REGINA LONGMUIR VS. KICKIN' IT, INC. (L-2868-14, MONMOUTH COUNTY AND STATEWIDE) ( 2020 )

NOT FOR PUBLICATION WITHOUT THE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
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SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-0422-18T2
REGINA LONGMUIR and
DOUGLAS A. LONGMUIR, JR.,
Plaintiffs-Respondents,
v.
KICKIN' IT, INC., n/k/a
ROCKY MARCIANO WORLD
FOUNDATION, INC., t/a
BULLYING . . . WE'RE KICKIN'
IT,
Defendants,
and
GINA MARIE RAIMONDO
and THOMAS RAIMONDO,
Defendants-Appellants.
________________________________
Submitted January 27, 2020 – Decided April 21, 2020
Before Judges Rothstadt and Moynihan.
On appeal from the Superior Court of New Jersey, Law
Division, Monmouth County, Docket No. L-2868-14.
Garland & Mason LLC, attorneys for appellants (Gary
L. Mason, on the brief).
Vincent E. Halleran, Jr., attorney for respondents.
PER CURIAM
Defendants Gina Marie Raimondo and her father, Thomas Raimondo,
(collectively, defendants) appeal from a September 4, 2018 order to pay
plaintiffs Regina Longmuir and Douglas A. Longmuir, Jr., $35,010 "in
compliance with the [c]ourt's July 19, 2016 [o]rder," which was entered after a
bench trial.1 This matter was previously before us when defendants appealed
the 2016 judgment entered after the trial judge determined defendants
fraudulently induced plaintiffs to loan them $35,010—paid by two checks
payable to a corporation Gina formed, Kickin' It, Inc. (KI)—and that there was
sufficient evidence to pierce the corporate veil. Longmuir v. Kickin' It, Inc.,
No. A-0980-16 (App. Div. Apr. 17, 2018). Because the trial judge did not apply
the correct standard of proof, we remanded the matter for that judge to reapply
the facts he found under the clear and convincing standard of proof. Id. at 7.
Defendants represent in their merits brief that the trial judge recused himself. A
1
We use the parties' first names in the balance of this decision for clarity; we
mean no disrespect or familiarity by that practice.
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different judge (remand judge) conducted the remand hearing, applied the
correct standard and re-entered the original judgment, which we now affirm.
The remand judge conducted a pretrial conference at which counsel for
both parties "agreed on the record and in correspondence that they would prefer
that [the remand judge] proceed with [his] decision on remand through a review
of the . . . case history, rather than through a new trial." The remand judge
reviewed the CourtSmart trial and post-trial hearings of June 22, June 23, June
29, July 19 and October 28, 2016, and the trial transcripts that counsel provided.
In delivering his oral opinion, the remand judge said: "In deciding this case,
[he] had the opportunity to read and hear the testimony of many witnesses,
principally," both plaintiffs and both defendants.
The remand judge concluded the checks written by plaintiffs to KI were a
loan, rejecting on credibility grounds defendants' position that they were an
investment. The remand judge found, "[i]ncredibly, the recollection of . . .
defendants throughout the testimony is seemingly clear only when it comes to
the terms of the funds being loaned as an investment." Citing to specific portions
of the June 22, 2016 trial transcript during which a recording of a conversation
between Regina and Gina was played, which the remand judge found "insightful
into [defendants'] demeanor," he continued: "The testimony of . . . defendants
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simply did not make sense[.] [D]efendants, especially Gina . . . , were absolutely
fixated on not admitting that this was a loan." The remand judge also observed
that Douglas, during his trial testimony, "had an uncomfortable, seemingly, an d
almost visceral reaction" to Thomas's refusal to accept the funds plaintiffs
wanted to tender to him personally.
The remand judge concluded Thomas "clearly was aware of the plan that
he and his daughter had to deceive . . . plaintiffs of their loan." The judge found
"Gina . . . was manipulating . . . plaintiff throughout their multiple meetings," at
which she told plaintiffs about KI through which she planned to sell apparel and
donate a portion of realized revenue to charities.
