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Jiorle v. Mupo

August 26, 2009

MARK P. JIORLE, INDIVIDUALLY AND ON BEHALF OF THE MARK P. JIORLE SELF-DIRECTED INDIVIDUAL RETIREMENT ACCOUNT, MID-OHIO SECURITIES, TRUSTEE, PLAINTIFF-RESPONDENT/CROSS-APPELLANT,
v.
EDWARD J. MUPO AND CAROL J. MUPO, DEFENDANTS-APPELLANTS/CROSS-RESPONDENTS, AND ANTHONY BILLECI, DEFENDANT-CROSS-RESPONDENT.



On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-591-05.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued March 11, 2009

Before Judges Parrillo, Lihotz and Messano.

Defendant Edward J. Mupo appeals from the judgment entered in favor of plaintiff Mark P. Jiorle following a jury trial. Plaintiff cross-appeals from that portion of the judgment dismissing his complaint against co-defendant Carolyn Mupo.*fn1 Defendant raises the following issues for our consideration:

I. [THE] JUDGMENT... SHOULD BE SET ASIDE SOLELY ON ACCOUNT OF EXTENDED IMPROPER AND PREJUDICIAL TESTIMONY OF PLAINTIFF AND CO-DEFENDANT BILLECI

II. PARTICULARLY WHERE MULTIPLE RELATED ISSUES ARE APPARENT, THE TRIAL JUDGE'S REFUSAL TO INSTRUCT THE JURY AS TO THE EXISTENCE OF A "MARY CARTER" LIKE ARRANGEMENT BETWEEN PLAINTIFF AND CO-DEFENDANT MUST CAUSE THE JUDGMENT... TO BE SET ASIDE.

III. VERY RECENT CASE LAW MAKES CLEAR THAT THE TRIAL JUDGE COMMITTED PLAIN ERROR WHEN HE ERRONEOUSLY CHARGED THE JURY THAT THE INTENDED PURPOSE OF PUNITIVE DAMAGES INCLUDES THE DETERRENCE OF "OTHERS."

IV. IN HIS INSTRUCTIONS THE TRIAL JUDGE FAILED TO PROVIDE THE JURY WITH ADEQUATE DIRECTION IN MANY RESPECTS, BUT MOST PARTICULARLY AS TO THE LAW PERTAINING TO IN REM FORELCOSURE AND REDEMPTION. THE RESULT WAS AN INVITATION TO SPECULATION.

V. IF THE VERDICT AGAINST [DEFENDANT] FOR $325,000 IS TO BE CONSTRUED AS DAMAGES IN THE NATURE OF RESTITUTION, IT MUST BE SEEN AS EXCESSIVE BECAUSE $101,300 OF THAT SUM CLEARLY WAS INVESTED IN THE PROJECT.

In his cross-appeal, plaintiff argues:

THE JURY'S FINDING THAT CAROL[YN] MUPO RECEIVED AN IMPROPER PERSONAL BENEFIT AS AN OFFICER OR DIRECTOR OF CMS, BUT THAT HER CONDUCT DID NOT CAUSE DAMAGE TO [PLAINTIFF], IS IRRECONCILABLY INCONSISTENT WITH THE JURY'S FINDINGS AGAINST ED MUPO ON THE SAME ISSUES; THEREFORE, THE JUDGMENT IN FAVOR OF CAROL[YN] MUPO SHOULD BE REVERSED AND THIS MATTER REMANDED FOR EITHER: (1) ENTRY OF JUDGMENT AGAINST CAROL[YN] MUPO FOR $107,200, OR (2) FOR A NEW TRIAL, LIMITED TO THE ISSUES OF CAUSATION, COMPENSATORY DAMAGES AND PUNITIVE DAMAGES AGAINST CAROL[YN] MUPO ONLY.

We have considered these arguments in light of the record and applicable legal standards. We reverse the award of punitive damages against defendant, and remand for a new trial on that issue. In all other respects, we affirm.

I.

Plaintiff filed his complaint against defendant and Carolyn alleging fraud, securities fraud, breach of fiduciary duties, and breach of the implied covenant of good faith and fair dealing. Also named as a defendant was Anthony Billeci, against whom plaintiff asserted a single claim for breach of contract.

Defendant and Carolyn filed an answer, cross claims, and a counterclaim, alleging that plaintiff's complaint was frivolous, constituted a fraud upon the court, and amounted to an "intentional course of conduct... constitut[ing]... malicious prosecution." Billeci filed an answer and cross-claims, and discovery ensued.

The testimony at trial revealed that defendant and Carolyn formed Carolyn Mortgage Services, Inc. (CMS) for the sole purpose of acquiring an abandoned warehouse located at 131 Jersey Avenue, New Brunswick (the property). Philip Maenza, an attorney, formed the corporation and maintained its corporate "book," but never issued stock certificates. By all accounts, the formalities of corporate governance were not followed. Defendant served as CMS's president and chief executive officer. Carolyn's status was unclear. Although originally an officer, she claimed that she abdicated that office in favor of plaintiff at some point in time.

In March 2001, CMS acquired the property which was encumbered with an existing mortgage that CMS assumed, and $2,000,000 in real estate tax arrearages. Plaintiff, a self-employed real estate investor, discussed with defendant acquiring an interest in either the property or CMS. Eventually, they agreed that plaintiff would invest $350,000 in CMS and become a fifty percent shareholder in the corporation. However, it was never specified whether defendant and Carolyn would convey some of their shares to plaintiff, or whether CMS would simply issue additional stock.

Beginning in the fall of 2002, Maenza arranged for monies to be sent from plaintiff's IRA custodian, Mid-Ohio Securities, to his attorney trust account. Between October 2002 and February 2003, pursuant to defendant's direction, Maenza disbursed $325,000 he had received from plaintiff.*fn2 He wrote checks totaling $101,300 on "various dates" to "various contractors for property clean up and professionals for fees." Maenza also wrote checks for the balance of the monies, $223,700, to defendant, Carolyn, their children, and Mupo Financial Services, Inc., a company controlled by defendant and his wife. Plaintiff testified that he never knew about, and did not authorize, these personal disbursements.

Plaintiff initially made his investment solely upon oral representations from defendant. Eventually, however, on March 4, 2003, the stock sale was memorialized in an agreement signed by defendant and Carolyn, acknowledging their receipt of $325,000 from plaintiff in return for "[fifty percent] of the stock of [CMS] free and clear of any claims."

Contemporaneous with these events, defendant sought a buyer for the property. His negotiations centered upon Billeci, the owner of Shore Pride Wholesale Meat, Inc. (Shore Pride), a New York-based company formed solely to obtain a lease to the warehouse on the property. Plaintiff was aware that the City of New Brunswick (the City) had commenced an in rem tax foreclosure action, and that it was willing to forbear prosecution, provided CMS and Shore Pride developed the property in accordance within certain timeframes. The forbearance agreement was memorialized in writing on September 30, 2002. The City agreed to delay its foreclosure action to allow CMS, as owner, and Shore Pride, as developer, to "remediate and develop" the property. Under its terms, however, the forbearance agreement would terminate if the "performance" deadlines were not met.

In October 2002, defendant, Carolyn, plaintiff, and Shore Pride, executed a stock transfer agreement by which 100% of CMS stock would be transferred to Shore Pride for the purchase price of $2,000,000.*fn3 The agreement was contingent upon Shore Pride securing financing from the New Jersey Economic Development Authority (EDA), and, in the event that was not obtained, the "contract [was] deemed null and void and the parties [had] no ...


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