NEW ENGLAND PETROLEUM LIMITED PARTNERSHIP v. DAIBES OIL LLC et al
Filing
153
OPINION. Signed by Judge Claire C. Cecchi on 3/16/18. (DD, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
NEW ENGLAND PETROLEUM LIMITED
PARTNERSHIP,
Civil Action No.: 14-cv-726
Plaintiff,
OPINION
V.
DAIBES OIL LLC, et aL,
Defendants.
CECCHI, District Judge.
I.
INTRODUCTION
This matter comes before the Court by way of two motions: (1) Defendants David L
Spector, CPA, P.C. and David L. Spector’s (collectively, the “Spector Defendants”) motion for
summary judgment as to counts nine and ten of Plaintiff New England Petroleum Limited
Partnership’s (“Plaintiff’) second amended complaint, (ECF No. 110); and (2) Plaintiffs motion
for summary judgment as to counts one through five and count eight of Plaintiff s second amended
complaint as against Defendants Daibes Oil LLC (“Daibes”), Munir J. Daibes (“Munir”), and Fred
A. Daibes (“Fred,” and collectively with Daibes and Munir, the “Daibes Defendants”). (ECF No.
111). After reviewing the submissions made in support of and in opposition to the instant motions,
as well as the arguments made on the record during oral argument on June 15, 2017, (ECF No.
14$ (“Tr.”)), and for the reasons set forth below,’ the Spector Defendants’ motion is denied and
Plaintiffs motion is granted in part and denied in part.
The Court considers any new arguments not presented by the parties to be waived. See Brenner
v. Local 514, United Bhd. of Carpenters &Joiners ofAm., 927 F.2d 1283, 129$ (3d Cir. 1991).
1
II.
BACKGROUND
“In or about September of 2007, Daibes.
.
.
and [Plaintiff] began a business relationship
pursuant to which Daibes.. would purchase petroleum products.
from [Plaintiff].”2 (ECF No.
.
111-2
¶ 1).
.
.
“In connection with the request to do business, and in the account applica
tion
submitted by Daibes.
.
.
to [Plaintiff], both Munir and Fred were listed as members of Daibes[.]”3
(Id.). Daibes “purchased [p]etroleum [p]roducts from [Plaintiff] by authorizing
Daibes[’s]
customers to lift {p]etroleum [p]roducts from [Plaintiffs p]etroleum {p]roducts
inventory at oil
terminals.” (Id.
¶ 2).
Plaintiff “would invoice Daibes.
.
.
for those liftings and Daibes.. would
.
pay [Plaintiff] for those invoices through electronic fund transfers
which ‘drafted’ (deducted) the amount owed from Daibes[’s]
..
.
.
.
.
generated by [Plaintiff],
bank accounts approximately ten
(10) days later.”4 (Id.).
“In 2008, as a condition of continuing to do business with Daibes.
Daibes
.
.
..
[Plaintiff] required
to submit an account application and current financial statements.”5
.
(Id.
¶ 3).
Moreover, on August 5, 2008, Daibes executed an agreement entitled “Acco
unt General Terms &
Conditions,” which sets forth the provisions governing Daibes’s purchases of petrole
um products
2
Unless otherwise indicated, the following factual background is not disputed by
the parties.
Although Daibes indicates it “disputes the purported facts contained in this paragr
aph with the
exception of Daibes.. commencing a business relationship with [Plaintiff] in or
about September
of 2007,” (ECF No. 122 ¶ 1), Daibes neither states its disagreement with this statem
ent nor cites
to “the affidavits and other documents submitted in connection with the motion.”
L. Civ. R. 56.1.
Accordingly, because this statement is “not disputed[, itJ shall be deemed undisp
uted for purposes
of the summary judgment motion.” Id. Moreover, Fred maintains that “he was
not aware of any
documents sent from Daibes
to [Plaintiff] at any point in time[.]” (ECF No. 12 1-26 1).
¶
Daibes admits this statement “with the exception that invoices must be agreed upon
and accepted
by Daibes
as to price and terms as a matter of law.” (ECF No. 122 2). Because statements
¶
of material facts “shall not contain legal argument or conclusions of law,” L. Civ.
R. 56.1, this
statement is deemed undisputed.
Although Daibes contends that Plaintiff “continued to do business with Daibes.
into 2008 and
beyond despite the representation of Alice Kuhne that a condition existed to do
business with
Daibes,” (id. ¶ 3), Daibes does not appear to dispute this statement.
.
.
.
.
.
.
.
.
2
.
from Plaintiff. (Id.
¶ 3;
ECF Nos. 122
¶ 3,
111-9 at 5). With regard to payment, the agreement
states that:
[Daibes] agrees to pay all amounts due, without offset or deduction, via means
acceptable to [Plaintiff] and within the terms of payment specified by [Plaintiff].
