THE BANCORP BANK v. CONDOR DEVELOPERS, LLC et al

Filing 107

OPINION. Signed by Judge Noel L. Hillman on 5/2/2019. (tf, )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

THE BANCORP BANK,
Plaintiff,

CIVIL NO. 15-4451(NLH)(AMD)

v.
OPINION
CONDOR DEVELOPERS, LLC,
DANIEL BROWN, NJG
ACQUISITIONS, LLC, ENPHRONT
INC., and STATE OF NEW
JERSEY,
Defendants.

APPEARANCES:
PHILIP S. ROSENZWEIG
SILVERANG, DONOHOE, ROSENZWEIG and HALTZMAN, LLC
595 E. LANCASTER AVENUE
SUITE 203
ST. DAVIDS, PA 19087
On behalf of Plaintiff
ANTHONY MORGANO
LEVINE STALLER SKLAR CHAN & BROWN PA
3030 ATLANTIC AVENUE
ATLANTIC CITY, NJ 08401
On behalf of Defendants
HILLMAN, District Judge
This matter concerns claims by Plaintiff, The Bancorp Bank,
regarding the default on the financing of a property in Atlantic
City, New Jersey that provides housing to veterans.

Presently

before the Court is Plaintiff’s motion for summary judgment
against Defendant Daniel Brown on a personal guaranty he signed

in connection with the financing for the property.

For the

reasons expressed below, Plaintiff’s motion will be granted as
to liability against Brown, with additional instructions by the
Court regarding the entry of judgment against him and the other
defendants.
BACKGROUND
On August 17, 2017, the Court granted Plaintiff’s motion
for summary judgment on its claims against Defendants Condor and
NJG.

The Court reserved decision on Plaintiff’s motion for

summary judgment on its claims against Brown arising from a
personal guaranty signed by Brown, and the Court ordered
supplemental briefing.

(Docket No. 92, 93.)

Plaintiff and

Brown timely complied with the Court’s order (Docket No. 94,
95), but numerous subsequent events, including an imminent sale
of the subject property, compelled the Court to refrain from
addressing Plaintiff’s claims against Brown, as well as refrain
from entering final judgment against Condor and NJG.
On May 1, 2019, the Court held oral argument on Plaintiff’s
claims against Brown.

It now appears the sale of the property

has fallen through and it remains under the control of the
court-appointed receiver.

Plaintiff’s claims against Brown

under the personal guaranty remain pending and ripe for
resolution.

The Court now issues the following Opinion,

restating the background from the prior Opinion, to support the
2

ultimate determination that Brown is liable under the personal
guaranty he entered into with Plaintiff.

As discussed further,

however, final judgment as to damages shall not be entered
against Brown at this point, with the Court directing the
parties to undertake certain steps to facilitate an equitable
process for effecting such a judgment.
By way of background, in 2008 Defendants took over a 14unit townhome project in Atlantic City, New Jersey as housing
for U.S. military veterans.

Due to various problems with

construction and damage from Super Storm Sandy in October 2012,
Defendants were unable to complete the project, even with
increased financing, and eventually defaulted on loans and lines
of credit extended by Plaintiff for principal in the amounts of
$5,100,000 and $950,000, respectively. 1

The defaulted

obligations were backed by personal guarantees executed by NJG
and Brown. 2

1

At the time Plaintiff filed its summary judgment motion,
Plaintiff claimed that the unpaid principal balance under the
loan was $4,916,309.50, and that the unpaid principal balance
under the line of credit was $947,978.36.
2

Brown is the sole member of NJG. As is discussed more fully
below, NJG and Brown provided personal guarantees to Plaintiff
in order to secure additional financing for the project. During
the course of discovery, Plaintiff learned that in addition to
NJG and Brown, two former members of Condor also provided
personal guarantees: Jack A. Gartner, Jr. and Joseph D. Jenci.
In October 2016, Plaintiff filed a third amended complaint to
assert breach of contract claims against Gartner and Jenci.
(Docket No. 75.) NJG and Brown filed an answer to the third
3

In June 2015, Plaintiff instituted the instant foreclosure
and breach of contract action against Condor, NJG, and Brown. 3
In February 2016, the Court held a hearing on Plaintiff’s motion
to appoint a receiver and granted that motion.

