AKM INTERNATIONAL, LLC et al v. CHEN et al

Filing 33

OPINION. Signed by Judge Kevin McNulty on 6/14/17. (sr, )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

AKM INTERNATIONAL, LLC and
CHUN-CHIEN LIN,

Civ. No. 14-2111 (KM) (JBC)

Plaintiffs,

OPINION

V.

JERRY CHEN, LASH VOLKSWAGEN,
INC., NEW COUNTRY AUDI, INC., and
MGD, LLC,
Defendants.

KEVIN MCNULTY, U.S.D.J.:
Plaintiffs AKM International, LLC (“AKM”) and Chun-Chien Lin (“Mr. Lin”)
(collectively, “Plaintiffs”) bring this action against Defendants Jerry Chen (“Mr.
Chen”), Lash Volkswagen, Inc., MGD, LLC (“MGD”), and New Country Audi
Motor Cars of Greenwich, Inc. (“New Country”).i The Complaint, in eight
counts, asserts claims of tort and breach of contract arising from the
defendants’ alleged incomplete performance of a contract to deliver several
BMW motor vehicles. Essentially, Plaintiffs contend that Jerry Chen sold them
some new BMWs (for resale to a third party in China), which he failed to
deliver. The issue on this motion is whether Mr. Chen was acting as the actual
or apparent agent of New Country when he did that. Now before the Court is
Defendant New Country’s motion (ECF no. 30)2 for summary judgment.

Defendant New Country was improperly pled as “New Country Audi, Inc.”
2

Record items cited repeatedly will be abbreviated as follows:
“Compl.”

Complaint (ECF no. 1-1)

=

“Def. Mot.”

=

Defendant New Country Motor Cars of Greenwich, Inc.’s
Brief in Support of Motion for Summary Judgment (ECF no.
30-2)
1

For the reasons set forth below, the evidence fails to raise any material
issue of fact as to the viability of Plaintiffs’ claims against New Country.
Summary judgment in favor of New Country on all counts will be granted.
I.

BACKGROUND
Plaintiff Chun-Chien Lin is the sole principal and owner of AKM, a New

Jersey limited liability company. (Def. Facts

¶{

2—4) New Country is an Audi

motor vehicle dealership located in Greenwich, Connecticut. (Id.

¶

1)

Connecticut’s motor vehicle laws prohibit New Country, as an Audi dealership,
from selling new BMWs. (Id.
3
liability company. (Id.

¶

¶

36) Defendant MGD is a Connecticut limited

7)

On October 7, 2011, Defendant Jerry Chen, a New Country salesperson,
4
left work early and never returned to New Country. (P1. Opp. Ex. F) A week
later, on October 14, 2011, Mr. Chen offered to sell the Plaintiffs eight new
5
BMW X5 motor vehicles (the “BMWs”). (Id.

¶

16) On that date, Mr. Chen sent

an e-mail message from his New Country e-mail account to Mr. Lin, offering
“MSRP [manufacturer’s suggested retail price] less $750 off only for you my
brother.” (P1. Opp. Ex. D)
“P1.

Opp.”

Plaintiffs AKM International, LLC. and Chun-Chien Lin,
Brief in Response to Defendant (New Country Audi’s),
Motion for Summary Judgment (ECF no. 31)

=

“Def. Reply”

=

“Def. Facts”

=

“P1. Facts”

=

Defendant New Country Motor Cars of Greenwich, Inc.’s
Reply Brief in Support of Motion for Summary Judgment
(ECF no. 32)
Defendant New Country Motor Cars of Greenwich, Inc.’s
Local Rule 56.1 Statement of Undisputed Material Facts in
Support of Motion for Summary Judgment (ECF no. 30-1)
Plaintiff AKM International, LLC. and Chun-Chien Lin’s
Local Rule 56.1 Statement of Undisputed Material Facts in
Response to Motion for Summary Judgment (ECF no. 3 1-6)

New Country is permitted to sell used BMWs. (See Def. Mot. Ex. I, Mackey Dep.
210:21—25)
3

Jerry Chen is also known as Gee Chen. (See, e.g., Def. Mot. Ex. H)
In the Complaint, Plaintiffs allege that only seven BMWs were offered for sale,
but now, after discovery, they state that the number was in fact eight. (Def. Facts ¶ 16)
2

Mr. Chen testified that Mr. Lin was not the “ultimate purchaser” but a
reseller or agent. (Def. Mot. Ex. D, Chen Dep. 91:5—7) The client of Lin and
MGD, i.e., the ultimate purchaser of the eight new BMWs, was a third party in
6
China. On October 14, 2011, that Chinese third party made a $70,000 wire
transfer payment to MGD. (Def. Facts

¶J 17—19; P1. Facts ¶{ 17—19)

Subsequently, the same client made four additional wire transfer payments,
totaling $453,400, to MOD’s account. (Id. ¶j 18—19) And the communications
between Mr. Chen and Plaintiffs regarding the BMWs, said Chen, had “nothing
to do with New Country.” (Def. Mot. Ex. D, Chen. Dep. at 110:15—24). (Def.
Facts

