ERIC INSELBERG VS. FRANK BISIGNANO (L-4954-15, HUDSON 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NOT FOR PUBLICATION WITHOUT THE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
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
APPELLATERIE DIVISION
DOCKET NO. A-3511-18T3
ERIC INSELBERG and
INSELBERG INTERACTIVE,
LLC,
Plaintiff-Appellant,
v.
FRANK BISIGNANO and
FIRST DATA CORPORATION,
Defendants-Respondents.
_______________________________
Argued telephonically March 24, 2020 –
Decided May 4, 2020
Before Judges Yannotti, Hoffman and Currier.
On appeal from the Superior Court of New Jersey, Law
Division, Hudson County, Docket No. L-4954-15.
Brian C. Brook argued the cause for appellants (Brook
& Associates, PLLC, attorneys; Brian C. Brooks on the
briefs).
Kevin H. Marino argued the cause for respondents
(Marino, Tortorella & Boyle, PC, Michael B.
Carlinsky, (Quinn, Emanuel, Urquhart and Sullivan,
LLP) of the New York Bar, admitted pro hac vice, R.
Corey Worcester, (Quinn, Emanuel, Urquhart and
Sullivan, LLP) of the New York Bar, admitted pro hac
vice, and Matthew A. Traupman, (Quinn Emanuel
Urquhart and Sullivan, LLP) of the New York Bar,
admitted pro hac vice, attorneys; Kevin H. Marino,
John B. Boyle, Michael B. Carlinsky, R. Corey
Worcester, and Matthew A. Traupman, on the brief).
PER CURIAM
Plaintiffs appeal from an order entered by the Law Division on February
15, 2019, denying their motion to enforce litigants' rights. Plaintiffs claim
defendants failed to comply with an October 27, 2017 consent order, which
dismissed the entire case with prejudice and required defendants to return all
sports memorabilia previously delivered as security for a $500,000 loan.
Concluding the motion judge did not abuse her discretion, we affirm.
I
This case represents another chapter in long-running, contentious
litigation between plaintiff Eric Inselberg and defendant Frank Bisignano. We
begin with a summary of the relevant facts, which we derive from the motion
record and our opinion on plaintiff's direct appeal. Inselberg v. Bisignano, No.
A-1718-17 (App. Div. March 12, 2019).
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In August 2010, Bisignano loaned $500,000 to plaintiff Inselberg
Interactive, LLC (Interactive), a company owned by Inselberg.1 The parties
memorialized the terms of the loan in a seven-page agreement (the Loan
Agreement). In addition to guaranteeing the loan, Inselberg secured it with
certain patents and "additional security," consisting of "two boxes containing
sports memorabilia owned by him[,] which he value[d] at $232,000." The
parties attached to the Loan Agreement a three-page handwritten list itemizing
the specific memorabilia.
In 2011, Interactive defaulted on the loan, after a federal grand jury
indicted Inselberg for mail fraud. Interactive never made any payments on the
loan, despite Bisignano extending the time for plaintiffs to cure the default.
As a result, in February 2013, the parties entered into an assignment
agreement (the Assignment Agreement), whereby plaintiffs assigned the patents
to Bisignano in partial payment and satisfaction of the loan. In pertinent part,
the agreement provided:
Interactive wishes to transfer, convey and assign all of
its right, title and interest in and to the [patents] in
partial payment and satisfaction of the indebtedness and
other obligations under the Loan Agreement and the
1
Inselberg created Interactive to provide marketing services for business
technology he invented. After patenting the technology, Inselberg transferred
the patents to Interactive.
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3
other Loan Documents and Bisignano is willing to
accept such [p]atents in partial payment and
satisfaction of the indebtedness and other obligations
under the Loan Agreement and other Loan Documents.
In addition, Interactive "waived in full" any obligation to transfer the patents
back to Inselberg and any right to a "realization of proceeds" related to the
patents.
In May 2013, Inselberg secured dismissal of the indictment against him.
Thereafter, Inselberg sought the return of the patents, claiming the value of the
sports memorabilia held by defendants exceeded the amount due under the loan.