Notice of pricing dispute must be received by [Plaintiff] within seven (7) workin
g
days of the date of our invoice. The payment due date and terms of any cash
discount will be printed on [Plaintiffs] invoice. [Daibes] agrees to not take any
such discount unless in compliance with discount terms and to not deduct any
greater amount than that allowed. [Daibes] agrees to pay a service charge of the
lesser of 1.5% per month or the maximum amount allowable under state law on any
outstanding past due balance and to pay all attorneys’ fees, experts’ fees, costs and
expenses incurred by [Plaintiff] in the enforcement of [Daibes’s] obligations or
collection of the account and amounts due thereunder.
(ECF No. 111-9 at 5). The parties do not dispute the existence of this agreement, (ECF
Nos. 1112
¶ 3,
122
¶ 3),
although Daibes maintains that “payment of invoices
agreed upon and accepted by Daibes
¶ 4),
.
.
.
.
.
must be accepted and
as to price and terms as a matter of law,”6 (ECF No. 122
.
and Fred avers that he “had never seen the Account General Terms and Conditions
prior to
his deposition.” (ECF No. 12 1-26
¶ 3).
“At the commencement of the parties’ relationship, and over the years they did busine
ss
together, [Plaintiff] requested and received financial statements from Daibes.
.
.
that were prepared
by and attested to by defendant David L. Spector, CPA of David L. Spector, CPA,
P.C.” (ECF
No. 111-2 ¶ 6; see also ECF No. 110-4 ¶ 11 (noting that the Spector Defendants prepar
ed financial
statements for Daibes)). “These financial statements included statements of Daibes
[’s]
and liabilities, income, expenses, and cash flow.” (ECF No. 111-2
“Over the years, Daibes[’s]
increased substantially.” (Id.
¶ 7;
.
.
.
.
.
.
assets
¶ 6).
purchases of [p]etroleum [p]roducts from [Plaintiff]
.
ECF No. 12 1-26
2009.. [Plaintiff] received in the mail.
.
.
¶ 7).
Moreover, “[o]n or about August 13,
credit authorizations from Fred and Munir.
6
.
.
as well
Because statements of material facts “shall not contain legal argument or conclusions
of law,” L.
Civ. R. 56.1, this statement is deemed undisputed.
3
as executed, witnessed, and notarized guarantees from Fred.
¶ 8).
.
and Munir[.]” (ECF No. 111-2
.
Although Daibes contends it “disputes the purported facts contained in this paragraph,” (ECF
No. 122 ¶ 8), Daibes does not cite to “the affidavits and other documents submitted in connection
with the motion.” L. Civ. R. 56.1. Accordingly, because this statement is “not disputed[, it] shall
be deemed undisputed for purposes of the summary judgment motion.” Id.
Fred contends,
however, citing to documents submitted in connection with the motion, that “the document
purporting to be Fred’s guaranty was not executed by Fred.” (ECF No. 12 1-26 8).
¶
The guaranties state, in relevant part, that Fred and Munir:
[H] ereby jointly and severally guarantee(s) the payment of any and all amounts due
for petroleum products heretofore and/or hereafter sold and delivered by [Plaintiff]
to {Daibes]
as well as the payment or discharge of any and all other
indebtedness or obligations whether now or at any time hereafter owing or unpaid
from the above named [Daibes] to [Plaintiff]
This Guaranty shall continue in
full force and effect until revoked by the undersigned by giving fifteen (15) days
prior notice of revocation in writing by registered or certified mail to [Plaintiff.]
.
.
.
.
.
.
.
(ECF No. 111-9 at 11, 14). “On or about November 7, 2013, [Plaintiff] received from Daibes...
personal financial statements for Munir and Fred for the period ending December 21, 2012, which
were prepared and attested to by the Spector Defendants.” (ECF Nos. 111-2
122
¶ 12).
¶ 12,
121-26
¶ 12,
Over the Daibes Defendants’ objections, Plaintiff maintains that Plaintiff “relied on the
personal financial statements, and agreed to permit Daibes
[p]etroleum [p]roducts lifted.” (ECF No. 111-2
¶
¶
.
.
to increase the amount of
13).
“From January 3 to January 15, 2014, Daibes
[Plaintiff] more than 400 times.” (Id.
.
.
.
.
lifted [p]etroleum [p]roducts from
16). “As of January 15, 2014, the outstanding unpaid
amount of [p]etroleum [p]roducts exceeded $5 million.”7 (Id.). “On or about January 15, 2014,
Daibes admits the contents of this statement “with the exception of the amount of the outstanding
balance which has not been reasonably and/or precisely determined or calculated by [Plaintiff] as
a matter of law{.]” (ECF No. 122 ¶ 16). Although statements of material facts “shall not contain
‘
4
after a substantial amount of [p]etroleum [p]roducts was lifted, an [electronic fund transfer] draft
was not honored due to insufficient funds in Daibes[’s]
.
.
.
bank account.” (Id.). “The next day,
upon learning of the non-honored draft, [Plaintiff] refused to permit Daibes.
.
.
any further access
to lift [p]etroleum {p]roducts.”8 (Id.).
