August 12, 2010
MODERN TECHNOLOGIES GROUP, INC., PLAINTIFF-RESPONDENT,
MICHAEL R. DANZI, DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Law Division, Burlington County, Docket No. L-58-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued: March 3, 2010
Before Judges C.L. Miniman and Waugh.
Defendant Michael R. Danzi appeals from an order entered on June 15, 2007, reinstating the complaint filed by plaintiff Modern Technologies Group, Inc., and from a judgment entered on May 26, 2009, in favor of plaintiff and against defendant in the amount of $165,345.61. We affirm.
Plaintiff corporation has a principal place of business at 3 Reeves Station Road in Medford. Plaintiff is a manufacturer of specialty automotive products for the limousine, bus, and ambulance industries; produces trade magazines; and runs trade shows for those industries. According to plaintiff's president, Eric Alpert, plaintiff has a number of wholly owned subsidiaries, including: (1) MTG Air, which manufactures air-conditioning systems for those industries; (2) Digest Publications, using the trade name of Limousine Digest, which is the leading trade-magazine publisher in the transportation industry; and (3) Limo Digest Show, which is the leading annual trade show for the limousine, bus, and ambulance industries. Defendant is an individual residing in Newport Beach, California. He was the president of Coastal Coachworks, with a principal place of business in Fountain Valley, California.
In October 2004, Coastal Coachworks and plaintiff entered into a blanket credit agreement whereby plaintiff extended credit on behalf of itself and its subsidiaries to Coastal Coachworks. Defendant signed the credit application on behalf of Coastal Coachworks. In pertinent part, the credit application states: "All sales and other transactions between Buyer and Seller shall be governed by the laws of the State of New Jersey and Buyer consents to the jurisdiction of the New Jersey Courts, County of Burlington." The only legal entities appearing on the credit application were plaintiff and Coastal Coachworks; the application did not mention any of plaintiff's subsidiaries.
Immediately below the corporate signature on page two of the credit application, defendant signed a personal guarantee, pursuant to which he personally guaranteed the payment of any obligation of Coastal Coachworks and agreed to pay any sum which might become due from Coastal Coachworks if the company failed to pay. The only entity appearing within the personal guarantee was plaintiff; the personal guarantee did not mention any of plaintiff's wholly owned subsidiaries. Plaintiff would not have entered into the credit agreement if the personal guarantee was not executed. After credit was extended, Coastal Coachworks began to purchase products from plaintiff and its subsidiaries.
Coastal Coachworks began experiencing financial difficulties thereafter. Defendant offered to return some of the delivered goods to plaintiff, seeking a credit against the amounts owed, but was unable to do so because defendant's business partner had a lien on the goods. The potential amount of the credit was approximately $15,000 to $25,000. This amount would have been split between plaintiff and a subsidiary, each of whom had sent goods to Coastal Coachworks. Coastal Coachworks went out of business in 2006, at which time it had outstanding invoices from plaintiff and its subsidiaries. According to the invoices, $165,345.61 was owed in all.
On January 8, 2007, plaintiff filed this action against defendant for breach of contract, seeking a judgment under the guarantee for the amounts owed on various invoices from it and its subsidiaries. On March 22, 2007, defendant filed a motion to dismiss the complaint for lack of in personam jurisdiction. Defendant certified that he did not consent to the jurisdiction of the New Jersey Superior Court due to the extreme cost, burden, and inconvenience that litigating in New Jersey would cause him. Defendant further certified that no portion of the instant transaction occurred in any state other than California.
The first motion judge dismissed the complaint on April 13, 2007, "without prejudice and without costs, for lack of in personam jurisdiction over the [d]efendant, and/or under the doctrine of forum non conveniens[.]" The judge indicated the motion was unopposed; however, plaintiff filed opposition on the date the judge decided the motion.
On May 2, 2007, plaintiff filed a notice of motion for reconsideration of the April 13 order. In a written order dated June 15, 2007, the first motion judge granted the motion for reconsideration and reinstated plaintiff's complaint. Defendant then filed his answer to the complaint on July 2, 2007, denying plaintiff's substantive allegations and asserting various affirmative defenses. The case proceeded through pretrial discovery, including interrogatories, requests for production of documents, and depositions.
Plaintiff filed a motion for partial summary judgment, which the second motion judge denied on May 9, 2008. Plaintiff sought reconsideration, and on June 20, 2008, that judge in a written decision denied plaintiff's motion and granted defendant's cross-motion for leave to amend his answer. Defendant filed his amended answer ten days later.