The remand judge rejected Thomas's testimony that he "clearly wasn't
involved," and found his name appeared on a KI business card that he presented
to plaintiffs, he had "extensive involvement in [KI] from the very first meetings"
with plaintiffs, and purchased a recreational vehicle—what the judge termed
"one of the most significant purchases by . . . defendants"—ostensibly used for
travel to sell KI's goods, in Thomas's name, "and afterwards." Thomas's
testimony that he purchased the vehicle in his name to obtain more favorable
financing did "not resonate at all" with the remand judge.
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In contrast to the picture defendants presented to plaintiffs, the remand
judge found:
[t]here never was any formality whatsoever in [KI].
There were no stock certificates, no financial reports
whatsoever, no tax documents filed with the State of
New Jersey or to the [Internal Revenue Service], no
operating agreement, and no tax payments.
There was an ambiguous Virginia corporation
that ultimately went bankrupt . . . with no dissolution
papers whatsoever.
The remand judge also noted Gina's testimony about "massive purchases made
in cash in order to allegedly obtain cheaper clothing for her alleged business
expenses; none of those purchases . . . was documented."
The remand judge concluded KI "was a facade for [defendants'] personal
gain" justifying a piercing of the corporate veil due to defendants' use of the
corporation as their alter ego. Applying the clear and convincing standard of
proof, the remand judge declined to vacate the judgment for plaintiffs.
As we noted in our previous decision in this case:
"Final determinations made by the trial court sitting in
a non-jury case are subject to a limited and well-
established scope of review." D'Agostino v.
Maldonado, 216 N.J. 168, 182 (2013). "[W]e do not
disturb the factual findings and legal conclusions of the
trial judge unless we are convinced that they are so
manifestly unsupported by or inconsistent with the
competent, relevant and reasonably credible evidence
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as to offend the interests of justice." [Seidman v.
Clifton Sav. Bank, S.L.A., 205 N.J. 150, 169 (2011)].
To the extent that the trial court's decision constitutes a
legal determination, we review it de novo.
[Longmuir, slip op. at 3 (first alteration in original).]
Defendants argue that "the [remand judge] did not identify any facts which
would prove fraud, by clear and convincing evidence, for the purpose of piercing
the corporate veil" and holding defendants "personally liable for KI's debt." We
disagree and affirm.
Although the remand judge did not heed our remand instruction to
"separately consider whether plaintiffs have proved their cause of action on the
sole remaining count [of fraud in the inducement], and then determine whether
they met their burden to pierce the corporate veil," id. at 7, the record supports
the conclusions he ultimately reached.
The elements of fraud in the inducement are: a misrepresentation of
material fact; knowledge or belief by the defendant of its falsity; intent that the
other party rely on the misrepresentation; and reasonable reliance thereon by the
other party. Nolan v. Lee Ho, 120 N.J. 465, 472 (1990). Fraud in the
inducement does not differ materially from common-law fraud, as it provides a
cognizable basis for equitable relief in the event a false promise induced
reliance. See Lipsit v. Leonard, 64 N.J. 276, 283 (1974).
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The remand judge found both defendants complicit in misrepresenting the
business in order "to deceive . . . plaintiffs of their loan," knowing that the
business was a conduit for defendants' personal interests as evidenced by the
lack of corporate formalities and the purchase of the recreational vehicle in
Thomas's name. Plaintiffs loaned their money expecting, from defendant's
representations, that they would get all their money back. Thus, all of the fraud-
in-the-inducement elements were met.
Those same proofs, coupled with the evidence that defendants' control
over the closely held corporation allowed Gina to travel the country in the
recreational vehicle, sufficed to pierce KI's corporate veil. As we observed the
last time this case was before us
Courts will disregard corporate, legal singularity and
hold individual principals liable if they use the
corporation as their alter ego and abuse the corporate
form in order to advance their personal interests.
"[W]hen the corporate fiction is a mere simulacrum, an
alter ego or business conduit of an individual, it may be
disregarded in the interest of securing a just
determination of an action." Coppa v. Taxation Div.
Dir., 8 N.J. Tax 236, 249 (Tax 1986).
[Longmuir, slip op. at 5 (alteration in original)
(citations omitted).]