The receiver has

been managing the property ever since.
Plaintiff filed a motion for summary judgment in its favor
on all of its claims against Condor, NJG, and Brown, and on
Defendants’ counterclaims against it, which include claims for
fraud in the inducement, breach of covenant of good faith and
fair dealing, intentional misrepresentation, malicious
prosecution, and unlawful permanent contract rescission.
Condor and NJG did not contest that judgment be entered on
Plaintiff’s claims against them.

Brown, however, argues that

disputed issues of material fact remain over his obligation
under his personal guaranty.

Brown admits that he signed a

guaranty on the line of credit, but denies that he is
individually liable.

Brown claims that Plaintiff’s former vice

president, Michael Schreiber, stated to Brown on various

amended complaint, and asserted counterclaims against Plaintiff
and cross-claims against Gartner and Jenci. (Docket No. 76.)
It is unclear from the docket whether these new defendants were
served with the third amended complaint or the cross-claims, and
they have not appeared in the action.
3

This Court has jurisdiction over this matter pursuant to 28
U.S.C. § 1332 because there is complete diversity of citizenship
between the parties and the amount in controversy exceeds
$75,000.
4

occasions that the loans would be extended, and despite what the
executed guarantees explicitly state Brown would not be held
personally liable for the line of credit upon any potential
default because the bank would simply repossess the property.
Brown argues that this dispute also compels the Court to deny
Plaintiff’s motion for summary judgment on his counterclaims.
In its moving brief, Plaintiff argues that it is entitled
to summary judgment on Brown’s counterclaims because he has not
provided any evidence to support his claims, including failing
to depose Michael Schreiber or any other bank representative.
Plaintiff argues that Brown’s self-serving testimony regarding
Schreiber’s alleged fraud to induce Brown to sign the personal
guaranty is insufficient to maintain his counterclaims.

Brown

argues that the personal guaranty was not the final expression
of their agreement since it does not contain an integration
clause, and maintains that his affidavit regarding Schreiber’s
misrepresentations remains unrebutted by Plaintiff, and
therefore establishes a genuine issue of material fact which
precludes summary judgment.
DISCUSSION
A.

Standard for Summary Judgment

Summary judgment is appropriate where the Court is
satisfied that the materials in the record, including
depositions, documents, electronically stored information,
5

affidavits or declarations, stipulations, admissions, or
interrogatory answers, demonstrate that there is no genuine
issue as to any material fact and that the moving party is
entitled to a judgment as a matter of law.

Celotex Corp. v.

Catrett, 477 U.S. 317, 330 (1986); Fed. R. Civ. P. 56(a).
An issue is “genuine” if it is supported by evidence such
that a reasonable jury could return a verdict in the nonmoving
party’s favor.
248 (1986).

Anderson v. Liberty Lobby, Inc., 477 U.S. 242,

A fact is “material” if, under the governing

substantive law, a dispute about the fact might affect the
outcome of the suit.

Id.

In considering a motion for summary

judgment, a district court may not make credibility
determinations or engage in any weighing of the evidence;
instead, the non-moving party's evidence “is to be believed and
all justifiable inferences are to be drawn in his favor.”
Marino v. Industrial Crating Co., 358 F.3d 241, 247 (3d Cir.
2004)(quoting Anderson, 477 U.S. at 255).
Initially, the moving party has the burden of demonstrating
the absence of a genuine issue of material fact.
v. Catrett, 477 U.S. 317, 323 (1986).

Celotex Corp.

Once the moving party has

met this burden, the nonmoving party must identify, by
affidavits or otherwise, specific facts showing that there is a
genuine issue for trial.

Id.

Thus, to withstand a properly

supported motion for summary judgment, the nonmoving party must
6

identify specific facts and affirmative evidence that contradict
those offered by the moving party.
57.

Anderson, 477 U.S. at 256-

A party opposing summary judgment must do more than just

rest upon mere allegations, general denials, or vague
statements.

