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Lyon Financial Services, Inc v. Nails At Last

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


August 29, 2011

LYON FINANCIAL SERVICES, INC., D/B/A US BANCORP BUSINESS EQUIPMENT FINANCE GROUP, PLAINTIFF-RESPONDENT,
v.
NAILS AT LAST, INC., D/B/A INDULGE SALON AND MEDISPA, A/K/A NDULGE SALON & SPA, A/K/A HAIR DIMENSIONS AND IRENE E. GAUGHAN, A/K/A IRENE GAUHN, DEFENDANTS/THIRD-PARTY PLAINTIFFS-APPELLANTS,
v.
SYNERON, SYNERON MEDICAL, LTD., THIRD-PARTY DEFENDANTS-RESPONDENTS.

On appeal from Superior Court of New Jersey, Law Division, Burlington County, L-2302-09.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted August 16, 2011

Before Judges Waugh and Koblitz.

Defendants, Nails At Last, Inc., d/b/a Indulge Salon and Medispa, a/k/a Ndulge Salon & Spa, a/k/a Hair Dimensions and Irene E. Gaughan, a/k/a Irene Gauhn, (referred to collectively as "Nail Salon") appeal the "with prejudice" aspect of the court's March 23, 2010 order granting the unopposed motion to dismiss with prejudice filed by third-party defendants Syneron and Syneron Medical, Ltd. (Syneron)*fn1 , as well as the trial court's June 3, 2010 denial of its motion for reconsideration. Nail Salon also appeals the August 30, 2010 grant of the summary judgment motion filed by plaintiff Lyon Financial Services, Inc., d/b/a US Bancorp Business Equipment Group (Lyon). After reviewing the record in light of the contentions advanced on appeal, we affirm the grant of summary judgment to Lyon and remand to the trial court for entry of an order dismissing the third-party complaint for lack of jurisdiction without prejudice to defendant's right to bring suit in any court.

Nail Salon characterizes itself as a "small beauty salon in a lower class neighborhood of New Jersey." The owner, a manicurist by trade, certifies that she was told by a representative of Syneron that she could make a profit performing liposuction with one of Syneron's machines. After she was unable to sell the service, she was allegedly induced to upgrade the machine by fraudulent promises. After failing to find customers for the enhanced treatments, Nail Salon stopped making payments to Lyon, the finance company, which subsequently filed this action.

On October 30, 2007, Nail Salon entered into a sales agreement with Syneron for a VelaSmooth System laser liposection machine for approximately $70,000.*fn2 The two parties agreed that if Nail Salon obtained third-party financing in connection with the purchase, Syneron would transfer title of the system to the third-party financing company. Nail Salon also entered into a lease agreement with Lyon, the third-party financing company, obligating Nail Salon to pay, beginning in ninety days, three monthly payments of $99, followed by six monthly payments of $400, followed by forty-eight monthly payments of $1918.59 for a total payment of $94,789.32. At the end of the lease period, Nail Salon could purchase the equipment from Lyon for $1.

On February 6, 2008, Nail Salon entered into another sales agreement with Syneron, trading in the VelaSmooth System for a VelaShape "two-head" System costing $89,900. Nail Salon was required to pay approximately $12,000*fn3 for the new machine after it received a credit of $70,900 for returning the VelaSmooth, as well as a "further discount" of approximately $8000. It was charged $1000 for shipping and handling. This sales agreement contained a provision limiting jurisdiction and venue for any dispute to Cook County, Illinois. On that same date, Nail Salon signed an addendum to the lease agreement with Lyon, replacing the VelaSmooth with a VelaShape and increasing the final forty-eight payments to $2233.25 each, for a total of $109,893.

Lyon filed a complaint against Nail Salon on July 13, 2009, alleging that Nail Salon made no payments due on or after November 30, 2008. Nail Salon filed an answer, counterclaim and third-party complaint against Syneron, alleging that, through false representations, Syneron improperly sold Nail Salon a medical device that it was not licensed or qualified to operate. Nail Salon alleged that Lyon was a part of the fraudulent enterprise to sell the equipment.

Syneron filed a motion to dismiss the third-party complaint. This unopposed motion was granted with prejudice by the court with no statement of reasons. Nail Salon filed a motion for reconsideration, arguing that the dismissal motion should have been granted without prejudice on jurisdictional grounds alone, acknowledging that the sales agreement specified that any dispute should be litigated in Illinois. The court denied this motion without indicating any reasons.

I

We are unable to determine whether the trial court granted Syneron's motion to dismiss on jurisdictional grounds alone.*fn4

The trial court did not place any reasons on the record or in the orders at the time of its decisions nor did it provide reasons after the appeal was filed as permitted by the Rules.

R. 2:5-1(b); see Allstate Ins. Co. v. Fisher, 408 N.J. Super. 289, 300 (App. Div. 2009); State in the Interest of J.R., 244 N.J. Super. 630, 635 (App. Div. 1990). Although not specifically raised by plaintiff as an issue on appeal, a trial court has a duty to make findings of fact and conclusions of law "on every motion decided by written orders that are appealable as of right." R. 1:7-4(a). Failure to perform this duty "'constitutes a disservice to the litigants, the attorneys and the appellate court.'" Curtis v. Finneran, 83 N.J. 563, 569-70 (1980) (quoting Kenwood Assocs. v. Bd. of Adjustment of Englewood, 141 N.J. Super. 1, 4 (App. Div. 1976)). Moreover, "[n]aked conclusions do not satisfy the purpose of R[ule] 1:7-4. Rather, the trial court must state clearly its factual findings and correlate them with the relevant legal conclusions." Ibid.