Dailies and Munir do not appear to dispute that Plaintiff tendered invoices to Daibes for
payment, that Daibes was required to pay Plaintiff for any petroleum products lifted, and that
Dailies and Munir have not paid Plaintiff. (ECF No. 122
¶J 45-48
(admitting these allegations
with the exception that Plaintiff argues that the amounts of monies owed have not been sufficiently
established)). Conversely, Fred maintains that he is “without knowledge” as to whether these facts
are true because Fred was not involved in the day to day work at Dailies, has no knowledge of any
documents, including financial statements, sent from Daibes to Plaintiff at any point in time, has
never seen the Account General Terms and Conditions agreement governing Plaintiffs invoices,
and did not execute a guaranty as to Daibes. (ECF No. 121-26
¶J 1, 3, 6,
8, 10, 35, 45-48).
On June 11, 2015, Plaintiff filed its second amended complaint in this Court. (ECF No.
83).
On October 14, 2016, the Spector Defendants and Plaintiff filed separate motions for
summary judgment. (ECF Nos. 110, 111). Plaintiff and Defendants subsequently filed a number
of additional submissions, which have been duly considered by the Court.
III.
LEGAL STANDARD
Summary judgment is appropriate if the “depositions, documents, electronically stored
information, affidavits or declarations, stipulations.
.
.
,admissions, interrogatory answers, or other
legal argument or conclusions of law,” L. Civ. R. 56.1, Daibes’s argument will be addressed in
further detail, infra.
8
Daibes admits the contents of this statement “with the exception [that]
[Plaintiff] did not
independently refuse to permit Dailies. to access [p]etroleum [p]roducts at that time.” (Id.).
.
.
.
5
.
.
materials,” Fed. R. Civ. P. 56(c), demonstrate that there is no genuine issue as to any material fact,
and, construing all facts and inferences in a light most favorable to the non-moving party, “the
moving party is entitled to ajudgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317,
322 (1986); see also Follock v. Am. Tel. & Tel. Long Lines, 794 F.2d 860, 864 (3d Cir. 1986).
The moving party has the initial burden of proving the absence of a genuine issue of
material fact. See Celotex, 477 U.S. at 323. Once the moving party meets this burden, the nonmoving party has the burden of identifying specific facts to show that, to the contrary, a genuine
issue of material fact exists for trial. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475
U.S. 574, 586-87 (1986). In order to meet its burden, the nonmoving party must “go beyond the
pleadings and by [its] 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, 477 U.S. at 324 (citations omitted); see also Big Apple BMW, Inc. v. BMW ofN. Am., Inc.,
974 F.2d 1358, 1363 (3d Cir. 1992) (“To raise a genuine issue of material fact,” the opponent must
exceed “the ‘mere scintilla’ threshold.
. . .“).
An issue is “genuine” if it is supported by evidence
such that a reasonable jury could return a verdict in the non-moving party’s favor. See Anderson
v. Liberty Lobby Inc., 477 U.S. 242, 248 (1986). A fact is “material” if, under the governing
substantive law, a dispute about the fact might affect the outcome of the suit. See 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. Indus. Crating Co., 358 F.3d
241, 247 (3d Cir. 2004) (quoting Anderson, 477 U.S. at 255).
6
IV.
DISCUSSION
A.
The Spector Defendants’ Motion for Summary Judgment
Currently before the Court is the Spector Defendants’ motion for summary judgment as to
count nine (fraudulent misrepresentation) and count ten (aiding and abetting fraudulent
misrepresentation) of Plaintiffs second amended complaint. (ECF No. 110). In support of the
Spector Defendants’ motion, they argue that: (1) the evidence put forth by Plaintiff is insufficient
to establish a cause of action under New Jersey law; and (2) based upon evidence adduced during
discovery, the Spector Defendants are entitled to summary judgment. (Id.). Each of the Spector
Defendants’ arguments will be addressed in turn.
1.
Reasonable Reliance
The Spector Defendants argue that the evidence put forth by Plaintiff is insufficient to
establish a cause of action under New Jersey law. (Id. at 1). More specifically, the Spector
Defendants contend that Plaintiff is unable to establish the “reasonable reliance” element of a
common law fraud claim.
“The elements of common law fraud are: ‘(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.” Electromagnetic Techs. Indus., Inc. v. CCOM, No. 13-3981, 2015 WL 3879691, at *1
(D.N.J. June 22, 2015) (citing Gennari v. Weichert Co. Realtors, 691 A.2d 350, 367 (N.J. l997)).
The Spector Defendants argue that Plaintiff is unable to establish the “reasonable reliance” element
Although the parties disagree as to whether New Jersey law or Massachusetts law applies in this
matter, the parties “agree that Massachusetts and New Jersey law are the same in the relevant
areas” of their motions for summaryjudgment. (Tr. at 4:23-5:8). Accordingly, the Court will cite
to both New Jersey and Massachusetts law in this Opinion.
