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Nicholas and Dana Brown v. William C. Martucci

March 12, 2012

NICHOLAS AND DANA BROWN, PLAINTIFFS-RESPONDENTS,
v.
WILLIAM C. MARTUCCI, DEFENDANT-APPELLANT.



On appeal from the Superior Court of New Jersey, Law Division, Special Civil Part, Union County, Docket No. DC-017451-10.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted February 29, 2012

Before Judges Sapp-Peterson and Ostrer.

William Martucci appeals from the final decision of the Special Civil Part, after a bench trial, awarding $10,000 to plaintiffs. The Browns claimed that Martucci fraudulently induced them to purchase shares in a company that they claimed became worthless. Rather than decide the merits of plaintiffs' fraud claim, the court sua sponte determined that plaintiffs' investment was a loan and required Martucci to repay it with costs, but no interest. We are compelled to reverse, based on the court's failure to allow cross-examination and to otherwise observe the formalities of a trial, and the lack of any evidential support in the record for the court's finding that the $10,000 payment was a loan.

I.

Plaintiffs filed a complaint in Special Civil Part on September 3, 2010. The complaint alleged,*fn1

Defendant fraudulently induced Plaintiff to enter into a $10,000 investment contract, where the "investment" had no real value. Defendant, and other parties presently unknown, did not provide any required investment documentation whatsoever and have retained Plaintiff's investment after numerous demands for return of same.

The matter was tried on February 24, 2011. Plaintiffs were represented by counsel. Martucci appeared pro se.

We glean the following from the trial record. According to Nicholas Brown (Brown), the sole witness for plaintiffs, Martucci was a family friend. Martucci allegedly induced plaintiffs to invest $10,000 in a company called First Unity, Inc., which purportedly was engaged in a business involving automatic teller machines. Admitted into evidence was a January 21, 2005 check in the amount of $10,000 drawn on plaintiffs' joint checking account by Dana Brown, payable to First Unity, which plaintiffs delivered to Martucci. However, sometime in 2006, plaintiffs received a certificate indicating they owned 10,000 shares in a different company, Ammpro. The stock certificate was not placed in evidence.

Brown testified that he registered the shares with E-Trade, which valued his shares at $800, according to an E-Trade document that the court reviewed, but was not admitted into evidence. Brown alleged that Martucci promised substantial returns on his investment. "We were told we would make, you know, [$]20 to 30,000 which was still, you know an acceptable return." Brown claimed that Martucci told him that he was an owner of Ammpro.

Martucci admitted that he proposed to plaintiffs that they invest in First Unity; he stated he was an investor himself; and he forwarded to them an investor questionnaire.

So when I was speaking to her [Dana Brown], and I had told her that there was an opportunity that I thought might be good because they - to make a few dollars, that I, my family and friends were investing in it. And along with myself being part of the investment group, I asked her if she would be interested and she said she would. I said, well, I said if you want to, I'll send you out this paperwork and because they're requiring this questionnaire to show that you're either accredited or non-accredited investor. And I sent her the paperwork.

They filled it out, sent the check back with the $10,000 and I passed that on to the people who own the company.

Martucci admitted that he personally received plaintiffs' $10,000 check and alleged he passed it on to the owners of First Unity. Martucci claimed that First Unity then merged into Ammpro. He denied receiving any remuneration in connection with plaintiffs' investment. He also testified that he told plaintiffs the investment was a gamble. He asserted that plaintiffs completed an investor questionnaire that disclosed investment risks. He later testified that he did not personally invest in First Unity or Ammpro, but his daughters did.

The court actively participated in the examination of witnesses. The court interrupted plaintiffs' counsel's opening statement and engaged in a colloquy with him about plaintiffs' position on issues in the case. At various points, the court allowed plaintiffs' counsel to clarify the witness's responses to questions.

During his examination of the witness, the judge expressed his view of the evidence. For example, when Brown testified that he could not trade his stock, plaintiffs' counsel, although not a sworn witness, repeated Brown's testimony, eliciting agreement from the court, and sparking an informal discussion among Brown, his attorney, and the court about the value of plaintiffs' stock. When Brown testified that there was no market for his stock, the court responded, "Well, I wouldn't buy it."

As plaintiffs' counsel began to elicit testimony from Brown regarding the investor questionnaire, the court suggested that plaintiffs' counsel call Martucci as a witness to explain the document. Brown then left the stand ...


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