FRANKEL AND RUBINSON v. RAYMOND ZOLA, ETC. (L-3742-20, CAMDEN COUNTY AND STATEWIDE) ( 2022 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-3698-20
FRANKEL AND RUBINSON,
Plaintiff-Appellant,
v.
RAYMOND ZOLA, individually
and trading as ROCK
FOUNDATION, LLC,
Defendant-Respondent.
___________________________
Argued June 9, 2022 – Decided June 24, 2022
Before Judges Haas and Mitterhoff.
On appeal from the Superior Court of New Jersey, Law
Division, Camden County, Docket No. L-3742-20.
Michael J. Ward, IV, argued the cause for appellant.
Jo-Leo W. Carney-Waterton argued the cause for
respondent.
PER CURIAM
Plaintiff Frankel and Rubinson appeals from a July 9, 2021 order
dismissing its claim for fraud and denying its request for prejudgment interest.
We affirm in part and reverse and remand in part.
We discern the following facts from the record. On May 6, 2009,
plaintiff, a general partnership, entered into a commercial lease agreement with
defendant Raymond Zola and Rock Foundation LLC 1. The lease agreement
included the following statement: "I, Raymond M. Zola, do hereby personally
guarantee the performance by[], Rock Foundation, LLC[,] a Limited Liability
New Jersey Corporation of all its obligations, duties[,] and covenants, without
limitation,[]under the aforesaid Building Lease Agreement." Defendant signed
the lease agreement twice, once as the tenant acknowledging the terms of the
lease and once as himself acknowledging the personal guarantee. After
defendant signed the lease, he began to operate his automobile lubrication
business, Cornerstone Quick Lube, in the leased building.
Over the years, defendant experienced problems with his ability to pay
rent as exhibited by his bank returning several checks to plaintiff due to
insufficient funds. On June 13, 2014, plaintiff notified defendant that he was
in default of the lease agreement and owed $16,745.65.
1
The record also refers to the LLC as Solid Rock Foundation LLC. See e.g.
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2
In 2017, plaintiff heard that defendant was attempting to sell his
automobile lubrication business. In or around April 2018, defendant told
plaintiff he found a buyer and that he wanted to terminate his lease early. In
the interim, his rent arrearages continued to increase.
On May 1, 2018, the parties entered into a termination agreement. In
the agreement, "Ray Zola T/A Rock Foundation LLC" agreed to pay
$38,177.24. Defendant signed the termination agreement and tendered check
number 3961 for $38,177.24. Defendant claimed plaintiff would not sign the
termination agreement unless he tendered a signed check. Plaintiff asserted
that at the time defendant tendered the check, he asked plaintiff to wait to cash
it until he could insure that sufficient funds were available in his bank account.
Defendant allegedly told plaintiff there would be sufficient funds after the sale
of his business.
During negotiations for the sale of defendant's business, a dispute arose
between defendant and the buyer, which resulted in a lawsuit. The matter
settled in March 2019, and the buyer paid defendant $34,830. Defendant
claimed plaintiff was present for the settlement and heard how much money
defendant would receive and when the money would be deposited. Defendant
alleged he never told plaintiff that he would notify the partn ership when
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sufficient funds would be available, and he eventually paid off other debts
owed by Rock Foundation and closed the business.
Plaintiff alleged defendant called plaintiff to inform the partnership that
he did not get all the money from the sale of his business, and that even if the
money from the settlement was not enough to satisfy the amount owed, he
would still have sufficient funds from his insurance settlement to pay the check
in full. Plaintiff alleged he never received payment despite patiently waiting
for defendant to have sufficient funds, periodically checking in with defendant
and his bank, and continually being assured of payment. Defendant denied
telling plaintiff he would pay the rent arrearages from the proceeds of an
insurance settlement and denied offering to pay the debts of Rock Foundation.
On November 10, 2020, plaintiff filed a complaint alleging breach of
contract and fraud. On May 28, 2021, following discovery, plaintiff moved for
summary judgment on the issue of defendant's liability in the amount of
$38,177.44 plus the loss of interest that accrued subsequent to May 1, 2018. On
June 15, 2021, defendant cross-moved for summary judgment, arguing
defendant was not personally liable and plaintiff's liability claim was barred by
waiver and estoppel.
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On July 9, 2021, the parties appeared before the motion judge. After
hearing from the parties, the judge first found defendant's waiver and estoppel
arguments to be without merit. The judge reasoned there was no waiver because
defendant "did not send a letter, did not send any communication whatsoever in
which he could rely upon that there was a waiver or that . . . the money was
being foregone." The judge stated that plaintiff did not wait an unreasonable
period of time to file the lawsuit, especially given the pandemic. The judge
explained the case was "a very straightforward . . . breach of contract claim
where one party owes the other party money, and the other party didn't pay."
The judge found defendant personally liable because defendant personally
signed the termination agreement and did not sign it as a member only. The
judge did not see any facts to support a fraud claim.
Accordingly, the judge partially granted plaintiff's motion for summary
judgment as to the liability issue in an order and oral decision. The judge found
defendant and Rock Foundation LLC jointly and severally liable in the amount
of $38,177.24. The judge also dismissed, with prejudice, plaintiff's fraud claim,
and she did not award prejudgment interest. Finally, the judge dismissed
defendant's cross-motion for summary judgment. This appeal followed.
