Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Siemens Financial Services, Inc. v. Haband Company

May 25, 2010

SIEMENS FINANCIAL SERVICES, INC., PLAINTIFF-APPELLANT,
v.
HABAND COMPANY, INC., DEFENDANT/THIRD-PARTY PLAINTIFF-RESPONDENT,
v.
TOTAL LOGISTIC SERVICES, INC., THOMAS J. RUELI, JERRY V. D'AQUINO AND THE DURKIN GROUP, LLC., THIRD-PARTY DEFENDANTS.



On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-7453-06.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued November 2, 2009

Before Judges Rodríguez, Reisner and Chambers.

Siemens Financial Services, Inc. (Siemens) appeals from three summary judgment orders: one dated July 31, 2008, and two dated December 19, 2008. Collectively, these orders dismissed all counts in Siemens's complaint against Haband Company, Inc. (Haband). We affirm.

These are the salient facts. Haband is a mail-order retailer of clothing and apparel. Siemens's suit alleged that third-party defendant Jerry V. D'Aquino, Haband's Vice President of Operations, misled it into entering into an $8 million loan with Total Logistic Services, Inc. (TLS), a transportation and delivery services company. Siemens also alleged that Thomas Rueli, President and sole shareholder of TLS, conspired with D'Aquino.

TLS applied for a revolving line of credit with Siemens, an asset-based lender. Siemens in turn engaged third-party defendant The Durkin Group (Durkin) to perform an underwriting investigation and due diligence regarding TLS's finances. After a series of field visits, Durkin provided a written report indicating TLS's assets included over $4 million in accounts receivable from Haband. Based on this report, Siemens approved the loan to TLS, conditioned upon "[s]atisfactory completion of the Lender's due diligence." Two weeks later, TLS reported to Siemens that the current amount of its accounts receivable totaled approximately $10 million, including thirteen invoices from Haband totaling $4.857 million. Rueli gave D'Aquino's telephone number to Siemens Vice President Keith Holler to confirm the amount of receivables.

Holler called D'Aquino. To verify that D'Aquino was a "representative" of Haband, Holler asked him about Haband's Georgia warehouse, its website, and its target audience.*fn1 Holler then asked D'Aquino if Haband owed TLS $4.857 million in receivables. D'Aquino answered that the amount "seemed reasonable." Holler gave D'Aquino four invoice numbers and D'Aquino confirmed the dollar amount on each invoice.

After the telephone call to D'Aquino, Siemens considered its due diligence complete and lent TLS an initial $8 million. Over the course of the next two years, Siemens lent TLS approximately $45 million to $60 million in revolving credit. TLS repaid this revolving balance at the rate of $2 million to $3.5 million per month.

In January 2006, the FBI revealed to both Haband and Siemens that D'Aquino had been secretly receiving kickback payments for years from Rueli. In return, he continually represented to Haband that TLS had the lowest shipping prices. However, upon learning of the fraud, Haband was able to immediately find several companies with cheaper shipping rates and quicker delivery times. D'Aquino had also falsely verified Haband's accounts receivable with TLS as being $4.857 million, when in reality Haband never owed more than $266,000.

Siemens terminated the loan upon learning of the fraud and demanded that TLS repay the loan at once. Rueli pleaded guilty to two counts of mail fraud: one for overstating accounts receivable to secure the Siemens loan and the other for the kickback payments to D'Aquino. D'Aquino pleaded guilty to two counts of aiding and abetting fraud and conspiring to defraud Siemens.

D'Aquino's actions violated two Haband policies. First, Haband's Controller, Anthony DelGuadio, testified that Haband had an unwritten policy that all accounts receivable inquiries were to go to DelGuadio. According to DelGuadio, this policy was verbally communicated to D'Aquino. Second, by accepting money from Rueli, D'Aquino also violated Haband's written policy forbidding employees from accepting gifts of any size from vendors. This policy was distributed to all employees.

Siemens sued Haband alleging fraudulent misrepresentation (Count One), negligent misrepresentation (Count Two), and collection of accounts receivable as assignee of TLS (Count Three). Haband moved for summary judgment on all three counts. Judge Bradley J. Ferencz granted summary judgment to Haband on Counts One and Two, but denied summary judgment on Count Three. Judge Ferencz found that "as a matter of law" D'Aquino "was clearly operating outside the scope of his employment" by committing a fraud. He rejected Siemens's argument that D'Aquino went along with the loan fraud as a benefit to Haband, so that TLS would stay in business and provide Haband with low shipping rates. The judge found that this argument "stretche[d] reality to the point wherein . . . no reasonable ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.