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Chirino v. Proud 2 Haul, Inc.

Superior Court of New Jersey, Appellate Division

April 25, 2019

GONZALO CHIRINO, FELIX D. JAY, ANDREW ANKLE, GARY JOSEPHS, RENE CAMPBELL, ASTON HEMLEY and MARYAN VASYUTA, Plaintiffs-Respondents,
v.
PROUD 2 HAUL, INC., and IVANA KOPROWSKI, Defendants-Appellants.

          Argued March 16, 2017

          On appeal from Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-6191-11.

          Frank G. Capece argued the cause for appellants (Garrubbo & Capece, PC, attorneys Mr. Capece, of counsel; James J. Seaman, on the briefs).

          David Tykulsker argued the cause for respondents (David Tykulsker & Associates, attorneys; Mr. Tykulsker, on the brief).

          Before Judges Alvarez, Accurso, and Manahan [1]

          OPINION

          ALVAREZ, P.J.A.D.

         Plaintiffs are members of a certified class of truck owner-operators who deliver sealed containers originating at the Port of New Jersey to customers in the northeast. Defendant Proud 2 Haul, Inc. (P2H) is the company through which orders are placed, registered with the Federal Motor Carrier Safety Administration, and subject to Truth in Leasing (TIL) regulations, 49 C.F.R. pt. 376, in conjunction with the Motor Carrier Act (MCA), 49 U.S.C. §§ 13901, 13902, 14102, and 14704. Defendant Ivana Koprowski is P2H's principal. Plaintiffs' complaint, in broad terms, sought damages for defendants' failure to have lease agreements in place, as required by federal law, enumerating deductions to be taken from their payments. See § 49 C.F.R. 376.12. Over the course of nine months, plaintiffs were granted several orders awarding partial summary judgment. On the day scheduled for trial on the remaining issues, the parties settled the matter, preserving defendants' right to appeal some of the relief awarded by the orders. For the reasons that follow, we affirm.

         Section 1B of the parties' settlement agreement[2] reads in pertinent part that defendants would appeal:

[O]n a specific and delineated set of issues concerning the court's previous decision awarding damages under the [MCA] in its decisions of November 15, 2013; paragraph 2 of the decision of December 20, 2013; February 14, 2014; February 28, 2014 and paragraph 5 of the decision of July 11, 2014 ("the Appealable Orders").

         In paragraph 7, the settlement agreement further states:

Defendants shall limit their appeal to the Appealable Orders and shall limit the issues raised to
a. [W]hether proof of "exact damages" sustained by each plaintiff as opposed to a fair and reasonable estimate is required for monetary compensation under the [MCA], and
b. [W]hether [d]efendants were required to have a written lease with the plaintiffs during the period from June 4, 2012, to March 31, 2014.

         We briefly describe the relevant circumstances. Plaintiffs' causes of action arise in part from a November 19, 2010 lease agreement between them and P2H. That agreement provided that P2H would reimburse taxes included in the price of diesel fuel for plaintiffs' trucks. Defendants initially claimed the agreement was void because it was entered into in error, later withdrawing that defense. The fuel taxes, like the other charges at issue, were not reimbursed and were actually deducted from the agreed-upon percentage of gross receipts paid to plaintiffs for making their deliveries.

         As a convenience, P2H supplied plaintiffs with a Wright Express (WEX) Gas credit card that most owner-operators used to make their fuel purchases. The trucks run only on diesel fuel, however, the drivers were also permitted to use the card to purchase gasoline for their personal vehicles.

         The remaining issues on appeal arise from a June 2012 agreement P2H entered into with Trucking Support Services, LLC, doing business as Contracts Resource Solutions (CRS). According to Koprowski, she entered into the arrangement to insure the drivers were considered independent contractors, and not defendants' employees. In accord with the agreement, CRS assumed responsibility for much of the paperwork generated by the deliveries, and the owners, in turn, entered into separate agreements leasing their equipment to CRS. Only P2H accepted and placed delivery orders. CRS in turn assigned the services and equipment it leased from the drivers to P2H. Plaintiffs' complaint alleged that defendants violated the TIL laws by virtue of the arrangement with CRS, in addition to violating the Wage Payment Law, N.J.S.A. 34:11-4.1, and engaged in acts of conversion and fraud.

         Turning to the orders, the November 15, 2013 partial summary judgment enforced the lease agreement between the parties requiring reimbursement of the fuel taxes, and held that defendants violated its terms. Damages were calculated at $382, 753.68. The court found defendants breached their contracts with plaintiffs, in violation of 49 C.F.R. § 376.12(h). The court's damage calculation was based on WEX records subpoenaed by plaintiffs. The court also awarded prejudgment interest of $18, 663.17, $275, 463.30 in attorney's fees, and $8, 896.62 in costs.

         Plaintiffs had difficulty obtaining the documents necessary to resolve the issue, as defendants' records suffered damage after Sandy, and therefore only WEX itself had a complete account of the charges. The WEX records, however, do not distinguish between diesel and gasoline purchases.

         Furthermore, the records did not include diesel purchases made by drivers who elected not to use the WEX card. That calculation was resolved by way of the settlement, and defendants agreed to be liable for 69.70% of the amount plaintiffs' expert determined was owed.

         In the trial court brief in opposition to plaintiffs' motion for summary judgment, defendants denied that they were bound by the lease term providing for reimbursement. They did not, however, argue that the judge's quantification of damages was erroneous, as a result of the possible inclusion of personal gasoline purchases made on the WEX card, or for any other reason.

         They did not argue that the TIL regulations require damages to be exact. That argument was raised months later in the litigation, only with regard to plaintiffs' claim that $4, 481, 747.37 was due and owing in total to plaintiffs for other monies withheld from their pay. The argument was never raised with regard to the damage calculation for WEX users until the appeal was taken.

         The trial court granted plaintiffs partial summary judgment on December 20, 2013, finding in Paragraph 2 that defendants were in violation of "49 C.F.R. § 376.12(a) as of May 27, 2012, by failing to have in place a written lease agreement with each owner-operator." The judge denied reconsideration of his decision on February 14, 2014.

         In his reconsideration opinion, the judge observed that "defendants have abandoned their prior legal theory (that conforming leases with the 'owner' - meaning the owner-operators - were in existence) in favor of a new theory based on further legal research by defense counsel in the 'definition' section of the TIL regulation." In addition to further research conducted after the initial motion decision, defendants also consulted with an "unidentified expert." The judge refused to grant relief based on a new legal theory after "more than nine months on various motions for summary judgment."

         Defendants' new legal theory was that the members of the class were not the owners of the equipment as defined in TIL regulations, rather, that CRS was the owner. Despite his rejection of the argument because it could have been made earlier, the judge went on to address its merits. Defendants' new position hinged on their definition of "owner" as a person or entity having ...


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