United States District Court, D. New Jersey
SSC SERVICE CORP. d/b/a SSC SERVICE SOLUTIONS, Plaintiff,
EDWARD TUREN, NEAL TUREN, CONTROL TFS WEST, INC., CONTROL FACULTY SERVICES, LLC, CONTROL EQUITY GROUP, INC., JOHN DOES 1-10, and ABC/XYZ CORPS. 1-10, Defendants.
KEVIN MCNULTY, U.S.D.J.
plaintiff, Southeast Service Corporation ("SSC"),
alleges that it entered into an oral settlement agreement on
January 20, 2015 with defendants Edward Turen
("Edward"), Neal Turen ("Neal"), and
three entities owned by Neal and Edward. Neal, however,
argues that there was no agreement because the parties did
not agree upon a material provision: whether Neal and Edward
are jointly and severally liable for the settlement amount.
Neal contends that he is liable for only 33% of the
settlement amount; SSC argues that Neal and Edward are
jointly and severally liable for the entire amount.
before this Court are SSC's motion for summary judgment
and Neal's cross-motion for summary judgment. For the
reasons herein, the motions will be denied.
a provider of facility management, landscaping, snow removal,
custodial, housekeeping and janitorial services for
educational facilities and shopping centers throughout the
United States. (PSMF ¶ 5). In March 2006, SSC entered
into a contract with Control Facility Services, LLC
("Control Facility"). (Id. at ¶ 6).
Pursuant to the contract, SSC agreed to act as a
subcontractor to provide janitorial and housekeeping services
at shopping centers owned by Macerich Partnership, L.P.
(Id.) Thereafter, Control Facility assigned its
right under the subcontract with SSC to Control TFS West,
Inc. ("Control TFS"). (Id. at ¶ 7).
SSC provided services to Control Facility and Control TFS for
numerous years. (Id. at ¶ 8).
and Neal Turen, who are brothers, are principals of Control
TFS, Control Facility, and Control Equity Group, Inc.
(collectively the "Control entities") (PSMF ¶
1). Control Equity is the parent company of Control TFS.
(Id. at ¶ 17). Edward is the majority
shareholder of each of the Control entities and
"generally" owns 67% of the equity in the entities,
while Neal is a minority shareholder who
"generally" owns 33% of the equity in the entities.
(Di Iorio Decl. ¶ 2; Neal Decl. ¶ 2). According to
SSC, the Turen brothers did not pay SSC money due under the
contract, and instead diverted funds to themselves while
rendering all of the Control entities insolvent. (PSMF
action is related to prior action, initially filed in New
Jersey state court but removed to this Court.
Previous Action- Control TFS West, Inc. v. Southeast
Serv. Corp., Docket No. 12-cv-5321
13, 2012, Control TFS filed a complaint against SSC in the
Superior Court of New Jersey, Hudson County, Law Division.
(PSMF ¶ 2). See (Notice of Removal, Exh. A
under 12-cv-5321). It asserted claims for tortious
interference with prospective economic advantage and
declaratory judgment. (Id.) On August 23, 2012, SSC
removed the action to this Court: Control TFS West, Inc.
v. Southeast Serv. Corp., Docket No. 12-cv-5321. (PSMF
¶ 3). Neal and Edward were not parties to the action;
Neal, however, was identified as an interested party.
September 26, 2012, SSC filed an Answer with Affirmative
Defenses, a counterclaim against Control TFS and third-party
complaint against the two other Control entities (Control
Facility and Control Equity). (PSMF ¶ 3). SSC's
counterclaim/third-party complaint alleged the following
Count 1: Breach of Contract - Control TFS and/or Control
Count 2: Implied Contract/Unjust enrichment- Control TFS
and/or Control Facility
Count 3: Breach of the Duty of Good Faith and Fair Dealing -
Control TFS and/or Control Facility
Count 4: Promissory Estoppel- Control TFS and/or Control
Facility Count 5: Constructive Trust- Control TFS, Control
Facility, and Control Equity
(ECF no. 50 of 12-cv-5321 at ¶¶ 45-69); (PSMF
¶ 4). SSC alleged that the principal amount of $5, 556,
564.61, consisting of $3, 049, 501.16 in fees due for May and
June, 2012 and $2, 507, 063.45 in improperly taken discounts,
plus attorneys' fees, was due and owing from Control to
SSC. (PSMF ¶ 12).
October 10, 2014, Control and SSC filed a Stipulation,
pursuant to which Control TFS agreed to dismiss all of its
affirmative claims against SSC. [Id. at ¶ 14).
