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Adkins v. Krikor

October 21, 2010


On appeal from Superior Court of New Jersey, Law Division, Passaic County, Docket No. L-2181-08.

Per curiam.


Argued September 13, 2010

Before Judges Rodríguez and Grall.

Defendants Krikor Kalfayan (Kalfayan) and Krikor, Inc., (Krikor) appeal from a $26,550 judgment entered against them jointly, severally and individually, after a bench trial. Plaintiff Jennipher Adkins has not participated in this appeal.

We conclude the judgment must be reduced to $15,000, the limit on damages that may be recovered in an action in the Special Civil Part.

The litigation arose from a dispute between plaintiff, who is a designer of bonnets, headbands, head-wraps and scarves, and defendants, the manufacturer that agreed to produce the accessories according to her design. Plaintiff commenced the litigation in the Special Civil Part of the Law Division. Defendants filed an answer and a counterclaim. In their answer, defendants contended that Kalfayan was not a proper defendant. The counterclaim, which was filed in the name of Krikor, sought damages in excess of the $15,000 available in the Special Civil Part.

The initial pleadings were dismissed for reasons not clear on this record, but plaintiff filed a second complaint reasserting her intention to be bound by the $15,000 limitation on damages in the Special Civil part. Defendants responded, reiterating the objection to an action against Kalfayan and a counterclaim for damages by Krikor in excess of $15,000. The case was transferred to the Civil Part of the Law Division and scheduled for trial.

Plaintiff and defendants' attorney appeared for trial, but Kalfayan did not attend and no other witness for the defense was called. Defense counsel requested an adjournment because he could not reach Kalfayan and there was no one else in business with him. Although his request was denied, defense counsel, noting he was not likely to receive an adjournment from the presiding judge, declined to pursue that option. Thereafter, over defense counsel's objection based on lack of prior notice, the judge amended plaintiff's complaint to allow her to establish damages in the amount of $69,000.

Plaintiff's unrebutted testimony established the following. Plaintiff, owner of Jenny Capp Company (JCC), and Krikor, through Kalfayan, had cooperated in business ventures prior to the transaction at issue. In the earlier transactions, plaintiff dealt only with Kalfayan, purchased material from Krikor and manufactured the products she marketed herself in JCC's California facility.

This transaction was different in that plaintiff had a contract with another company, TWT Distributing. TWT agreed to pay her $95,616 for a product line she designed and that TWT planned to market under its own label. Because plaintiff did not have the wherewithal to fill the order, she and Kalfayan discussed the possibility of Krikor overseeing production and shipping of the completed products.

Plaintiff produced three draft agreements, which were dated May 15, May 23, and November 1, 2006, respectively. The first was prepared by plaintiff, and the second two were prepared by Kalfayan. The agreement plaintiff prepared was for Kalfayan's signature as owner of Krikor. The agreements Kalfayan drafted identified him as the president of Krikor. Although all three agreements set forth the respective obligations of JCC and Krikor, all three identify plaintiff, JCC, Kalfayan and Krikor as the contracting parties.

The agreements have common elements pertinent to plaintiff's claim. Under each version, Krikor was obligated to either produce and ship or supervise the manufacture and shipment of the finished products. Krikor was to pay the suppliers and contractors, and JCC was to provide printed inserts for the packaging. Plaintiff was to produce evidence that she had granted TWT authority to pay Krikor for the merchandise and for Krikor to deduct its costs and retain three percent of the net amount of the invoice.

The differences in the agreements related to the cost of shipping; plaintiff proposed that she pay the costs, but Kalfayan proposed that he deduct that expense along with his other costs and his three percent of the net value of the ...

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