7
of a common law fraud claim because Gary Kaneb, the President of Plaintiff:
[T]estifled unequivocally that in extending credit to Defendant Daibes. he relied
exclusively on what he understood to be the net worth of Defendants [Fred] and
[Munir]
additionally the expert retained by Plaintiff in order to prove its fraud
allegations against the Spector Defendants, has refused to opine that a fraud was,
in fact, committed.. [T]he uncontroverted evidence discerned through discovery
reveals that [Plaintiff] did not rely upon those financial statements in any manner
whatsoever, when it extended credit and/or increased credit to [Plaintiff]. Plaintiff
made it’s [sic] decisions based solely upon the net worth of [Fred] and his alleged
personal guarantees.
.
..
.
.
.
.
(ECF No. 110-1 at 1-2). Accordingly, the Spector Defendants maintain that no genuine issue of
material fact exists with respect to the “reasonable reliance” element of a common law fraud claim
and therefore, the Spector Defendants are entitled to summary judgment.
The Court disagrees.
In opposition to the Spector Defendants’ contention, Plaintiff
identifies three pieces of evidence in support of its argument that Plaintiff reasonably relied on the
financial statements prepared by the Spector Defendants in deciding whether to authorize an
increase in Daibes’s credit line. first, Plaintiff points to Plaintiffs “Credit Review Form,” which
purportedly “shows that [Plaintiff] maintained a record of the information obtained from the
Financial Statements prepared by the Spector Defendants and reviewed the information, which
was required to satisfy [Plaintiff] that Daibes.
.
.
had the financial ability to repay its debts.” (ECF
No. 11$ at 12;see also ECFNo. 111-s at 156-63).
Second, Plaintiff relies on the deposition testimony of Alice Kubne, Treasurer of
Continental Management Corporation, General Partner of Plaintiff, which states in relevant part:
Q.
What is the decision [to provide credit] based upon?
A. The application, knowledge of the company, the financial statements provided
for the company, references provided.
And why was a decision made to sell to [Daibes] during that period 2007, 2009,
even though they had yet to provide a personal guarantee?
Q.
8
A. We had financial statements for the company prepared by a professional
accountant that we relied upon.
Q.
How is the credit line set by New England Petroleum?
A. It’s based on financial statements or tax returns, references, whether or not we
have a personal guarantee, a letter of credit, a cash deposit, knowledge of the
company, history of the company, et cetera.
(ECfNo5. 110-11 at 14, 22; 110-12 at 19-20).
Third, Plaintiff highlights the deposition testimony of Ms. McSweeney, Plaintiffs Credit
Manager, which states in relevant part:
On a credit application, what items would be of concern to you that would make
you request a personal guarantee?
Q.
A. Not the credit application. It’s the financial statements.
Q.
During your review of the financial statements, what concerns would the
financial statements raise which would lead you to request a personal guarantee?
A
Low equity.
(ECFNo. 111-8 at 15).
Based on the foregoing, the Court cannot find that there is no genuine issue of material fact
as to Plaintiffs reliance. Even assuming the Spector Defendants are correct in asserting that Mr.
Kaneb testified that he did not rely on Daibes’s financial statements in deciding whether to extend
Daibes’s credit line, Plaintiff sets forth sufficient evidence that Plaintzfj through individuals such
as Ms. Kuhne and Ms. McSweeney, did in fact rely on such statements. Accordingly, the Spector
Defendants’ argument is without merit.
The Spector Defendants further argue that, even if Plaintiff was able to establish the
reliance element of a common law fraud claim, Plaintiffs reliance was unjustifiable because
9
“Plaintiff failed to conduct even a cursory investigation as to the financial stability of’ Daibes.
(ECF No. 110-1 at 3). Based on the foregoing, the Court finds that at a minimum, there is a genuine
issue of material fact as to whether Plaintiffs reliance was justifiable. See supra (discussing the
documents and information considered by Plaintiff in deciding whether to issue credit to Daibes).
As such, this argument is also without merit.
2.
Mr. Love’s Opinion and Testimony
The Spector Defendants next argue that based upon evidence adduced during discovery,
the Spector Defendants are entitled to sunnnaryjudgment. (ECF No. 112 at 4). More specifically,
in addition to their reliance argument, the Spector Defendants contend that Plaintiff is unable to
prove the elements of fraud by “clear and convincing evidence” because “Plaintiff is unable to rely
upon Mr. Love’s [(Plaintiffs expert witness)] opinion[.]” (Id. at 5-6).
As a preliminary matter, the Court notes that the Spector Defendants’ contention assumes
that a plaintiff cannot survive summary judgment on a fraud claim without reliance on an expert
witness. Nonetheless, depending on “the facts of [a] case, expert testimony [may] not [be]
necessary to establish a prima fade case.
.
.
for fraud[.]” Saitrino v. Senatore, No. A-5805-04T1,
2006 WL 2346300, at *2 (N.J. Super. Ct. App. Div. Aug. 15, 2006).
Even if expert testimony was necessary to establish a prima facie case for fraud, the Spector
Defendants’ contentions concerning Mr. Love are meritless.
first, the Spector Defendants
maintain that “Mr. Love refused to opine that the Spector Defendants had committed fraud.” (ECF
No. 1 10-1 at 5). Second, the Spector Defendants aver that “Mr. Love’s opinion that there is
‘indicia of fraud’ may well be subject to exclusion [because s]ituations in which the failure to
qualify the opinion have resulted in exclusion are usually those in which the expert testimony may
be considered speculative, through use of words such as ‘possibility.” (Id. (citing cases)).