The Stipulation re-positioned SSC as the plaintiff and the
Control entities as defendants. (Id. at ¶ 15).
alleges that while conducting discovery in that case, it
found evidence of fraudulent activities by Edward and Neal.
In particular, SSC maintains that the evidence revealed that
Edward and Neal diverted money to themselves rather than
paying SSC and other known creditors. [Id. at
¶¶1622). Based on their findings,
SSC's attorneys began drafting a complaint against Edward
and Neal as individuals. (Id. at ¶ 23).
January 9, 2015, Magistrate Judge Steven C. Mannion held an
in-person status conference with the named parties, SSC and
the Control entities, and their respective counsel. After the
conference, he issued a text order noting that the case had
been settled: "The court has been notified verbally by
both parties that this case has been settled and that counsel
will either file a consent judgment or stipulation of
dismissal by 1/23/15. Note that Fed. R. Civ. P
41(a)(1)(A)9ii) requires that any stipulation of dismissal be
signed by all parties." (ECF no. 49 of 12-cv-5321).
on that text order, this Court issued an order dismissing the
case without costs and with prejudice, "subject to the
right, upon good cause shown within sixty (60) days, to
reopen the action if the settlement is not consummated."
(ECF no. 50 of 12-cv-5321).
January 20, 2015 Meeting
potential claims against the Turen brothers remained. In
contemplation of settlement, SSC's counsel did not
immethately file a complaint against the brothers. (PSMF
point before January 20, 2015, Joshua W. Denbeaux, Esq., who
represented the Control entities in 12-cv-5321 as well as
Edward, contacted John Di Iorio, counsel for Neal.
Edward's counsel provided Neal's counsel with the
factual background concerning the claims in the prior
litigation involving SSC and the Control entities. (Di Iorio
Decl. ¶ 6; Denbeaux Decl. ¶ 2). He also advised
Neal's counsel that SSC was prepared to bring a new
lawsuit against Neal and Edward. (Di Iorio Decl. ¶ 6;
Denbeaux Decl. ¶ 2).
that discussion, on January 20, 2015, the following
individuals met at the offices of SSC's counsel to
discuss settlement: 1) a principal of SSC; 2) SSC's
counsel, Matthew A. Lipman; 3) Edward (on behalf of himself
and as principal for the Control entities); 4) Edward's
counsel; 5) Neal; and 6) Neal's counsel. (PSMF ¶ 26;
DRSMF ¶¶ 25-26; Denbeaux Decl. ¶ 2).
parties offer differing versions of what occurred on January
for SSC contends that after a full day of negotiations,
"an [oral] agreement was reached to settle" the
impending claims against the Turen brothers. (PSMF ¶ 27;
Lipman Cert. ¶ 25). According to SSC, "[a]ll
parties and their counsel agreed to the terms of the
settlement and departed from the meeting after thanking one
another for reaching an agreement and shaking hands."
(PSMF ¶ 28; Lipman Cert. ¶ 25). Neal and his
counsel, however, maintain that the parties only agreed to
the total amount, $3, 000, 000, and timing of the payments to
be made to SSC, and that a full settlement agreement was not
reached. (Neal Decl. ¶ 10; Di Iorio Decl. ¶ 8).
Edward's counsel corroborates this account; he states
only that "the parties agreed to the amount and timing
of the payments to be made to SSC." (Denbeaux Decl.
claims that, during the day-long settlement meeting on
January 20, 2015, SSC's counsel and its representative
had a separate meeting with Edward and his counsel-without
Neal. (DASMF ¶ 6). At this separate meeting, SSC
allegedly stated to Edward that joint and several liability
was a condition of the settlement. (Id. at ¶
6). At the time, the substance of those discussions was not
shared with Neal or his counsel. (Id.) Rather,
Edward and Neal allegedly caucused in the presence of their
respective attorneys-without representatives from SSC-and
agreed between themselves that Neal would be responsible for
33% of the settlement payments, and Edward would be
responsible for 67% of the payments. (Id. at ¶
7; Di Iorio Decl. ¶ 13; Di Iorio Depo. 9:l-:25). At his
deposition, Neal's counsel testified that the brothers
agreed on those percentages because "that was their
equity interest percentage generally speaking in by and large
most of the Control entities." (Di Iorio Depo. 10:7-:9).
through counsel, recognizes that "[d]uring the
settlement conference the parties met in a conference room
and also spent time separated." (Denbeaux Decl. ¶
5). Edward's counsel "spoke to Neal Turen and his
counsel and [he] spoke to SSC and its counsel together, and
separately." (Id.) He corroborates Neal's
recollection and remembered "specifically Case
2:15-cv-04160-KM-MAH Document 52 Filed 08/27/18 Page 7 of 21
PageID: 604 discussing the terms of the agreement" in a
room with the SSC representative and counsel for SSC.
