July 21, 2011
HAROLD P. MINTZ, D/B/A ENHANCEMENT ASSOCIATES, PLAINTIFF-APPELLANT,
SEMPRAE LABORATORIES, NEW SPRING CAPITAL PARTNERS, ZEV SCHERL, RACHEL SCHERL, MARY JAENSCH, THE JANNICK GROUP, IRA LUBERT, QUAKER BIOVENTURES, INDEPENDENCE CAPITAL PARTNERS, DEFENDANTS-RESPONDENTS.
On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-5950-10.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted June 21, 2011
Before Judges Carchman and Parrillo.
Plaintiff Harold P. Mintz d/b/a Enhancement Associates, appeals from an order of the Law Division dismissing his complaint against defendants Semprae Laboratories, New Spring Capital Partners, Zev Scherl, Racherl Scherl, Mary Jaensch, The Jannick Group, Ira Lubert, Quaker Bioventures and Independence Capital Partners for failure to state a cause of action. We affirm.
We briefly set forth the relevant facts. In March 2008, Martin Crosby, then-C.E.O. of Zestra Laboratories, Inc., communicated with plaintiff, a stockholder in Zestra and an investment banker, to help find an investor or acquirer for Zestra due to Zestra's deteriorating economic status. No writing was prepared to memorialize this arrangement nor were any terms of an agreement including compensation, set forth in a writing.*fn1 In addition to communicating with Crosby on a daily basis, as a close acquaintance, plaintiff also had prepared an annual report for Zestra as a formal consultant prior to this engagement, through Enhancement Associates,*fn2 and submitted an invoice of $30,000 to Zestra for his services.
In seeking possible investors, plaintiff first approached Glenn Rieger, a senior partner at New Spring Capital Partners (New Spring) on March 18, 2008 by email informing him of this new opportunity. As a result of that email, Rieger contacted his partner Zev Scherl (Zev),*fn3 who asked plaintiff if his wife, Rachel Scherl (Rachel), and her partner, Mary Jaensch, could participate since Rachel's consulting business, The Jannick Group, was a multi-million dollar consulting firm with expertise in products similar to the products Zestra sold.
After this initial introduction, phone calls, emails and other communications followed between the parties that led to an initial face-to-face meeting in plaintiff's conference room in Fort Lee. The purpose of this meeting was for New Spring, Zev, Rachel and Jaensch to find out more information about Zestra. Subsequent to this meeting and throughout May 2008, numerous communications and meetings took place regarding a potential transaction between plaintiff, defendants and Crosby. After some time, Zev informed plaintiff that Zev was in agreement regarding the acquisition of Zestra.
After plaintiff seemed confident that defendants would buy Zestra, plaintiff asserted that he shifted his focus back to other matters that required his attention and as a result was "cut out of the loop" of communication between defendants and Zestra. Plaintiff also alleges that defendants had instructed Crosby to stop communicating with plaintiff and threatened him if he did not stop communicating. According to plaintiff, the "communication drop off between [plaintiff] and Crosby was immediate, clear, evident, and documented demonstrating the effectiveness of the threats."
Before plaintiff and Crosby had ceased their communication, plaintiff had advised Crosby that bankruptcy was necessary for Zestra. As a result, Zestra filed for bankruptcy on June 29, 2008 in the United States Bankruptcy Court for the District of Delaware. Plaintiff failed to file any administrative claim for any monies due regarding services rendered to Zestra. After receiving the "Disclosure Statement for Debtor's Chapter 11 Plan of Liquidation" (Disclosure Statement), plaintiff sent a letter to the bankruptcy court objecting to the Disclosure Statement. At a hearing in the bankruptcy court, plaintiff asserted that Zestra owed him a finder's fee of $200,000 based on an oral agreement between plaintiff and Crosby.
After hearing testimony by plaintiff, the bankruptcy court concluded that the "record [did] reflect [that] there was an oral agreement between Mr. Mintz and the Debtor" but that the record was unclear "on what the amount of [his] claim should be based upon the value of his services." Plaintiff was granted leave to file a late claim as an unsecured creditor. A hearing date to assess the value of plaintiff's services was set but before the hearing, plaintiff and Zestra reached an agreement to resolve that claim. According to that stipulation, which was approved by the court, plaintiff released "the Debtor, the Trustee, the Official Committee of Unsecured Creditors and the Committee's Counsel" from all claims.
