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Patel v. Om Overseas

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


November 18, 2009

NAYNA PATEL, PLAINTIFF-RESPONDENT,
v.
OM OVERSEAS, L.L.C., D/B/A TUFF ONES AND OM PRAKASH, AN INDIVIDUAL D/B/A TUFF ONES, DEFENDANTS-APPELLANTS.

On appeal from Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-5672-06.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued November 18, 2008

Before Judges Skillman, Graves and Grall.

Plaintiff Nayna Patel (Patel) filed suit for repayment of a $125,000 loan she allegedly made to Om Prakash (Prakash), an individual doing business as Tuff Ones, and OM Overseas, L.L.C. (OM Overseas), a New Jersey Limited Liability Company doing business as Tuff Ones. In an answer and counterclaim, defendants admitted receiving a check from Patel for $125,000, but defendants claimed the money was a partial payment for promotional items that Patel had ordered. OM Overseas also asserted a breach of contract counterclaim for damages. After a four-day trial, a jury rendered a verdict in favor of plaintiff and awarded her the sum of $173,499.92. The jury also determined that no money was due to OM Overseas on its counterclaim. Defendants appeal from an order for judgment entered on October 30, 2007, and an earlier order denying their motion for summary judgment. We affirm.

Patel is a licensed real estate broker and a licensed mortgage broker in the State of New Jersey. She owns and operates two companies in Edison, New Jersey: Richa Realty, Inc., and Richa Mortgage Co. Prakash is the principal of defendant OM Overseas. OM Overseas is a manufacturer and importer of apparel and gift items, primarily from India and China. OM Overseas uses the brand name "Tuff Ones" on many of its products.

The parties met sometime in 2000 and became friends. In February or March 2003, Patel ordered 200 "men's down jackets" embossed with the Richa Realty logo as promotional items for her realty business. Patel paid for the jackets with a check from Richa Realty's business account made payable to OM Overseas LLC in the amount of $5000.

About a year later, Prakash told Patel he "needed money" and she agreed to loan him $20,000. On March 25, 2004, Patel gave Prakash a personal check in the amount of $20,000. Patel wrote "Loan to OP" on the front of the check and made the check payable to Tuff Ones. With regard to that transaction, Patel testified as follows:

Q: Why is it your personal account rather than your business account?

A: Because it was a favor for me. It wasn't business relation. It was a favor to him. As a friend to friend I was giving him.

Q: And why is the check made out to Tuff Ones?

A: Because he told me that Om Prakash doing business as Tuff Ones. He asked me to write the check in Tuff Ones name.

Q: And did you write -- is there a memo line on that check... you're looking at?

A: It's a loan to OP, again, O stands for Om, P stands for Prakash. I mention it's a memo loan to OP.

Q: And how long was that loan for?

A: This particular loan he asked for two weeks.

Patel also testified that Prakash repaid the loan with interest by transferring the sum of $20,222 into her personal account on April 8, 2004.

With regard to the check for $125,000 that Patel gave to Prakash on September 23, 2004, Patel testified that Prakash came to her office with his wife, Bonu, and their son, and he explained to Patel that he needed money because a customer had given him a check for $200,000 that bounced. Patel testified she told Prakash she did not "have that kind of money," but Prakash was desperate, so she agreed she would try to help him. Patel also testified that one of her agents, who was present at the office, overheard her conversation with Prakash:

Q: Okay. So, now, was anyone else present in your office?

A: At that time, yes... one of my agents she was in my office.

Q: And what is her name?

A: Bharti Patel.

Q: And is she related to you?

A: No.

Q: Okay. And where is her office?

A: Her office is outside mine.

Q: Pardon me?

A: It's the same office. We have office in the basement.... One side I'm sitting here then we have open floors like we have six tables on -- and next office is her office.

Q: Okay. You're in your office?

A: My office.

Q: She's in her office?

A: Right.

Q: Is there a solid wall?

A: No, it is partition.

Patel also testified that Prakash "asked for $125,000 for two months," and he offered to return her money "with 15 percent interest." In order to raise the money, Patel transferred $50,000 from her home equity line of credit account into her personal checking account and borrowed $75,000 from Sanji Parikh, who she described as a good friend:

Q: You said you borrowed [$]75,000?

A: Yes. I borrowed $75,000.

Q: From who did you borrow [$]75,000?

