December 13, 2010
BRENDAN MCELDUFF, AN INDIVIDUAL AND DOING BUSINESS AS 168 REALTY, ULSTER CONSTRUCTION, INC., A NEW JERSEY CORPORATION AND 170 REALTY CORP., A NEW JERSEY CORPORATION, PLAINTIFFS-RESPONDENTS,
GERARD SCHUHMANN, A/K/A GERARD J. SCHUHMANN, A/K/A GERARD J. SCHUHMANN, JR., DEFENDANT-APPELLANT, AND ANDREW ASSAF, JR., A/K/A ANDREW ASSAF AND PEGGY VIGGIANO, DEFENDANTS.
On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-4579-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted November 29, 2010 - Decided Before Judges Lisa and Sabatino.
Pursuant to a jury verdict, judgment was entered on January 25, 2010
in favor of plaintiffs against defendant, Gerard Schuhmann*fn1
(defendant) for $158,000 plus prejudgment interest. The claim
against defendant was based on a civil conspiracy. It arose out of a
course of events over several years during which defendant's
then-wife, Theresa Schuhmann (Theresa), embezzled nearly $223,000 from
plaintiffs, by whom she was employed. Theresa was criminally
prosecuted, pled guilty to theft charges, and was sentenced to a
probationary term conditioned upon serving 364 days in the county jail
and paying restitution for the full amount she embezzled. In
conjunction with that criminal proceeding, a judgment was entered
against Theresa in favor of plaintiff Brendan McElduff for the full
amount. In the succeeding years, Theresa paid nearly $65,000 in
restitution, leaving an undisputed balance due of $158,000. Plaintiffs
brought this action against defendant and others allegedly involved in
the conspiracy for recovery of the balance due.
Defendant argues on appeal that: (1) his motion to dismiss should have been granted because plaintiffs failed to present sufficient evidence to establish the elements of civil conspiracy; (2) the trial court erred in admitting in evidence, under the business records exception to the hearsay rule, a computerized sales record bearing defendant's name and address;
(3) the court committed plain error by allowing the case to go to the jury with a verdict sheet designating only "Brendan McElduff" as the plaintiff, rather than requiring an allocation of damages in favor of each plaintiff; and (4) the court committed plain error by entering a judgment in favor of all plaintiffs, which was inconsistent with the jury's verdict in favor of only Brendan McElduff. We reject these arguments and affirm.
The individual plaintiff, Brendan McElduff, was the sole shareholder and proprietor of several small businesses. These included the other named plaintiffs, namely, his sole proprietorship known as 168 Realty, and two corporate entities, Ulster Construction, Inc., a construction company, and 170 Realty Corp., which administered the buildings in which McElduff conducted his business activities. McElduff hired Theresa in March 1997 as an administrative assistant for Ulster Construction, Inc. She also performed some clerical work related to McElduff's realty business. Her salary was paid solely by Ulster Construction, Inc. Her responsibilities included collecting and depositing rent checks, and some bookkeeping functions, including providing financial information to the companies' accountant. She drafted checks for McElduff's review and approval. She was not authorized to sign McElduff's name to any checks, open credit accounts in his name, or utilize a signature stamp that was in her desk.
In May 2002, McElduff discovered that Theresa had been stealing from him. He reviewed his records and determined that she had opened several credit accounts in his name without his knowledge and used the accounts to make personal purchases, with the bills being paid from McElduff's business accounts.
McElduff reported this information to law enforcement authorities, and, at their direction, he engaged the services of a forensic accountant, who conducted a thorough examination of the business records and issued a detailed report. The accountant determined that Theresa opened three credit accounts with cards bearing her name and that of McElduff. Total charges of $143,783.97 were incurred using these cards. Further, Theresa forged checks from McElduff's personal checking account and various business accounts in the total amount of $79,168.91.
Based upon this report, Theresa was indicted for theft. Pursuant to a negotiated plea agreement, the second-degree theft charge against Theresa was downgraded to third degree.*fn2 She pled guilty and was sentenced in the manner we have previously set forth.
Throughout the time period of the thefts, defendant and Theresa were married and lived together. Defendant deposited the vast majority of Theresa's legitimate paychecks into his checking account, leaving her during this two-year period with only about $4350 of legitimately earned income for personal use. During some stretches of time, Theresa gave all of her legitimate income to defendant, but still had funds available to make large purchases of groceries and other household items. Further, Theresa's spending increased dramatically while the couple's legitimate income decreased by almost fifteen percent.
The couple had little by way of cash reserves. Nevertheless, despite a general lack of available funds obtained through legitimate income, defendant professed ignorance of Theresa's spending the entirety of the nearly $223,000 she stole from plaintiffs. Most of this was spent on personal items, items for the couple's use, and household improvements.
Examples of purchases included a $260 box of cigars as a gift for defendant and the rental of an expensive Lincoln automobile costing $1870 for approximately eight weeks. Defendant was aware that Theresa rented the car, notwithstanding that at the time she was giving him all of her legitimate salary. Theresa never drove the car to work.