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On appeal, plaintiff presents the following argument for our
consideration:
POINT I
THE AVAILABLE EVIDENCE BEFORE THE
MOTION JUDGE CONFIRMED THAT PLAINTIFF
WAS INDUCED TO RELY UPON, AND DID
REASONABLY RELY UPON TO PLAINTIFF'S
DETRIMENT, THE FALSE AND KNOWINGLY
MISLEADING STATEMENTS OF DEFENDANT . . .,
AND THEREFORE, THE COURT ERRED BY (1)
DISMISSING PLAINTIFF'S CLAIM THAT IT WAS
DEFRAUDED BY DEFENDANT . . ., AND (2) NOT
AWARDING PLAINTIFF HIS REQUEST FOR
PRE[]JUDGMENT INTEREST.
Appellate review of a trial judge's grant or denial of summary judgment is
de novo. Branch v. Cream-O-Land Dairy, 244 N.J. 567, 582 (2021). We
consider, as the motion judge did, "whether the competent evidential materials
presented, when viewed in the light most favorable to the non-moving party, are
sufficient to permit a rational factfinder to resolve the alleged disputed issue in
favor of the non-moving party." Brill v. Guardian Life Ins. Co. of Am., 142 N.J.
520, 540 (1995). Summary judgment must be granted "if the pleadings,
depositions, answers to interrogatories and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any material fact
challenged and that the moving party is entitled to a judgment or order as a
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matter of law." Templo Fuente De Vida Corp. v. Nat'l Union Fire Ins. Co. of
Pittsburgh, 224 N.J. 189, 199 (2016) (quoting R. 4:46-2(c)).
"To establish common-law fraud, a plaintiff must prove: '(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.'"
Banco Popular N. Am. v. Gandi, 184 N.J. 161, 172-73 (2005) (quoting Gennari
v. Weichert Co. Realtors, 148 N.J. 582, 610 (1997)). "Fraud is not presumed; it
must be proven through clear and convincing evidence." Stochastic Decisions,
Inc. v. DiDomenico, 236 N.J. Super. 388, 395 (App. Div. 1989).
Guided by these principles, we reject plaintiff's argument that the judge
erred in dismissing plaintiff's fraud claim because the judge correctly found that
plaintiff did not prove the elements of fraud. The parties completed discovery,
and plaintiff, by its own admission, presented all the evidence it wanted to
present. Based on the record provided, it is clear that plaintiff failed to establish
through clear and convincing evidence that defendant made any material
misrepresentations with knowledge or belief of its falsity or that plaintiff
reasonably relied on defendant's alleged misrepresentations. As the judge
pointed out, this is a simple contract matter in which defendant is liable to pay
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the rent arrearages the parties contracted for. Thus, we affirm the judge's
dismissal of plaintiff's fraud claim.
The judge, however, erred in declining to award plaintiff prejudgment
interest. We review an award of prejudgment interest and the calculation thereof
for abuse of discretion. Litton Indus., Inc. v. IMO Indus., Inc., 200 N.J. 372,
390 (2009). A trial court decision will constitute an abuse of discretion where
"the decision [was] made without a rational explanation, inexplicably departed
from established policies, or rested on an impermissible basis." Saffos v. Avaya
Inc., 419 N.J. Super. 244, 271 (App. Div. 2011).
"[T]he award of prejudgment interest on contract and equitable claims is
based on equitable principles." Cnty. of Essex v. First Union Nat. Bank, 186
N.J. 46, 61 (2006). "The equitable purpose of awarding prejudgment interest is
compensatory, 'to indemnify the claimant for the loss of what the moneys due
[to] him would presumably have earned if the payment had not been delayed.'"
Cnty. of Essex v. Waldman, 244 N.J. Super. 647, 667 (App. Div. 1990) (quoting
Busik v. Levine, 63 N.J. 351, 358 (1973)).
In awarding prejudgment interest, "[t]he basic
consideration is that the defendant has had the use, and
the plaintiff has not, of the amount in question; and the
interest factor simply covers the value of the sum
awarded for the prejudgment period during which the
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defendant had the benefit of monies to which the
plaintiff is found to have been earlier entitled."
[First Union Nat. Bank, 186 N.J. at 61 (quoting Rova
Farms Resort, Inc. v. Invs. Ins. Co., 65 N.J. 474, 506
(1974)).]
Here, despite properly finding that defendant was liable for the breach of
contract claim, the judge denied plaintiff's request for prejudgment interest
without making any findings as required by Rule 1:7-4. See also Salch v. Salch,
240 N.J. Super. 441, 443 (App. Div. 1990) ("Meaningful appellate review is
inhibited unless the judge sets forth the reasons for his or her opinion.").
Because defendant benefited from money that rightfully belonged to plaintiff,
the judge mistakenly exercised her discretion. Therefore, we reverse and
remand to the trial court for an award of prejudgment interest to be added to the
judgment.
Affirmed in part, reversed and remanded in part. We do not retain
jurisdiction.
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