The case proceeded to trial on May 7, 2009, before a third judge. Of all the invoices, only two contained plaintiff's name. The other invoices contained either no name, but with an address at plaintiff's property, or the name of one of plaintiff's subsidiaries. Alpert testified that he discussed the various subsidiaries with defendant during the course of their dealings. Over defendant's objections, the various invoices were accepted into evidence. After plaintiff rested, the trial judge denied defendant's motion to dismiss. In doing so, the judge, consistent with Alpert's testimony, took "judicial notice" that the invoices sent to defendant had plaintiff's logo on them although the logo did not appear on the photocopies. The judge also found that plaintiff is the parent company of the various subsidiaries and that defendant knew this. The judge therefore denied the motion to dismiss. The judge then rendered an oral decision after all evidence was presented, holding defendant liable for $165,345.61.
The judge entered a judgment in that amount in favor of plaintiff on May 26, 2009.*fn1 The judge denied defendant's request for a stay pending appeal. Defendant filed a notice of appeal on July 1, 2009. He subsequently moved before us for a stay, which we denied on July 28, 2009.
Defendant first challenges the order granting plaintiff's motion for reconsideration of the dismissal of its complaint. A decision to grant or deny a motion for reconsideration is addressed to the trial judge's discretion. Fusco v. Newark Bd. of Educ., 349 N.J. Super. 455, 462 (App. Div.), certif. denied, 174 N.J. 544 (2002); Marinelli v. Mitts & Merrill, 303 N.J. Super. 61, 77 (App. Div. 1997); Cummmings v. Bahr, 295 N.J. Super. 374, 389 (App. Div. 1996). Similarly, a trial judge's reconsideration of, and grant of relief from, an interlocutory order before final judgment is a matter committed to the judge's sound discretion. Johnson v. Cyklop Strapping Corp., 220 N.J. Super. 250, 263 (App. Div. 1987), certif. denied, 110 N.J. 196 (1988). Thus, an order granting a motion for reconsideration is reviewed for an abuse of that discretion. Cummings, supra, 295 N.J. Super. at 389. A trial court decision will constitute an abuse of discretion where "the 'decision [was] made without a rational explanation, inexplicably departed from established policies, or rested on an impermissible basis.'" United States v. Scurry, 193 N.J. 492, 504 (2008) (quoting Flagg v. Essex County Prosecutor, 171 N.J. 561, 571 (2002)).
Defendant argues that the motion judge properly granted his motion to dismiss the complaint for lack of personal jurisdiction on April 13, 2007, and thus erred when he granted plaintiff's motion for reconsideration and reinstated the complaint. Defendant maintains that he has had no contact with the State of New Jersey and no portion of the transaction at issue occurred outside California. Defendant further contends that the jurisdictional provision in the credit application applies only to Coastal Coachworks and he is not subject to it. He asserts that he has never consented to the jurisdiction of the courts in New Jersey. Finally, defendant argues that the motion judge should not have considered the motion for reconsideration because plaintiff chose not to contest his motion to dismiss.
Plaintiff argues that the motion judge properly granted its motion for reconsideration and correctly ruled that New Jersey has personal jurisdiction over defendant. First, plaintiff claims that the motion judge did not abuse his discretion in granting the motion because he did not consider the credit application with the personal guarantee before granting defendant's motion to dismiss. Second, citing Shelter Systems Group Corp. v. Lanni Builders, Inc., 263 N.J. Super. 373 (App. Div. 1993), plaintiff asserts that New Jersey has personal jurisdiction over defendant because the jurisdictional provision of the credit application applies to both Coastal Coachworks and defendant, the personal guarantor. Plaintiff further argues that the provision is enforceable against defendant because the two-page credit application with the personal guarantee at the end should be construed as one integrated document and injustice would result if the court were to find in favor of defendant.
In reinstating plaintiff's complaint, the judge issued a written opinion dated June 8, 2007. In that opinion, the judge noted that he was first presented with the credit application and personal guarantee when plaintiff moved for reconsideration.
The judge stated that execution of both the credit application and personal guarantee, which appeared to be on the same document, was necessary for the parties to engage in business. Citing Shelter Systems, supra, 263 N.J. Super. at 376-77, the judge reinstated the complaint because "it would not make logical sense to have an agreement where the principal party would have to sue the company in one place and the guarantor in another place."
