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Gemini Capital Group, LLC v. Lamiaa Gouda


October 13, 2011


On appeal from the Superior Court of New Jersey, Law Division, Hudson County, Docket No. DC-004087-10.

Per curiam.


Argued October 3, 2011

Before Judges A. A. Rodriguez and Fasciale.

Defendant Lamiaa Gouda (Gouda) appeals from a credit card judgment entered after a Special Civil Part bench trial. Defendant contends primarily that she was prejudiced by (1) the late submission of a redacted computer-generated document, (2) testimony from a surprise witness, and (3) the introduction of documents into evidence without a proper foundation. We agree and reverse.

Plaintiff Gemini Capital Group, LLC (Gemini) buys credit-card debt and attempts to collect from certain debtors. Gemini argued that in August 2009 it purchased from Turtle Creek Assets, Ltd. (Turtle Creek) certain debt that Turtle Creek had purchased from Chase Bank USA, N.A. (Chase). Gemini contended that Gouda maintained a credit card with Chase and defaulted on several payments. Gemini filed its complaint and sought to collect the debt that Gouda allegedly incurred. Gouda denied both that she had any debt and that she had entered into a credit card agreement with Chase.

In May 2010, Gemini filed a summary judgment motion and relied on a certification from Roger Neustadt. Gemini had listed Neustadt in its interrogatory answers as a witness with relevant knowledge. Neustadt identified himself in his certification as "a member of" Gemini and as the custodian of records. He stated that he performed a "review of the computer records" and determined that Gouda maintained a balance on her account. Gemini did not produce the referenced computer records, however.

Gouda opposed the motion and argued that Gemini failed to produce the computer records on which Neustadt relied. Gouda also contended that Gemini did not produce a cardholder agreement between her and Chase, and that the bills of sale that purportedly established the assignment of the debt from Chase to Turtle Creek to Gemini were not authenticated.

In June 2010, the court denied the motion and issued a three-page written opinion.*fn1 The court stated that genuine issues of material fact existed concerning "whether [Gouda's] account exist[ed], given the incomplete nature of [Gemini's] records, and whether [Gemini] in fact owns [Gouda's] alleged account, i.e., whether it was actually transferred in the bill of sale transactions."

In August 2010, a one-day bench trial occurred. Gemini produced one witness and introduced into evidence four separate exhibits.*fn2 Gouda did not testify. Gemini produced Ryan Fealey as its trial witness, an individual it never identified in discovery, but someone who had worked with Neustadt. Although Gemini knew several days before the trial that Neustadt was unavailable to testify, it never notified Gouda that it would call Fealey as its witness. Gouda's attorney objected to the testimony, but the judge permitted Fealey to testify and stated:

What's the -- what's the harm. I mean, in as much as he's going to say, virtually, the same thing as the other witness, Mr. Neustadt, who answered, is going to say. He works with him, he -- he has the same information to provide.

Although it was not certain whether Fealey would provide the same information as Neustadt, the judge determined that there was no prejudice. Gouda's counsel objected repeatedly to various questions during Fealey's testimony.

As Vice President of Operations of Gemini, Fealey testified that his responsibilities included "analyzing prospective portfolios of debt purchases." The judge permitted Fealey to render opinion testimony concerning the recordkeeping practices of Chase. Fealey testified, based on his experience of purchasing several other Chase portfolios, that P-1 through P-4 were prepared in the ordinary course of Chase's business. As a result, the judge admitted the documents into evidence over the strenuous objections of Gouda's counsel.

Gouda's counsel learned during the direct examination of Fealey that the bill of sale from Chase to Turtle Creek (P-1), and bill of sale from Turtle Creek to Gemini (P-2), referenced an identical, redacted computer-generated attachment purporting to be a printout that listed Gouda's name, account number, and balance due. Although it had access to the attachment, Gemini never produced the computer document until the day before trial.*fn3

Gemini's counsel stated that the document had not been produced earlier because "[i]t just wasn't printed off." Fealey testified that "[a]s a matter of our business practices, we don't normally . . . provide this kind of specific debtor information until necessary and given that a trial was occurring, that's when we did it."

On August 19, 2010, the trial judge rendered his oral opinion. Concerning the admissibility into evidence of P-1 through P-4, the judge stated that

[U]nder Hahnemann University Hospital v. Dudnick, 292 [N.J. Super.] 11 [(App.

Div. 1996)], a witness can testify as to the reliability of computer[-]generated records where he can demonstrate that the record is what he claims it to be, if he is sufficiently familiar with the record system used and that it was regular practice of the business to make the record.

I find that Mr. Fealey has met all of these criteria and is, thus, competent to testify as to the exhibits marked P-1 through P-4.

[Gouda] . . . offered no evidence of the untrustworthiness . . . of these records.

As a result, the judge admitted the documents into evidence. He then entered judgment against Gouda in the amount of $12,235.52 plus court costs. Without any request, the judge indicated that he would award counsel fees to Gemini's counsel. After reviewing an affidavit of services, the judge awarded to Gemini's counsel $5,000 in fees.

