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Sovereign Bank v. Lasch

September 8, 2010


On appeal from Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-519-05.

Per curiam.


Submitted: May 12, 2010

Before Judges Payne and C.L. Miniman.

Defendants Callie Lasch and Vincent Roggio appeal from a November 21, 2008, judgment in favor of plaintiff Sovereign Bank (Sovereign) in the amount of $182,444.41 for principal, interest, late fees, post-judgment interest, attorneys' fees, and costs due under a promissory note, business loan agreement, and commercial guaranty. We affirm.


On December 17, 2003, Lasch and Sovereign entered into a Business Loan Agreement pursuant to which Sovereign agreed to lend Lasch $100,000. Lasch simultaneously executed and delivered to Sovereign a Promissory Note wherein she promised to pay Sovereign the principal sum of $100,000 plus interest on or before May 15, 2004. Roggio, Lasch's husband, executed a Commercial Guaranty the same day, in which he personally guaranteed payment of Lasch's indebtedness to Sovereign. Among many other provisions, the Promissory Note and Business Loan Agreement each included a "Right of Setoff" clause that gave Sovereign the authority to deduct the amount due on May 15, 2004, from Lasch's accounts at Sovereign. The Promissory Note and Business Loan Agreement also permitted Sovereign to recover attorneys' fees and costs associated with collection proceedings.

On June 4, 2004, Lasch and Sovereign executed a Note Modification Agreement, which Roggio again guaranteed. In its first recital, the Note Modification Agreement stated that on December 17, 2003, Lasch obtained from Sovereign "a Time Loan evidenced by a Promissory Note in the sum of One Hundred Thousand and 00/100 Dollars ($100,000.00) (the 'Principal Amount') bearing the same date (the 'Note')." The second recital stated the Promissory Note's requirement that Lasch repay $100,000 plus interest on May 15, 2004, and make all required monthly interest payments. The third and fourth recitals stated: "Whereas, the outstanding principal balance owing on the Note as of June 3, 2004, is Zero and 00/100 Dollars ($0.00) (the 'Outstanding Balance');*fn1 and Whereas at the request of [Lasch] and in agreement of [Sovereign] the Note will be modified." Based on these recitals, Lasch and Sovereign agreed to extend the "Time Loan" maturity date to December 15, 2004, "on which date all principal, accrued unpaid interest, and fees if any, shall be due and payable in full." The Note Modification Agreement also affirmed Roggio's status as the personal guarantor of Lasch's indebtedness to Sovereign.

Consistent with the terms of these documents, Lasch made monthly interest-only payments on the fifteenth day of each month from January to November 2004. However, the principal sum was not paid when due. On December 22, 2004, Lasch's loan was referred to John Giangrossi, relationship manager for a portfolio of defaulted commercial loans for Sovereign. The loan was forwarded to Sovereign's in-house counsel for the purpose of instituting collection litigation. Sovereign thereafter filed suit on or about January 31, 2005, against Lasch and Roggio seeking judgment for the amount due.*fn2

In 2007 when discovery was proceeding, defendants' attorney sent notices in lieu of subpoenas to various individuals, including Stacy Carbone, a Vice President of Sovereign. Carbone is the former manager of Sovereign's Red Bank branch and was living in Florida in 2007 and at the time of trial. Roggio believed her testimony was "critical to this case." On or about September 29, 2008, Lasch and Roggio, no longer represented by counsel,*fn3 sent a letter to Sovereign's counsel setting forth a list of documents to be produced and employees they wished to depose that Sovereign had "agreed to produce for trial." Carbone was on this list. On October 8, 2008, Sovereign's counsel informed Lasch and Roggio that Carbone's deposition would be taken on October 13. However, on October 14, Sovereign's counsel informed Lasch and Roggio that the deposition was postponed because Carbone had work-related issues. Trial was scheduled for October 20, 2008.