Saldana v. Kmart Corp., 260 F.3d 228, 232 (3d Cir.

2001).
B.

Analysis

Whether Brown is liable under the personal guaranty hinges
on the evidentiary impact of Brown’s pre-guaranty discussions
with Schreiber.

Brown states in his certification attached to

his opposition brief (Docket No. 91-1) that he undertook the
project to provide housing to veterans because it was an issue
very dear to him and he wanted to make a difference in their
lives.

Brown states that he had a good working relationship

with Schreiber, and that Schreiber told him on various occasions
that the bank would not enforce the personal guarantees, and
only needed them to secure the financing.

Brown states that

Schreiber’s statements were material to his signing the
guarantees and that he would not have signed them but for those
representations.

Brown also asserts that he was under the

impression that Bancorp would work with him to avoid defaulting
Brown and his entities, including through such means as
providing additional extensions to the mortgage and loan
agreement or by seeking to repossess the project and relieve
7

Brown of his personal guarantees on the notes. 4
Brown argues that his discussions with Schreiber prior to
his signing the personal guaranty raise issues of material fact
as to (1) whether the personal guaranty document he signed was
the parties’ final expression of their agreement, and (2)
whether Brown was fraudulently induced into signing the
guaranty.
With regard to whether the personal guaranty document
constitutes the four corners of the parties’ agreement, or
whether Brown’s conversations with Schreiber are also part of
the agreement, “parol evidence is admissible in construing a
contract, not to change the contract's unambiguous terms, but to
put the words in context.”

Viglione v. Frisina, 2013 WL

1457581, at *6 (N.J. Super. Ct. App. Div. 2013) (citing Conway
v. 287 Corp. Ctr. Assoc., 187 N.J. 259, 268–70 (2006)) (other
citation omitted).

The New Jersey Supreme Court has explained:

The polestar of construction is the intention of the
parties to the contract as revealed by the language used,
4

Brown states that in addition to construction delays, Super
Storm Sandy severely damaged several of the units, and then fire
damaged another unit, and the insurance proceeds did not nearly
cover the cost of repairs. When the notes became due and
payable, Condor and NJG could not repay the loans, and Brown
offered to return the property to Plaintiff. Instead, Plaintiff
filed the instant lawsuit, and Brown relates that he is dire
financial circumstances and does not have the financial
wherewithal to pay back those funds. He also states that he is
considering filing for personal bankruptcy, but as of the date
of this Opinion, there is no indication that Brown has filed
bankruptcy.
8

taken as an entirety; and, in the quest for the intention,
the situation of the parties, the attendant circumstances,
and the objects they were thereby striving to attain are
necessarily to be regarded. The admission of evidence of
extrinsic facts is not for the purpose of changing the
writing, but to secure light by which to measure its actual
significance. Such evidence is adducible only for the
purpose of interpreting the writing - not for the purpose
of modifying or enlarging or curtailing its terms, but to
aid in determining the meaning of what has been said. So
far as the evidence tends to show, not the meaning of the
writing, but an intention wholly unexpressed in the
writing, it is irrelevant.
Id. (quoting Conway, 187 N.J. at 269).
“Where a contract demonstrates that the parties have merged
all prior negotiations and agreements in writing, the parol
evidence rule bars evidence of prior negotiations and agreements
tending to add or vary the terms of the writing being
considered.”

Id. (citation omitted).

A court must “read as a

whole all writings forming part of the same transaction.”

Id.

As for Brown’s claim of fraud, “it is an accepted principle
that ‘fraud operates to discharge the guarantor from his
liability on the guaranty, and may be set up by him as a defense
to an action on the guaranty.’”

Ramapo Bank v. Bechtel, 539

A.2d 1276, 1279 (N.J. Super. Ct. App. Div. 1988) (quoting 38
C.J.S., Guaranty § 32 at 1170-1171).

“The facts concealed,

however, must be facts which if known by the guarantor would
have prevented him ‘from obligating himself, or which materially
increase his responsibility . . . .’”
C.J.S., Guaranty § 32 at 1171).
9

Id. (quoting at 38

To state a claim for fraudulent inducement, a plaintiff
must demonstrate: (1) a material misrepresentation of a
presently existing or past fact; (2) knowledge or belief by the
defendant of its falsity; (3) an intention that the other person
rely on it; (4) reasonable reliance thereon by the other person;
and (5) resulting damages.

