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David S. Mathiesen and Air Mods and Repair, Inc v. David Moleski

August 12, 2011

DAVID S. MATHIESEN AND AIR MODS AND REPAIR, INC., PLAINTIFFS-APPELLANTS,
v.
DAVID MOLESKI, ROBERT COAKLEY, SPIRIT FLIGHT AIRWAYS, INC., AND ONE 1974 CESSNA 421B, N317AM, S/N421B0565, DEFENDANTS/THIRD-PARTY PLAINTIFFS-RESPONDENTS,
v.
JAMES WALL, THIRD-PARTY DEFENDANT.



On appeal from the Superior Court of New Jersey, Law Division, Ocean County, Docket No. L-335-08.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued: March 30, 2011

Before Judges Axelrad and J. N. Harris.

Plaintiffs David Mathiesen and Air Mods and Repair, Inc. (Air Mods), an airplane repair business and its owner, filed suit against defendants, David Moleski, Robert Coakley, Spirit Flight Airways, Inc., and One 1974 Cessna 421B, N317AM (Cessna) for collection of an outstanding repair bill. Both parties obtained verdicts in their favor from the jury. Plaintiffs appeal from the court's denial of their motion to dismiss defendants' counterclaim asserting violations of the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -20, and the resulting verdict in defendants' favor on their counterclaim. We affirm.

I. On February 27, 2008, plaintiffs filed an amended complaint against defendants alleging breach of contract in failing to pay the outstanding debt of $19,516.36 for repairs and maintenance on the Cessna. Defendants Moleski and Coakley filed an answer and counterclaim disputing the amount sought to be collected and alleging violations of the CFA. Moleski and Coakley also filed a third-party complaint against James Wall, seeking damages for his alleged removal of certain items from the Cessna. Plaintiffs filed an answer to the counterclaim.

In April 2009, the parties entered into a consent order permitting plaintiffs and Wall to join Asset Recovery Services (ARS) as a fourth-party defendant. Plaintiffs' and Wall's amended answer included a fourth-party complaint against ARS for contribution and indemnification.*fn1

Following arbitration, defendants filed a demand for a trial de novo. The matter was tried by a jury on the issues of the breach of contract and the counterclaim for violations of the CFA. After defendants rested, plaintiffs moved to dismiss defendants' counterclaim, which the court denied. The jury returned a verdict in favor of plaintiffs in the amount of $19,516.36 on their breach of contract claim and in favor of defendants in the amount of $20,785.13 on their counterclaim for violations of the CFA. By order of September 8, 2010, the court entered final judgment, trebling defendants' award in accordance with the CFA, N.J.S.A. 56:8-19,*fn2 and reducing it by plaintiffs' award for a net award of $42,839.08. Additionally, the court awarded defendants reasonable attorneys' fees and costs of $34,603.95 pursuant to the CFA, N.J.S.A. 56:8-19, resulting in a final judgment in favor of defendants and against plaintiffs in the amount of $77,443.03. Plaintiffs appealed.

II. The following facts were presented by testimony and evidence at trial. Mathiesen presented his case for collection of the bill. Moleski and Coakley took the position no payment was due, and presented their counterclaim for violations of the CFA alleging unconscionable commercial practices in connection with the repair and overcharges relating to the Cessna and the collection tactics for the outstanding bill and illegal conversion of the plane's radio and log books.

Mathiesen is an aircraft mechanic and owner of Air Mods, an aircraft maintenance shop located in Robbinsville, New Jersey. Coakley's Cessna was stored in Florida but was brought to Air Mods in New Jersey for mandated annual inspections beginning in 2004. According to Coakley, the annual inspection costs on the Cessna were generally between five and eight thousand dollars.

Moleski, Coakley's pilot, delivered the plane to Mathiesen for the annual inspection in early 2007. According to Mathiesen, when Moleski dropped off the plane for the inspection, he asked whether there were any areas he should focus on and Moleski told him "'the auto pilot is flaky'" but it worked. Moleski testified that he was not aware of anything wrong with the plane and simply asked Mathiesen to perform an annual inspection. Mathiesen was aware the Cessna was being sold.

Moleski was never given a written estimate of the work and his expectation was that the cost would be "four, five, six, eight thousand, tops." Moleski explained that he stopped by about four times as Mathiesen was working on the plane and the last time he was there, it appeared Mathiesen was doing additional work so he asked what would be the amount of the bill. According to Moleski, the response was, "Well, it's up there. It's fifteen thousand. . . . But we're doing this, and this, and this."

A week later, Moleski picked up the plane and discovered the auto pilot was not functioning properly so he returned the plane for repair and picked it up a few weeks later. Moleski received a bill by mail in the interim totaling $31,143.51 and was "shocked" by the amount. When Moleski picked up the plane around April 2007, Mathiesen handed him a bill for the additional work performed on the auto pilot in the amount of $3,372.85. According to Moleski, the auto pilot was still not working properly, and Mathiesen tried to fix it until Moleski said he had to leave for Florida and took the plane "as is."

Mathiesen testified he handed the initial bill to Moleski who he acknowledged was "shocked" by the amount. According to Mathiesen, Moleski said he would have Coakley write him a check; Moleski denied he made that promise. Coakley wired Mathiesen $15,000 in June 2007, and according to Mathiesen, said he "would have to get the balance out of [] Moleski." Coakley denied the statement; he testified he told Mathiesen he was under the impression the bill would not exceed $15,000, and he thought the bill was egregious because he had no quotes, no bids, was never informed "this amount of work was being done on the aircraft[,]" and certain parts of the aircraft were still not working properly. Coakley said he would not pay the balance and heard nothing for about five months.