A: I borrowed [$]75,000 from Sanji Parikh.

Q: And what made you approach him for a loan?

A: He's a good friend. I know that he have good money. He's well to fund this kind of money. And I told him Sanji... if you help me to lend this money then you also will get a 15 percent return.

Patel deposited the $75,000 she borrowed from Parikh in her personal account and on September 23, 2004, she gave Prakash her personal check for $125,000 made payable to Tuff Ones. Patel testified the check was made payable to Tuff Ones, which she understood was "Om Prakash doing business as Tuff Ones," because Prakash told her "to write a check in the Tuff Ones name." Patel said she wrote "Loan to OP" on the memo portion of the check to indicate the payment was a loan to Om Prakash. Patel also testified that one of her friends, Triloki Batra, was present when she gave the check to Prakash. Other than the check itself, there were no other writings to memorialize the transaction or to establish the $125,000 payment to Prakash was a loan.

Patel testified she agreed to loan $125,000 to Prakash for two months, and at the end of two months Prakash requested a four-month extension. Patel said she agreed to the four-month extension, but after four months Prakash asked for "one more six month extension." At that point, Patel explained she needed to pay interest to Parikh on the money she borrowed from him, so Prakash agreed to a $9000 interest payment. Patel testified Prakash gave her a signed blank OM Overseas check, which she completed in his presence on March 15, 2005. Patel made the check payable to Sanji Parikh in the amount of $9000. When Patel was asked why she wrote the check for $9000, she testified as follows:

Because I asked him interest money. I said if you don't have much money at least try to be pay part of the money, that way I don't have to pay from my pocket. And he say, okay, I have $9,000 you can deposit $9,000. Because if you can't collect interest then 15 percent of $125,000 yearly interest comes [to] around $18,750. And that's the reason we wrote a check for $9,000 to Mr. Parikh.

In return for the interest payment, Patel agreed to extend the loan for another six months----until September 2005.

Patel testified that in September 2005, Prakash said he was "getting the big, big, orders," and he told Patel he would try to return her money with interest within two months. However, he failed to do so and in January 2006, when Prakash asked for another extension, Patel refused. After Prakash failed to respond to a "demand letter" from Patel's attorney, Patel filed the present action to obtain repayment of the loan.

Patel's testimony was corroborated, to some extent, by three witnesses. Bharti Patel, plaintiff's office manager, testified she was present in September 2004 when Prakash came to the office with his wife, Bonu, and his son to speak with Patel. She also testified she overheard the conversation in Patel's office because her office was in close proximity and the offices did not have full-length walls. According to Bharti Patel, "Prakash and his wife were very emotional":

[T]hey were talking in Indian and English both and I can understand both the languages. And he said some kind of an order from somebody else, the check had ordered and the check was bounced. And I think Bonu was literally crying. So --especially when somebody is crying or laughing or something it draws more attention of yours. And then, you know, he was saying, he was begging -- almost begging Nayna to give him money because he had no relatives or nobody in this country....

....

He said you have to help me. Nayna said I don't have the money right now. He said, oh, you have many friends or whatever, but you have to help me, at least whatever you can. And I think it was $125,000.

....

Q: And at any time did you hear anything having to do with T-shirts?

A: Not at all, no.

In addition, Parul Anin, who said she was good friends with Patel and Prakash, testified she was aware of the check that Patel gave to Prakash because she worked at the PNC branch office where Patel maintained her personal checking account. According to Anin, when Patel transferred money from her home equity line of credit to her personal account, she forgot to sign the transfer check. Therefore, the check that Patel gave to Prakash bounced, and Anin contacted Patel to obtain her signature on the transfer check. Because of her involvement, Anin was aware of the "Loan to OP" notation on the check that Patel gave to Prakash. Anin testified she spoke to Prakash "about the $125,000" after "he bought the Mercedes," and Prakash told her "don't worry, [I'm] doubling her money in business."

Patel's third witness was Triloki Batra, who testified as follows:

Q: Mr. Batra, do you recall being present when Ms. Patel physically tendered the check to Mr. Prakash?

A: Yes, I was there.

Q: And did he say anything? First tell us yes or no, did he say anything?

A: Yes.

Q: Did you hear what he said?

A: Yes.

Q: And what did he say?

A: Exactly word to it I don't recall, but it was this is a life saver for me. He thanked her. That kind of thing.