Because a dismissal for lack of jurisdiction is not a determination on the merits, it should be made without prejudice to Nail Salon's right to sue in an appropriate jurisdiction. See Exxon Research & Eng'g Co. v. Indus. Risk Insurers, 341 N.J. Super. 489, 519 (App. Div. 2001) (where we noted that "[a] dismissal based upon the inability of a court to entertain a matter, such as lack of jurisdiction, does not represent an adjudication on the merits thereby precluding a subsequent action"); Pressler & Verniero, Current N.J. Court Rules, comment 4 on R. 4:37-2 (2011) (explaining that "[a]s a general rule, a dismissal on the merits is with prejudice while a dismissal based on the court's procedural inability to consider a case is without prejudice"); Watkins v. Resorts Int'l Hotel & Casino, Inc., 194 N.J. 398, 416 (1991) (noting that while there are issues of semantics as to what a judgment "on the merits" means, "the rule remains that a dismissal based on a court's procedural inability to consider a case will not preclude a subsequent action on the same claim . . .").

A decision on the merits, assuming New Jersey had jurisdiction, would preclude another such complaint from being filed in another state. See Underwriters Nat'l Assurance Co. v. N.C. Life & Accident & Health Ins. Guar. Ass'n, 455 U.S. 691, 704, 71 L. Ed. 2d 558, 570 102 S. Ct. 1357, 1366 (1982) (where the United States Supreme Court explained that "a judgment of a court in one State is conclusive upon the merits in a court in another State only if the court in the first State had power to pass on the merits -- had jurisdiction, that is, to render the judgment") (citations and internal quotation marks omitted).

Because both parties agree that New Jersey does not have jurisdiction, the trial court did not have the ability to consider the merits, and the dismissal must be for lack of jurisdiction and thus, without prejudice. We therefore remand for the entry of a modified dismissal order consistent with that determination.

II

Nail Salon also appeals the grant of summary judgment in the amount of $127,866.31 to Lyon, arguing that Lyon was a part of the fraudulent scheme perpetrated by Syneron. As we have often recognized, an appellate court reviews a grant of summary judgment de novo, applying the same standard governing the trial court under Rule 4:46. Liberty Surplus Ins. Corp. v. Nowell Amoroso, P.A., 189 N.J. 436, 445-46 (2007). Generally, courts must "consider whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party." Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995); see also R. 4:46-2(c).

The trial court reasoned that Nail Salon knew that the Syneron salesman did not work for Lyon, and thus, Lyon was not responsible for any promises or representations made by the salesman. Because two separate contracts were prepared, one sales contract with Syneron and one lease/financing contract with Lyon, the court found that Nail Salon was aware that Lyon was merely a finance company. We agree.

The front page of the lease agreement between Lyon and Nail Salon includes the following provisions:

By signing below, you certify all conditions and terms of this agreement on the front and back have been reviewed and acknowledged.

5. WARRANTY DISCLAIMER: WE MAKE NO WARRANTY, EXPRESS OR IMPLIED, INCLUDING THAT THE EQUIPMENT IS FIT FOR A PARTICULAR PURPOSE OR THAT THE EQUIPMENT IS MERCHANTABLE. YOU AGREE THAT YOU HAVE SELECTED THE SUPPLIER AND EACH ITEM OF EQUIPMENT BASED UPON YOUR OWN JUDGMENT AND DISCLAIM ANY RELIANCE UPON ANY STATEMENTS OR REPRESENTATIONS MADE BY US OR ANY SUPPLIER. WE DO NOT TAKE RESPONSIBILITY FOR THE INSTALLATION OR PERFORMANCE OF THE EQUIPMENT. THE SUPPLIER IS NOT AN AGENT OF OURS AND NOTHING THE SUPPLIER STATES CAN AFFECT YOUR OBLIGATION UNDER THE AGREEMENT. YOU WILL CONTINUE TO MAKE ALL PAYMENTS UNDER THIS AGREEMENT REGARDLESS OF ANY CLAIM OR COMPLAINT AGAINST SUPPLIER OR THE EQUIPMENT.

A trial court's legal interpretation of the meaning of a contract is subject to de novo appellate review. Fastenberg v. Prudential Ins. Co. of Am., 309 N.J. Super. 415, 420 (App. Div. 1998). The construction of a contract term is a question of law. Bosshard v. Hackensack Univ. Med. Ctr., 345 N.J. Super. 78, 92 (App. Div. 2001). The scope of that legal review includes deciding whether a contract provision is clear and unambiguous. Nester v. O'Donnell, 301 N.J. Super. 198, 210 (App. Div. 1997). We conclude that the language in the lease/ financing contract is clear and unambiguous.

Nail Salon argues that, because discovery is incomplete and Nail Salon did not receive the bargained-for equipment or services, genuine issues of material fact exist. Nail Salon claims that it presented unspecified "specific facts through the Affidavits" creating "genuine issues for trial." We are unable to glean any facts Nail Salon has presented or might discover that could raise a genuine issue of material fact under these circumstances. We therefore affirm the grant of summary judgment to Lyon.

Affirmed in part and remanded in part.


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