Financial Casualty & Surety, Inc. v. Mascola et al

Filing 319

OPINION. Signed by Judge Renee Marie Bumb on 7/19/2013. (tf, )

NOT FOR PUBLICATION

[Dkt. No. 271, 304]

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
CAMDEN VICINAGE

FINANCIAL CASUALTY SECURITY
COMPANY, INC.,
Civil No. 1:11-cv-04316
(RMB/JS)

Plaintiff,

OPINION

v.
JAMES V. MASCOLA, et al.,
Defendants.

Appearances
Samuel M. Silver
2050 Route 27, Suite 105
North Brunswick, NJ 08902
Attorneys for Plaintiff
Eugene M. Rondeau
Attorneys at Law
1410 Hooper Ave., 2nd Floor
Toms River, NJ 08753
Attorneys for Defendant
Bumb, UNITED STATES DISTRICT JUDGE:
In this action, Plaintiff Financial Casualty & Surety, Inc.
(“FCS”), a Texas corporation, asserts claims against a number of
defendants, including Defendant Jeanne Rondeau (“Rondeau”), for
breach of contract. Rondeau has moved for summary judgment
arguing that she is not personally liable under the contract at
issue because she only signed it in her corporate capacity as a

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member of a limited liability company (“LLC”).1 For the reasons
set forth below, Rondeau’s motion is granted.
I.

BACKGROUND
Rondeau was a member of A1 Bail 4U LLC (“A1 Bail”), a New

Jersey limited liability company that operated as a bail bond
agency in New Jersey. [Docket No. 271, Jeanne Rondeau Affidavit
at 17].
On or about November 21, 2008, FCS entered into a SubProducer Bail Bond agreement (the “Agreement”). [Docket No. 278,
Exhibit A-1 (“Agreement”) at ¶ 4]. Importantly, the Agreement
contains a choice-of-law provision in which FCS may elect to
have disputes concerning the Agreement decided under Texas law.
[Agreement at ¶ 28 (“At the discretion of [FCS], the Agreement
is to be interpreted in accordance with the laws of the State of
Texas, where company is based, or of the Sub-Producer’s home
state.”)].
The Agreement begins by identifying “Jeanne Rondeau
A1BAIL4U, LLC” as the relevant Sub-Producer. [Docket No. 278,
Ex. A-1 at 4. (the “Agreement”)(“Jeanne Rondeau A1BAIL4U, LLC
(hereinafter ‘Sub-Producer’)]. The following paragraph, in
contrast, states, “The term ‘Sub-Producer’ shall collectively
refer to Jeanne Rondeau and/or A1BAIL4U”. [Agreement at ¶ 1].

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Plaintiff has also moved for leave to file a sur-reply brief on choice
of law principles. [Docket No. 304]. That motion is GRANTED. 

2 

Under the terms of the Agreement, the Sub-Producer was
authorized to issue bail bonds with FCS as surety. [Agreement at
¶ 17]. The “Sub-Producer” also agreed to indemnify any and all
liability arising from the Agency Agreement. [Id.]
The Agreement has two sections requiring the Sub-Producer’s
signature. [Agreement at 13-16]. The first signature block is
pre-typed with “SUB-PRODUCER Jeanne Rondeau.” [Agreement, at
13]. The second is pre-typed with “Sub-Producer: Jeanne
Rondeau.” [Agreement at 16.] A1 Bail was not identified as the
Sub-Producer in any signature block. In each signature block,
Rondeau signed “Jeanne Rondeau, Member A1 Bail 4U.” [Id.].
At some point in 2010, Rondeau left A1 Bail. [Docket No.
271, p. 20, ¶ 14].

FCS subsequently filed suit in federal

court, claiming diversity jurisdiction seeking indemnity under
the Agreement from Rondeau personally for outstanding bail bond
forfeiture debts. See [Docket No. 278 at 1]. FCS maintains that
Texas law should govern the dispute due to the Texas choice-oflaw provision within the Agreement. FCS argues that, under Texas
law, Rondeau personally guaranteed the contractual obligations
of A1 Bail. Rondeau argues that New Jersey law should apply and,
under New Jersey law, she is not personally liable. Rondeau
argues that she is entitled to summary judgment on this ground.
II.

