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Oronzio Spinelli and Rosa Spinelli v. Echeverry Industries LLC


February 7, 2012


On appeal from Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-10107-10.

Per curiam.


Submitted January 19, 2012

Before Judges Fuentes and Koblitz.

Plaintiffs Oronzio and Rosa Spinelli move for summary reversal of an order denying their motion to enforce the terms of a settlement agreement between themselves and defendants Echeverry Industries, Carlos Echeverry, and Zilkamarie Echeverry. Because the trial court's order is procedurally defective, contrary to the principles of contract law, and unsupported by a statement of reasons, we grant plaintiffs' motion for summary disposition. The following facts will inform our legal analysis.

The Loans

On May 27, 2010, plaintiffs and defendant Echeverry Industries entered into a contract for the sale of the Park Avenue Bakery. Under the terms of the contract for sale, plaintiffs received from defendants two promissory notes totaling $113,000. The first note obligated defendants to pay $36,000 without interest, through thirty-six $1,000 payments, due on the first of each month. The second note, in the amount of $77,000, had an interest rate of 8.8%, and called for seventy-two payments by defendant of $1380.34 (inclusive of principal and interest), also due on the first of each month. The two loans were secured by liens on fixtures, equipment, furniture and inventory of the Park Avenue Bakery, as well as defendant's other business, Fabulous Stylz.

The Law Suit

On October 20, 2010, Park Avenue Bakery filed a complaint against defendants alleging that they failed to make the payments due for September 1, 2010, and October 1, 2010, and thus were in default under the two promissory notes. On November 23, 2010, Carlos and Zilkamarie Echeverry filed a pro se answer and cross-complaint on behalf of Echeverry Industries, asserting that plaintiffs had breached certain provisions of the contract of sale. On February 7, 2011, plaintiffs filed an amended complaint substituting their names for that of Park Avenue Bakery.

The Settlement Agreement

In March 2011, the trial court referred the case to mediation.*fn1 On March 28, 2011, the parties attended a mediation conference and reached a settlement agreement. Under this agreement Echeverry Industries and the Echeverrys individually acknowledged that they were indebted to plaintiffs and promised to pay to plaintiffs $750 per month, due on the fifteenth day of each month, through March 15, 2012. Thereafter, the payments would increase to $1000 per month, again due on the fifteenth day of each month, until the entire balance was paid. As consideration for this agreement, plaintiffs agreed to dismiss their complaint and defendants agreed to dismiss their counterclaim.

Paragraph 8 of the settlement agreement provided that:

If Defendants fail to remit any payment in accordance with the terms provided in this agreement, Plaintiffs may enter a judgment for the full amount of the indebtedness less any payments made by that time, along with an attorneys' fee in the amount of $5,000.00.

On April 4, 2011, the court entered an order dismissing the litigation as having been settled.

Breach of the Settlement Agreement

In May 2011, defendants allegedly failed to make a timely payment. On or about August 15, 2011, plaintiffs filed a motion to enforce the settlement agreement and to enjoin defendants from using the collateral securing the loans pending an orderly seizure and liquidation. Plaintiffs requested oral argument in the event the motion was opposed. Plaintiffs' counsel certified in support of the motion that defendants had tendered some payments under the settlement agreement, but that those payments were received beyond the fifteenth day of the month, and thus had been refused by plaintiffs.

On August 26, 2001, Carlos Echeverry, acting pro se, submitted a letter to the court in opposition to plaintiffs' motion. In this letter, Carlos Echeverry indicated that he had made some payments under the settlement agreement, but admitted that the "payments have not been on time." He said that he wanted "a change of payment date to the 15th of every month" to make it "comfortable" for him to make the payments on time.*fn2

Carlos Echeverry also claimed that he had been struggling financially since purchasing the business. Plaintiffs' counsel responded to Carlos Echeverry's submission and specifically objected to his pro se arguments on behalf of the co-defendant business entity, and his co-defendant wife.

On September 2, 2011, the trial court entered an order denying plaintiffs' motion without prejudice. At the bottom of the order, the motion judge wrote: "Defendant shall provide plaintiff with all past due payments to cure default. Defendant is further compelled to continue to make timely payments pursuant to the settlement agreement." The judge also indicated that the motion had been opposed, thereby acknowledging and implicitly accepting Carlos Echeverry's pro se response.

Plaintiffs filed a notice of appeal in the Appellate Division on September 19, 2011. They filed this motion for summary disposition on December 12, 2011. Defendants submitted their opposition to the motion on January 9, 2012.

Motion for Summary Disposition

Plaintiffs maintain that this matter is suited to summary disposition because the record is small, the issues are entirely legal, and the trial court's ruling contained obvious substantive and procedural errors. They argue the court erred in failing to enforce the settlement agreement, in failing to support its decision with any findings of fact and conclusions of law, and by allowing a limited-liability corporation to appear before the court through a non-lawyer who merely holds an ownership interest in the business.

Defendants respond that the trial court's order is interlocutory, and as such, this court lacks jurisdiction to consider the appeal. Defendants' argument in this respect is predicated on the trial court's insertion of the phrase "without prejudice" in the order denying plaintiffs' motion to enforce litigant's right. Defendants also make factual assertions concerning their efforts to cure the defaults on the notes, and plaintiffs' alleged failure to either acknowledge or return their payments.