In Shelter Systems, supra, 263 N.J. Super. at 374, the plaintiff sold building materials to the defendants, a corporate builder and its principal, both from Pennsylvania. The plaintiff's principal place of business was in New Jersey, and it maintained locations in other states. Ibid. The plaintiff sued the corporate defendant for building materials sold and delivered and sued the individual defendant on a guarantee of payment for the corporate buyer's purchases. Ibid.
The defendants moved to dismiss the action for lack of in personam jurisdiction. Ibid. The judge held that there were insufficient New Jersey contacts and the choice-of-forum provision in the agreement with the corporate defendant was not enforceable against either defendant. Ibid. On appeal, we enforced the choice-of-forum provision, which provided that all actions would be brought in the state of the plaintiff's principal place of business. Id. at 375. The individual defendant argued that the choice-of-forum provision did not bind him, because the credit application in which it was contained was only signed by the corporate defendant. Id. at 376. His earlier-executed personal guarantee contained no choice-of-forum provision. Ibid. We rejected this argument, saying:
The individual guarantor was the owner and president of the corporation. He allegedly guaranteed payment for all purchases. In agreeing to stand behind his corporation's performance, such a guarantor must be taken to have accepted reasonable means outlined in the corporation's contract for enforcement of the contractual obligation, not only against the corporation but, where applicable, also against the guarantor. Where several writings are produced as part of one transaction, they may be read together as one. General Elec. Credit Corp. v. Castiglione, 142 N.J. Super. 90, 101 (Law Div. 1976).
The purpose of requiring an individual guarantee from the owner of a corporate residential builder is to have security greater than the corporation's gossamer assurances of payment. The purpose of an agreement as to the forum for litigating over an interstate commercial transaction is to avoid having to pursue a debtor into a jurisdiction that the creditor believes inconvenient. When a corporate debtor defaults in payment to a supplier, the personal guarantor is frequently the only available source of funds. It would be unjustifiable, belying the real nature of the transaction, to rule that the litigation forum accepted by the corporation was not also accepted by the individual guarantor who executed the corporation's agreement on its behalf. [Ibid.]
Therefore, we held that "a person who signs a guarantee of his corporation's future commercial debts to a supplier, and then later executes on the corporation's behalf a contract to buy goods which contains a choice-of-forum provision, agrees for himself to litigate in the same forum in his capacity as guarantor." Id. at 376-77.
Here, the personal guarantee was part and parcel of the two-page corporate credit application and presents an even more compelling case than Shelter Systems for concluding that the guarantor agreed to the choice-of-forum provision. We find no abuse of discretion in the judge's June 15, 2007, order reconsidering dismissal. It was made with a rational explanation, did not inexplicably depart from established policies, and rested on a permissible basis. Scurry, supra, 193 N.J. at 504.
Second, defendant challenges the trial court's judgment in favor of plaintiff based upon the testimony and invoices submitted. When error in a fact-finding by a judge is alleged, the scope of appellate review is limited. Close v. Kordulak Bros., 44 N.J. 589, 599 (1965). In a non-jury case, the appellate court will only decide whether the findings made could reasonably have been reached on "sufficient" or "substantial" credible evidence present in the record, considering the proofs as a whole. Ibid. Of course, "[a] trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference." Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).
Defendant argues that the trial judge erred in awarding a judgment for the full amount of the debt, because the credit application he personally guaranteed was with "Modern Technologies Group Inc." only and did not include any other entities within its scope. Likewise, defendant asserts that his personal guarantee was limited solely to any debt owed by Coastal Coachworks to plaintiff only. Defendant argues that since the documents did not include any references to plaintiff's subsidiaries, he cannot be held liable for amounts due such a subsidiary. Defendant further contends that the credit application "is bereft of any mention of affiliates, whether generally or by specific name, and, therefore, the credit application and guaranty could not have been used to support claims by any entity other than Modern Technologies Group Inc."
Plaintiff argues that the trial judge properly ruled that defendant guaranteed payment of all the submitted invoices. Plaintiff contends that the adduced evidence shows that the parties' objective expectations were that the credit application covered plaintiff and its subsidiaries and defendant guaranteed payment for invoices from plaintiff's subsidiaries. Plaintiff points to Alpert's testimony that defendant was aware that plaintiff used different trade names, that all were under the same umbrella, and that the credit application, including the personal guarantee, was a blanket agreement for plaintiff and all of its subsidiaries. Thus, plaintiff urges us to reject defendant's argument that he did not guarantee the invoices from plaintiff's subsidiaries.