LEGAL STANDARD

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Summary judgment is appropriate where there is no genuine
issue as to any material fact and the moving party is entitled
to judgment as a matter of law. Fed. R. Civ. P. 56; Celotex Corp
v. Cartrett, 477 U.S. 317, 323 (1986). To avoid summary
judgment, the non-moving party must “go beyond the pleadings and
by her own affidavits, or by the depositions, answers to
interrogatories, and admissions on file, designate specific
facts showing that there is a genuine issue for trial.” Celotex
Corp., 477 U.S. at 324. A genuine issue of material fact is one
that will permit a reasonable jury to return a verdict for the
nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248 (1986). In evaluating the evidence, the Court must view the
inferences to be drawn in the light most favorable to the
nonmoving party. Curley v. Klem, 298 F. 3d 271, 276-77 (3d Cir.
2002).
III. ANALYSIS
Because this Court sits in diversity and the parties
dispute whether Texas or New Jersey law applies, this Court must
apply New Jersey choice-of-law rules to determine which state’s
laws govern. See Gibbs ex rel. Gibbs v. Carnival Cruise Lines,
314 F.3d 125, 131 (3d Cir.2002) (citing Klaxon Co. v. Stentor
Elec. Mfg. Co., Inc., 313 U.S. 487 (1941)). Under New Jersey
law, where, as here, there is a contractual choice of law
provision, courts follow a two-step inquiry considering whether:
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(1) there is an actual conflict between the laws of the two
states; and (2) if there is a conflict, whether the choice-oflaw provision in the contract should be enforced. See Kramer v.
Ciba-Geiby Corp. 854 A.2d 948, 958 (N.J. Super. Ct. App. Div.
2004) (citing Gantes v. Kason Corp., 679 A.2d 106 (N.J. 1996).
This Court addresses each step of the analysis in turn.
A.

Step 1: Whether There Is a Conflict Between New Jersey
and Texas Law

The parties do not dispute that, under Texas law, Rondeau’s
signature would personally bind her under the contract. Under
New Jersey law, in contrast, Rondeau would not be personally
liable. New Jersey law requires clear and explicit evidence of a
party’s intent to bind herself personally. See Home Buyers
Warranty v. Roblyn Dev. Corp., MER-L-464-05, 2006 WL 2190742, at
*5 (N.J. Super. Ct. App. Div. Aug. 4, 2006) (requiring “clear
and explicit evidence of [the party’s] intention to bind
[themselves] personally”). That clear and explicit intent can
generally be demonstrated by having the corporate officer sign
twice – once in the officer’s corporate capacity and once in the
officer’s individual capacity. See City of Millville v. Rock,
683 F.Supp. 2d 319, 327 (D.N.J. 2010).
Because the Sub-Producer definition was ambiguous,
alternating between “Rondeau A1Bail4U” and “Rondeau and/or
A1Bail4U,” and because Rondeau signed each Sub-Producer

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signature block only once and indicated “member A1 Bail 4U” with
each signature, there is no clear and explicit evidence that
Rondeau intended to waive her personal immunity.
While FCS argues that the signature block listing of only
Rondeau’s name is suggestive of an intent to bind Rondeau
personally, that evidence is still far too ambiguous to overcome
the high burden of demonstrating a clear intent to relinquish
personal immunity.2

Accordingly, New Jersey and Texas law

conflict in the treatment of Rondeau’s personal liability and
this Court must proceed to step two of the choice-of-law
analysis and determine whether the choice-of-law clause in the
Agreement should be enforced.
B.

Step 2: Whether the Choice of Law Provision Should Be
Enforced

For step two of the analysis, New Jersey follows the Second
Restatement of Conflict of Laws, which provides that a choiceof-law clause will be enforced unless either:
(a)

the chosen state has no substantial relationship
to the parties or the transaction and there is no

2

FCS relies heavily on Yardley Travel Ltd. v. Betar, A-570-09T1, 2012 WL
2737802 (N.J. Super. Ct. App. Div. July 10, 2012) in arguing that Rondeau
would be personally liable under New Jersey law. In Yardley, a corporate
officer was found to have released both his personal claims and the claims
of his company when he signed two release agreements notwithstanding the
fact that he signed as officer of the company and the agreements did not
specifically reference him personally releasing any claims. Id. at *15.
Yardley is inapposite in three key respects: (1) Yardley dealt with the
release from liability by a corporate officer in his personal capacity,
not the inadvertent imposition of liability on a corporate officer; (2)
there was evidence of prior oral agreements in which the officer at issue
agreed to personally release any claims; and, (3) there was evidence that
the officer did not, in fact, have the authority to bind the corporation
and therefore could only have been releasing his own claims. Id.

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other reasonable basis for the parties' choice;
or,
(b)

application of the law of the chosen state would
be contrary to a fundamental policy of a state
which has a materially greater interest than the
chosen
state
in
the
determination
of
the
particular issue and which, under the rule of §
188, would be the state of the applicable law in
the absence of an effective choice of law by the
parties.