We address the jurisdictional question first. Defendants' argument that this appeal is interlocutory is without merit. Although the trial court used the phrase "without prejudice" in denying plaintiffs' motion, that notation is legally inconsequential when applied to a motion in aid of litigants' rights filed pursuant to Rule 1:10-3.

A trial court's decision on contempt motions are generally subject to appeal as a final disposition. See Pressler & Verniero, Current N.J. Court Rules, comment 4.5 on R. 1:10-3, comment 2.3.3 on R. 2:2-3 (2012); cf., Saltzman v. Saltzman, 290 N.J. Super. 117, 123 (App. Div. 1996) (holding that order directing that obligor be produced in court for an ability-topay hearing is interlocutory). Here, the order denying plaintiffs' motion is not interlocutory because there are no remaining matters concerning this litigation to be addressed by the trial court. Unlike Saltzman, where a future proceeding was pending, the order entered by the trial court here denied the only relief plaintiffs sought. The court's decision was thus final as to all parties and subject to appeal as of right. Pressler & Verniero, supra, comment 2.2.2 on R. 2:2-3.

Rule 2:8-3(b) authorizes the summary disposition of appeals where "the issues on appeal do not require further briefs or full record." "The procedure is intended to provide a pre-transcript, pre-argument opportunity for the screening of those cases involving issues which are clear-cut or which demonstrate that the decision on appeal was patently in error." GE Capital Mortg. Servs., Inc. v. N.J. Title Ins. Co., 333 N.J. Super. 1, 5 (App. Div. 2000) (citing Pressler, Current N.J. Court Rules, comment 2 on R. 2:8-3(b) (2000)).

With these principles as our guide, we will now address the merits of plaintiffs' motion for summary disposition. This matter is ripe for summary disposition because the order entered by the trial court is legally flawed in several respects. The first problem lies in the trial court's failure to adhere to the rudimentary principles of adjudication: (1) make specific factual findings supported by the record; (2) apply the relevant legal principles to those facts; and (3) reach a sustainable conclusion based on this analysis.

Rule 1:7-4 requires a court to "find the facts and state its conclusions of law thereon in all actions tried without a jury." "Naked conclusions do not satisfy the purpose of R. 1:7-4. Rather, the trial court must state clearly its factual findings and correlate them with the relevant legal conclusions." Curtis v. Finneran, 83 N.J. 563, 570 (1980). "Findings . . . without reference to the supporting evidence, are insufficient to permit review by [the appellate] court and a disservice to the litigants, who are left to speculate about the basis for the discretionary decision." Gordon v. Rozenwald, 380 N.J. Super. 55, 78 (App. Div. 2005).

Here, the court did not make any findings of fact or engage in any discernable legal analysis. The court did not decide whether defendant breached the settlement agreement, whether the payment provisions of the agreement are ambiguous, or whether special circumstances existed that militated against strict enforcement of the agreement. Perhaps most importantly, the court did not address whether the settlement agreement is a binding contract in light of the fact that part of the consideration underlying the agreement concerned the dismissal of the counterclaims filed on behalf of Echeverry Industries by Carlos and Zilkamarie Echeverry, two individuals legally incapable of representing the interests of this corporate entity in this litigation.

Independent of these irregularities, given the parties' conflicting factual positions, the motion should not have been decided without an evidentiary hearing. A litigant filing a motion under Rule 1:10-3 must show that the responding party failed to comply with a court order and that the court's assistance is necessary to secure compliance. N.J. Dep't of Envtl. Prot. v. Mazza & Sons, Inc., 406 N.J. Super. 13, 29 (App. Div. 2009). "[I]f there is a contested issue of fact regarding the defendant's compliance with the order or ability to comply, the trial court must conduct an evidentiary hearing to resolve the factual dispute." Ibid. Here, the court's failure to hold such a hearing warrants a summary reversal and a remand so that the appropriate proceedings may be conducted.

As a final matter, we address plaintiff's improper representation argument. Rule 1:21-1(a) allows a person not admitted to practice law in this State to appear in court if the person is "a real party in interest to the action or the guardian of the party." Thus, pro se litigants may represent themselves when they are real parties in interest. Non-lawyers may not, however, represent corporations or members of their family, including spouses. Kasharian v. Wilentz, 93 N.J. Super. 479, 482 (App. Div.) (holding that nominal representatives of persons in beneficial interest, not themselves lawyers, should not be permitted to conduct legal proceedings in court), certif. denied, 48 N.J. 447 (1967); see also Rule 1:21-1.

Thus, although Carlos Echeverry may represent himself, he is not authorized to represent his wife or Echeverry Industries. Because the settlement agreement was signed, in part, by Carlos Echeverry as an individual, and plaintiffs' motion named him directly, the court should have considered his pro se letter as speaking only for Carlos Echeverry as an individual. Thereafter, default judgment could have been entered against the two non-appearing defendants.

Final Disposition

Pursuant to Rule 2:8-3(b), we summarily reverse the trial court's order denying plaintiffs' motion to enforce litigant's rights, and remand the matter to the trial court for an evidentiary hearing to be followed by a decision that complies with Rule 1:7-4. We do not retain jurisdiction.

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