On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-6053-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued February 1, 2011 Before Judges Messano and Waugh.
Following a bench trial, the judge entered an order for judgment in favor of plaintiff Frank A. Leo against defendant Bernard J. Perini in the amount of $219,057.28. Defendant now appeals asserting various claims of error. Plaintiff cross-appeals, arguing that the judge improperly entered judgment for an amount that was less than the amount he was entitled to pursuant to the guaranty that was the subject of the suit.
We have considered these arguments in light of the record and applicable legal standards. We reverse.
Plaintiff filed his complaint in the Law Division on December 26, 2007. The first count sought recovery on a promissory note allegedly in default. The note, dated January 10, 2006, was in the principal amount of $307,500, which, together with interest in the amount of $22,500, was due and payable in full on March 11, 2006 (the January 10 note). The note provided that upon failure to make payment, further interest would accrue at 18% per annum on the unpaid balance. Defendant Spotted Zebra, Inc. (Spotted Zebra) was the payor, and the note was executed by AnnMarie Giancontieri, its president. Pursuant to the terms of the note, Spotted Zebra granted plaintiff a security interest "in 100% of its assets."
Pursuant to the note, defendant and co-defendant Bruce M. Brigandi also guaranteed Spotted Zebra's obligations. Defendant and Brigandi pledged as security for the guaranty "their individual 20% interests in Paseges Food Distribution, Inc. [(Paseges)]." The note provided a signature line for defendant Nick Meintanas, the chief executive officer of Paseges, to consent to the pledge. The guaranty was executed by defendant and Brigandi in counterparts; Paseges never executed the document. The second count of plaintiff's complaint sought judgment based upon defendant's and Brigandi's guaranty.
Defendant filed an answer generally denying plaintiff's allegations. Little discovery ensued, and plaintiff moved for summary judgment on September 24, 2009. However, the matter had already received a trial date that preceded the return date of the motion. The motion was apparently denied as "moot."
On October 5, 2009, Brigandi entered into a consent judgment with plaintiff in the amount of $377,500. On October 9, the judge entered default judgment against Spotted Zebra in the amount of $416,290.13. Trial commenced on October 13 solely against defendant.*fn1
Before any testimony, defendant advised the judge that he intended to introduce evidence that 1) Meintanas never executed the consent; and 2) that plaintiff's counsel had agreed to escrow all monies and not forward any to Spotted Zebra until the consent was executed. Plaintiff's counsel argued that Meintanas' consent was irrelevant to defendant's obligations under the guaranty because it was "fully integrated" with the note. Without expressly ruling on the issue, the judge determined that he "need[ed] to take some testimony."
Defense counsel also advised the judge that he intended to introduce two draft promissory notes that were circulated before the first note was executed. He argued the proffered evidence did not violate the parol evidence rule. Plaintiff's counsel, in opposition, noted there was a "subsequent promissory note for more money that [defendant] executed with a personal guarantee." Claiming not to have obtained a copy of the second note until recently, plaintiff's counsel argued, "if we're going to say that other promissory notes are evidentiary, then I've got a $392,000 promissory [note] signed by [defendant]. I may seek to amend our complaint to conform with the proofs, because this appears to be a subsequent note also personally guaranteed." When defense counsel asked if plaintiff was formally amending the complaint, plaintiff's counsel responded, "[n]ot at this point in time. It depends on the proofs . . . ."
Plaintiff testified and identified the January 10 note and the payments he had received from Spotted Zebra on account of the note, totaling $85,500. On cross-examination, plaintiff acknowledged that Brigandi "brought [him] into the deal." He further admitted that he had previously loaned Brigandi personally "[s]omewhere in the neighborhood of [$]180,000, $200,000." The $85,500 that had been repaid on the January 10 note "came from [Brigandi] for Spotted Zebra['s] obligation."
Plaintiff also admitted that he did not loan Spotted Zebra the full amount reflected on the note. Instead, the $307,500 "encompassed some of . . . Brigandi's prior obligations." Plaintiff explained that when Brigandi approached him for a loan on behalf of Spotted Zebra, "[plaintiff] said unless the . . . note encompasse[d] past obligations, [he] wouldn't loan the money." The first note "superseded everything" regarding Brigandi's prior debts, and, as a result, plaintiff believed defendant had "responsibility for monies that [he] loaned on a personal basis to . . . Brigandi."
Plaintiff identified two notices confirming the wire transfers of $212,500 from his account to Spotted Zebra --$127,500 on January 11, 2006, and for $85,000 on January 27. This was the full amount of money he actually loaned the ...