¶ 21)
Five of the BMWs were delivered to the Plaintiffs as promised. (P1. Facts

¶

22) Those vehicles were purchased from various BMW dealerships: BMW of
Westchester, Hassel BMW, or BMW of New London. (Def. Facts
7

¶ 34) None of

those delivered vehicles, testified Mr. Chen, were purchased from New Country.
(Def. Facts

¶ 29)

The remaining three BMWs—the ones that were not delivered as
promised—are the subject of Plaintiffs’ Complaint. Those three did not come
from New Country, either. Rather, individuals from Clifton, NJ, Bensalem,
Pennsylvania, and West Sayerville, New York purchased those BMWs from
Hassel BMW. (Def. Facts

¶J 30, 35; P1. Facts ¶ 30)

Mr. Lin testified that he never signed a contract with, received an invoice
from, or transferred money to, New Country. (Def. Facts

¶ 25) Plaintiffs have

offered no evidence that New Country had any control over the payments wired
to MOD. Nevertheless, Mr. Lin states that he believed Mr. Chen was acting on

Actually, Plaintiffs produced documentation concerning only four of the BMWs.
Neither Mr. Lin’s name nor AKM’s name appears in any of those documents. (Def.
Facts ¶11 23—24)

6

7
Plaintiffs contend that Mr. Chen and MOD were agents of, or somehow affiliated
with, New Country. They do not allege any other connection between New Country and
these sales. (P1. Facts ¶ 34)

3

8
behalf of New Country and that MGD was a part of New Country. (P1. Facts ¶j
17—18, 25) The plaintiffs contend that Chen acted as New Country’s employee
or agent in the transaction. (See P1. Facts

¶J 20— 21, 24, 26, 29, 31—35)

Although Mr. Chen did not formally resign from New Country, there
seems to be no dispute that he quit at some point. According to a November 2,
2011 letter from then—New Country General Sales Manager Mark DeMarsico,
Mr. Chen was removed from New Country’s payroll as of October 31, 2011 for
job abandonment. Mr. DeMarsico’s letter describes the circumstances leading
to the termination of Mr. Chen’s employment at New Country:
On Friday October 7th 2011 Gee Chen texted messaged Julia
Glaser here at New Country Audi Sales stating he was leaving early
from work he was not feeling well, he followed up on Saturday
October 8th that [hje was going to be in the hospital for a few days
and has not returned to work since.
I Mark DeMarsico the general sales manager have called his cell
phone several times to question whether he was returning to work
or not and Mr. Chen has not returned any of the calls. He has
contacted David Uva to say he was still not feeling well and to
question him about deals. He has not called or contacted any of
the management staff making us aware he was not coming in or
coming back to work.
I requested and have waited for three weeks to receive a letter from
him regarding a leave of absence for medical reasons and have
received nothing, As of October 31st 2011 Gee Chen should be
removed from payroll for job abandonment.
Mark DeMarsico
General Sales Manager
New Country Audi

At his deposition, Mr. Lin explained that “In my mind, I still deal with New
Country Audi.” (P1. Facts ¶ 25) (quoting Lin Dep. 56:21—23) Mr. Lin did not ask Mr.
Chen any questions about MGD, and instead “assume[d] that [MGD] is an internal
change for New Country Audi,” because it was his understanding that Mr. Chen was
working for New Country. (Lin Dep. Tr. at 55:14—21; 56:21—25) Mr. Lin based that
understanding, at least in part, on the fact that Mr. Chen had sent him the offer e
mail from a New Country e-mail address and that Mr. Lin would call Mr. Chen at his
New Country Audi phone number if he could not reach him at his cellular phone
number. (Id. at 57:8—14)
8

4

(Def. Mot. Ex. H)
Mr. Chen began working at Lash Auto Group shortly after leaving New
Country. This is corroborated by evidence that on October 21, 2011, Lash
Volkswagen direct-deposited $450 into Chen’s HSBC checking account. (Def.
Facts

¶

27; Def. Mot. Ex. F) Chen testified at his deposition that he was

employed at Lash Volkswagen when all of the wire transfers from Plaintiffs’
client to MOD for the BMWs occurred, all the way back to the first transfer on
October 14, 2011. (Def Facts

¶

28; see also Chen Dep. 154:1—13)

On January 17, 2014, New Country filed a complaint in Connecticut
State Superior Court against a former employee, David Uva. New Country’s
claim arose from a scheme in which Uva allegedly sold Audi automobiles from
New Country to an export buyer, in violation of Audi and New Country policies.
(P1. Opp. Ex. A) In that state court complaint, New Country alleged that Uva
and his co-conspirators received payments from the export buyers through
MGD, which, at a profit, supplied Audi automobiles that MOD purchased from
New Country. (Id.) Relatedly, on December 1, 2014, New Country filed a
complaint against Mr. Uva in bankruptcy court in the District of Connecticut,
seeking to have Uva’s liability to them declared non-dischargeable. (P1. Opp.
Ex. B)
On February 10, 2014, Plaintiffs filed the Complaint in this action in New
Jersey state court. (Def. Facts

¶

8) On April 4, 2014, New Country removed the

action to federal court. To date, Plaintiffs have not served process on
Defendants MGD and Lash Volkswagen. (Id.