Q: Did you hear any discussion about T-shirts?

A: No.

Prakash testified to a sharply contrasting sequence of events. According to Prakash, he had a number of business discussions with Patel because she was "a very good entrepreneur," and she wanted to improve her realty and mortgage business with more advertising and "promotional items." Prakash testified he met with Patel several times to discuss the items she would order, and Patel agreed to purchase 4000 dozen (48,000) "plain T-shirts" and 2000 dozen (24,000) "logo T-shirts." Prakash testified that the check he received from Patel in the amount of $125,000 was an "advance payment" for the T-shirts that Patel ordered. However, when Prakash was asked on cross-examination if he ever demanded any additional payments from Patel prior to the letter he received from Patel's attorney demanding repayment of a $125,000 loan, he answered: "No, it was not in writing."

Regarding the blank check he gave to Patel and the $9000 payment to Sanji Parikh, Prakash testified that Patel had received some plastic wall clocks she had not paid for and she wanted to reduce her down payment for the T-shirts to $100,000. Therefore, Patel agreed to deduct the sum of $16,050 from the $125,000 to pay for the clocks, and Prakash agreed to pay $9000 to reduce Patel's down payment to $100,000. Prakash testified:

[S]he paid for the T-shirts and that was some time during September. And... my Accounts Department told me there's an invoice which was not paid from Richa Realty. So when I contacted her she said, okay, I have already given you $125,000 I would like to deduct this amount from that 125,000 and from 125,000 I would like to bring that amount as $100,000. So then I give her a check. I say, okay... whatever the balance then from 125,000 reduce this and remaining balance to make it round figure to 100,000. I give her a check which was blank. I did not sign -- I just sign and I do not write anything, neither the date nor the beneficiary, nor the amount. And that's how this was more like settled.

Prakash also testified OM Overseas ordered the T-shirts from a factory in India in November 2004 because Patel wanted the shirts delivered in April and May 2005. However, after the plain T-shirts were shipped to the United States, Patel refused delivery and the shirts were stored in a warehouse in Secaucus until they were eventually sold at a reduced price. In addition, Prakash told the jury he visited the factory in India where the logo T-shirts were manufactured and stored, and he showed the jury a videotape of the logo T-shirts. Based on his calculations, Prakash told the jury that Patel's outstanding balance to Om Overseas was $81,500.

During summations, defendants' attorney told the jury that the $125,000 check made payable to Tuff Ones was a down payment for T-shirts that Patel ordered, and he argued that Patel had "concocted a story involving an alleged loan that has more holes in it than a piece of Swiss cheese." On the other hand, plaintiff's attorney told the jury that the $125,000 check was made payable to Tuff Ones because Prakash told Patel "he is Tuff Ones." Plaintiff's attorney also argued that Patel gave Prakash a personal check for $125,000 because it was a personal loan; Patel noted the purpose of the payment on the front of the check, which was negotiated without any modifications or alterations; and there was no reason for Patel to require additional documentation because Prakash had repaid a similar loan for $20,000.

The trial court instructed the jury on the requirements for a contract and specified that Patel was asserting separate claims against OM Overseas and Prakash for repayment of "a loan in the amount of $125,000 made payable to Tuff Ones." In addition, the court instructed the jury that both defendants denied they were liable to Patel "because the $125,000 represented a down payment made by Mrs. Patel to OM Overseas towards the purchase of 4,000 dozen white T-shirts and 2,000 dozen logo T-shirts. Mr. Prakash also contends that he is not individually liable to Mrs. Patel." Moreover, the jury verdict sheet included the following questions, each of which was answered in the affirmative by a unanimous vote:

1. Do you find by a preponderance of the credible evidence that the Defendant OM Prakash breached a contract with the Plaintiff Nayna Patel?

2. Do you find by a preponderance of the credible evidence that the Defendant OM Overseas LLC breached a contract with the Plaintiff Nayna Patel?

3. If you have answered, "Yes" to questions 1 and/or 2 do you find by a preponderance of the credible evidence that the Plaintiff sustained damages that were proximately caused by the breach?