Gennari v. Weichert Co. Realtors,

691 A.2d 350, 367, 148 N.J. 582, 610 (N.J. 1997).
A party who proves the he was fraudulently induced to enter
a contract has two choices – either rescind or affirm the
contract.

See Tonglu Rising Sun Shoes Co., Ltd. v. Natural Nine

(USA) Co., Ltd., 2016 WL 7374543, at *3 (D.N.J. 2016) (citing
Daibo v. Kirsch, 720 A.2d 994, 998 (N.J. Super. Ct. App. Div.
1998)) (other citation omitted).

When a plaintiff seeks only

equitable remedies such as rescission, however, the plaintiff
needs to prove equitable fraud, which is a lesser burden than
proving legal fraud.

Tonglu, 2016 WL 7374543, at *3 (D.N.J.

2016) (citing Jewish Ctr. of Sussex Cty. v. Whale, 86 N.J. 619,
625 (1981) (“[W]hatever would be fraudulent at law will be so in
equity; but the equitable doctrine goes farther and includes
instances of fraudulent misrepresentations which do not exist in
the law.”).

Unlike a plaintiff claiming legal fraud, a

plaintiff claiming equitable fraud does not need to prove the
defendant's scienter in making the misrepresentation; rather, a
plaintiff seeking rescission of a contract based on fraud in the
10

inducement, must show by clear and convincing evidence: (1) a
material misrepresentation of a presently existing or past fact;
(2) the maker's intent that the other party rely on it; and (3)
detrimental and reasonable reliance by the other party.

Id.

For a claim of fraudulent inducement, an exception to the
parol evidence rule applies.

The parol evidence rule “‘operates

to prohibit the introduction of oral promises to alter or vary
an integrated written agreement,’” but the introduction of
extrinsic evidence to prove fraud in the inducement is a wellrecognized exception to the parol evidence rule.

Everest Nat.

Ins. Co. v. Sutton, 2008 WL 3833586, at *7 (D.N.J. 2008)
(quoting Alexander v. CIGNA Corp., 991 F. Supp. 427, 436–37
(D.N.J. 1998)) (other citation omitted).
“‘Extrinsic evidence to prove fraud is admitted because it
is not offered to alter or vary express terms of a contract, but
rather, to avoid the contract or to prosecute a separate action
predicated upon the fraud.’”

Alexander, 991 F. Supp. at 436

(quoting Filmlife, Inc. v. Mal "Z'' Ena, Inc., 598 A.2d 1234,
1235 (N.J. Super. App. Div. 1991)), cited in Everest, 2008 WL
3833586, at *7.

A party may not, however, seek to contradict

the express terms of a writing to avoid obligations he knowingly
assumes.

Everest, 2008 WL 3833586, at *7.

The Court does not find either of Brown’s positions
availing.

Addressing first Brown’s contention that the personal
11

guaranty was not a complete expression of his agreement with
Plaintiff because the personal guaranty document does not
contain an integration clause, the Court finds that Brown’s
argument is without merit.

Brown is correct that the personal

guaranty does not contain an explicit integration clause such as
the one in Everest, 2008 WL 3833586 at *6-7, where the personal
guaranty contained the clause, “This Agreement is intended by
the parties as a final expression of their agreement, is
intended as a complete statement of such agreement, and is in
lieu of any oral understanding.”

And the Court accepts as true

for the purposes of deciding Plaintiff’s motion that Schreiber
orally represented to Plaintiff that the personal guaranty was a
mere formality that would not be enforced against him.

But when

the terms of the personal guaranty and the other mortgage
documents are considered as a whole, it is clear that the
documents signed by Brown constitute the entirety of their
agreement, and Schreiber’s oral representations as to the Bank’s
future intentions of enforcing the personal guaranty are not
part of the parties’ contract.
The original December 28, 2011 loan promissory note between
Plaintiff and Condor Developers LLC, for which NJG Acquisitions,
LLC was the managing member, and of which Brown was the sole
member, contains a “cross-collateralization and cross-default”
provision.