10
Nonetheless, Mr. Love’s testimony states in relevant part:
Q. When you say “indicia of fraud,” what do you mean?
A. The conditions that could lead to that fraud. fraud includes an action and intent.
“Intent” is a state of mind. I can talk about the indicia for it. I can’t talk about a
person’s state of mind.
Q. So your testimony is that these indicia, these elements could show that the fraud
existed but you don’t know for certain?
A. No. Let me say, there’s a very strong indicia here of fraud. Okay? Only a trier
of fact is going to make a determination if there was fraud. Okay? That’s the
ultimate question on the fraud. Everything here, the books, the records, the
interrelationship of transactions and business transactions, not being able to find
documents to support things, they are all indicia of fraud.
(ECF No. 110-10 at 9). Accordingly, although the Spector Defendants contend that Mr. Love
refused to opine that the Spector Defendants had committed fraud, Mr. Love’s true contention was
that whether the Spector Defendants are in fact guilty of fraud is a question for the jury. For the
same reason, Mr. Love chose to opine on whether “indicia” of fraud existed in the present case,
rather than conclude fraud occurred. The Court does not find that such qualifications make Mr.
Love’s opinion so speculative as to render it excludable. Contra State v. Harvey, 581 A.2d 483,
495 (N.J. 1990) (instructing the court that on remand, an expert’s testimony that an injury possibly
or possibly not consisted of two injuries would be inadmissible). As such, the Spector Defendants’
arguments fail and their motion for summary judgment is denied.
B.
Plaintiffs Motion for Summary Judgment
Also currently before the Court is Plaintiffs motion for summary judgment as to counts
one through five (breach of contract, book account, breach of the implied covenant of good faith
and fair dealing, unjust enrichment, and breach of guaranty) and count eight (estoppel) of
Plaintiffs second amended complaint. (ECF No. 111). With respect to counts one through three,
Plaintiff moves for
sun-imary
judgment only as to Daibes. With respect to count four, Plaintiff
11
moves for summary judgment as to all of the Daibes Defendants. With respect to count five,
Plaintiff moves for summary judgment only as to Munir and Fred, and with respect to count eight,
Plaintiff moves for summary judgment only as to Fred. Each count will be addressed in turn.
1.
Breach of Contract (Count One)
Plaintiff first argues that the Court should grant summary judgment as to count one because
Daibes breached its agreement with Plaintiff. “To sustain a breach of contract claim, [a plaintiff]
must establish: ‘(1) a contract between the parties; (2) a breach of that contract; (3) damages
flowing therefrom; and (4) that [the plaintiff] performed its own contractual obligations.”
Mehrnia v. New Century Bank, No. 10-4159, 2012 WL 481282, at *3 (D.N.J. Feb. 10, 2012) (citing
Frederico v. Home Depot, 507 F.3d 188, 203 (3d Cir. 2007)).
Here, the undisputed evidence demonstrates that Daibes executed and delivered to Plaintiff
an agreement entitled “Account General Terms & Conditions.” (ECF Nos. 111-2 3, 122 3; see
¶
¶
also ECF No. 111-9 at 5). Pursuant to this agreement, Daibes purchased petroleum products from
Plaintiff, for which Plaintiff rendered invoices to Daibes. (ECF No. 111-9 at 5). The agreement
required Daibes to pay all amounts due on the invoices in accordance with the terms set forth on
such invoices. (Id.). Daibes was also required:
[T}o pay a service charge of the lesser of 1.5% per month or the maximum amount
allowable under state law on any outstanding past due balance and to pay all
attorneys’ fees, experts’ fees, costs and expenses incurred by [Plaintiff] in the
enforcement of[Daibes’s] obligations or collection of the account and amounts due
thereunder.
(Id.).
Daibes undisputedly agreed to the provisions required under the agreement, which was
executed on August 5, 2008. (ECF Nos. 111-2
¶J 3, 46;
122
¶J 3,
46). Daibes has not paid the
amounts due or the service charge required by the agreement. (ECF Nos. 111-2
¶ 47,
122
¶ 47).
Therefore, Daibes is currently in default. There is no dispute that Plaintiff performed its own
12
contractual obligations under the agreement. (ECF Nos. 111-2
¶ 45,
122
¶ 45).
Rather, Daibes
contends that Plaintiffs failure “to provide adequate support for the specific amounts it is seeking
from Daibes” renders summary judgment inappropriate. (ECF No. 120 at 9).
In support of its damages calculations, Plaintiff submitted a summary of invoices produced
in discovery and two certifications under oath. The summary of invoices shows that between
January 3, 2014 and January 15, 2014, Daibes incurred invoices totaling $5,619,400.84, which had
not been paid to Plaintiff. (ECF No. 111-12 at 70-78; see also ECF No. 111-10 at 2-13 (same)).
