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Erdheim v. Maggio

July 20, 2009


On appeal from Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-5748-07.

Per curiam.


Argued April 22, 2009

Before Judges Stern, Rodríguez and Espinosa.

Plaintiff appeals from an order granting summary judgment to defendant, dismissing plaintiff's complaint with prejudice, as well as the denial of his motion to suppress defendant's answer. Defendant cross-appeals from the dismissal of his counterclaim for alleged overpayments on the subject loan and for counsel fees. We affirm in part and reverse and remand in part.

It is undisputed that plaintiff Michael Erdheim loaned defendant Roger Maggio $20,000 on August 24, 1998, and that defendant made substantial payments thereafter. Neither the loan nor its terms were memorialized in a written agreement. The parties do not agree regarding terms that would be standard in a conventional loan, i.e., the term of repayment, the amount and frequency of payments on the loan, and how interest was to be computed. While the parties agree that defendant would pay ten percent interest on the loan, they disagree as to whether the interest was simple or compound interest.*fn1

Defendant borrowed the money to purchase a cooperative apartment located in Fort Lee. He admits that the loan was to be secured by life insurance and a security interest in the apartment. Pursuant to this agreement, defendant added plaintiff as a beneficiary to receive $40,000 of the proceeds from his life insurance policy in August 1998 and filed a U.C.C. filing statement reflecting plaintiff's security interest in December 1999. Plaintiff executed a U.C.C. termination statement in December 2002 so that defendant could refinance the apartment. Before removing the lien, defendant told plaintiff he would grant him a new U.C.C. lien. However, defendant's cooperative board later advised him that the security interest was not permitted by the board's governing rules. In May 2007, defendant removed plaintiff as a beneficiary on his life insurance policy because he believed he had fully repaid the loan.

The only records regarding payment were produced by defendant. In April 2007, defendant provided plaintiff with a list of payments (the "Erdheim Conversion") prepared by the financial manager for defendant's company. After the complaint was filed, defendant provided plaintiff with an accounting of payments made on the loan (the "accounting") prepared by Frank Baglieri, a certified public accountant. The accounting is detailed, including check numbers, amounts, the dates checks were actually deposited, reductions for principal and interest, and subtotals of the outstanding principal. Copies of the front and back of each cancelled check listed, with dated processing stamps, were provided to support the calculations. Baglieri certified that the accounting was accurate, based on defendant's view of the loan terms.

The accounting lists eighty-eight payments to plaintiff made between November 1998 and May 2007, totaling $30,938.10 ($21,069.07 in principal and $9869.03 in interest). Defendant contends that these payments reflect an overpayment of $1069. Plaintiff has disputed twelve of these transactions, for a total of $11,611.20 in challenged payments.

The "Erdheim Conversion" is plainly incomplete on its face as it lists no payments for 1999, only one payment in 2000 and only one payment in 2001. It is, however, undisputed that defendant made twenty-three payments totaling $6580.20 during the period from February 1999 through December 2001, none of which were included in the "Erdheim Conversion."*fn2 Defendant later explained that his financial manager was not working for defendant during the entire repayment period and was unaware of repayment records kept by a former employee that were stored in a separate file. The accounting also includes a $500 payment made after the "Erdheim Conversion" was prepared, that plaintiff has not disputed. Therefore, plaintiff does not dispute that he received $7320.20 more in repayments than that reflected in the "Erdheim Conversion." Nonetheless, plaintiff relies upon the "Erdheim Conversion" as a purported admission by defendant that he owed plaintiff $13,086.

Plaintiff filed this complaint, alleging that defendant failed to repay a loan (count one) and committed fraud (count two). The complaint demanded compensatory damages of $17,552.41 and, in violation of Rule 4:5-2, punitive damages of $75,000. Before filing an answer, defendant sent plaintiff a Rule 1:4-8 notice of frivolous litigation filing letter, as well the accounting.

Defendant filed an answer and counterclaim for overpayment on the loan and for counsel and expert fees. Plaintiff filed an answer to the counterclaim.

Plaintiff filed a motion to suppress defendant's answer for failure to provide discovery, and, approximately two weeks later, defendant provided discovery responses. Defendant filed a cross-motion for summary judgment. Plaintiff sent a supplemental certification in support of his suppression motion, asking that it be considered a motion to compel more specific answers. However, neither party asked for an extension of the August 21, 2008 discovery end date. Defendant submitted a reply in support of his cross-motion.

In summary, the motions before the judge were plaintiff's motion to suppress defendant's answer for failure to provide discovery and defendant's cross-motion for summary judgment, seeking the dismissal of the complaint and judgment in defendant's favor on the counterclaim. At oral argument, defense counsel also advised the court that a frivolous litigation claim had been asserted in the counterclaim. Defendant requested leave to submit a certification for counsel fees. In a written opinion, the motion judge granted defendant's summary judgment motion and denied plaintiff's motion to suppress the answer and counterclaim for failure to provide discovery or, in the alternative, to compel discovery.

Plaintiff did not move for summary judgment as to defendant's claims. However, the judge dismissed the counterclaim, stating in a written opinion, Defendant's counter-claim is also dismissed. The overpayment of $1,069.00 was voluntarily made to completely discharge this matter. The defendant's actions waived making it a claim in this litigation. Additionally legal fees and costs are not recoverable in civil cases pursuant to N.J. Ct. R.: 4:42-9(a). The court, therefore, rejects defendants claim for these items. The court, while troubled by plaintiff's claims does not find the litigation frivolous. The pro-se plaintiff is ...

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