That provision provides, “All property of Borrower
12

and any property of Guarantor of any kind or nature in which
Bank has been granted security interest hereunder or in which
Bank shall hereafter be granted a security interest or a Lien of
any kind shall constitute Collateral for all Obligations . . .
It shall not be necessary for cross-collateralization, crossdefault, cross-acceleration or cross-guarantee language to be
inserted into any other previously existing or hereafter created
instrument, document, or agreement for this section to be fully
enforceable by Bank against Borrower and Guarantor . . . or any
other documents executed by Borrower and/or Guarantor in favor
of Bank.”

(Docket No. 39-2 at 7.)

The loan application summary and disclosure signed by Brown
provides in the section identifying him as a guarantor that
“[b]y signing below, the person or persons identified as
Guarantors above understand that they will be required to become
personally obligated to repay the Loan in the event of default.”
(Docket no. 39-3 at 17.)
The first modification agreement of the original note
signed by Brown on August 29, 2012 provides, “This First
Modification Agreement encompasses all the modifications,
restatements and extensions to the Existing Note and the
Existing Mortgage, notwithstanding any verbal communications
between the parties.”

(Docket No. 39-4 at 32.)

The “Guaranty by Daniel Brown and NJG Acquisitions, LLC”
13

provides, “the Undersigned acknowledges that the Bank would not
have made nor would it make extensions of credit to the Borrower
without the Undersigned jointly and severally guaranteeing,
absolutely and unconditionally, the payment and performance of
all Obligations of the Borrower owed or due to the Bank, that
this Guaranty is a material inducement for the Bank to make
extensions of credit to the Borrower, and that the Undersigned
will benefit from the Bank making extensions of credit to the
Borrower.”

(Docket No. 39-7 at 2.)

It further provides, “The

Undersigned agree that they will, from time to time, execute,
acknowledge and deliver, or cause to be executed acknowledged
and delivered, such supplements hereto and such further
documents and instruments as may reasonably be required for
carrying out the intention of or facilitating the performance of
this Guaranty.”

(Id. at 8.)

Based on this quoted language, among many other provisions
in the loan documents, it is evident that despite the absence of
a specific or more targeted integration clause, the loan
promissory note, the personal guaranty and the related documents
constitute the entire universe of the parties’ contractual
obligations.

The evidence does not show, and indeed contradicts

such a position, that oral representations to Brown by the
bank’s employee could provide supplemental terms to the written
documents.

The record is undisputable that Brown’s obligations
14

set forth in the personal guaranty he signed govern, and not
Schreiber’s informal assurances to the contrary.

See, e.g., Dow

Chemical Co. v. Schaefer Salt & Chemical Co., 1992 WL 672289, at
*18 (D.N.J. 1992) (in considering whether the personal guarantee
documents constituted the final expression of the parties where
the guarantee contracts did not contain a clause stating that
they are the sole and final expression of the parties, the court
finding that a review of the entire guarantees as well as the
record before the court revealed no evidence challenging the
status of the guarantees as a final expression of the terms, and
finding as a matter of law that the personal guarantee documents
constituted a final expression between the parties as to the
terms contained therein).
The terms of the loan and personal guaranty documents
quoted above also show how Plaintiff’s fraudulent inducement
argument is unavailing.

Under New Jersey law, reliance upon a

promise not to enforce a note or other similar agreements does
not constitute fraud.

Fr. Winkler KG v. Stoller, 839 F.2d 1002,

1004 n.6, 1006 (3d Cir. 1988)

(applying New Jersey law:

“Neither the parties nor the district court dispute the
application of New Jersey law to the present action.”).

The New

Jersey Supreme Court explained why:
To admit parol proof of a contemporaneous oral agreement
that so contradicts a lawful, valid written contract as to
render the latter absolutely impotent, would amount to a
15

circumvention of the beneficial object of the parol
evidence rule. To hold that parties made two contracts at
the same time, one of which is in positive contradiction of
the other is somewhat fantastic.
Fr. Winkler KG v. Stoller, 839 F.2d 1002, 1006 (3d Cir. 1988)
(quoting Reconstruction Finance Corp. v. Gohl, 21 A.2d 693, 696
(N.J. 1941)).