As to Plaintiffs submitted certifications, Ms. Kuhne’s first certification states, in relevant part:
As of January 15, 2014, the outstanding unpaid amount of [p]etroleum [p]roducts
exceeded $5 million. In total, the sum of $5,619,400.84 is due and owing from
Daibes
to [Plaintiff] for the [p]etroleum [p]roducts purchased by Daibes
during the twelve (12) day period they lifted the products.
.
(ECF No. 111-3
.
.
¶J 13-14; see also ECF No.
126-3
¶ 8 (stating in Ms. Kuhne’s second certification
that “the sum of $5,619,400.84 is due and owing from Daibes
.
.
.
to [Plaintiff] for [p]etroleum
[pjroducts purchased by Daibes.. for which they have not paid.”)).
.
With respect to the service charge, Plaintiff provided a certification under oath, stating that:
As to the service charges owed, the Agreement clearly provides: “Customer agrees
to pay a service charge of the lesser of 1.5% per month or the maximum amount
allowable under state law on any outstanding past due balance....” That amount
equates to 18% per annum. Attached hereto as Exhibit A is a true copy of the
calculations compiled as to the amount due for service charges. The amount due
for contractually mandated service charges through November 21, 2016 (the
adjourned return date of this motion) is $2,869,306.99.
(ECF No. 126-3
¶J 11-12; see also id.
at 5-15 (presenting in a spreadsheet the service charges for
the period between January 3, 2014 and January 15, 20l4)).b0
10
The Court notes that Plaintiff “only ran interest through the initial return date of the motion
which was November of 2016.” (Tr. at 25:14-15). The Court further notes that Plaintiff testified
that it will submit a separate affidavit as to attorneys’ fees and expert fees. (Tr. 25:17-19). Plaintiff
is directed to include in such affidavit interest calculations for the period after November 2016.
13
Despite the evidence presented by Plaintiff, Daibes argues that “the lack of [Plaintiff’s]
ability to identify any portions of the pleadings, depositions, answers to interrogatories, and/or
admissions on file regarding the specific damage amounts required by [Plaintiff],” means that
“[Plaintiff] has failed to demonstrate the absence of a genuine issue of material fact as it relates to
[Plaintiffs] breach of the Agreement claim.” (ECF No. 120 at 10). The Court disagrees. The
evidence provided by Plaintiff satisfies Plaintiffs initial burden of proving the absence of a
genuine issue of material fact. See Celotex, 477 U.S. at 323.
Therefore, the burden of identifying specific facts to show that, to the contrary, a genuine
issue of material fact existed for trial, shifted to Daibes. See Matsushita Elec. Indus. Co., 475 U.S.
at 586-87. Daibes therefore must have “go[ne] beyond the pleadings and by [its] own affidavits,
or by the ‘depositions, answers to interrogatories, and admissions on file,’ designate[d] ‘specific
facts showing that there is a genuine issue for trial.” Celotex, 477 U.S. at 324; see also Big Apple
BMW, Inc., 974 F.2d at 1363. Because Daibes has failed to identify any evidence contradicting
Plaintiffs damages calculations, Daibes’s argument is without merit. Accordingly, Plaintiffs
motion for summary judgment with respect to count one as against Daibes is granted.
2.
Book Account (Count Two), Breach of the Implied Covenant of
Good Faith and Fair Dealing (Count Three), and Unjust Enrichment
(Count Four)
Plaintiffnext argues that the Court should grant summary judgment as to count two because
Daibes is liable to Plaintiff under a book account, as to count three because Daibes breached the
covenant of good faith and fair dealing, and as to count four because the Daibes Defendants have
been unjustly enriched. During oral argument, however, Plaintiff clarified that counts two through
four were pled as alternative theories of liability, and need not be adjudicated if summary judgment
was granted on count one. (Tr. at 24:11-25:12, 39:10-11). Accordingly, Plaintiffs motion for
summary judgment with respect to count two as to Daibes, with respect to count three as to Daibes,
14
and with respect to count four as to the Daibes Defendants is denied as moot.
3.
Breach of Guaranty (Count Five)
Plaintiff further contends that the Court should grant summary judgment as to count five
because Munir and Fred breached their respective guaranties.
To be entitled to a judgment on a guaranty, a plaintiff must demonstrate: 1)
execution of the guarantee by the guarantor (i.e., that it was the defendant who
signed the guarantee); 2) the principal obligation and terms of the guaranty; 3) the
lender’s reliance on the guaranty in extending monies to the borrower; 4) default
by the principal obligator; 5) written demand for payment on the guarantee; [and]
6) failure of the guarantor to pay upon written demand.
US. on Behalf of Small Bus. Admin. v. DelGuercio, 818 F. Supp. 725, 727-28 (D.N.J. 1993).
Because Munir and Fred’s guaranties require different analyses, each will be addressed in turn.
a.
Munir
With respect to Munir, there is no dispute that Munir voluntarily and knowingly executed
the guaranty. (ECF No. 122
¶8
(“Admit
.
.