¶

10)

On November 18, 2016, New Country filed its motion for summary
judgment. (ECF no. 30) That motion is now before the Court.
II.

DISCUSSION
A. Summary Judgment Standard
Federal Rule of Civil Procedure 56(a) provides that summary judgment

should be granted “if the movant shows that there is no genuine dispute as to
any material fact and the movant is entitled to judgment as a matter of law.”
5

Fed. R. Civ. P. 56(a); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248, 106 5. Ct. 2505 (1986); Kreschollek v. S. Stevedoring Co., 223 F.3d 202,
204 (3d Cir. 2000). In deciding a motion for summary judgment, a court must
construe all facts and inferences in the light most favorable to the nonmoving
party. See Boyle v. County of Allegheny Pennsylvania, 139 F.3d 386, 393 (3d
Cir. 1998). The moving party bears the burden of establishing that no genuine
issue of material fact remains. See Celotex Corp. v. Catrett, 477 U.S. 317, 322—
23, 106 S. Ct. 2548 (1986). “[W]ith respect to an issue on which the nonmoving
party bears the burden of proof.

.

.

the burden on the moving party may be

discharged by ‘showing’—that is, pointing out to the district court—that there
is an absence of evidence to support the nonmoving party’s case.” Id. at 325,
106 5. Ct. 2548.
If the moving party meets its threshold burden, the opposing party must
present actual evidence that creates a genuine issue as to a material fact for
trial. Anderson, 477 U.S. at 248, 106 S. Ct. 2505; see also Fed. R. Civ. P. 56(c)
(setting forth types of evidence on which nonmoving party must rely to support
its assertion that genuine issues of material fact exist). “[U]nsupported
allegations.

.

.

and pleadings are insufficient to repel summary judgment.”

Schoch v. First Fid. Bancorporation, 912 F.2d 654, 657 (3d Cir. 1990); see also
Gleason v. Norwest Mortg., Inc., 243 F.3d 130, 138 (3d Cir. 2001) (“A
nonmoving party has created a genuine issue of material fact if it has provided
sufficient evidence to allow a jury to find in its favor at trial.”).

6

B. Analysis
1.

Breach of Contract, Breach of Contract Implied at
Law, and “Specific Performance: Delivery of Goods
and Services” (Counts 1—3)
a. Breach of Contract

Plaintiffs allege that, of the eight new BMWs that were promised, New
Country failed to deliver three. Under New Jersey law, a breach of contract
claim has three essential elements: (1) the existence of a valid and enforceable
contract between the parties, (2) a breach of that contract, and (3) damages.
Murphy v. Implicito, 920 A.2d 678, 689 (N.J. Super. Ct. App. Div. 2007); accord
Frederico v. Home Depot, 507 F.3d 188 (3d Cir. 2007).
As to Counts 1—3, New Country argues that the breach of contract
claims founder on the first element: the existence of an enforceable contract
between New Country and Plaintiffs. To establish the existence of a valid
contract of sale, “Plaintiff must show mutual assent, consideration, legality of
the object of the contract, capacity of the parties and form[alityj of
memorialization.” Fletcher-Harlee Corp. v. Pote Concrete Contractors, Inc., 421 F.
Supp. 2d 831, 833 (D.N.J. 2006) (citing Cohn v. Fisher, 118 N.J. Super. 286,
291, 287 A.2d 222 (1972)).
New Country argues that there is no evidence that it ever made an offer
to Plaintiffs to sell the BMWs or that Plaintiffs formally accepted such an offer.
(Def. Mot. 8) Indeed, aside from Plaintiffs’ repeated assertions that Mr. Chen
was acting on New Country’s behalf, there is no evidence connecting New
Country to any agreement to sell the BMWs to Plaintiffs or their Chinese
clients. It is undisputed that Plaintiffs never signed a contract with, received an
invoice from, or transferred money to, New Country. (Def. Facts

¶

25) It is

Count 3, titled “Specific Performance: Delivery of Goods and Services,” appears
to be a variation on the breach of contract claim (Count 1), differing only in that it
requests the equitable relief of specific performance. I therefore address these counts
together. Neither party directly elucidates the elements of a claim for breach of a
contract implied at law (Count 2). I address that claim in Section II.B.1.b, infra.
7

further undisputed that Plaintiffs were not the “ultimate purchaser[s]” of the
BMWs, and that the communications between Mr. Chen and Plaintiffs
regarding the BMWs had “nothing to do with New Country.” (Def. Facts

