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2 Tonjac, LLC v. Skylands Community Bank

September 29, 2010


On appeal from the Superior Court of New Jersey, Law Division, Morris County, Docket No. L-33-09.

Per curiam.


Argued September 14, 2010

Before Judges Parrillo, Yannotti and Espinosa.

Plaintiff 2 Tonjac, L.L.C. (Tonjac) appeals from an order entered by the Law Division on February 19, 2010, which granted summary judgment in favor of defendant Skylands Community Bank (Skylands) and denied plaintiff's cross-motion for summary judgment. We affirm.

This appeal arises from the following facts. Anthony Caputo (Caputo) and his wife owned a restaurant in Byram Township, which they operated under its corporate name, Porky's, A Place for Ribs, Inc. (Porky's). In January 1997, the Caputos sold the business to defendant Lefkas, Inc. (Lefkas), and in June 2005, the Caputos sold Lefkas the property on which the restaurant was located. The property consisted of a restaurant and a two-bedroom house. Lefkas financed the purchase of the property with a $249,000 mortgage loan from Skylands and a $451,000 mortgage loan from Porky's.

In August 2005, the house was damaged by fire. Lefkas had insured the property through Franklin Mutual Insurance Company (Franklin). Franklin issued a check dated November 22, 2005, in the amount of $72,000, in settlement of the fire damage claim. The check was made payable to Lefkas and Porky's. Skylands negotiated the check on November 25, 2005.

Tonjac filed a complaint in the trial court on January 5, 2009, in which it named Skylands as defendant.*fn1 Tonjac asserted that it was the successor in interest to Porky's. It alleged that Porky's had never endorsed or authorized anyone to endorse the check on its behalf. According to Tonjac, Lefkas presented the check to Skylands bearing Lefkas' endorsement along with a forged endorsement for Porky's. Defendant paid Lefkas the full amount of the check.

Tonjac further alleged that Skylands cashed and deposited the check "without making a reasonable attempt to verify the endorsements" or Lefkas' authority to cash or deposit the check. Tonjac claimed that Skylands breached its duty of care by failing to take reasonable steps to ascertain the genuineness of the endorsements, and Skylands was grossly negligent by cashing or depositing the check "without following reasonable commercial banking procedures and standards."

On February 2, 2009, Skylands filed an answer, in which it asserted eleven separate defenses. Skylands's third separate defense stated that Tonjac's action was barred by the statute of limitations, laches, waiver and abandonment of the claim. Skylands additionally asserted various cross-claims against Lefkas. In March 2009, Tonjac served initial interrogatories upon Skylands, in which it asked Skylands to set forth the facts upon which it based its third separate defense. Tonjac believed that Skylands's response to this and other interrogatories was deficient and, therefore, obtained an order by the court dated August 31, 2009, which required Skylands to provide more specific answers.

On September 8, 2009, Skylands provided a further response to Tonjac's interrogatories. Tonjac maintained that Skylands's supplemental answers did not comply with the court's order. In particular, Tonjac asserted that Skylands had not provided the factual basis for the third separate defense. Skylands insisted, however, that its answer was fully responsive to the question.

On June 18, 2009, counsel for Skylands wrote to Tonjac's attorney and stated that he had recently scheduled depositions for the Caputos. Skylands's counsel stated that, based on his review of the matter, liability in the matter rests with the other defendants and Tonjac would have difficulty attempting to collect any judgment from them. Skylands's counsel additionally stated that, in an attempt to avoid further costs of litigation, he had been authorized to offer to settle the matter for $15,000. The offer was apparently rejected and the Caputos were deposed on August 3, 2009.

On December 23, 2009, Skylands filed a motion for summary judgment, in which it argued that Tonjac's claim was barred by the statute of limitations. Tonjac thereafter filed a cross-motion seeking to strike Skylands's statute of limitations defense on the basis of waiver, estoppel and laches. Tonjac argued that Skylands should be barred from asserting the statute of limitations defense because it had engaged in discovery, provided insufficient answers to interrogatories and inexcusably delayed in seeking dismissal of the complaint.

The trial court considered the motion on February 19, 2010, and placed its decision on the record on that date. The court noted that that N.J.S.A. 12A:4-111 required that Tonjac's claim on the check be brought within three years of its accrual. The court found that Tonjac's cause of action accrued on November 25, 2005, when Skylands ...

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