On December 15, 2001, one of the fraudulent credit cards was used to make a $201 purchase at Men's Wearhouse, a men's clothing retailer. Consistent with store policy, the sales clerk obtained the purchaser's name, address and telephone number. The recorded information matched defendant's name, address and telephone number. Further, defendant personally endorsed four fraudulent checks that were made payable to Theresa. Two were on McElduff's personal account; one was on the account of Ulster Construction, Inc.; one was on another of McElduff's wholly owned businesses, P.J. McCorp, which was not named as a plaintiff (although it was mentioned in the body of the complaint). These checks totaled $4750.
Based upon this evidence, the jury found that a claim of civil conspiracy against defendant had been proven. Thus, the jury unanimously determined that defendant "understood that Theresa Schuhmann was stealing money from Brendan McElduff," "accepted the benefits of the theft," and "either explicitly or implicitly agreed to do his part to further the theft."
We first consider defendant's argument that his motion to dismiss under Rule 4:37-2(b) was improperly denied because plaintiffs failed to present sufficient evidence to make out a prima facie case of civil conspiracy. He argues there was no evidence "of a Swiss Bank Account, lavish vacations, fancy cars, fancy restaurants, expensive clothes, expensive parties, or voluntary unemployment." He further argues that he received no "direct, or knowing, benefit" sufficient to indicate that his wife was embezzling large amounts of money. He argues that the circumstantial evidence from such things as the Men's Wearhouse sales record, his endorsement of the forged checks, and Theresa's gift to him of the cigars, were insufficient to permit the case to go to the jury. We do not agree.
Upon a defendant's motion, a plaintiff's claim may be involuntarily dismissed if, at the close of the plaintiff's case, he or she has failed to establish a right to relief. R. 4:37-2(b). "[T]the judicial function on a motion for involuntary dismissal 'is quite a mechanical one [in which] [t]he trial court is not concerned with the worth, nature or extent (beyond a scintilla) of the evidence, but only with its existence, viewed most favorably to the party opposing the motion.'" Epperson v. Wal-Mart Stores, Inc., 373 N.J. Super. 522, 527 (App. Div. 2004) (quoting Dolson v. Anastasia, 55 N.J. 2, 5--6 (1969)). The trial judge must accept as true "all evidence presented in plaintiff's case and provide plaintiff, as well, with all legitimate inferences generated by that evidence." Id. at 526 (citing R. 4:37-2(b)). Appellate courts apply the same standard when reviewing a trial court's decision. Id. at 527.
To satisfy the requirements of a civil conspiracy claim, a plaintiff must establish that the defendant understood and accepted the general objectives of the scheme, and agreed, either explicitly or implicitly, to do his or her part to further those objectives. Banco Popular N. Am. v. Gandi, 184 N.J. 161, 177 (2005). "[T]he nature of a conspiracy is such that more often than not the only type of evidence available to prove the conspiracy is circumstantial evidence. And although the verdict must not be the result of pure speculation . . . circumstantial evidence will suffice." Bd. of Educ. v. Hoek, 38 N.J. 213, 239 (1962) (citation omitted). Therefore, plaintiffs' failure to present any direct evidence of a conspiracy did not defeat the establishment of a prima facie case.
In denying defendant's motion, Judge DeAvila-Silebi found that a reasonable jury could infer from the large body of circumstantial evidence that defendant was aware of Theresa's activities, accepted the benefits of them, and agreed to do his part to further her activities of stealing from her employer. She therefore found that plaintiffs had presented sufficient evidence to establish a prima facie case and survive defendant's motion to dismiss. The record amply supports the judge's decision.
We next consider defendant's argument that the computerized purchase record from Men's Wearhouse was improperly admitted in evidence. That record indicated that the purchaser identified himself with defendant's name and provided defendant's telephone number and home address. The transaction was completed using a fraudulent credit card bearing McElduff's name. At trial, defendant objected to the admission of the record on two grounds. First, he argued it was "not probative of the fact that Gerard Schuhmann made the purchase." Second, due to the sales clerk's failure to verify that the name given by the purchaser matched that on the credit card, "the record was unreliable and was created outside the course of regular business practices." Judge DeAvila-Silebi found these arguments unpersuasive, and so do we.
Generally, a trial court's admission of evidence is reviewed under the "abuse of discretion" standard. Brenman v. Demello, 191 N.J. 18, 31 (2007) (citing Green v. N.J. Mfrs. Ins. Co., 160 N.J. 480, 492 (1999)). Out-of-court statements offered to prove the truth of the matter at issue are generally prohibited under the hearsay rule. N.J.R.E. 802. Under the business-records exception to the hearsay rule, however, courts may admit into evidence statements contained in a writing or other record of acts, events, conditions, and subject to Rule 808, opinions or diagnoses, made at or near the time of observation by a person with actual knowledge or from information supplied by such a person, if the writing or other record was made in the regular course of business and it was the regular practice of that business to make it, unless the sources of information or the method, purpose or circumstances of preparation indicate that it is not trustworthy. [N.J.R.E. 803(c)(6).]