¶

21)

The VINs of the five BMWs that were delivered—which Plaintiffs allege were
purchased from New Country—demonstrate that they were not sold by New
Country, but by BMW of Westchester, Hassel BMW, or BMW of New London.
(Def. Facts

¶

34) The three BMWs that were not delivered —allegedly in breach

of some contract with New Country—were all sold by Hassel BMW, not New
Country. (Def. Facts ¶j 30, 35; P1. Facts

¶J

30, 35)

Plaintiffs thus have no alternative but a theory of agency or apparent
authority. They hang their hats on the contention that Mr. Chen was New
Country’s employee or agent—or, at least, that he appeared to be. (P1. Opp. 10—
11; P1. Facts

¶J

20

—

21, 24, 26, 29, 31—35) Even assuming that Chen had quit

working for New Country, the Plaintiffs claim that they reasonably relied on his
apparent authority to act on New Country’s behalf. As an abstract legal matter,
they are correct: where an agent or other actor does not have actual authority
to affect a principal’s legal relations with a third party, an agent or actor may
nevertheless possess apparent authority. New Jersey Lawyers’ Fttnd for Client
Prot. v. Stewart Title Guar. Co., 203 N.J. 208, 220, 1 A.3d 632, 639 (2010);
Sears Mortg. Corp. v. Rose, 634 A.2d 74, 79 (N.J. 1993); Restatement (Third) Of
Agency

§

2.03 (2006). Where the theory falls apart is not on the law but on the

facts.
Plaintiffs point out that the October 14, 2011 e-mail message from Mr.
Chen originated from his New Country e-mail. In that message, Chen offered
Mr. Lin “MSRP [manufacturer’s suggested retail price] less $750 off only for you
my brother.” (ECF no. 31-5 at 1) Lin also testified that he would contact Mr.
Chen at his New Country phone number if he could not reach him at his
cellular phone number.’° (Lin Dep. 57:8—14) New Country, for its part, argues

Mr. Lin also testified that when he called Mr. Chen at New Country during the
Even when he...
“period of time when I purchased.
the BMW X5 from him.
8
10

.

.

.

.

.

that Mr. Chen abandoned his job at New Country on October 7, 2011, and had
begun employment at Lash Volkswagen by the time he made any offer of the
BMWs to Plaintiffs. In response, Plaintiffs point to the fact that Mr. Chen
remained on New Country’s payroll through October 31, 2011.
These facts suggest that that Mr. Chen’s apparent authority to act on
behalf of New Country might have lingered during the time period in which he
contracted with Plaintiffs to sell the BMWs. That might be so even if his
employment—and thus his actual authority to contract on New Country’s
behalf—ended when he abandoned his job on October 7, 2011. See
Restatement (Third) Of Agency

§ 3.11 cmt c (2006)(”An agent’s apparent

authority may survive or linger after the termination of actual authority
because [a]pparent authority protects third parties who interact with an agent
on the basis of the principal’s prior manifestation and who lack notice that the
’
1
agent’s actual authority has terminated.”). In short, there might be a triable
issue of fact if Chen’s status as an actual or apparent agent of New Country as
of a particular date were a consequential issue.
However, Mr. Chen’s agency status after October 7, 2011, is not a
consequential issue. The evidence is undisputed that, even when employed by
New Country, Mr. Chen lacked both actual and apparent authority to sell new
BMWs on New Country’s behalf. True, as a New Country employee or agent,
always told me that he’s out in the field. They
was not in the office, the operator.
never told me that he’s no longer with New Country Audi.” (Lin Dep. 111:11—18)
.

ii

.

As the Restatement explains:
Often termed “lingering authority,” the doctrine stated in this section
recognizes that it is reasonable for third parties to assume that an
agent’s actual authority is a continuing or ongoing condition, unless and
until a third party has notice of circumstances that make it
unreasonable so to assume. These circumstances include notice that the
principal has revoked the agent’s actual authority, that the agent has
renounced it, that the agent’s authority was limited in duration or to a
specific undertaking, or that circumstances otherwise have changed
such that it is no longer reasonable to believe that the principal consents
to the agent’s act on the principal’s behalf.

Restatement (Third) Of Agency

§ 3.11 cmt c (2006).
9

Mr. Chen had actual and apparent authority to sell motor vehicles from New
Country’s inventory. Nevertheless, there is no evidence establishing a triable
issue whether Mr. Chen ever possessed actual or apparent authority to sell
new BMWs on New Country’s behalf.

First, I consider actual authority. New Country has stated that it “cannot
sell, does not sell, and is not authorized to sell new BMW motor vehicles.” (Def.
Facts

¶

33; see P1.

¶

36) Under New Country’s billing system “[ijt is impossible

for New Country Audi or any of its sales force to sell new BMW motor vehicles.”
(Def.

¶

37) Plaintiffs do not deny that New Country isn’t an authorized dealer of

new BMWs; they just allege that New Country somehow sold new BMWs
anyway. (See P1.

