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RNC Systems, Inc. v. MTG Holdings, LLC

United States District Court, D. New Jersey

March 27, 2017

RNC SYSTEMS, INC., Plaintiff,
v.
MTG HOLDINGS, LLC, SUMMARY HOLDINGS, LLC, and IRIC COHEN. Defendants.

          Dean E. Weisgold, Esq. Attorney for Plaintiff

          Trevor S. Williams, Esq. Attorney for Defendants

          OPINION

          Jerome B. Simandle Chief U.S. District Judge

         I. INTRODUCTION

In 2014, Plaintiff RNC Systems, Inc. (“RNC”) won a judgment against Modern Technologies Group, Inc. (“MTG”), in a suit before this Court arising from a failed business relationship between the two companies. To date, RNC has been unable to collect any part of that judgment. RNC instituted this suit the following year against MTG Holdings, LLC (“MTG LLC”), Summary Holdings, LLC (“Summary”), and Iric Cohen, asserting that MTG, MTG LLC, and Summary were alter egos of one another and of Mr. Cohen, and that Defendants in this case should be liable for RNC's judgment against MTG from the prior lawsuit. This case now comes before the Court on Defendants' motion for summary judgment and motion to strike Plaintiff's opposition to this motion, and Plaintiff's motion to amend the complaint to add Modern Technologies Group, Inc. as a defendant. [Docket Items 72, 84 & 95.] For the reasons that follow, the Court will deny the motion to strike, grant the motion to amend, and deny the motion for summary judgment.

         II. BACKGROUND

         A. Factual Background [1]

         The Parties

         RNC is a Nevada corporation with its principal place of business in California. (Findings of Fact and Conclusions of Law (“FFCL”) dated December 31, 2014, RNC Systems, Inc. v. Modern Technologies Group, Inc., Case No. 08-1036 (JBS/KMW), at 9.) RNC developed a particular product, the Limo Touch, for use in limousines. (Id. at 8-9.)

         MTG was a New Jersey limited liability company with its principal place of business in Medford, New Jersey. (Id. at 8-9.) MTG was also in the limousine business. It ceased business operations in March 2014 and avers that it holds only “shelving, old inventory (unsellable)” as remaining assets and that its principals have no interest in any other businesses. (MTG Responses to Information Subpoena Served on February 22, 2015 (Ex. 3 to Declaration of Dean E. Weisgold (“Weisgold Decl.”) [Docket Item 79-1]) at ¶¶ 6, 7, 15.) According to New Jersey Business Entity Information records, MTG's status as a New Jersey Profit Corporation was revoked and reinstated numerous times for failing to file an annual report for two consecutive years. (Ex. 21 to Weisgold Decl.) Eric Alpert, Iric Cohen's brother in law, was the President of MTG until September 8, 2012, and Sharon Ronchetti was an executive vice president of MTG in charge of financials until June of 2013. (Deposition of Eric Alpert (Ex. B to Def. SMF) at 4:15-20, Ronchetti Dep. at 4:10-5:2.) Mr. Cohen was the CEO of the company. (Deposition of Iric Cohen (Ex. A to Defendants' Statement of Material Facts) at 9:20-22.) No tax returns have been produced after 2011 in this action.

         MTG LLC is a New Jersey limited liability company with its principal place of business in Medford, New Jersey. (Complaint [Docket Item 1] at ¶ 2.) MTG LLC's status as a New Jersey LLC was revoked on April 16, 2015 for failing to file an annual report for two consecutive years. (New Jersey Business Entity Information Dated August 5, 2016 (Ex. 20 to Weisgold Decl.).) No tax returns for MTG LLC have been produced for any time period in this action.

         Summary was a short-lived New Jersey limited liability company with its principal place of business in Medford, New Jersey. (Compl. at ¶ 3.) The company was created in order to continue the business of MTG when the former company experienced financial difficulties. (Certification of Iric Cohen (Ex. F to Def. SMF) at ¶¶ 14-158.) It was terminated or dissolved in 2014. (New Jersey Business Entity Information Dated June 29, 2015 (Ex. 13 to Weisgold Decl.); Cohen Dep. at 17:7-12.) No tax returns for Summary have been produced for any time period in this action. According to Defendants' accountant, all three companies have filed separate state and federal tax returns and have maintained separate funds. (Certification of Albert Van Sciver, CPA (Ex. 27 to Weisgold Decl.) at ¶¶ 4-5.)

