and the applicant's obligation to verify that a financial aid application was complete. Moreover, defendants claim that plaintiffs did not utilize their services to appeal the denial of financial aid, and suggest ― without support in the record ― that somehow the result might have been different had they done so.

We reject the contentions advanced by defendants.

The deposition of Sang was taken in Washington, D.C. Sang was an absent and unavailable witness in New Jersey. Both Sanford and defendants' counsel were present, and defendants' counsel cross-examined Sang and asked him questions during the deposition. Sang's deposition was therefore admissible under Rule 4:16(c). Defendants could have developed at trial, if not at the deposition, that the information Sang relied on was wrong by asking Winograd about any relevant financial information.

While defendants' newsletter referred to the applicants' obligations, their form entitled "services provided" clearly states that CFAS "prepare[s] and file[s] all financial aid forms," and plaintiffs claim they were so advised orally. There was sufficient evidence in the record to uphold the liability of both defendants and plaintiffs' financial losses, as Winograd paid the amount of tuition which was not awarded to Goldstein.

See Rova Farms, supra, 65 N.J. at 484 (a trial judge's factual findings "are considered binding on appeal when supported by adequate, substantial and credible evidence").

With respect to plaintiffs' cross-appeal, the trial judge gave his reasons for finding no "unconscionable conduct." We agree with the judge that plaintiffs' losses were compensated by his findings on the contract claim and that, with respect to the financial aid, defendants did nothing to "inure ... to their benefit in any way, shape or form." Certainly, the letter concerning Winograd's medical condition was totally inappropriate. However, it was written to help and assist plaintiffs' attempt to receive financial aid.

On the other hand, the misrepresentations about Sanford's background may have constituted part of a "sale" or "advertisement" of "merchandise," including "services." See N.J.S.A. 56:8-1 (definitions); N.J.S.A. 56:8-2 ("Fraud, etc., in connection with sale or advertisement of merchandise or real estate as unlawful practice"). Accordingly, we remand for further consideration of whether there was proof of "a causal relationship between [any] unlawful conduct [by defendants] and the plaintiff's ascertainable loss." See Dabush v. Mercedes Benz U.S., LLC, 378 N.J. Super. 105, 114 (App. Div.), certif. denied, 185 N.J. 265 (2005) (quoting N.J. Citizen Action v. Schering-Plough Corp., 367 N.J. Super. 8, 12-13 (App. Div.), certif. denied, 178 N.J. 249 (2003)). See also Real v. Radir Wheels, Inc., ___ N.J. ___ (2009) (finding a consumer suffered ascertainable loss as the result of purchasing a used automobile). Stated differently, the trial judge must further consider and address whether the defendants' conduct in inducing plaintiffs to retain CFAS in the first place is remedial under the Consumer Fraud Act.

Affirmed on appeal and remanded on the cross-appeal.


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