In May 2014, Inselberg requested access to the sports memorabilia in
Bisignano's possession for the purpose of exchanging certain memorabilia of
equivalent value. According to Inselberg, he brought $156,000 worth of his
sports memorabilia to Bisignano's home, but his personal assistant – Moussa
Ousmane – prevented Inselberg from taking any memorabilia in exchange. In
March 2015, Inselberg contends that he went to Bisignano's home and "swapped
out some of the memorabilia held by Bisignano for replacement memorabilia."
In November 2015, Bisignano retained a sports memorabilia dealer, Steiner
Sports, to provide a preliminary valuation of the sports memorabilia held as
collateral. Steiner emailed Bisignano a list of the items together with a
preliminary valuation of each item.
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After Bisignano's appointment as CEO of defendant First Data
Corporation (First Data), Inselberg accused First Data of using his patented
technology without a license and demanded the corporation purchase either the
patents or an exclusive license to them. Shortly thereafter, Bisignano granted
First Data a license to use or sell the patented technology, without requiring
royalties for their use.
In December 2015, plaintiffs filed a ten-count complaint, alleging
defendants breached specific provisions of the Uniform Commercial Code
(UCC) and asserting various other claims, including the invalidity of the
Assignment Agreement. Plaintiffs sought monetary damages for royalties from
the transfer of the patents to First Data. Plaintiffs also asserted a conversion
claim regarding the sports memorabilia.
After their efforts to remove all proceedings to federal court proved
unsuccessful, defendants moved for dismissal of plaintiffs' complaint under
Rule 4:6-2(e), arguing the assignment agreement constituted a strict foreclosure
under N.J.S.A. 12A:9-620. In a written statement of reasons, the motion judge
found the Loan Agreement entered into by the parties was valid and enforceable.
The judge further concluded the Assignment Agreement transferring the patents
constituted a valid strict foreclosure under N.J.S.A. 12A:9-620(a) and (c)
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because it established the necessary record authenticated after default; in
addition, he found that plaintiffs consented to Bisignano's acceptance of the
collateral as partial satisfaction of plaintiffs' obligation under the Loan
Agreement. Nevertheless, the judge declined to dismiss the complaint, finding
the Assignment Agreement contained "no agreed upon value for the partial
satisfaction" of plaintiffs' debt. The judge directed the parties to engage in
discovery to determine the value of the patents and the amount that should be
applied to plaintiffs' outstanding debt.
After the parties disagreed as to the scope of the ordered discovery, the
judge issued the following clarification on October 5, 2017:
The court did not 'deny in entirety' [d]efendants'
motion. Clearly, the statement of reasons provided, at
a minimum, the 'partial grant' of [d]efendants' motion,
limiting the [p]laintiffs' recovery to any excess value
greater than $500,000 that valuation of the collateral
may produce. Thus, discovery will be limited to
VALUATION of patents and sports memorabilia and
nothing more.
After a conference with the motion judge later that month, defendants
submitted a proposed order (the Final Order) that would result in the dismissal
of all remaining claims while allowing plaintiffs to appeal without further delay.
The Final Order submitted by defendants provided for the dismissal of plaintiffs'
remaining claims with prejudice and defendants' agreement to:
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a) Assign the [p]atents a value at least equal to the
outstanding amount owed to Bisignano (thus
effectively forgiving the entire $500,000 debt
and all accrued interest);
b) Dismiss their counterclaims with prejudice; and
c) Return the sports memorabilia held as collateral
to Inselberg.
Plaintiffs consented to the form of the order, but not its entry (to preserve their
right to appeal the strict foreclosure ruling). The judge signed the Final Order
on October 27, 2017, resulting in the dismissal of the action "in its entirety with
prejudice."
Plaintiffs appealed and we affirmed, concluding the motion judge
"correctly determined the [A]ssignment [A]greement constituted a valid strict
partial foreclosure," which served to extinguish plaintiffs' rights and interests in
the patents. Bisignano, slip op. at 9. We held that Bisignano became the owner
of the patents upon execution of the [A]ssignment [A]greement, and that "the
debt has been satisfied as defendant[s] agreed to assign the value of the loan and
accrued interest as the value of the patents." Id. at 10. We further noted
defendants' contention that plaintiffs' "conversion claim regarding the sports
memorabilia" was rendered "moot" because "defendants agreed to return all of
the sports memorabilia under the final order." Id. at 4 n.1.