Instructional Systems, Inc. v. Computer Curriculum Corp., 614
A.2d 124, 133 (citing to RESTATEMENT (SECOND)

OF

CONFLICT

OF

LAWS §

187(2) (West 1971)).
The first exception listed in the Restatement approach does
not apply because FCS is headquartered in Texas, giving Texas
law a substantial relationship to the parties. Instructional
Systems, 614 A.2d at 133 (finding that the plaintiff being
domiciled in the state listed in the choice-of-law provision
constituted a substantial relationship); RESTATEMENT (SECOND)
CONFLICT

OF

OF

LAWS § 187 cmt. f (1971).

For the second exception to apply, this Court must find:
(1) New Jersey law has a materially greater interest than Texas
in the determination of the particular issue; (2) the
application of Texas law would be contrary to a fundamental
policy of New Jersey; and (3) under the general choice of law
factors in § 188 of the Restatement, New Jersey law applies. See
Newcomb v. Daniels, Saltz, Mongeluzzi, & Barrett, 847 F.Supp.

7 

1244, 1248 (D.N.J. 1994). The Court addresses each point in
turn.
1.

New Jersey Has a Materially Greater Interest than
Texas

Factors considered in determining which forum has a
materially greater interest include the place of negotiation,
place of execution, place of performance, citizenship of the
parties, and the policy behind the law at issue. See Actega
Kelstar, Inc. v. Musselwhite, 09-1255, 2010 U.S. Dist. LEXIS
18801 at *9 (D.N.J. March 2, 2010) (citing TransPerfect
Translations, Inc. v. Leslie, 594 F. Supp. 2d 742, 751 (S.D.
Tex. 2009)); See also Business Incentives Co., Inc. v. Sony
Corp. of America, 397 F.Supp. 63, 67 (S.D.N.Y. 1975); Winer
Motors, 506 A.2d 817 (reasoning that New Jersey's interest in
the particular contract was greater than Connecticut's interest
because the franchisee was located in New Jersey).
Aside from the choice-of-law provision, the only contact
with Texas is that FCS is domiciled there. There is no evidence
that Texas has any strong interest in having its law apply to
the dispute. New Jersey, on the other hand, has far greater
contacts. FCS is a New Jersey licensed insurance company,
Rondeau and A1 Bail are New Jersey citizens, the contract was
negotiated and executed in New Jersey, and the contract was
performed in New Jersey. And as discussed below, New Jersey has

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a strong interest in protecting its citizens from incurring
individual liability inadvertently.

Because New Jersey has a

greater connection with the litigation, and a strong public
policy interest, New Jersey has a materially greater interest in
the determination of this particular issue.
2. Liability Would Violate a Fundamental New Jersey Policy
There is no exact definition or detailed statement to
describe situations where a “fundamental policy” is found to
exist. RESTATEMENT (SECOND)

OF

CONFLICT

OF

LAWS § 187 cmt. g (1973).

Courts, in defining what a fundamental policy entails, have
looked to statutes, court decisions, and court rules. Federal
and state courts have found fundamental policies in a number of
different areas, including the regulation of contingency fee
agreements, protection of franchisees, regulation of loan
interest rates, reducing government waste, and the protection of
consumers in installment purchases.3 For three reasons, the Court

3

Winer Motors, 506 A.2d at 821 (finding that Connecticut, through
legislation, had “overriding interest in the fair treatment of its
franchisees” despite a similar New Jersey statute); Kaneff v. Del. Title
Loans, Inc., 587 F.3d 616, 624 (3d Cir. 2009) (finding “Pennsylvania's
interest in the dispute, particularly its antipathy to high interest rates
such as the 300.01 percent interest charged in the contract at issue,
represents such a fundamental policy”) (citing Pa. Dept. of Banking v.
NCAS of Delaware, LLC, 948 A.2d 752, 754 (Penn. 2008)); E-Rate Consulting,
Inc. v. Harrisburg Sch. Dist., 04-5258, 2006 U.S. Dist. LEXIS 93929 at
*29-31 (D.N.J. Dec. 18, 2006) (holding that notwithstanding similar New
Jersey statute, Pennsylvania laws aimed at increasing oversight and
accountability in educational related contracts would be contravened by
applying New Jersey law because “[r]educing government waste and
corruption is surely a fundamental policy of any state”); Turner v.
Aldens, Inc., 433 A.2d 439, 442 (N.J. Super. Ct. App. Div. 1981) (holding
that honoring the contract’s choice-of-law provision would contravene