¶

37.) But although Plaintiffs assert that New Country has in

fact sold BMWs, those allegations are unsubstantiated; they are not supported
2
by any evidence sufficient to create a genuine issue of material fact.’

Using circular logic, Plaintiffs assert that New Country had the ability to sell
new BMWs because Mr. Chen was authorized to make such sales on New Country’s
behalf. (P1. Facts ¶ 37) They cite no evidence for such authorization, however.
12

Plaintiffs also claim that New Country has admitted that Mr. Chen, “along with
New Country’s on-site management team had the authority to approve” sales of new
BMWs. (Id. ¶ 33) The “admissions” to which Plaintiffs refer are a State court complaint
(and a related complaint in bankruptcy court) that New Country filed in 2014 against
their former employee, David Uva, for a 2009 scheme to defraud New Country though
the unauthorized sale for export of Audi vehicles. There is no indication that Mr. Chen
was involved in that alleged scheme, or that any of the vehicles sold by Mr. Uva were
new BMWs (or any other new non-Audi vehicle). Thus, these court documents do not
provide any support to Plaintiffs’ contention that Mr. Chen, or anyone else at New
Country, was authorized or able to sell new BMWs.
Although Plaintiffs do not cite it, I consider Mr. Lin’s deposition testimony that
he had at some earlier time purchased a new BMW from New Country through Mr.
Chen. (Lin Dep. 91:7 94:18) There is less to that testimony than meets the eye,
however. Mr. Lin initially stated that, “I think maybe [I] b[ought] one BMW from [Mr.
Chen] before.” (Id. at 92:13—14; emphasis added) After asked by New Country’s
counsel whether he was sure, Mr. Lin replied that he was sure, that it was a new car,
and that he paid for the purchase by wire transfer to New Country. (Id. at 92:11
93:16) Mr. Lin could not recall the year in which the purchase occurred. (Id. at 92:23
93:-i) Mr. Carkhuff, counsel for New Country, then made a document production
request on the record for “any documents to establish plaintiff purchased a new BMW
from New Country Audi at any time, and again, we will produce what we have.” (Id. at
94:13—17) Plaintiffs have presented no evidence to substantiate Mr. Lin’s testimony.
10
—

—

—

Second, Mr. Chen similarly lacked apparent authority to sell new BMWs
on New Country’s behalf. The essentials of apparent authority are wellestablished under New Jersey law:
The question in every case depending upon the apparent
authority of the agent is whether the principal has by his
voluntary act placed the agent in such a situation that a
person of ordinary prudence, conversant with business
usages and the nature of the particular business, is justified
in presuming that such agent has authority to perform the
particular act in question.
King v. Estate of Senn, No. A-3013-07T3, 2008 WL 5331891, at *3 (N.J. Super.
Ct. App. Div. Dec. 23, 2008) (emphasis added) (quoting C.B. Snyder Realty Co.
v. Nat’l Newark & Essex Banking Co. of Newark, 14 N.J. 146, 154 (1953)); see
also Automated Salvage Transp., Inc. v. NVKoninklUke KNP BT, 106 F. Supp. 2d
606, 618—19 (D.N.J. 1999); Farmers & Merchants Nat. Bank v. San Clemente
Fin. Grp. Sec., Inc., 174 F.R.D. 572, 580 (D.N.J. 1997). Here, the “particular act
in question” is Mr. Chen’s alleged contracting on New Country’s behalf for the
sale of new BMWs.
I hold as a matter of law on this factual record that no reasonable party
in the business of buying and selling automobiles could have concluded that
Mr. Chen possessed the particular authority to sell new BMWs on behalf of New
Country, which did not itself have the authority to sell new BMWs. In many
cases, apparent authority may present a factual issue; the question “whether a
reasonable person in the position of a third party would believe that an agent
had the authority or the right to do a particular act” is generally “a question for
the trier of fact.” Restatement (Third) Of Agency

§ 2.03 (2006); see also Gizzi v.

Texaco, Inc., 437 F.2d 308, 310 (3d Cir. 1971) (“Questions of apparent
authority are questions of fact and are therefore for the jury to determine.”).
Here, however, there is no evidence that New Country acted in a way that
The purchase, if it occurred, would be an ascertainable fact, just as New Country’s
status, or not, as an authorized BMW dealer is an ascertainable fact. No evidence,
however, was forthcoming, and no reasonable factfinder could credit Lin’s stray, vague
oral representation in light of the documentary record.
11

would lead Plaintiffs to hold a reasonable belief that New Country had
authorized Mr. Chen to sell new BMWs on New Country’s behalf.
a general matter there is no requirement that the third party inquire
into the scope of an agent’s authority.” Restatement (Third) Of Agency

§ 2.03

cmt d (2006). However, “if material doubt arises” as to whether “the proposed
transaction appears to be reasonably related to the principal’s known
business,” then it is “ordinarily

.