.
to [Plaintiff] receiving a personal guaranty from
Munir Daibes[.]”)). Further, despite Munir’s arguments to the contrary, the terms of the guaranty
itself are unambiguous. The guaranty states, in pertinent part, that Munir:
[H] ereby jointly and severally guarantee(s) the payment of any and all amounts due
for petroleum products heretofore and/or hereafter sold and delivered by [Plaintiff]
to [Daibes]
as well as the payment or discharge of any and all other
indebtedness or obligations whether now or at any time hereafter owing or unpaid
from the above named [Daibes] to [Plaintiff]
This Guaranty shall continue in
full force and effect until revoked by the undersigned by giving fifteen (15) days
prior notice of revocation in writing by registered or certified mail to [Plaintiff.]
.
.
.
.
.
.
.
(ECF No. 111-9 at 11). Although Munir purports to dispute that Plaintiff relied on Munir’s
guaranty in extending monies to Daibes, (ECF No. 122 ¶ 7), Munir cites to no “affidavits [or] other
documents submitted in connection with the motion” in support of such opposition. L Civ. R.
56.1. Rather, Munir merely cites to two deposition transcripts discussing what Daibes’s credit line
15
was at certain periods of time. (ECF Nos. 121-7 at 4-5, 121-8 at 3). Accordingly, Munir has not
met his burden that a genuine issue of material fact exists for trial.
Additionally, Munir concedes that he has defaulted. (ECF No. 122 ¶J 46, 48). Finally, on
January 24, 2014, Plaintiff made a written demand for payment on the guaranty, (ECF No. 111-10
at 2-3), which Munir has not paid. (ECF No. 122
¶ 48).
Accordingly, because all of the elements
necessary to establish a prima facie case ofbreach of guarantyhave been satisfied, and no genuine
issue of material fact exists as to these elements, Plaintiffs motion for summary judgment with
respect to count five as to Munir is granted.
b.
Fred
Unlike Munir, Fred does not concede that the first element of a breach of guaranty claim,
execution of the guaranty by the guarantor, has been met. (ECF No. 12 1-26
¶ 8).
Rather, Fred
maintains that “the document purporting to be Fred’s guaranty was not executed by Fred.” (Id.).
Despite Fred’s contention, Plaintiff argues that Fred is nonetheless liable because Fred’s notarized,
witnessed guaranty is presumed valid. SCF No. 111-1 at 20).
“A certificate of acknowledgment made by a duly authorized officer is regarded as prima
facie evidence that the person therein named executed the instrument to which it is attached as his
voluntary act and deed.” Dencer v. Erb, 60 A.2d 282, 285 (N.J. Ch. 1948). “The statements
contained in the acknowledgment may be shown to be untrue.” Id. “But to establish its falsity
and overcome the strong presumption of its integrity the proof must be clear, satisfactory, and
convincing.” Id.
Plaintiff contends that Fred has not overcome this presumption for two reasons. First,
Plaintiff argues that Fred’s self-serving testimony carries little weight with respect to overcoming
the presumption of validity.
(ECF No. 111-1 at 21).
16
Second, Plaintiff avers that Fred’s
handwriting expert “refused to offer an opinion to a reasonable degree of certainty or even a
probability as to whether Fred was incapable of being the signatory to the Fred Guaranty. Nor
could [Plaintiffs expert] eliminate Fred as the signer of the document.”
(Id. at 21-22).
Accordingly, Plaintiff maintains that Fred’s expert’s “testimony is of such a vague and
indeterminate nature that it cannot defeat sunm1ary judgment.” (Id. at 22).
In opposition, Fred contends that “[a]mple evidence in the record supports Fred’s position
that he did not sign the guaranty.” (ECF No. 121 at 13). Such purported evidence includes: (1)
Fred’s testimony under oath that he did not sign the guaranty; (2) Fred’s expert’s testimony that
Fred’s signature was not authentic; and (3) testimony from the notary and witness to Fred’s
signature that they do not know whether Fred signed the guaranty. (Id. at 13-14).
Despite Plaintiffs arguments to the contrary, the Court does not find that Fred’s expert’s
“testimony is of such a vague and indeterminate nature that it cannot defeat summary judgment.”
(ECF No. 126 at 17). Rather, Fred’s expert opined that “the signature on the questioned guaranty
is not a genuine signature of Mr. Daibes.” (ECF No. 121-21 at 4). This opinion is also consistent
with Fred’s testimony that he did not sign the guaranty.
Plaintiff further contends that the following evidence supports the presumption of validity:
(1) Fred’s notary’s testimony about the authenticity of Fred’s signature; (2) the amount of times
Fred’s notary has notarized Fred’s signature; and (3) Fred’s notary’s unwillingness to sign
anything that she did not believe contained Fred’s signature. Nevertheless, Fred’s notary testified
during her deposition that she could not say if Fred signed the guaranty or not. (ECF No. 12 1-5 at
3). The purported witness to the guaranty testified to the same. (ECF No. 12 1-22 at 4
(“Q. But
you don’t have any personal knowledge sitting here today whether it was really him who signed it
or somebody else? A. I just don’t know.”)). In fact, Fred’s notary and the purported witness to
17
the guaranty notarized and signed the guaranty out of Fred’s presence, without knowledge of
whether Fred signed the guaranty. Combined with the evidence discussed above, the Court finds
that Fred has overcome the presumption of validity and that a genuine issue of material fact exists
as to whether Fred signed the guaranty. See Keville v. McKeever, 675 N.E.2d 417, 430 (Mass.