The Third Circuit drove home the point in

considering the case before it, where a signatory to a personal
guaranty filed an affidavit in opposition to summary judgment
contending that he was provided with oral representations that
the personal guaranty was just a formality and would not be
enforced – just as Brown has argued here:
Stoller contends that his affidavit, submitted in
opposition to Winkler's motion, created an issue of
material fact sufficient to preclude the district court's
entry of summary judgment against him. . . . Stoller
averred that the plaintiff's employees informed him that
his personal guarantee was required by Deutche Bank as a
precondition for discounting additional notes. Moreover,
defendant asserted that he was told that his guarantee was
“a mere formality” and that he would never be held
personally liable on it. Stoller contends that these
misrepresentations constituted fraud. . . . Defendant
argues that he was entitled to have his assertions accepted
as true, and correspondingly, that the district court
improperly resolved an issue of credibility on a motion for
summary judgment.
. . .
[P]roof in support of a guarantor's allegation that his
indorsement was required only as a matter of form, and that
it would never be enforced, is prohibited by the parol
evidence rule. The notes are unconditional and indorsed
without qualification. They embody the final written
expression of the parties’ agreement, and Stoller’s
affidavit therefore constitutes an attempt to contradict,
alter, or modify the terms of an integrated contract. In
16

fact, Stoller’s affidavit would do more than simply modify
the notes' terms; it would utterly extinguish them.
Notably, Stoller has not asserted failure of consideration,
mistake, or accident-allegations that are indeed provable
by parol evidence. Finally, the defendant's assertion that
Winkler's representations constituted fraud is utterly
meritless.
Fr. Winkler KG, 839 F.2d at 1006.
The Third Circuit concluded, “our holding supports the
integrity and stability of commercial transactions.

The

negotiability of commercial paper in the marketplace would be
severely impaired if an indorser or guarantor of a note could
avoid liability simply by attempting to show that his
unqualified written promise to pay was not to be enforced. . . .
Because we conclude that Winkler's representations, even if
accepted as true, were interdicted by New Jersey's parol
evidence rule, we affirm the district court's order dismissing
his counterclaim.”

Id. at 1007.

The Third Circuit’s analysis, predicated on New Jersey law,
is directly applicable here.

The personal guaranty explicitly

states that “the Bank would not have made nor would it make
extensions of credit to the Borrower without the Undersigned
jointly and severally guaranteeing, absolutely and
unconditionally, the payment and performance of all Obligations
of the Borrower owed or due to the Bank,” and “that this
Guaranty is a material inducement for the Bank to make
extensions of credit to the Borrower.”
17

(Docket No. 39-7 at 2.)

Just like in Fr. Winkler KG v. Stoller and Reconstruction
Finance Corp. v. Gohl, Brown’s position that the guaranty was a
mere formality and would not be enforced against him is a
fantastical position that creates two simultaneous and
contradictory contracts which, if credited, would “utterly
extinguish” the existence of the guaranty.

Such a position is

not countenanced under New Jersey law.
Moreover, even accepting as true that Schreiber made verbal
assurances to Plaintiff regarding the enforcement of the
personal guaranty, Schreiber’s alleged misrepresentations do not
constitute the requisite “material misrepresentation of a
presently existing or past fact” needed to prove fraud in the
inducement.

See Jewish Ctr. of Sussex Cty., 86 N.J. at 625.

Instead, Brown contends that Schreiber misrepresented future
intention:

“Mr. Schreiber told me on various occasions since

2011 that, while I was signing extensions, personal guarantees,
and the like, the bank would not be looking to me for those
personal guarantees; rather, it was just necessary to get the
financing, and that I would not be personally liable on the
loans.

I would not have signed these guarantees but for Mr.

Schreiber's representations.”

(Docket No. 91-1 at 2.)(emphasis

added).
“It is the general rule that to be actionable, fraud must
relate to a present or preexisting fact and cannot ordinarily be
18

predicated on representations which involve things to be done in
the future.”