.

.

reasonable to inquire further about the

extent of the agent’s authority.” Id. At the time of their dealings with Mr. Chen
regarding the sale of the BMWs, Plaintiffs knew of many facts that would have
led “a person of ordinary prudence, conversant with business usages and the
nature of the particular business” to doubt, or at least to inquire into, Mr.
3
Chen’s authority to sell new BMWs on New Country’s behalf.’
The Plaintiffs were in the business of buying and selling motor vehicles,
and they were familiar with the Connecticut motor vehicle market. Mr. Lin
testified, for example, that he had been purchasing cars through Mr. Chen
since at least 2007. (See 91:16—17) No reasonable purchaser of new motor
vehicles in Connecticut, familiar with the local motor vehicle market, would
believe that a New Country salesperson was authorized to sell new BMWs.
Plaintiffs concede that Connecticut’s motor vehicle laws prohibit New Country,
as an Audi dealership, from selling new BMWs. (P1. Facts

¶ 36) And, as

discussed above, there is no evidence that New Country ever did sell new
BMWs.
Mr. Lin did testif\j to a subjective belief: “In my mind, I [was] still deal[ing]
with New Country Audi.” (P1. Facts

¶ 25, quoting Lin Dep. 56:21—23) But that

‘3
Although Plaintiffs assert that they made the payments to MGD with the
based upon the
“understanding that MGD was in fact a part of New Country Audi.
misrepresentations of Mr. Chen,” (e.g., P1. Facts ¶ 18), Mr. Chen’s misrepresentations
cannot create apparent authority. Indagro u. Nilva, No. CV 07-3742 (MCA), 2016 WL
3574330, at *8 (D.N.J. June 30, 2016) (“The focus is on the principal’s acts and
statements; the agent’s unilateral, unauthorized representations do not create
apparent authority.”) (citing Wilzig v. Sisselman, 209 N.J. Super. 25, 36, 506 A.2d
1238 (App. Div. 1986)).
.

12

.

belief, under the law, must be a reasonable one. Lin stated, with no evidentiary
support, that he simply “assume[d] that jMGD] is an internal change for New
4
Country Audi.” There is no evidence, however, that Lin ever even asked.
Rather, his sole basis for this assumption was his prior assumption that Mr.
Chen was acting as an agent for New Country. (Lin Dep. Tr. at 55: 14—21;
56:21—25) And that prior assumption regarding Lin, for the reasons already
discussed, is an inadequate basis to bind New Country.
As stated above, no reasonable purchaser could have concluded that
New Country itself—through Mr. Chen, or through anybody—possessed the
authority to sell new BMWs. In addition, and in the alternative, I observe that
there were many facts that would have created a duty to inquire further as to
Chen’s authority. True, the Plaintiffs offer testimony that Chen continued for
some time to use a New Country e-mail address, or that New Country did not
state when answering the phone that Chen had left their employment. But
consider the following facts, as Plaintiffs should have done: The Plaintiffs never
signed a contract with, received an invoice from, or transferred money to New
Country in relation to the sale of the BMWs. In the course of prior business
with Mr. Chen and MGD shortly after MGD’s creation, Chen yelled at Lin for
accidentally wiring money to New Country instead of MGD—inexplicable if, as
Lin now says, MGD was just another name for New Country. (P1. Facts

¶

26)

(citing Lin Dep. 58:1—21) All of the eight BMWs in fact came from dealerships
other than New Country. In short, there were none of the usual indicia of a
contract to buy cars from New Country, a common enough commercial
transaction that would routinely be the subject of clear and unmistakable
documentation.
So—even setting aside the fact that any reasonable person in the
automobile business in Connecticut would have understood that New Country
itself was legally barred from selling new BMWs—Plaintiffs’ claim would be

14

The sense of “change,” as used here, seems to be “name change.”
13

doomed by their failure to conduct any reasonable inquiry as to the extent of
Mr. Chen’s authority to sell new BMWs on New Country’s behalf via MGD. No
reasonable factfinder could conclude that Plaintiffs’ assumption that Mr. Chen
had such authority was justified. The doctrine of apparent authority does not
protect third parties so conveniently “deceived” or willfully blind.
As a matter of law, Mr. Chen lacked actual or apparent authority to bind
New Country in a contract for the sale of the BMWs. Accordingly, I will grant
summary judgment in favor of New Country on Counts 1 and 3.
b. Breach of Contract Implied at Law
Neither party directly states the elements of a claim for breach of a
contract implied at law (Count 2). Nevertheless, it is readily apparent that
Plaintiffs’ claim for breach of implied contract fails as a matter of law.
The New Jersey Supreme Court has described the nature of a claim of a
contract implied-in-law in terms that rule out the Plaintiffs’ claim here:
In essence, a contract action implied-in-law is a restitutionary
claim. Like the equitable doctrine of restitution, the key element of
a quasi-contract claim is that one party has been unjustly
enriched at the expense of another. Recovery under both doctrines
is typically measured by the amount the defendant has benefitted
from the plaintiff’s performance.
Wanaque Borough Sewerage Auth. v. Twp. of W. Miford, 144 N.J. 564, 575, 677
A.2d 747 (N.J. 1996). As a result, “there are only two ‘essential elements’ of a
contract implied in law: ‘(1) that the defendant has received a benefit from the
plaintiff,’ and ‘(2) that the retention of the benefit by the defendant is
inequitable.” Id. (quoting Judy Beckner Sloan, Quantum Meruit: Residual
Equity in Law, 42 DePaul L. Rev. 399, 408 (1992) (citing Frederic C. Woodward,
The Law of Quasi Contracts 9 (1913))).
Here, those two essential elements are absent. In particular, there is no
evidence demonstrating that New Country received any benefit whatever from
the funds that Plaintiffs’ client in China wired to MGD as deposits or payments
for the BMWs, which, remember, were not obtained or purchased from New
Country at all.
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Accordingly, I will grant summary judgment for New Country on Count 2.