When Roggio raised the issue of Carbone's availability on the day scheduled for trial, Sovereign's counsel informed the judge that Carbone was no longer a bank employee and he had no ability to compel her to appear. He informed the judge of the various efforts he made to arrange for Carbone's deposition. The following day, Sovereign's counsel reiterated Carbone's lack of responsiveness to his requests. Roggio explained that he did not pursue Carbone himself because he relied on the alleged promises and guarantees of Sovereign's counsel that Carbone would be available. Sovereign's counsel then, with court permission, stepped outside the courtroom and called Carbone on his cell phone. During the ensuing conversation, Carbone told Sovereign's counsel that she would only be available Thursday, October 30. The case then moved forward without Carbone's testimony.

After pre-trial proceedings, during which the judge bifurcated the jury trial on the auto loan,*fn4 the case was heard without a jury on October 23, 2008. At this point, Sovereign's records showed that Lasch and Roggio owed $150,378.97, consisting of $100,000.00 in principal, $43,259.03 in unpaid accrued interest, and $7119.94 in late fees. Giangrossi testified that no principal payments on the loan were ever made. Regarding the recital in the Note Modification Agreement stating the loan balance was $0.00, Giangrossi explained that he was not present when the agreement was signed and the reference to a zero balance in the recital was a typographical error. When the loan was referred to him, Giangrossi determined the amount due based on Sovereign's screen system; a printout from the screen reflecting the amount Lasch and Roggio owed was introduced into evidence.

Lasch also testified at the trial. She believed that the $100,000 principal amount was repaid sometime between May 2004 and June 2004 after Roggio's account "was offset to do so." Lasch admitted that she had no documents demonstrating that the loan was repaid in full by her between May and June 2004. Consistent with his wife's testimony, Roggio testified that the loan was paid off sometime between May 17, 2004, and June 2004. He stated that he and Lasch "only found this out when [Sovereign's counsel] sent us this exhibit this week, and that triggered our memory. And we made inquiries to make certain that our memory was correct, that it is correct." Roggio nonetheless admitted that he never received a notification from the bank stating that the loan had been paid in full.

The judge rendered an oral decision after the parties' summations. The judge found Lasch and Roggio jointly and severally liable in the amount of $150,378.97. The judge also found that Sovereign could recover attorneys' fees pursuant to the note's provisions and requested Sovereign to submit a certification as to the proper amount.

On or about November 4, 2008, Sovereign filed a notice of motion for an award of attorneys' fees and costs and entry of judgment. Sovereign also filed a certification in support of the motion, attesting to the quantum of fees sought. Sovereign submitted a supplemental certification on or about November 17, 2008.*fn5 On November 21, 2008, the court, over defendants' opposition, granted Sovereign's motion and awarded $29,670.00 in fees and $1498.92 in costs for a total of $31,168.92. The court also entered a final judgment against Lasch and Roggio, holding them jointly and severally liable for $182,444.41. This amount consisted of: $150,378.97 in principal, accrued interest to October 23, 2008, and late charges; $30.91 per day in post-judgment interest pursuant to Rule 4:42-11, totaling $896.52; and the aforementioned $31,168.92 in fees and costs.

Defendants filed a notice of appeal on January 5, 2009. They raised a variety of evidentiary issues, asserted that the judge abused her discretion in denying a continuance to permit them to depose Carbone, and contended that the judge abused her discretion in awarding post-judgment interest, attorney's fees and costs.

On March 11, 2010, we sua sponte ordered the appeal dismissed without prejudice as to Lasch only because she filed a bankruptcy petition on October 20, 2009, which operated as an automatic stay of the proceedings as against her pursuant to 11 U.S.C.A. § 362. We further ordered that any party was permitted to move to reinstate the appeal as to Lasch if the case had not been disposed of or if the Bankruptcy Court lifted the stay. Finally, we ordered that the appeal as to Roggio would proceed.