Accordingly, there are three circumstances that must be satisfied for business records to qualify for the exception:
First, the writing must be made in the regular course of business. Second, it must be prepared within a short time of the act, condition or event being described. Finally, the source of the information and the method and circumstances of the preparation of the writing must justify allowing it into evidence. [State v. Sweet, 195 N.J. 357, 370 (2007), cert. denied, ___ U.S. ___, 129 S. Ct. 2858, 174 L. Ed. 2d 601 (2009) (quoting State v. Matulewicz, 101 N.J. 27, 29 (1985)).]
The record establishes that the computer sales record satisfied all three circumstances. Elias Jaffe testified regarding the record. He was a regional sales manager for Men's Wearhouse, Inc., and had worked for the company for twelve years. He was familiar with the company's computer record-keeping system, and testified that the record came from the company's system and was kept in the normal course of business. Jaffe also testified that records such as this were created contemporaneously with the transactions with which they were associated.
As to the third requirement, evidence regarding the creation of the record must establish that it possesses a "circumstantial probability of trustworthiness." Matulewicz, supra, 101 N.J. at 29-30 (quoting Mahoney v. Minsky, 39 N.J. 208, 218 (1963)). "[T]his general acceptance of reliability will not attach if 'the trial court, after examining [the records] and hearing the manner of their preparation explained, entertains serious doubt as to whether they are dependable or worthy of confidence.'" Ibid. (quoting Mahoney, supra, 39 N.J. at 218). In overruling defendant's objection, the judge did not express any concern over the dependability or trustworthiness of the record's preparation.
This record was clearly probative of the fact that defendant made the purchase from Men's Wearhouse. And, Jaffe's testimony provided a proper foundation to establish the admissibility of the document under the business records exception. The judge did not err in admitting this document in evidence.
Defendant's last two arguments are related. Their thrust is that although there were four plaintiffs the case was submitted to the jury as though McElduff was only plaintiff, and the jury was not asked to allocate damages among the four plaintiffs. Defendant argues that this was error, and that the error was compounded by entry of final judgment in favor of all of the named plaintiffs, although the jury found only in favor of McElduff. In essence, defendant argues that plaintiffs were alleging four separate conspiracies, and they should have been required to prove each conspiracy separately with the attendant damages corresponding to each.
These arguments ignore the manner in which this case was tried and the stipulation of total damages in the amount of $158,000 in the event the jury found defendant liable for a civil conspiracy. Plaintiffs pled a single conspiracy. Throughout the trial, McElduff was collectively referred to as the "plaintiff." Indeed, in the judgment entered against Theresa as part of her criminal disposition, only McElduff was designated as the judgment creditor.
It was understood throughout this civil conspiracy proceeding that there was an identity of interest between McElduff and his wholly owned business entities. In his opening statement to the jury, defendant's attorney said that "[t]hey will not be able to prove that [defendant] conspired with Theresa Schuhmann to defraud Mr. McElduff." (emphasis added). In defense counsel's summation, he recounted McElduff's testimony that he trusted Theresa but she embezzled all of this money "from him." (emphasis added). Counsel immediately followed with the remark: "We agree to that."
Most telling was defense counsel's comments during the charge conference. He agreed to the proposed verdict sheet, which identified only McElduff as the subject of the alleged conspiracy. In reviewing the verdict sheet, the judge commented that the jury charge would reflect the stipulated unpaid balance of $158,000. The judge then asked, "But should there be an additional interrogatory as to how much damages?" Defense counsel replied: "I don't think they have a choice, Judge. I think if they rule against my client it has to be -- I agree with [plaintiff's counsel] as far as the number of 158." In further discussion of the proposed jury charge, this colloquy occurred:
[Defendant's counsel]: And they [the jury] understand that by finding Mr. Schuhmann guilty they're awarding damages in the amount of $158,000 and that's exactly what the damage provision [in the charge] states. [Plaintiff's counsel]: But they're not deciding the damages. So they shouldn't get a charge for an issue they're not deciding. You can only confuse or --
What are they supposed to do with the charge? I agree with Your Honor, that --THE COURT: Well the damages is only going to be included in the jury charge if they have to find damages. [Defendant's counsel]: Correct.
THE COURT: But you're telling me that the two of you have agreed that they're not going to be finding a number. [Defendant's counsel]: They're not going to be finding the number, the number is agreed to. But they have to know what they're finding and the damages are 158 and that's exactly what the damages are.
THE COURT: But you've already - the way that I read the jury verdict form sheet is that they're going to decide whether or not he conspired. [Defendant's counsel]: Correct.
THE COURT: And if the answer is yes, then the Court would have to enter $158,000.
[Defendant's counsel]: That's correct, because it's not bifurcated case.
It is abundantly clear that throughout the course of the trial, both parties and the court used the name "Brendan McElduff" to refer to the victims collectively. Defendant never interposed this objection at trial, and we therefore analyze this issue under the plain error standard. Under that standard, we will not reverse unless any error was "clearly capable of producing an unjust result." R. 2:10-2. We are satisfied there was no error, let alone plain error.