2.

Common Law Fraud, Fraud in the Inducement, and
Consumer Fraud (Counts 4—5, 8)

Plaintiffs’ fraud-related claims rely on the same facts and allegations as
their contract claims. They appear to be little more than contract claims
dressed up as fraud. Those fraud claims fail for several reasons.
a. The Elements of the Fraud Claims
First, Plaintiffs fail even to allege their fraud claims with the particularity
required by Federal Rule of Civil Procedure 9(b). Still less do they demonstrate
a genuine issue of material fact by supporting the elements of their fraud
claims with evidence. Fundamentally, Plaintiffs’ Complaint and summary
judgment submissions fail to specify the nature of any misrepresentation,
deception, or unconscionable business practice that any defendant directed at
Plaintiffs.
A plaintiff’s claim of common law fraud or fraud in the inducement
cannot succeed unless it pleads and proves a particular misrepresentation or
omission. See Zorba Contractors, Inc. v. Hous. Auth., City of Newark, 362 N.J.
Super. 124, 139, 827 A.2d 313, 322 (App. Div. 2003) (that “defendant made a
material misrepresentation or omission of fact” is an essential element of
common law fraud); Rotante v. Franklin Lakes Bd. of Educ., No. CIV.A. 13-3380
JLL, 2014 WL 1266238, at *4 (D.N.J. Mar. 26, 2014) (“a material
misrepresentation [or omission] of a presently existing or past fact” is an
essential element of fraudulent inducement claim) (citing Gennari v. Weichert
Co. Realtors, 148 N.J. 582, 610, 691 A.2d 350 (1997)).
Similarly, to succeed in their Consumer Fraud Act claim, a plaintiff must
plead and prove
[t]he act, use or employment by any person of any unconscionable
commercial practice, deception, fraud, false pretense, false
promise, misrepresentation, or the knowing, concealment,
suppression, or omission of any material fact with intent that
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others rely upon such concealment, suppression or omission, in
connection with the sale or advertisement of any merchandise or
real estate, or with the subsequent performance of such person as
aforesaid
N.J. Stat. Ann.

§ 56:8-2.

The Complaint here does not identify any act by any party that would
satisfy the first element of a fraud claim. Further, the summary of facts in
Plaintiffs’ summary judgment opposition papers lacks any allegation of a
misrepresentation or omission. Rather, it reads as a garden-variety breach of
contract, with the label of fraud slapped on:
On October 14, 14, 2011, Plaintiffs, in good faith, purchased the
subject vehicles from Defendant, New Country Audi’s on-site
management team and key salesman who utilized both New
Country Audi’s business premises and “banner” (name) in
furtherance of the transaction. The funds were tendered by
Plaintiffs to MGD. (See Defendants Undisputed Statement of
Material Facts #18). Four (4) vehicles were not delivered to
Plaintiffs.
(P1. Opp. 14—15) Plaintiffs cite in addition to the Connecticut Superior Court
and U.S. Bankruptcy Court proceedings that New Country initiated against
David Uva. (P1. Opp. 13—14) These citations to separate matters involving Uva
shed no light on what misrepresentations, if any, Mr. Chen or New Country
made to Plaintiffs in connection with the sale of the BMWs.
Plaintiffs have presented no evidence sufficient to create a triable issue
as to each element of their fraud claims. Summary judgment will be granted in
New Country’s favor on Counts 4, 5, and 8.
b. Vicarious Liability
Second, and in the alternative, even a validly alleged and proven fraud
claim against Mr. Chen would fail as against New Country. There is no
sufficient evidence that New Country is vicariously liable for Chen’s conduct.
For these purposes, I will assume arguerido that Mr. Chen remained, or
reasonably appeared to remain, a New Country employee during the sale of the
BMWs and that he made some fraudulent misrepresentation or omission. Even
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so, Plaintiffs cannot succeed under theories of either respondeat superior or
apparent authority in holding New Country vicariously liable.
Under New Jersey law, to succeed in establishing a claim under the
doctrine of respondeat superior, a “plaintiff must prove (1) that a masterservant relationship existed and (2) that the tortious act of the servant
occurred within the scope of that employment.” Carter v. Reynolds, 175 N.J.
402, 815 A.2d 460, 463 (N.J. 2003). The New Jersey Supreme Court adopted
Restatement (Second) of Agency

