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Mamacita, Inc. v. Colborne Corp.

July 15, 2010

MAMACITA, INC., PLAINTIFF-RESPONDENT/ CROSS-APPELLANT,
v.
COLBORNE CORP., DEFENDANT-APPELLANT/CROSS-RESPONDENT.



On appeal from Superior Court of New Jersey, Law Division, Camden County, Docket No. L-2731-06.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued December 15, 2009

Before Judges Fuentes and Gilroy.

Plaintiff Mamacita, Inc. filed suit against defendant Colborne Corporation alleging breach of contract, breach of expressed and implied warranties, and violations of the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -20. Following a bench trial, the Law Division found in plaintiff's favor on the claims based on breach of contract and awarded compensatory damages in the amount of $538,167.08. However, the court dismissed plaintiff's claims under the CFA and denied damages for loss of profits.

Defendant appealed the judgment of the trial court; plaintiff cross-appealed the court's rulings which dismissed its claims under the CFA and denied lost profits as an additional measure of damages. By order dated April 30, 2009, we granted defendant's motion seeking leave to withdraw its appeal. Thus, the only issues before us relate to plaintiff's uncontested cross-appeal. Specifically, the trial court held that the CFA is not applicable here because the product sold by defendant to plaintiff was not intended to be available to "the public at large," but was manufactured by defendant to meet plaintiff's specific business needs. The trial court also precluded plaintiff from presenting evidence of lost profits damages as a sanction for plaintiff's discovery violation.

We now reverse the trial court's ruling concerning the inapplicability of the CFA and remand for the court to make specific findings on this issue. The CFA protects a corporation, such as plaintiff, from unconscionable commercial practices, deception, false promises and misrepresentations in connection with the acquisition of equipment. It does not matter whether the corporation intended to use the equipment for its own business use, or purchased the equipment for resale to a third party or to the public at large.

We affirm, however, the trial court's ruling which denied plaintiff's application to recover lost profits as a measure of damages. Notwithstanding plaintiff's characterization on its cross-appeal, the trial court's ruling was not predicated on its application of the new business rule. The record shows that the trial court based its ruling entirely on plaintiff's counsel's failure to provide defense counsel with copies of the documentary evidence supporting plaintiff's claim for lost profits. Thus framed, we discern no legal basis to disturb the trial court's ruling in this respect.

The following facts inform our discussion of the legal issues raised by plaintiff in its cross-appeal.

I.

At the time this suit began, plaintiff had been producing a vegetable-based frozen product for Goya Foods, Inc. for approximately twenty-five years. Sometime in 2000, Goya offered plaintiff the opportunity to become its new provider of dough discos for Goya's use in making empanadas. In response to this business opportunity, plaintiff developed a dough recipe and began searching for a company to provide it with the equipment necessary to manufacture the Goya dough discos.

Starting in early 2003, plaintiff and defendant Colborne, a company specializing in manufacturing machinery used to produce dough-based products, began exchanging emails to determine the type of equipment defendant would manufacture and/or supply in order to meet plaintiff's business needs. Throughout 2005, the parties worked together to test different equipment with differing dough recipes provided by plaintiff. Defendant agreed to supply plaintiff with equipment of a certain quality to be used in making the dough discos.

In 2005, as part of a financing package with its bank, plaintiff agreed to lease the dough equipment from Central Atlantic Leasing Corporation (CAL), who in turn purchased the equipment from defendant. Plaintiff presented CAL with a commitment agreement from Goya as part of the security for this financing scheme.

Plaintiff alleged that defendant breached its contractual obligations by providing equipment not of the quality promised. Specifically, plaintiff alleged that the equipment provided by defendant never functioned properly and was not USDA approved or corrosion-resistant. Plaintiff's breach of contract, ...


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