In rendering its decision, the trial judge found that plaintiff is a parent corporation with at least three subsidiaries, MTG Air, Limousine Digest, and Limo Digest Show, and these four corporations together entered into a financial agreement with Coastal Coachworks and defendant. The trial judge was "satisfied that the personal guarantee covered all of the subsidiary corporations to [plaintiff]," and he was further satisfied that the invoices "were for materials and services provided to Coastal Coachworks and not paid for." The judge found that plaintiff was justified in not accepting return of certain items due to the lien defendant's business partner had on the goods. The judge concluded that "this is nothing more than a . . . standard collection case, with a personal guarantee. And I'm satisfied that the defendant . . . is obligated to plaintiff on . . . his guarantee to the extent of $165,345.51."
"Guaranty agreements are to be strictly construed." Garfield Trust Co. v. Teichmann, 24 N.J. Super. 519, 527 (App. Div. 1953) (citations omitted). It is well-settled in New Jersey that the language of a guarantee agreement must be interpreted against the drafter. Housatonic Bank & Trust Co. v. Fleming, 234 N.J. Super. 79, 82 (App. Div. 1989) (citation omitted). A guarantor cannot be held liable beyond the strict terms of the agreement, and an agreement guaranteeing a particular debt does not extend to other indebtedness outside the manifest intention of the parties. Garfield Trust Co., supra, 24 N.J. Super. at 527. Indeed, a guarantor's promise cannot be extended by implication, and any ambiguity in a guarantee should be construed in favor of the guarantor. Housatonic Bank, supra, 234 N.J. Super. at 82 (citations omitted).
However, a guarantee "must be interpreted according to its clear terms so as to effect the objective expectations of the parties." Ibid. Moreover, the terms and provisions of a guarantee are to be primarily considered with a view towards discovering and giving effect to the parties' intentions. Garfield Trust Co., supra, 24 N.J. Super. at 526 (citations omitted). "[T]he terms of a guarantee agreement must be read in light of commercial reality and in accordance with the reasonable expectations of persons in the business community involved in transactions of the type involved." Ctr. 48 Ltd. P'ship v. The May Dep't Stores Co., 355 N.J. Super. 390, 405-06 (App. Div. 2002) (citation omitted).
We find no error in the trial judge's determination that defendant's personal guarantee of the credit application extended to plaintiff's subsidiaries. The reality of the transaction is that the seller was plaintiff, a parent company with at least three subsidiaries, and the buyer was Coastal Coachworks, on whose behalf defendant executed a personal guarantee. According to Alpert's testimony, plaintiff's expectation was that the personal guarantee covered all of plaintiff's companies as plaintiff would not have executed the credit application otherwise. Logically, defendant could not have reasonably expected that his personal guarantee only extended to the parent company, when Coastal Coachworks ordered and received goods from the subsidiaries on credit pursuant to the credit agreement with plaintiff. The credit agreement and personal guarantee covered all credit transactions with Coastal Coachworks where plaintiff extended credit for its subsidiaries' goods. Ibid. We see no basis for disturbing the judgment.
Finally, defendant challenges the trial judge's taking of "judicial notice" that plaintiff's logo appeared on the invoices. "As a general rule, admission or exclusion of proffered evidence is within the discretion of the trial judge whose ruling is not disturbed unless there is a clear abuse of discretion." Dinter v. Sears, Roebuck & Co., 252 N.J. Super. 84, 92 (App. Div. 1991). In the event of an error, reversal is warranted only in cases of a clear abuse of discretion. See In re Estate of Howard C. Hope, Sr., 390 N.J. Super. 533, 541 (App. Div.) (trial court rulings on discretionary decisions will not be reversed on appeal absent a showing of an abuse of discretion), certif. denied, 191 N.J. 316 (2007); see also Purdy v. Nationwide Mut. Ins. Co., 184 N.J. Super. 123, 130 (App. Div. 1982) (same).
Defendant argues that the trial judge "erred when [he] took judicial notice of the means by which [p]laintiff prepared its invoices." We find no merit to this contention. The judge clearly misspoke when he used the term "judicial notice." The record clearly demonstrates that the judge was actually making fact-findings based on the evidence before him. Defendant's contention does not merit further discussion in this opinion.