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Kim Van Gorden and Kim Karnis v. Barone's Restaurant and Pasquale Barone

August 11, 2011


On appeal from Superior Court of New Jersey, Law Division, Sussex County, Docket No. L-84-09.

Per curiam.


Submitted July 26, 2011

Before Judges Graves and Yannotti.

Plaintiffs Kim Van Gorden and Kim Karnis appeal from an order dated December 17, 2010, denying their motion in aid of litigants' rights to enforce the terms of a settlement agreement. For the reasons that follow, we affirm in part, reverse in part, and remand for further proceedings.

In a complaint filed on January 28, 2009, plaintiffs asserted various claims against their former employers, defendants Barone's Restaurant (Barone's) and Pasquale Barone. The parties subsequently entered into a written settlement agreement (the Agreement) that required Barone's to make installment payments to Van Gorden in the total amount of $55,000, and to Karnis in the total amount of $35,000. The Agreement did not require defendant Pasquale Barone to make any payments to plaintiffs, and he did not guarantee the payments to be made by Barone's.

Pursuant to the Agreement, all of the payments were to be made to plaintiffs' attorney's trust account and, in the event of a default, the Agreement stated that Barone's would be responsible for "reasonable counsel fees and costs" incurred by plaintiffs to collect the amount "due and owing to them." In addition, the Agreement provided that plaintiffs would be entitled to seek "a judgment in the full amount" if "Barone's fail[ed] to cure the default in payment."

After making three installment payments to Van Gorden and four installment payments to Karnis, Barone's ceased to make payments in accordance with the schedule set forth in the Agreement, and plaintiffs filed their first motion to enforce litigants' rights. However, that motion was denied on October 1, 2010, because plaintiffs failed to comply with Paragraph 7 of the Agreement, which required them to "provide counsel for Barone's with a written notice of default."

Subsequently, in a letter dated October 5, 2010, plaintiffs' attorney provided defendants' attorney with a written notice of default and requested payment of the outstanding amounts owed ($10,387 to Van Gorden and $5,446 to Karnis). In the same letter, plaintiffs' attorney stated that plaintiffs would "seek judicial enforcement of their rights" if the outstanding payments were not made by October 20, 2010.

The payments were not made, however, and on October 27, 2010, plaintiffs filed another motion. This time plaintiffs requested a judgment against both defendants "for the full amount of the settlement plus the assessed attorney's fees and costs." In a letter to the court dated November 5, 2010, defendants' attorney conceded that Barone's "continues to experience financial issues which prevent it from being able to compensate plaintiffs under the [Agreement]. Barone's Restaurant does indeed intend to pay Plaintiffs the settlement sums, but additional time will be necessary to do so." Defendants' attorney also indicated that Paragraph 6 of the Agreement only required Barone's to pay plaintiffs, and that "'Barone's' is defined under the Agreement as Barone's Restaurant." Therefore, defendants' attorney argued that "no judgment should be entered against defendant Pasquale Barone, as he is not in breach of the Agreement."

In an order dated November 12, 2010, the court denied plaintiffs' motion without prejudice. The court's findings, which were set forth in a statement of reasons attached to the order, included the following:

The Court agrees with Defendants that, pursuant to the Paragraph 6 of the Settlement Agreement, Barone's Restaurant alone had the obligation to make payments to the Plaintiffs. Paragraph 6 plainly states that "Barone's agrees to pay Plaintiffs the gross amount of NINETY THOUSAND DOLLARS ($90,000.00) . . . ." (emphasis added). The Court agrees with Defendants that Pasquale Barone individually is under no personal obligation to make those payments to the Plaintiffs, and thus a judgment rendered against him would be inappropriate.

It appears that the total current outstanding payment due to Karnis is $5,446, and the total outstanding payment due to Van Gorden is $10,387, according to Plaintiff[s'] counsel's certification. But the Court is not informed what the full net unpaid balance of the settlement proceeds are, as owed to each Plaintiff. If further motion practice follows, Plaintiffs' counsel shall submit certification from each of the individual Plaintiffs as to the net amount due and owing to each party, with a detailed payment history.

The court further noted that plaintiffs were required to submit an affidavit of services pursuant to Rule 4:42-9(b) in support of their request ...

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