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

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


August 11, 2011

KIM VAN GORDEN AND KIM KARNIS, PLAINTIFFS-APPELLANTS,
v.
BARONE'S RESTAURANT AND PASQUALE BARONE, DEFENDANTS-RESPONDENTS.

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

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

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 for an award of counsel fees and costs.

Plaintiffs' third motion to enforce litigants' rights was filed on November 18, 2010. In Paragraphs 15 and 16 of a certification dated November 17, 2010, plaintiffs' attorney itemized the amounts due to plaintiffs as follows:

15. The payments received by Ms. Van Gorden are set forth in the First Motion, the Second Motion, and in a chart contained in the Court's November 12, 2010 Order (which mistakenly contains an extra payment to Ms. Van Gorden). Ms. Van Gorden has received three payments of $1,833.00 for a total of $5,499.00. The total amount due to Ms. Van Gorden under the Settlement Agreement is $55,000, as acknowledged by the Court's November 12, 2010 Order. Thus, Ms. Van Gorden is due a total of $49,501.00. The amount due is not disputed by Defendants.

16. The payments received by Ms. Karnis are set forth in the First Motion, the Second Motion, and in a chart contained in the Court's November 12, 2010 Order. Ms. Karnis has received four payments of $1,167.00 for a total of $4,668.00. The total amount due to Ms. Karnis under the Settlement Agreement is $35,000, as acknowledged by the Court's November 12, 2010 Order. Thus, Ms. Karnis is due a total of $30,332.00. The amount due is not disputed by Defendants.

Plaintiffs' attorney also requested "legal fees and expenses" in the amount of $5,865.10, and he described the services performed and costs incurred in a separate document.

The court found that defendant Barone's was in violation of litigants' rights for failing to comply with the Agreement. Nevertheless, plaintiffs' motion was again denied, without prejudice, for procedural reasons. This appeal followed.

Plaintiffs raise the following points for our consideration:

POINT I

THE LOWER COURT ABUSED ITS DISCRETION WHEN IT EFFECTIVELY DENIED PLAINTIFFS' MOTION TO ENFORCE LITIGANTS' RIGHTS AGAINST DEFENDANTS BECAUSE IT REFUSED TO ENTER JUDGMENT AGAINST DEFENDANT BARONE'S RESTAURANT.

POINT II

THE LOWER COURT ABUSED ITS DISCRETION WHEN IT DENIED PLAINTIFFS' MOTION FOR RECONSIDERATION OF THE COURT'S DETERMINATION THAT DEFENDANT PASQUALE BARONE IS NOT PERSONALLY LIABLE FOR THE SETTLEMENT AMOUNT.

POINT III

THE LOWER COURT ABUSED ITS DISCRETION WHEN IT DENIED PLAINTIFFS' REQUEST FOR ATTORNEYS' FEES AND COSTS INCURRED WITH THE ENFORCEMENT OF THEIR RIGHTS PURSUANT TO THE SETTLEMENT AGREEMENT.

We agree with the trial court that plaintiffs' request for a judgment against Pasquale Barone is contrary to the clear and evident import of the Agreement signed by the parties. As the court correctly noted, it could not "redraft or rewrite a contract to favor one party over the other, or to correct a possible drafting oversight." See Schnakenberg v. Gibraltar Sav. & Loan Ass'n, 37 N.J. Super. 150, 155 (App. Div. 1955) ("The court will not make a different or better contract than the parties have seen fit to make for themselves.").

On the other hand, "'[s]ettlement of litigation ranks high in our public policy.'" Nolan v. Lee Ho, 120 N.J. 465, 472 (1990) (quoting Jannarone v. W.T. Co., 65 N.J. Super. 472, 476 (App. Div.), certif. denied, 35 N.J. 61 (1961)). Moreover, as Judge (now Justice) Long has observed:

The point of this policy is not the salutary effect of settlements on our overtaxed judicial and administrative calendars (although this is an undeniable benefit) but the notion that the parties to a dispute are in the best position to determine how to resolve a contested matter in a way which is least disadvantageous to everyone. In recognition of this principle, courts will strain to give effect to the terms of a settlement wherever possible. It follows that any action which would have the effect of vitiating the provisions of a particular settlement agreement and the concomitant effect of undermining public confidence in the settlement process in general, should not be countenanced. [Dep't. of Pub. Advocate v. N.J. Bd. of Pub. Utils., 206 N.J. Super. 523, 528 (App. Div. 1985).]

In the present matter, it is clear that Barone's breached the parties' Agreement and, based on the payments made to his law firm, plaintiffs' attorney has specified the amounts that are due and owing to plaintiffs. Furthermore, defendants do not dispute plaintiffs' proofs. Under these circumstances, we conclude that plaintiffs are entitled to a judgment against Barone's and that an award of counsel fees and costs is warranted.

Accordingly, the part of the order dated December 17, 2010, that denied plaintiffs' request for a judgment against Pasquale Barone is affirmed; the part of the order that denied plaintiffs' request for a judgment against Barone's Restaurant and an award of counsel fees and costs is reversed; and the matter is remanded for further proceedings consistent with this opinion. Jurisdiction is not retained.

20110811

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