Thus, the jury made separate findings as to each of the defendants and determined that both defendants were liable for the damages plaintiff sustained in the amount of $173,499.92. In addition, the jury unanimously rejected the counterclaim asserted by OM Overseas.*fn1

On appeal, defendants present the following arguments:

POINT I

THE THREE SURPRISE WITNESSES SHOULD HAVE BEEN BARRED FROM TESTIFYING BECAUSE PATEL'S DEPOSITION TESTIMONY REGARDING THEIR KNOWLEDGE WAS UNTRUTHFUL AND MISLEADING.

POINT II

THE THREE WITNESSES SHOULD HAVE BEEN BARRED FROM TESTIFYING BECAUSE PATEL FAILED TO DISCLOSE THAT SUCH WITNESSES HAVE KNOWLEDGE OF PURPORTED ADMISSIONS MADE BY PRAKASH.

POINT III

THE TRIAL COURT ERRED BY DENYING DEFENDANTS' REQUEST FOR A CHARGE EXPLAINING THE STATUS OF A LIMITED LIABILITY COMPANY VIS A VIS ITS PRINCIPAL.

POINT IV

THE JURY VERDICT IS FATALLY INCONSISTENT.

POINT V

THE MOTION JUDGE AND TRIAL JUDGE ERRED BY FAILING TO DISMISS THE CLAIMS ASSERTED AGAINST PRAKASH INDIVIDUALLY.

A. THE DENIAL OF DEFENDANTS' MOTION FOR PARTIAL SUMMARY JUDGMENT.

B. THE TRIAL JUDGE'S DENIAL OF PRAKASH'S MOTIONS TO DISMISS THE INDIVIDUAL CLAIMS ASSERTED AGAINST HIM.

Based on our review of the record and the applicable law, we are satisfied that the issues raised by defendants are without sufficient merit to warrant extended discussion in a written opinion. R. 2:11-3(e)(1)(E). We therefore affirm with only the following comments.

In their first point, defendants allege that a new trial is warranted because the trial court allowed "three surprise witnesses" to testify. We disagree. In her answers to interrogatories, Patel stated that "Parul Anin is a PNC employee who was aware of the loan to defendants"; "Bharti Patel was present when defendant Om Prakash asked plaintiff for money"; and "Triloki Batra was present when the check was handed to Om Prakash." Moreover, in response to defendants' motion to bar the three witnesses, plaintiff's attorney offered to produce the witnesses if defendants' attorney "really needs to depose them." But defendants' attorney indicated he was "not in a position to start taking depositions." In denying defendants' motion to exclude the witnesses, the court stated:

We knew about these people all along. They could have been questioned, all along in depth. Additionally to what the plaintiff said that these people were going to testify about and it's a tactic or strategy that the adversary has to live with in that they didn't do it. So your application counsel is herewith denied, again, because I do not find that there's any surprise or any prejudice with regard to allowing these people to testify.

The record fully supports the trial court's finding that there was no attempt by plaintiff to mislead or deceive defendants and that defendants would not be surprised or prejudiced by the witnesses' testimony. Accordingly, we find no mistaken exercise of discretion by the trial court in denying defendants' motion. See, e.g., Brown v. Mortimer, 100 N.J. Super. 395, 401-02 (App. Div. 1968) (noting that even witnesses not named in discovery should be permitted to testify at trial when the failure to supply their names was not the result of a design to mislead and the opposing party would not be surprised or prejudiced).

Defendants also contend that the jury should have been instructed on the law of limited liability companies, because "a principal of a limited liability company such as Prakash is permitted to conduct business and receive checks made payable to the limited liability company without incurring any personal liability." We note, however, that the trial court asked counsel if there were any exceptions to the jury charge after the court completed its instructions, and defendants' attorney replied "No." Therefore, we must review the court's failure to instruct the jury on the law of limited liability companies under the plain error standard. Toto v. Ensuar, 196 N.J. 134, 144 (2008). With respect to plain error, Rule 2:10-2 provides a reviewing court may disregard any error or omission "unless it is of such a nature as to have been clearly capable of producing an unjust result."

In this case, we are satisfied that defendants cannot demonstrate plain error because there was substantial evidence to support the jury's findings and it is unlikely that the jury would have reached a different result if the court had provided instructions on the law pertaining to limited liability companies.

This case was a classic credibility contest to be resolved by the jury. We are satisfied from our examination of the record that the jury's findings and conclusions are adequately supported by the evidence, and we conclude there is no valid reason or legal justification for disturbing the jury's verdict.

Affirmed.


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