On appeal, Gouda argues that the judge erred by (1) introducing into evidence the bills of sale (P-1 and P-2); (2) denying her request to exclude the redacted computer-generated printout that had been produced the day before trial (the attachment to P-1 and P-2); (3) permitting the surprise witness, Fealey, to testify and render opinions about the business practices of Chase; and (4) awarding counsel fees. Gouda also contends that Gemini prejudiced her defense by not producing the alleged cardholder agreement between her and Chase that arguably would have indicated whether she was entitled to invoke her right to an arbitration proceeding, rather than litigation.*fn4

Generally, our scope of review of a final judgment entered by the Special Civil Part is exceedingly narrow. Usually, because the trial judge is the fact-finder and because the judge has the opportunity to assess the credibility and demeanor of the witnesses first-hand, we defer to the judge's factual determinations, so long as they are supported by substantial credible evidence in the record. Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 483-84 (1974). In this case, however, our focus is not on the judge's factual determinations, but rather on whether Gouda was prejudiced by Fealey's testimony, Gemini's late submission of the computer document, and the judge's evidentiary rulings. We will also address whether the judge abused his discretion by awarding counsel fees.

We begin by addressing whether Gouda was prejudiced by Fealey's testimony. "It is well settled that parties to litigation may through discovery proceedings elicit from their adversaries the names of witnesses proposed to be used at the trial, and that failure to provide the same may result in sanctions imposed by the court excluding their testimony." Brown v. Mortimer, 100 N.J. Super. 395, 401 (App. Div. 1968) (citations omitted). Generally, sanctions imposed should be "just and reasonable," ibid., and "unnamed witnesses should be permitted to testify where the failure to supply their names in discovery was not the result of a design to mislead and where there was no surprise or prejudice to the opposing party if the testimony were to be allowed." D.G. ex rel. J.G. v. N. Plainfield Bd. of Educ., 400 N.J. Super. 1, 21 (App. Div.), certif. denied, 196 N.J. 346, cert. denied, 555 U.S. 1085, 129 S. Ct. 776, 172 L. Ed. 2d 756 (2008) (internal quotation marks omitted). Pursuant to Rule 6:4-6, "[t]he provisions of [Rule] 4:23 (sanctions for failure to make discovery) shall apply to actions in the Special Civil Part[.]" We have previously stated that the factors which weigh heavily in canceling the sanction of the exclusion of testimony at the trial for failure to comply with the [discovery] rules are (1) absence of a design to mislead or conceal -- as, for example, mistake, inadvertence, excusable neglect, or honest misunderstanding; (2) absence of the element of surprise if the evidence is admitted; and (3) absence of prejudice which would result from the admission of the evidence. [D'Agostino v. Schaffer, 45 N.J. Super. 395, 402 (App. Div. 1957).]

Here, Gemini knew before the trial date that Neustadt was unavailable to testify. Fealey testified that he knew he would testify as early as "Thursday or Friday of [the week before the trial that began on the following Tuesday]," but Gemini failed to notify Gouda's attorney, who was surprised to see Fealey at trial and unprepared to cross-examine him. We attribute that failure to inadvertence, rather than "a design to mislead or conceal."

Gemini argued that Fealey would render testimony similar to that of Neustadt; however, that is not what occurred. In an attempt to lay a foundation for the admissibility of the documents, Fealey testified to his own personal experience of transactions involving Chase. It is unlikely that Neustadt would have testified to Fealey's personal experience in the acquisition of Chase portfolios. In that sense, his testimony differed from what Neustadt was expected to offer, and Gouda was therefore prejudiced.

We also agree with Gouda that she was prejudiced by the late submission of the computer-generated printout. Without any preparation, Gouda's counsel cross-examined Fealey concerning this critical document. Fealey testified that the computer-generated document is an Excel spreadsheet containing information of various debtors. He redacted the document the day before trial to remove personal information of other debtors. The redacted document allegedly contained Gouda's name, account number, account balance, contract date, and contact information. Fealey admitted that he possessed the unredacted document since "July of 2009," and stated that "[t]here's no reason to [redact it before trial], because [it's] not being distributed anywhere." In other words, he waited until the day before trial to prepare it.

There is no indication, however, that Gemini deliberately concealed the document or attempted to mislead Gouda. Once it became clear that the judge refused to bar the redacted computer printout and the testimony of Fealey, there were other less severe remedies available to Gouda. The judge should have adjourned the trial to afford Gouda's counsel adequate time to prepare.

Next, Gouda argues that the judge erred by relying on Hahnemann, supra, to introduce the bills of sale (P-1 and P-2) into evidence. In Hanemann, we addressed the admissibility of computer printouts. Hahnemann, supra, 292 N.J. Super. at 15. The bills of sale are not computer printouts. Rather, an example of a computer printout in this case would be the redacted document that Gemini produced on the eve of trial. Hahnamann is therefore inapplicable to the admissibility of P-1 and P-2.

Finally, at the end of the judge's oral opinion he stated, "I will award a counsel fee to [Gemini's] attorney and I'll . . . do that after my review of an . . . affidavit of services[.]" He reviewed the affidavit and awarded Gemini's counsel $5,000 in attorney's fees. In "all actions tried without a jury," the judge must "by an opinion or memorandum decision, either written or oral, find the facts and state [his or her] conclusions of law[.]" R. 1:7-4(a). "The rule requires specific findings of fact and conclusions of law[.]" Pressler & Verniero, Current N.J. Court Rules, comment 1 on R. 1:7-4 (2012). We are unable to review the decision to award counsel fees because no findings of fact or conclusions of law were provided.

We reverse and remand for a new trial.

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