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Aacon Contracting, LLC v. Glenn Poppe


July 30, 2012


On appeal from Superior Court of New Jersey, Law Division, Union County, Docket No. L-2718-10.

Per curiam.


Submitted July 24, 2012

Before Judges Graves and Yannotti.

Defendants Glenn Poppe, Poppe Construction, Inc. (Poppe Construction), Poppe Contracting, Inc. (Poppe Contracting), and Walter H. Poppe General Contractors, Inc. (Walter H. Poppe General Contractors), appeal from a November 7, 2011 order granting summary judgment to plaintiff AACON Contracting, LLC (AACON). We affirm.

On May 13, 2008, Poppe Construction and AACON signed an agreement (the subcontract) in which AACON, as subcontractor, agreed to provide concrete and masonry work for the construction of a Walgreens pharmacy in Colonia. AACON was to be paid $394,000 for the work it performed. Poppe Construction represented it was the general contractor in a contract with Walgreens; however, the general contractor was actually Poppe Contracting, not Poppe Construction.

After AACON began working on the project, Walter H. Poppe General Contractors issued several checks to AACON and its suppliers totaling $179,054. In September 2008, a dispute arose between AACON and Poppe Construction because a concrete slab floor poured by AACON was rejected by Walgreens. Thereafter, Walter H. Poppe General Contractors withheld payments due AACON under the subcontract. The concrete slab floor was repaired by Cream Ridge Environmental, Inc. (Cream Ridge Environmental), which issued an invoice to Walter H. Poppe General Contractors for $32,356.63 on December 8, 2008. However, AACON and Poppe Construction disputed responsibility for the cost of the repair.

On February 4, 2009, AACON filed a construction lien claim against the owner of the property on which the Walgreens pharmacy was being built. The lien claim amount of $214,946 represented the amount AACON was to receive under the subcontract less the amount it had already been paid.

On February 25, 2009, Walgreens issued a check to Walter H. Poppe General Contractors for $127,606.05, and on April 2, 2009, Walgreens issued a check to Walter H. Poppe General Contractors for $277,680.47. In subsequent requests for payment, Poppe Contracting represented to Walgreens that AACON was "previously paid" $354,600.

AACON completed work on the project in June 2010, and Walgreens paid AACON $39,400 on June 29, 2010. In return, AACON discharged its construction lien claim on August 4, 2010.

AACON and Poppe Construction submitted their dispute regarding the remainder of the amount due AACON to arbitration. The parties stipulated that the "unpaid subcontract balance was $175,546." In an August 30, 2010 decision, the arbitrator concluded that the repair work performed by Cream Ridge Environmental was "solely the responsibility of AACON" and that Poppe Construction was liable for the remainder due under the subcontract. The arbitrator awarded AACON $156,704, which was calculated by taking the unpaid subcontract balance of $175,546, together with $8114 for interest and $5400 for reasonable counsel fees, and subtracting the $32,356 repair charge. On October 15, 2010, a Law Division judge in Bergen County confirmed the arbitration award and entered judgment in favor of AACON and against Poppe Construction in the amount of $156,704.

Shortly thereafter, AACON filed a complaint in the Law Division in Union County alleging fraud (count one), negligence (count two), breach of fiduciary obligations (count three), and conspiracy to commit fraud (count four). AACON named Glenn Poppe, Poppe Construction, Poppe Contracting, and Walter H. Poppe General Contractors as defendants. Defendants filed an answer on January 7, 2011.

At his deposition, Glenn Poppe testified he was the sole owner, shareholder, and officer of Poppe Construction, Poppe Contracting, and Walter H. Poppe General Contractors; the three entities did not have any equipment or employees; he reviewed all contracts entered into by the three entities; in 2008 and 2009, he received "wages from Walter H. Poppe General Contractors, Inc."; and Poppe Contracting, Poppe Construction, and Walter H. Poppe General Contractors were "paid in full" by Walgreens.

In October 2011, AACON filed a motion for summary judgment. In a supporting certification, Phillip Taglianetti, Sr., President of AACON, stated that when he executed the subcontract with Poppe Construction, he "relied upon the representations by that entity that it had a contract with Walgreens." Taglianetti also certified that "Poppe Contracting and Glenn Poppe represented to AACON that AACON was not being paid because Poppe Construction had not been paid by Walgreens for AACON's work." In response, Glenn Poppe certified that "[t]o the best of [his] knowledge and recollection, [he] never made a representation to [AACON] or any representative of [AACON] that Poppe had not been paid for [AACON]'s work."