(Id. at ¶¶ 6, 7). Edward's counsel
also recalled SSC "making joint and several liability a
condition for the settlement." (Id. at ¶
7). According to Edward's counsel, Edward "did not
take a position as to whether joint and several liability was
a requirement." (Id. at ¶ 8). After the
separate meeting, they "returned to the conference room
where SSC put the proposed settlement to Neal Turen and his
counsel." (Id.) Edward's counsel states
that the settlement agreement was not then put into writing,
he did not take notes, and he did not have any recollection
of whether the joint-and-several-liability term was discussed
at the meeting amongst all the parties. (Id. at
concedes that at the January 20th meeting, the
nature of the liability was not discussed among all of the
parties and not discussed between SSC and Neal. (PRSMF
¶¶ 5-6). Neal and his counsel do not dispute this.
In particular, Neal's counsel alleges that at no point
during the meeting did all of the parties ever discuss, nor
was it agreed by all of the parties, that the Control
entities, Edward, and Neal would be jointly and severally
liable for the payments due to SSC. (Di Iorio Decl. ¶
11). See (Di Iorio Depo. 8:12-: 16) (stating that he
"believe[d] that certain terms of the agreement were
discussed at that meeting and certain terms were not
discussed at that meeting and to be amplified in written
documents"). See also (id. at 8:20-:25). Neal
similarly claims that the topic of how much of the payments
he would be responsible for was never discussed in his
presence among all the parties at the meeting, nor "were
the words joint and several ever used" in his presence
at the meeting. (Neal Decl. ¶ 11). He asserts that he
"did not, and would not" agree to be jointly and
severally liable. (Id. at ¶ 12).
Events After January 20, 2015 Meeting
days after the meeting, on January 29, 2015, SSC's
counsel sent an email to Edward's counsel and Neal's
counsel, attaching a "proposed settlement agreement for
. . . review and comment." (Di Iorio Decl., Exh. B). The
attached propose "Settlement Agreement" contained
the following provision:
Edward and Neal, jointly and severally, agree to pay
to SSC the total sum of Three Million Dollars ($3, 000,
000.00) (the "Settlement Payment") ...."
(Settlement Agreement Draft 1 ¶ 1 (emphasis added)).
This was the first time joint and several liability was
explicitly raised with Neal or his counsel. (DASMF ¶ 10;
Di Iorio Decl. ¶ 14; PRSMF ¶ 10).
February 9, 2015, Neal's counsel sent an email to
SSC's counsel and Edward's counsel, attaching a
redlined revision of the Settlement Agreement. (Di Iorio
Decl., Exh. C). In this version, Neal's counsel deleted
the phrase "jointly and severally" from the first
paragraph. (Settlement Agreement Draft 2 ¶ 1) (showing a
strikethrough horizontal line through the phrase
"jointly and severally"). He also added this
e. Control and Edward are jointly and severally liable for
2/3 of the amount due SSC under this Agreement. Neal is
severally liable for 1/3 of the amount due SSC under this
Agreement. All payments made pursuant to this Agreement will
be applied 2/3 to the amounts Control and Edward are
responsible for and 1/3 to the amount Neal is responsible for
pursuant to this Agreement.
(Id. at ¶ 1(e)).
to Neal's counsel, at some unspecified time after he sent
his email, SSC's counsel "followed up about
revisions to the draft settlement agreement." (Di Iorio
Decl. ¶ 16). Neal's counsel maintains that he
advised SSC's counsel "that the issue of joint and
several liability had not been discussed by SSC at the
settlement meeting with Neal Turen, let alone agreed to, and
that Neal Turen would not agree to be jointly and severally
liable for the payments due." (Id., ) He also
"further advised" SSC's counsel that he would
make changes to his proposed revisions to the settlement
weeks later, on March 2, 2015, Edward sent an email to
SSC's counsel, with a copy to Neal himself (not
Neal's counsel). (Di Iorio Decl., Exh. F). In the email,
Edward asked: "Could you send Neal and me the wire
instruction[s] so we can make the $40, 000 payment today per
agreement." [Id.) Thereafter, SSC's counsel
replied to Edward, with a copy to Edward's counsel and
Neal, attaching instructions for wiring of funds.
(Id.} Edward wired $26, 800 (67% of the $40, 000