Our scope of review of the issues raised in this appeal is very limited. With respect to evidentiary issues, "[a]s 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). See also Hisenaj v. Kuehner, 194 N.J. 6, 12 (2008) (review of evidential ruling is limited to examining the decision for abuse of discretion); Brenman v. Demello, 191 N.J. 18, 31 (2007) (determination of admissibility of evidence is reviewed for palpable abuse of discretion). Reversal is warranted only in cases of a clear abuse of discretion. Purdy v. Nationwide Mut. Ins. Co., 184 N.J. Super. 123, 130 (App. Div. 1982).

A trial court decision will constitute a clear 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)). However, if a judge makes a discretionary decision, but acts under a misconception of the applicable law, we need not defer; instead, we must adjudicate the controversy in the light of the applicable law in order that a manifest denial of justice be avoided. State v. Steele, 92 N.J. Super. 498, 507 (App. Div. 1966); Kavanaugh v. Quigley, 63 N.J. Super. 153, 158 (App. Div. 1960).

With respect to a refusal to grant a continuance to depose a witness, "[t]he granting of a continuance is a matter exclusively within the province and sound discretion of the trial judge and should not be upset unless it appears from the record that defendant suffered manifest wrong or injury." In re Elizabeth Educ. Ass'n, 154 N.J. Super. 291, 299 (App. Div. 1977) (citation omitted), certif. denied, 77 N.J. 492 (1978); see also State v. Gallegan, 117 N.J. 345, 354 (1989) (ordinarily, adjournments committed to the discretion of the trial court). A trial court's refusal to continue a trial is reviewed for an abuse of that discretion. See Schweizer v. MacPhee, 130 N.J. Super. 123, 127 (App. Div. 1974) (stating the proposition of law that reversal of discretionary decisions only follows in cases of clear abuse of that discretion).

As to an award of attorneys' fees and post-judgment interest, a fee award is committed to the discretion of the trial judge and is thus reviewed for an abuse of that discretion. Packard-Bamberger & Co. v. Collier, 167 N.J. 427, 443-44 (2001). "'[F]ee determinations by trial courts will be disturbed only on the rarest of occasions, and then only because of a clear abuse of discretion.'" Id. at 444 (quoting Rendine v. Pantzer, 141 N.J. 292, 317 (1995)).

The court's award of post-judgment interest pursuant to Rule 4:42-11(a) is similarly reviewed for an abuse of discretion. Baker v. Nat'l State Bank, 353 N.J. Super. 145, 174 (App. Div. 2002); see also Musto v. Vidas, 333 N.J. Super. 52, 74 (App. Div.) (reviewing an award of pre-judgment interest for an abuse of discretion), certif. denied, 165 N.J. 607 (2000). Although Rule 4:42-11(a) instructs that post-judgment interest shall run from the date of judgment, trial courts are vested with the discretion to vary the award in the interests of equity. Id. at 173 (citing Interchange State Bank v. Rinaldi, 303 N.J. Super. 239, 264 (App. Div. 1997)). The trial court's award of post-judgment interest is, therefore, reviewed for an abuse of discretion. Schweizer, supra, 130 N.J. Super. at 127.

When a party does not object to an alleged trial error, the court's decision is reviewed for plain error. R. 2:10-2; Fitzgerald v. Stanley Roberts, Inc., 186 N.J. 286, 317-18 (2006). "Under that standard, the issue is whether the [decision] had the 'clear capacity for producing an unjust result.'" Fertile v. St. Michael's Med. Ctr., 169 N.J. 481, 493 (2001) (quoting State v. Melvin, 65 N.J. 1, 18 (1974); citing Rule 2:10-2); accord Tartaglia v. UBS PaineWebber Inc., 197 N.J. 81, 128 (2008); Kvaerner Process, Inc. v. Barham-McBride Joint Venture, 368 N.J. Super. 190, 201 (App. Div. 2004). ...

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