"Where individuals set up 'legitimate business structures to further their
personal and business plans' and 'd[o] not use their [businesses] to commit fraud
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or defeat the ends of justice,' the veil-piercing doctrine will not apply." Canter
v. Lakewood of Voorhees, 420 N.J. Super. 508, 522 (App. Div. 2011) (first
alteration in original) (quoting Shotmeyer v. N.J. Realty Title Ins. Co., 195 N.J.
72, 87 (2008)). The remand judge's finding set this case apart from that scenario.
Personal liability may be imposed upon a controlling stockholder of a close
corporation where the controlling stockholder disregards the corporate form and
utilizes the corporation as a vehicle for committing equitable or legal fraud.
Walensky v. Jonathan Royce Int'l, Inc., 264 N.J. Super. 276, 283 (App. Div.
1993).
Inasmuch as the consideration of that issue is one for the factfinder,
"unless there is no evidence sufficient to justify disregard of the corporate form ,"
Verni ex rel. Burstein v. Harry M. Stevens, Inc., 387 N.J. Super. 160, 199 (App.
Div. 2006), we decline to disturb the remand judge's decision. We are
unconvinced that the remand judge's findings and legal conclusions "are so
manifestly unsupported by or inconsistent with the competent, relevant and
reasonably credible evidence as to offend the interests of justice." Seidman, 205
N.J. at 169 (quoting In re Tr. Created by Agreement Dated Dec. 20, 1961, 194
N.J. 276, 284 (2008)).
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The remand judge's findings with regard to the lack of corporate structure
and compliance with corporate formalities, including accountings, record -
keeping and required filings, were indicative that KI had "no separate existence"
from its owner, and acted merely as the owner's "conduit," "instrumentality," or
"alter ego." Verni ex rel. Burstein, 387 N.J. Super. at 200. Gina's action in
securing the loan and spending the borrowed funds, and Thomas's actions,
abetting Gina's fraudulent scheme, supported the judge's conclusion that both
were personally liable to plaintiffs.
Lastly, we reject defendant's complaint that the remand judge made
credibility findings without observing the witnesses. Defendants agreed to have
the remand judge decide the case on the already-established record. Moreover,
although we have long decried making credibility determinations without
hearing testimony, see, e.g., Conforti v. Guliadis, 128 N.J. 318, 322-23 (1992);
see also Clowes v. Terminix Int'l, Inc., 109 N.J. 575, 587 (1988), the remand
judge's credibility findings were based on his assessment of the oral testimony
that he heard on CourtSmart from which he could discern the witnesses'
demeanor such as Douglas's "uncomfortable, seemingly, and almost visceral
reaction[.]" His credibility findings were also based on his perceptive analysis
of defendants' testimony, findings which did not require witness observation.
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For instance, he found it clear that "defendants are absolutely precise when it is
convenient for their testimony, their language about a loan versus an investment
being the most obvious example of this manipulation. Yet, their testimony falls
on their inability to be anything but precise in the running of this alleged
business. It was not."
We also note the remand judge's findings coincided with what we
recognized in our prior decision in this matter as the trial judge's "extensive
findings of fact[.]" Longmuir, slip op. at 3. In his oral opinion, the trial judge
perpended defendants' testimony and concluded Thomas was "much more
involved in the relationship with his daughter than what he would lead anybody,
would like people to believe." And, he noted Gina continued to use the
recreational vehicle purchased in Thomas's name even after the money had been
"burned through . . . [a]nd the idea of [Gina] to sell clothing and give a
percentage back to charitable organizations had long since gone."
The trial judge also noted the abundant evidence of lack of corporate
formality. He found defendants "used [plaintiffs'] money for whatever expenses
they had. And without . . . any regard for any accounting for it at all. There was
absolutely no accounting done."
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The trial judge was clear when he found plaintiffs loaned the funds to
defendants; it was not an investment. Although he did not apply the correct
standard of proof, he found the evidence showed defendants "were involved in
a plan, . . . not to use [the] money specifically for [KI]," but to use it for Gina's
"personal gain."
The evidence supports the remand judge's factual findings and legal
conclusions.
Affirmed.
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