Anderson v. Modica, 73 A.2d 49, 52–53 (N.J. 1950)

(citing Arnold v. Hagerman, 17 A. 93 (E. & A. 1888)) (other
citations omitted).

Schreiber’s representations to Brown that

the “bank would not be looking to me for those personal
guarantees” and “I would not be personally liable on the loans”
are promises relating to future events.

They are not

misrepresentations of the past or current state of affairs but
rather a prediction of a future act of forbearance that was
itself dependent on the contingency that the principal would not
satisfy the loan.
Accordingly, even accepting as true all of Brown’s
assertions in his certification, Brown’s fraudulent inducement
claim fails as a matter of law. 5

See, e.g., Travelodge Hotels,

Inc. v. Honeysuckle Enterprises, Inc., 2005 WL 3164205, at *8
(D.N.J. 2005) (“In the present case any prediction on Evans's or
Larson's part that Honeysuckle would enjoy a 15% increase in
sales related to future event and cannot constitute fraud in the
inducement, because a statement relating to future events cannot

5

Having charged fraud, Brown has the burden of proving its
existence as an inducement to the making of the contract for
both his counterclaim and affirmative defense to Plaintiff’s
breach of contract claim. See Invengineering, Inc. v. Foregger
Co., 184 F. Supp. 366, 373 (D.N.J. 1960) (citing City of Clifton
v. Cresthaven Cemetery Ass'n, 71 A.2d 655, 657 (N.J. Super. Ct.
App. Div. 1950) (“The burden of establishing fraud rests upon
the party who asserts it.”).
19

satisfy the element of being a statement that is known to be
false at the time it is made.”) (citing Anderson, 4 N.J. at 391–
92); Van Dan Egg Co. v. Allendale Farms, Inc., 159 N.J. Super
452, 457 (App. Div. 1985)); Shtutman v. Carr, 2017 WL 4402045,
at *5 (N.J. Super. Ct. App. Div. 2017) (“Defendant's alleged
statements to plaintiff did not speak to a present or past fact
[to state an actionable fraudulent inducement claim]. Plaintiff
testified at his deposition defendant told him the Indigo–Energy
‘stock is going to increase,’ it was ‘going to rise,’ and ‘it's
going to go huge,’ and how ‘terrific everything was going to
be.’ Plaintiff also said he was told the stocks ‘c[ould]n't do
anything but go up.’

These statements all constituted

predictions about the future.”).
In sum, the mortgage documents, including the personal
guaranty signed by Brown, constitute the terms of the parties’
agreements, and those terms cannot be supplemented with
Schreiber’s oral representations to Brown.

The personal

guaranty cannot be rescinded based on Schreiber’s statements to
Brown because if they were credited, the personal guaranty would
become a nullity.

The personal guaranty also cannot be

rescinded under a fraudulent inducement argument because
Schreiber did not make any representations of past or present
fact.

Consequently, Plaintiff is entitled to summary judgment

in its favor on its breach of contract claim against Brown, and
20

on Brown’s fraudulent inducement counterclaim.
CONCLUSION
Even though the Court has determined that Brown is liable
under the personal guaranty, because of the particular
circumstances of this case, the Court will refrain from entering
final judgment against Brown at this time.

Plaintiff, Brown,

the receiver, and any other interested party shall confer on a
procedure to timely and equitably, but still within the rights
and obligations of the personal guaranty, move Plaintiff’s claim
against Brown, as well as Condor and NJG, to final judgment.
As discussed at oral argument, the Court is of the view
that the receiver should move expeditiously to conclude a market
sale, or if necessary a foreclosure sale, of the property so the
Court can conduct those proceedings necessary to quantify the
appropriate judgments against Defendants Condor, NJG and now
Brown.

If the parties cannot agree on that procedure within two

weeks of the date of this Opinion, the Court will set a hearing
to effect the entry of final judgments.
An appropriate Order will be entered.

Date:
May 2, 2019
At Camden, New Jersey

s/ Noel L. Hillman
NOEL L. HILLMAN, U.S.D.J.

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