Mathiesen testified he was then referred to ARS by Wall, an acquaintance in the construction demolition business. Mathiesen understood ARS "repossessed construction equipment" and was "very effective at collecting money." In October 2007, he told someone at ARS*fn3 he was owed money on an invoice, provided information on the Cessna, and agreed to pay fifty percent of what was collected.

Moleski then received a call on his cell phone from someone who identified himself as "Vito"*fn4 who told him to check his plane because the caller had his radios and log books, which would be returned when he paid the money he owed. Moleski confirmed that the items were missing from the Cessna. Mathiesen phoned while Moleski was with the police and insurance adjuster and "started mentioning something about the bill," to which Moleski responded that someone had broken into the plane and he was busy. A few minutes later, "Vito" called Moleski and said, "this is not a theft. This is an asset recovery. And when you pay Mathiesen his money, you get your radios and log books back. I'll talk to the police, I'll talk to anyone, I'll talk to the insurance company."

Moleski then began working with the FBI. Moleski testified that he asked Mathiesen in a phone conversation when he "start[ed] stealing things out of airplanes as part of your normal business[,]" to which Mathiesen responded, "I didn't steal anything. I paid someone to do it." Pursuant to instructions from the FBI, Moleski requested pictures of the equipment and log books from Mathiesen. According to Mathiesen, he, in turn, demanded proof from ARS that the collection company had the items, and received, in his mailbox, pictures depicting the radios and log books with identifying serial numbers, which he emailed to Moleski on December 4, 2007. Mathiesen testified that after he received the pictures, he was told by "Vito" that if the bill were paid, the property would be returned. On cross-examination, Mathiesen acknowledged that in November and December 2007, he continued to demand payment from defendants for the balance of the invoice in exchange for return of the stolen items.

Moleski explained that he and Mathiesen then planned a meeting in January 2008 to exchange the items for $19,000, which never occurred. Mathiesen eventually got possession of the radios and log books by purportedly paying ARS $7,500 pursuant to instructions from "Vito," which he claimed he paid by way of an envelope full of cash. Mathiesen's attorney delivered the stolen items to the prosecutor's office in July 2008. In August 2008, Mathiesen pled guilty to third-degree conspiracy and theft by failure to make required disposition of property received, N.J.S.A. 2C:5-2a(l), N.J.S.A. 2C:20-9.*fn5 The jury was not informed that Wall was criminally charged with extortion and related offenses and entered pretrial intervention.

Coakley testified that he had a contract for sale of the Cessna in February 2007 for $235,000. According to Coakley, the sale could not close in July because the auto pilot was not working properly, it was then delayed until November, but could not be consummated because of the missing equipment, and the contract was ultimately revoked. The Cessna was sold to another purchaser in early 2010 for $150,000. Coakley testified that he incurred hangar storage charges of $798 per month from November 2007 through February 2008 ($3192) and then moved the Cessna outside and incurred reduced storage charges of $132 per month to the date of sale. He also testified to insurance premiums he paid on the Cessna from December 2007 through January 2010, annual inspection costs for 2008 and 2009 and additional costs for parts, and insurance proceeds he received. In summation, defense counsel calculated the approximate damages at $125,673.

At the close of defendants' case, plaintiffs moved to dismiss the CFA claims, arguing Mathiesen's conduct regarding collection of the debt was outside of the scope of the CFA.*fn6 The court denied the motion, finding payment of the bill was part of the initial transaction -- it was "not separate and apart" and "d[id]n't enjoy individual status." Rather, it was "all part and parcel of the . . . annual and any repair done on the plane." The court elaborated: [I]f [the jury] find[s] that [Mathiesen] used the situation to coerce [] Coakley into paying a bill, then I think it could definitely be considered an unconscionable practice at the very least, not to mention a host of other violations of the Statute, certainly a shar[p] practice. And again the [CFA] has to be read broadly.

In charging the jury on the CFA, the court framed defendants' CFA allegations as follows:

The defendants here claim that plaintiffs committed what is commonly known as a consumer fraud when plaintiffs charged defendants in excess of $15,000 for the repair and inspection services on the airplane and with respect to plaintiffs' involvement in the theft of the log books and the radios from the defendants' personal airplane. The Consumer Fraud Act says that anyone who engages in an unconscionable commercial practice is chargeable with consumer fraud. Specifically defendants charge that the plaintiffs allegedly used by means of affirmative []acts an unconscionable commercial practice and misrepresentation in connection with charging for the inspection and repair of defendants' airplane without an estimate and in the subsequent activity with respect to plaintiffs' involvement in the collection of the balance of the bill.

The court next gave the model jury charge on the CFA, 4.43, including the elements of a CFA claim, specifically an unconscionable commercial practice, causation, and damages. With respect to trebling of damages and attorneys' fees, the judge instructed the jury:

If you find that the [CFA] was violated and you award damages, you should understand that the law requires me to triple whatever amount of damages you award. This is because the [CFA] is punitive in nature and the tripling of your award is meant to punish the defendant. I'm sorry. The plaintiffs. It gets confusing when there's a counterclaim.

In addition, should you award damages to the defendants, the law also requires me to compel the plaintiffs to pay whatever reasonable attorneys' fees defendants incurred in bringing their counterclaim. I will determine at a later time the reasonable amount of attorneys' fees, should this be the case. [Emphasis added.]

Neither party objected to the jury instructions.

The jury was provided the following verdict form pertinent to the issues on appeal:

5. Do you find by a preponderance of the evidence that [] Mathiesen committed any unconscionable commercial practice, deception, fraud, false pretense, false ...


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