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Cowan, Gunteski & Co. v. Macrae

May 3, 2010


On appeal from the Superior Court of New Jersey, Law Division, Ocean County, Docket No. L-2035-06.

Per curiam.


Submitted April 19, 2010

Before Judges Rodríguez and Reisner.

Defendant Arthur D. Macrae, Sr. appeals from a judgment in the amount of $32,305.10, plus $3,637.20 in pre-judgment interest, against himself, and in favor of plaintiff Cowan, Gunteski & Company (CG&C), a certified public accounting firm. This judgment was entered at the conclusion of a bench trial.

We affirm based substantially on the findings, reasons and analysis expressed by Judge Steven F. Nemeth in his October 17, 2009 written opinion.

Defendant, who is legally blind, and his son Arthur Macrae, Jr. (Arthur, Jr.), incorporated A.D. Mac Consulting Group, Inc. (A.D. Mac). Defendant intended to utilize the corporation as an intermediary for telecommunications work. However, the corporation remained a shell.

Arthur, Jr. and his partner were approached by Tekemark Global Solutions (Tekemark) and offered a $2 million line of credit to provide telecommunications infrastructure. Subsequently, defendant transferred his interest in A.D. Mac to Arthur, Jr. for $1. Arthur, Jr., however, had significant financial difficulties and was forced to sell his assets to Tekemark in exchange for Tekemark assuming corporate debts. Around this time, New York state claimed that A.D. Mac owed $750,000 in unpaid sales taxes as a consequence of the sale of assets to Tekemark.

Thereafter, Arthur, Jr. and defendant sought the advice of Edward Dimon, Esq. to determine whether Arthur, Jr. had a cause of action against Tekemark. Dimon contacted Joseph Guntesky, C.P.A., a principal of the CG&C firm, to represent A.D. Mac in a New York state sales tax audit and potential claims against Tekemark. On August 11, 2004, Gunteski met with Dimon, and the next day with Dimon, Steve Leone, Esq., defendant and Arthur, Jr. The participants at the meeting discussed the New York state sales tax audit and issues involving potential litigation against Tekemark. The Macraes indicated that they wanted to retain CG&C as their accounting expert. Gunteski testified that his various services were discussed. Gunteski asked for a $10,000 retainer. Defendant denied that he agreed to accept full responsibility for Gunteski's fees.

Gunteski sent a retainer agreement to Arthur, Jr. The retainer agreement was returned to Gunteski containing signatures above the lines for Arthur, Jr. and defendant. A $10,000 check, issued on the joint account of defendant and his fiancé, Lynne Bryant, accompanied the retainer.

The parties again met in September. Gunteski indicated that he would need an additional $15,000 in fees to complete the agreed services. There was another meeting in October at which Arthur, Jr. voiced his anger over the costs for the sales tax audit. The parties were unable to reach an agreement regarding the fees. Gunteski's services terminated at the completion of the New York state sales tax audit. The Macraes and counsel informed Gunteski in October 2004 that they were not going to file a lawsuit against Tekemark, although according to Gunteski, his review of the financial records indicated that there were "significant discrepancies" pertaining to A.D. Mac's debt. CG&C sent A.D. Mac an invoice for the outstanding balance, $28,456.50, dated January 6, 2005. The due date was February 5, 2005.

CG&C sued defendant for the unpaid bill. Arthur, Jr. was not named as a defendant because he filed for bankruptcy in October 2005 and was therefore discharged of any personal liability for Gunteski's claim pursuant to 11 U.S.C. § 524(a)(2).

Judge Nemeth conducted a three day bench trial. Gunteski testified that at the initial meeting, he believed that defendant and Arthur, Jr. owned the company, which had been sold to Tekemark. The parties reached a "verbal agreement" to retain his firm's services. This agreement was later set forth in the retainer agreement. However, Gunteski was unable to recollect the exact language defendant used to express his assent. The retainer stated that "[i]t is our understanding that [defendant] and [Arthur, Jr.] accept full financial responsibility for our fees[.]" The signatures of defendant and Arthur, Jr. appeared above their respective names.

Gunteski presented letters written by Dimon to the New York tax auditor dated August 17 and 18, 2004. The first letter stated that his firm represented A.D. Mac and "the two principals in the company, [defendant] and [Arthur, Jr.] with regard to the sales tax audit . . . [A.D. Mac] has hired [Gunteski] to do the accounting for this audit." The third letter is addressed to Chuck Miller, Tekemark's CFO, and provides that "[t]he State of New York conducted their sales tax audit of [A.D. Mac] for one week at the accounting firm of ...

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