Subsequent to the bankruptcy hearing, plaintiff confronted defendants one final time to secure a finder's fee but was not successful. According to plaintiff's complaint, it was at this time that plaintiff was threatened by defendants and was informed that if plaintiff sued the defendants, that defendants would "ruin [plaintiff's] reputation and hurt him in whatever way [they] could." After this conversation, plaintiff reported this event to local authorities and the F.B.I. so that this event was properly documented.
Shortly after, plaintiff filed his complaint in the Superior Court alleging among other causes of action, tortuous interference, bankruptcy fraud, intentional infliction of emotional distress, extortion and various other claims. On defendants' motion, the motion judge dismissed plaintiff's complaint.
On appeal, plaintiff asserts, among other things, that the motion judge erred by failing to consider plaintiff's claim for unjust enrichment, claiming that the bankruptcy judge determined that defendants were unjustly enriched at plaintiff's expense; the judge erred in concluding that the Statute of Frauds N.J.S.A. 25:1-16, barred plaintiff from enforcing a claim for a brokerage fee as against defendants; and the motion judge erred by considering plaintiff's settlement in the bankruptcy court for his fee claim as payment in full for all fees that were due plaintiff.
We have carefully reviewed the record and the briefs of the parties and we conclude that plaintiff's arguments are without merit. R. 2:11-3(e)(1)(E). We affirm substantially for the reasons set forth in Judge Wilson's written opinion of October 29, 2010. We add the following comments.
We first note that a flaw in plaintiff's argument regarding his relationship with defendants is exposed in his testimony in the Delaware bankruptcy proceeding. When arguing that he had a contract with Zestra, plaintiff added that "I believe I have a contract on both sides." While this was premised on certain defendants being a "debtor in possession," the bankruptcy judge made no finding that plaintiff had any contractual relationship with any of the defendants. Any contractual relationship between plaintiff and defendants was not adjudicated in the bankruptcy proceedings and would be subject to the Statute of Frauds in New Jersey.
Moreover, his various claims of bankruptcy fraud and defendants' involvement in the bankruptcy proceedings including their alleged "control" of the proceedings are not causes of action cognizable in the Superior Court of New Jersey but are claims that should have been brought in the bankruptcy proceedings. To seek redress from the Law Division would require a New Jersey State Court to assess and adjudicate the proceedings and procedures of the bankruptcy court in Delaware. Such a cause of action is not cognizable here.
Plaintiff asserts that the bankruptcy judge made a finding that defendants were unjustly enriched at the expense of plaintiff. That is not accurate. Here is what the bankruptcy judge found:
I am convinced that something unfair to Mr. Mintz happened here, but there are limitations, which I've previously discussed, on what the Court can do to address the situation. The Court already engaged, at the request of the Debtor, apparently spurred by the Committee, an investment banker in this case, whose compensation has been approved. For all [the] reasons that I mentioned earlier, I am not prepared to treat this claim, whatever its amount, as a post-petition administrative claim; there just is no basis stated, either in the Code or otherwise, on which this Court can do so. I'm not prepared to direct the Debtor nunc pro tunc to engage Mr. Mintz as the estate's investment banker, it had one.
I agree with the Debtor that this record does not support a price term for the value of Mr. Mintz's services. I am convinced the record does reflect there was an oral agreement between Mr. Mintz and the Debtor and purportedly he who had authority to act on behalf of the Debtor at the time, and that normally such payment would be made at or after closing based upon, in part, sales price. But here's what I'm prepared to do in some effort to try to redress the unfairness which I think was visited upon Mintz, and that is while I will deny the request for payment of an administrative expense, I will permit the late filing of the claim as a general pre-petition unsecured claim, and I'll set a further date for evidentiary hearing on what the amount of that claim should be based upon the value of his services.
These comments hardly bespeak of finding of unjust enrichment.
Finally, we find no merit in any of plaintiff's additional points raised on appeal.