Plaintiff's motion was argued on November 4, 2011, and the court rendered an oral decision on November 7, 2011. The court found there was no genuine issue of any material fact regarding AACON's fraud claims against defendants. The court's findings included the following:

Poppe Construction executed and delivered to AACON a contract that represented Poppe Construction had a contract with Walgreens to be the general contractor. Poppe Construction had no such contract. In fact, Poppe Contracting had the contract. Poppe Contracting and Glenn Poppe represented to AACON that AACON was not being paid because Poppe Construction had not been paid by Walgreens. In fact, Walgreens had made payments to one of Mr. Poppe's other corporate entities, Walter H. Poppe [General Contractors].

These payments were as a result of applications submitted by Poppe Contracting that indicated Poppe Contracting had in fact paid AACON. AACON relied upon the misrepresentations of the Poppe entities that payment would be forthcoming as late as March of 2010, one year after AACON left the project and returned to complete punch list work.

Thus, the court determined that plaintiff sustained damages as a result of defendants' false representations. Additionally, the court found that AACON "established the elements necessary to pierce the corporate veil" of the Poppe entities and hold Glenn Poppe personally liable:

At his deposition, Glen Poppe admitted that the three corporations . . . named in this case, Walter H. Poppe [General Contractors], Poppe Construction, and Poppe Contracting, had no employees during the time the contract was entered into with AACON and presently have no employees.

He admitted he reviewed all contracts for each of the Poppe entities. He admitted that he received funds as compensation from Walter H. Poppe [General Contractors] in 2009. He admitted to signing documents and swearing and attesting to the contents on behalf of all of those entities and to a certain extent relying upon others even though he was really the corporate entity that was signing those documents.

He admitted that he is and at the time of the performance of the contract was the sole shareholder, officer, and director of all of these defendant Poppe entities. Therefore, the court finds that he is clearly and solely responsible for the actions of these three entities.

He reviewed their contracts. He attended the affairs of each of the businesses. He was the sole shareholder[], officer, and director. He was the sole individual responsible for the shuffling of these corporations to achieve a purpose, namely the avoidance of the obligations to AACON, the plaintiff in this case.

There is no one else to blame for the conduct of the three entities, but Glenn Poppe. As a result of the fraud perpetrated on the plaintiff at the direction of Glenn Poppe, plaintiff was induced to continue working on a project it is still owed payment for.

While generally a corporation is an entity separate and distinct from its principals, and an individual is separate and distinct from corporations. [Touch of Class Leasing v. Mercedes-Benz Credit, 248 N.J. Super. 426 (App. Div.), certif. denied, 126 N.J. 390 (1991)]. [T]here is no genuine issue of material fact . . . . [T]he distinction between these three defendant Poppe entities and Glenn Poppe is one of form and not of substance.

The court memorialized its decision in an order that granted plaintiff's summary judgment motion as to each defendant in the amount of $156,704. This appeal followed.

Defendants argue on appeal that the court erred because "there are material and disputed facts in this case," and AACON "failed to meet its burden of proving several elements of its claims." Based on our examination of the record, we are satisfied that defendants' arguments do not warrant extended discussion in a written opinion. R. 2:11-3(e)(1)(E). We affirm substantially for the reasons stated by Judge Karen Cassidy, with only the following comments.

Summary judgment is appropriate where "the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." R. 4:46-2(c). When determining whether there is a genuine issue of material fact, the court 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 fact-finder 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).

In this case, the evidence presented to the motion judge established that the subcontract falsely represented that Poppe Construction was the general contractor for the project; AACON reasonably relied on that misrepresentation when it entered into the subcontract with Poppe Construction; Poppe Contracting falsely represented to Walgreens that AACON had been paid for its work; and, as AACON's president certified, AACON was induced to continue working on the project because he was told that AACON would be paid "when Poppe was paid for AACON's work."

The record also confirms that Poppe Construction, Poppe Contracting, and Walter H. Poppe General Contractors were exclusively controlled by Glenn Poppe, who used the entities to avoid paying AACON. Under these circumstances, there were sufficient grounds for the motion judge to pierce the corporate veil and find defendants jointly and severally liable to plaintiff. See, e.g., Jewish Ctr. of Sussex Cnty. v. Whale, 86 N.J. 619, 624 (1981) ("A misrepresentation amounting to actual legal fraud consists of a material representation of a presently existing or past fact, made with knowledge of its falsity and with the intention that the other party rely thereon, resulting in reliance by that party to his detriment.")


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