9 

concludes that protecting individuals acting on behalf of their
company from unintended liability is a fundamental policy of the
New Jersey.
First, the New Jersey legislature has recognized the
important of this interest by affording significant protection
to corporate officers and members against personal liability.4
The framework adopted by the New Jersey legislature provides
that:
Except as otherwise provided by this act, the debts,
obligations and liabilities of a limited liability
company. . . . shall be solely the debts, obligations
and liabilities of the limited liability company; and
no member, manager, employee or agent of a limited
liability company shall be obligated personally for
any such debt, obligation or liability of the limited
liability company. . . . by reason of being a member,
or acting as a manager, employee or agent of the
limited liability company.
N.J. Stat. Ann. §42:2B-23 (West 1994).
Second, New Jersey courts’ decisions evidence that this is
a fundamental policy. New Jersey courts have both acknowledged
the weight of this statutory framework in their own decision
making and crafted common law protections, like the two

strong New Jersey policy in protecting consumers as intended by the Retail
Installment Sales Act, N.J. Stat. Ann. § 17:16C-1 et seq. (West 1981)).
4

While Texas similarly provides protection to members of LLCs against
individual liability, numerous cases have found a fundamental policy to be
contravened notwithstanding a similar statute in the state indicated by
the choice-of-law provision. See supra note 3; Tex. Bus. Orgs. Code Ann. §
101.144 (West 2006)(“Except as and to the extent the company agreement
specifically provides otherwise, a member or manager is not liable for a
debt, obligation, or liability of a limited liability company, including a
debt, obligation, or liability under a judgment”).

10 

signature requirement described above, to insulate individuals
from unintended corporate liability. See NYDIC Mgmt. Servs., LLC
v. DS Montvale, LLC, A02473-06T2, 2008 N.J. Super. Unpub. LEXIS
1054 at *3 (N.J. Super. Ct. App. Div. Nov. 8, 2007) (noting the
Court was persuaded by “the statutory protection provided to the
members of such companies against personal responsibility for
the debts of the companies” in N.J. Stat. Ann. § 42:2B-23).
Third, a revision to the statutory code, set to take full
effect in March 2014, reaffirms the fundamental nature of New
Jersey’s policy of protecting corporate officers from personal
liability. The revised language closely tracks the current
statute, but specifically adds:
The failure of a limited liability company to observe
any particular formalities relating to the exercise of
its powers or management of its activities is not a
ground for imposing liability on the members or
managers
for
the
debts,
obligations,
or
other
liabilities of the company.
N.J. Stat. Ann. § 42:2C-30 (West 2013) (emphasis added).
This new language reiterates the strength of this policy and New
Jersey’s reticence in imposing unforeseen personal liability on
LLC members acting on behalf of their companies.
Because it is a fundamental policy of New Jersey to protect
individuals from inadvertent corporate liability, and Texas law
would find Rondeau liable under ambiguous circumstances,

11 

application of Texas law would violate a fundamental policy of
the state of New Jersey.
3. New Jersey is Otherwise the State of Applicable Law
New Jersey would also be the state of applicable law in the
absence of an effective choice-of-law provision in the contract.
The factors for consideration are outlined in Section 188 of the
Second Restatement. They include: (a) the place of contracting;
(b) the place of negotiation of the contract;(c) the place of
performance;(d) the location of the subject matter of the
contract; and, (e) the domicile, residence, nationality, place
of incorporation and place of business of the parties. RESTATEMENT
(SECOND)

OF

CONFLICT

OF

LAWS § 188 (West 1973).

This analysis closely mirrors the determination of which
state has a materially greater interest discussed above. For
those same reasons, New Jersey would be the state of applicable
law rather than Texas. The place of contracting, negotiation,
and performance are all in New Jersey.

The subject matter of

the contract is the issuance of bonds in New Jersey and the
Defendant and A1 Bail are residents of New Jersey.

The only

contact with Texas is that FCS is domiciled there. This lone
contact is outweighed by the numerous connections the parties
and contract have with New Jersey.
IV. Conclusion

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For the reasons discussed above, there is a genuine
conflict between New Jersey and Texas law regarding the
imposition of liability on corporate members, and the
enforcement of the Agreement’s choice-of-law provision would
violate a fundamental policy of New Jersey. Accordingly, New
Jersey law should govern this dispute.
Under New Jersey law, Rondeau did not explicitly and
clearly express an intention to make herself personally liable
in the contract. Therefore, her one signature as a member of A1
Bail cannot be construed to bind both A1 Bail and herself
personally. Defendant’s motion for summary judgment is therefore
GRANTED.
s/Renée Marie Bumb
RENÉE MARIE BUMB
United States District Judge
Date: July 19, 2013

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