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SBS Finance, L.L.C. v. Bloom

Superior Court of New Jersey, Appellate Division

May 31, 2013

SBA FINANCE, L.L.C., Plaintiff-Respondent,
v.
JAY BLOOM, Defendant-Appellant, and NAC TECHNOLOGY & OPERATIONAL RESOURCES, L.L.C., Defendant.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued January 16, 2013

On appeal from Superior Court of New Jersey, Law Division, Essex County, Docket No. L-0854-10.

Fred Shahrooz Scampato argued the cause for appellant.

Christopher P. Gengaro argued the cause for respondent (Lentz & Gengaro, L.L.P., attorneys; Mr. Gengaro, of counsel and on the brief).

Before Judges Ashrafi, Hayden and Lisa.

PER CURIAM

Defendant Jay Bloom appeals from summary judgment granted to plaintiff SBA Finance, L.L.C., requiring him to pay a total of $108, 555.89 in satisfaction of a debt he had guaranteed, together with attorney's fees. We reverse.

Viewed most favorably to defendant Bloom, R. 4:46-2(c); Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995), the summary judgment record and prior proceedings in the trial court establish the following relevant facts and procedural history.

On January 1, 2004, Bloom, Steven Trenk, and Baton (a partnership of two persons) formed NAC Technology & Operational Resources, LLC (NAC). A few weeks later, City National Bank of New Jersey lent $60, 000 to NAC, later to be increased to $70, 000 through a "Change in Terms Agreement" executed on May 23, 2004. The bank obtained guarantees for repayment of the loan from Bloom and the Baton partners. Also, an entity named Silverado Insurance, Ltd., which was owned and operated by Steven Trenk and his father, Alvin Trenk, gave a commercial guarantee and entered into a hypothecation agreement with the bank by which Silverado pledged as collateral a certificate of deposit valued at about $102, 000.

NAC's operations did not go as planned. On June 7, 2006, Steven Trenk filed suit against Bloom in the District Court of Clark County, Nevada, alleging breach of the NAC partnership agreement and Bloom's fiduciary duty to NAC. Trenk sought injunctive and declaratory relief, as well as money damages and attorney's fees. Among other wrongs, Trenk's complaint alleged that Silverado had been promised a five percent ownership interest in NAC in return for its pledged collateral but that the interest was never transferred. Trenk also claimed that he had taken out a $50, 000 personal loan on NAC's behalf, in return for NAC's promissory note and an increased ownership interest in NAC. The complaint alleged that NAC was in default on its obligations to Steven Trenk. The complaint made reference to the $70, 000 City National loan and Silverado's pledge of collateral to obtain the loan, but it did not state that the City National loan was in default or that Bloom was obligated to reimburse Trenk because of that default.

Three years after the Nevada litigation commenced, on September 27, 2009, Bloom and Steven Trenk (signing both in his personal capacity and on behalf of NAC) entered into a settlement agreement. They released one another from all claims "arising from or relating to" the lawsuit. The settlement agreement also indicated the parties' intent to "waive any and all rights, claims, demands, obligation[s], and/or causes of action which through ignorance, oversight, or error may have been omitted from the terms of this Agreement." The Nevada case was dismissed with prejudice.

Before the settlement occurred, plaintiff SBA Finance, L.L.C., was founded, in May 2008. The attorney for SBA in this litigation was listed as the authorized representative of SBA in the certificate of formation issued by the New Jersey Department of Treasury. Alvin Trenk's friend, Stanley Amsterdam, was listed as the sole member and officer of the company. However, as later determined in Amsterdam's deposition, he played no role in determining SBA's actions and was not responsible for paying the fees of SBA's attorney. The sole purpose of forming SBA was to purchase and collect on the $70, 000 City National note. Amsterdam's participation in SBA was as a "favor" to Alvin Trenk, and any money recovered in this litigation would go to Alvin Trenk.

Through communications engaged in between counsel for plaintiff SBA and City National Bank, the bank was paid more than $71, 000 in exchange for assignment of the City National note and guarantees to SBA. The bank executed a formal assignment on December 17, 2008. As part of the deal, the bank released Silverado's collateral. At a later time in this litigation, it was ...


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