         Mr. Cohen is the sole owner, officer, and director of MTG. (Ex. 3 to Weisgold Decl.) He is also a principal of Summary (Ex. 13 to Weisgold Decl.) and MTG LLC. (Ex. 20 to Weisgold Decl.) A Statement of Financial Condition for Mr. Cohen from December 31, 2013 prepared by certified public accountants notes that, at that time, Mr. Cohen owned 100% of the common stock of MTG and 50% of the common stock of Summary, and that MTG was an asset with no value and Summary was an asset worth $2, 000, 000. (Statement of Financial Condition (Ex. 11 to Weisgold Decl.) at p. 2 of 5.) The parties dispute how involved Mr. Cohen was with the operations of MTG during the time RNC and MTG had a business relationship and whether representatives from RNC had any interactions with him before September 2012, when Mr. Alpert left MTG. (Compare Cohen Dep. at 9:14-23 (Mr. Cohen was an absentee owner) with Deposition of Sharon Ronchetti (Ex. C to Def. SMF) at 6:9-21 (Mr. Cohen became involved in day-to-day operations in September 2012) and Declaration of Iric Cohen (Ex. F to Def. SMF) at ¶¶ 11-13 (same); see also Def. SMF ¶¶ 19-22.) Mr. Cohen would withdraw money from MTG's bank accounts for “personal reasons” (Alpert Dep. at 15-15-20; see also Ronchetti Dep. at 13:21-14:17) and he told employees that “he was the one who owned everything around here.” (Ronchetti Dep. at 7:15-25.)

         MTG LLC owns property located at 3 Reeves Station Road, Medford, New Jersey; this same address is listed as the permanent address of Summary and the only business location for MTG. (Deed (Ex. 4 to Weisgold Decl.); Ex. 13 to Weisgold Dep.; Ex. 3 to Weisgold Dep.) MTG LLC entered into three mortgages on the Property and has paid off two of them. (Mortgage dated July 2, 2003 (Ex. 16 to Weisgold Decl.); Mortgage dated February 4, 2008 (Ex. 17 to Weisgold Decl.); Mortgage dated May 16, 2014 (Ex. 18 to Weisgold Decl.); Discharge of Mortgage (Ex. 19 to Weisgold Decl.) However, the Statement of Financial Condition of Mr. Cohen lists the Property as owned 100% by Mr. Cohen, and he referred throughout his deposition to the Property as his. (Ex. 11 to Weisgold Decl. at p. 4 of 5; Cohen Dep. at 24:14-16.) MTG owns no real property, although it sold some property “about three years ago, ” or in around 2012. (Cohen Dep. at 45:22-46:20.)

         The RNC-MTG Business Relationship

         RNC and MTG entered into a written Licensing Agreement dated December 6, 2003, by which MTG was to pay RNC licensing fees for the use of two different products to be used in the limousine industry. (FFCL at 1.) MTG stopped paying any royalties to RNC after October 1, 2008, but continued to sell at least one of the licensed products covered by the Licensing Agreement after that date, at least until December, 2013. (Id. at 7, 12, 24.) The parties now dispute when the business relationship between RNC and MTG ended: whether it was when MTG stopped paying royalties due under the Licensing Agreement, or whether it continued as Mr. Cohen continued to use RNC-licensed technology. (Compare Def. SMF ¶¶ 10, 21 with Pl. SMF ¶¶ 10, 21.)

         RNC filed suit against MTG in February 2008, seeking a declaration that MTG had breached the Licensing Agreement by failing to discharge its obligations, and that the Licensing Agreement was terminated; MTG filed counter-claims sounding in breach of contract, fraud in the inducement, commercial disparagement, and unfair competition. (Id. at 3.) Over six years later, the case (“the Judgment lawsuit”) finally proceeded to a bench trial before this Court, on the parties' breach of contract claims only. (Id.) The Court ultimately ordered and adjudged that RNC prevailed on both its claim for breach of contract and ...


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