App. Ct. 1997) (“[W]e agree with the guardian that tthe presumption of validity] was rebutted
by
(a) the notary’s admission that she notarized a signature on a document.
.
.
that was not signed in
her presence; (b) Marian’s admission that the Harvard Avenue deed was signed out of the notary’s
presence, and (c) McCann’s expert opinion that it was Marian who signed Joseph’s name to the
deed.”). Accordingly, Plaintiffs motion for summary judgment with respect to count five as to
Fred is denied.
4.
Estoppel (Count fight)
Plaintiff argues that the Court should grant summary judgment as to count eight because
Fred is estopped from disclaiming responsibility for the debt he owes to Plaintiff. “Equitable
estoppel ‘is designed to ensure that the loss is borne by the party who “made the injury possible or
could have prevented it.” Mortg. Elec. Registration Sys., Inc. v. Omar, No. A-5 1 87-06T3, 200$
WL 2050834, at *6 (N.J. Super. Ct. App. Div. May 15, 2008) (citations omitted). “Equitable
estoppel does not require evidence of fraudulent intent; the doctrine applies if the conduct ‘works
an unjust or inequitable result to the person it was designed to influence.” Id. (citations omitted).
“[A]s between two innocent parties[,] equity will visit the loss upon the one by whose act the injury
first could have been avoided.” Id. (alterations in original) (citations omitted).
Here, Plaintiff assumes for the purposes of its argument that Fred is an innocent party, and
contends that Fred should be responsible for the debt owed to Plaintiff because Fred “was in the
best position to prevent the submission to [Plaintiff] of the allegedly forged Fred Guaranty.” (ECF
18
No. 111-1 at 26). In support of Plaintiffs contention, Plaintiff points to the following allegations:
(1) fred testified that he did not always sign documents in front of a notary; (2) Plaintiff had no
reason to question the signed, witnessed, and notarized guaranty; and (3) fred haphazardly handled
notarizations in his office. (Id. at 25-27). Because the actual harm suffered by Plaintiff resulted
from Daibes’s failure to pay Plaintiffs invoices, Plaintiffs argument necessarily implies that,
without submission of Fred’s purported guaranty, such default could have been prevented.
In opposition to Plaintiffs argument, fred maintains that it was Plaintiff that made
Daibes’s default possible, or could have prevented such default by Daibes. (ECF No. 121 at 19).
In support of Fred’s contention, Fred avers that Plaintiff “consistently allowed Daibes.
.
.
to run
balances that were significantly higher than the company’s credit limits.” (Id.). Moreover, Fred
alleges that “Daibes[’s]
.
.
.
credit limit began at $250,000, ultimately increasing to $2 million.
Nonetheless, [Plaintiff] permitted Daibes.
.
.
to run balances far exceeding these limits, at times
exceeding $5 million.” (Id.). Finally, Fred purports that Plaintiff “possessed a mechanism to lock
purchasers out of the system and prevent them from lifting, but it neglected to lock Daibes.
.
.
out
until January 2014, after the balance had increased to approximately $5.8 million.” (Id.).
Based on the foregoing, the Court finds that a genuine issue of material fact exists as to
which party’s actions or inactions could have first prevented Daibes’s default. See Farmers Nat’l
Bank & Tr. Co. ofReading v. Flexible Truck Coip., $1 F.2d 541, 541 (3d Cir. 1936) (“If we apply
the principle that where one of two innocent parties must suffer through the wrongdoing of a third,
the loss must be borne by that party whose act or omission made possible the wrong, then it
becomes a question for the jury whether the omission of the appellee
.
.
.
was not the dominant
factor in making the loss possible.”).
furthermore, it appears that Plaintiff also argues that summary judgment is proper under
19
the more modem approach to equitable estoppel claims. Pursuant to the more modem approach,
“[t]he essential elements of equitable estoppel are a knowing and intentional misrepresentation by
the party sought to be estopped under circumstances in which the misrepresentation would
probably induce reliance, and reliance by the party seeking estoppel to his or her detriment.”
O’Malley v. Dep’t of Energy, 537 A.2d 647, 651 (N.J. 1987). Nonetheless, because Fred has
demonstrated a genuine issue of material fact as to whether Fred signed the guaranty, Plaintiff is
unable to establish a knowing and intentional misrepresentation at this stage of the litigation. See
supra Part W.B.3.b. Accordingly, summary judgment with respect to count eight as to Fred is
denied.
V.
CONCLUSION
For the reasons stated above, the Spector Defendants’ motion for summary judgment is
denied. Further, Plaintiffs motion for summary judgment is granted in part and denied in part.
An appropriate Order accompanies this Opinion.
Dated:
I
° ‘
CLAIRE C. CECCHI, U.S.D.J.
20
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