§ 228—29 (1958) as the proper framework for

assessing the scope of employment. Carter, 175 N.J. at 411. The Restatement
provides that “[clonduct of a servant is within the scope of employment if, but
only if:
(a) it is of the kind he is employed to perform;
(b) it occurs substantially within the authorized time and space
limits;
(c) it is actuated, at least in part, by a purpose to serve the master,
and
(d) if force is intentionally used by the servant against another, the
use of force is not unexpectable by the master.”
Restatement (Second) of Agency

§ 228 (1958). Conversely, “[cjonduct of a

servant is not within the scope of employment if it is different in kind from that
authorized, far beyond the authorized time or space limits, or too little actuated
by a purpose to serve the master.” Id.
Even if a master-servant relationship existed between New Country and
Mr. Chen, no reasonable factfinder could conclude that Mr. Chen acted within
the scope of his employment. Plaintiffs have offered no evidence to demonstrate
that Mr. Chen was motivated even in part to serve New Country’s interests. All
the evidence points to the contrary: Mr. Chen appears to have abandoned his
job at New Country prior to offering the BMWs for sale, the purchase payments
were transferred to MGD, the automobiles in question did not come from New
Country, and New Country derived no benefit from the transaction.

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To the extent that Plaintiffs seek to hold New Country vicariously liable
5
for Mr. Chen’s actions on the basis of apparent authority,’ I reject that
attempt for the reasons stated in Section II.B. 1 .a, supra.
In short, Plaintiffs cannot establish New Country’s vicarious liability
under theories of respondeat superior or apparent authority, and Plaintiffs offer
no other plausible theory of liability. For this reason, too, I will grant summary
judgment in favor of New Country on Counts 4, 5, and 8.
3.

Damage to Business Reputation (Count 6)

Plaintiffs have withdrawn their claim for damage to business reputation.
(P1. Opp. 15) Accordingly, I will grant summary judgment in favor of New
Country on Count 6.
4.

Conversion (Count 7)

Finally, Plaintiffs admit that they have no evidence to substantiate their
claim that New Country Audi took “actual, physical possession of the funds
Plaintiffs tendered” to MGD. (P1. Opp. 15) Nevertheless, they insist that “by
allowing and admitting” that the tendered funds were “pirated away’ by [New
Country’s] on-site management team and key salesman under the guise of
MGD, LLC being represented as Defendant, New Country Audi.

.

.

a

constructive conversion has in fact occurred.” (Id.)
As the Third Circuit has stated, “conversion is essentially the wrongful
exercise of dominion and control over the property of another in a manner
inconsistent with the other person’s rights in that property.” McAdam v. Dean
Witter Reynolds, Inc., 896 F.2d 750, 771 (3d Cir. 1990) (citing Life Ins. Co. of
Va. v. Snyder, 141 N.J. Super. 539, 545, 358 A.2d 859 (Passaic County Ct.
1976); Mueller v. Technical Devices Corp., 8 N.J. 201, 207, 84 A.2d 620 (1951);

See, e.g., Restatement (Third) Of Agency § 7.08 (2006) (“A principal is subject to
vicarious liability for a tort committed by an agent in dealing or communicating with a
third party on or purportedly on behalf of the principal when actions taken by the
agent with apparent authority constitute the tort or enable the agent to conceal its
commission.”).
15

18

McGlynn v. Schultz, 90 N.J. Super. 505, 526, 218 A.2d 408 (Ch. Div. 1966)
(citing 89 C.J.S. Trover and Conversion

§ 1 (1955)), aff’d, 95 N.J. Super. 412,

231 A.2d 386 (App. Div.), cert. denied, 50 N.J. 409, 235 A.2d 901 (1967)). As
discussed above, Plaintiffs have not provided evidentiary support for their
contention that New Country was aware of, allowed, or was involved in any way
with the wire transfer payments to MGD. Therefore, there is no evidence that
New Country had even “constructively” exercised control or dominion over the
funds, and Plaintiffs’ claim for conversion must fail as a matter of law.
Accordingly, I will grant summary judgment in favor of New Country on
Count 7.
III.

CONCLUSION
The Plaintiffs may have a legal claim against somebody; that issue is not

before the Court. That somebody however, is not New Country, which on this
record seems to be the proverbial “deep pocket” target of convenience. For the
reasons set forth above, New Country’s motion for summary judgment is
GRANTED as to all counts.
An appropriate Order follows.

Dated: June 14, 2017

HON. KEVIN MCNULTY,

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