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On December 4, 2017, Inselberg and his attorney traveled to the office of
defendants' attorney to retrieve all the sports memorabilia Inselberg previously
provided as collateral. While extensive memorabilia was returned, Inselberg
immediately determined that four pieces of memorabilia were missing.
On December 26, 2018, plaintiffs filed a motion to enforce litigants'
rights, asserting Bisignano failed to return the following four items of sports
memorabilia, as required by the Final Order: 1) a pair of Muhammad Ali boxing
trunks worn during his 1977 fight against Ernie Shavers; 2) a football helmet
worn by Larry Fitzgerald in 2010; 3) a Leroy Neiman serigraph of Michael
Jordon; and 4) a Peter Max painting of Michael Jordan.2 In a supporting ten-
page certification, Inselberg provided extensive details regarding the sports
memorabilia provided to Bisignano as collateral, and the various items that were
"swapped out" over time. According to Inselberg, on March 24, 2015, he
"created a final inventory of the items that [Bisignano] was keeping as
collateral." He recounted that he "wrote out [the inventory] by hand at
[Bisignano's] house," and that Ousmane worked with him to create it and made
a copy of it.
2
According to Inselberg, each artwork depicting Michael Jordan was signed by
both the artist and Jordan himself.
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On January 17, 2019, Bisignano filed opposition, which included his own
certification, stating he returned all the memorabilia Inselberg left with him as
collateral for the loan. He certified, "As far as I know, I never possessed the
Peter Max [artwork], the Ali trunks, or the Larry Fitzgerald helmet"; however,
he acknowledged that these items of memorabilia could have been "swapped out
by Inselberg on one of the two occasions" when he came to Bisignano's home in
2014 and 2015. Bisignano did confirm he possessed the Leroy Neiman artwork,
claiming Inselberg gave it to him "as a gift." Despite this understanding,
Bisignano gave the Neiman artwork to his attorneys, on the date he signed his
certification, and instructed them to return it to Inselberg.
Bisignano also provided a certification from his personal assistant,
Moussa Ousmane, who handled the exchanges when Inselberg came to
Bisignano's home to swap out items of memorabilia. Ousmane denied ever
receiving the Mohammad Ali trunks or the Neiman artwork from Inselberg.
Ousmane also disputed Inselberg's claim that Inselberg gave him the Peter Max
painting and the Neiman artwork on February 23, 2015, as he "was out of the
country in Africa" at that time. Ousmane acknowledged observing Inselberg, in
March 2015, with a handwritten inventory list, but denied participating in its
creation.
A-3511-18T3
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On February 15, 2019, the motion judge denied plaintiffs' application to
enforce litigants' rights. Citing Milne v. Goldenberg, 428 N.J. Super. 184, 198
(App. Div. 2012), the judge ruled:
The [c]ourt does NOT find that . . . Bisignano, as the
'disobedient party,' was able to comply or that he failed
to comply. Had the parties made a definitive inventory
of the items and made same part of their settlement
agreement, the [c]ourt would have some basis to
determine if there was non-compliance. Instead the
'list' of items seems to be a moving target of sorts that
has changed and has been subject to differing
interpretations, causing both parties to resort to
recollections of a third party (Ousmane). Unilateral
emails and lists that do not indicate assent or agreement
do not and cannot satisfy the burden associated with the
relief requested. Inasmuch as the primary relief
requested is denied, so too is the application for costs
and fees.
Plaintiffs now appeal the denial of their motion to enforce litigants' rights.
II
Plaintiffs argue the motion judge erred by treating Bisignano's agreement
to return the memorabilia as part of a "settlement agreement"; as a result, they
contend the judge mistakenly focused on whether the parties ever finalized the
list of items Bisignano agreed to return. Additionally, plaintiffs contend the
judge erred when she failed to find that Bisignano "implicitly accepted" a
A-3511-18T3
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memorabilia list prepared by plaintiffs in November 2017, when Bisignano's
counsel did not object to the list.
We review a trial court's enforcement of litigant's rights pursuant to Rule
1:10-3 under an abuse of discretion standard. Wear v. Selective Ins. Co., 455
N.J. Super. 440, 458-59 (App. Div. 2018) (citing Barr v. Barr, 418 N.J. Super.
18, 46 (App. Div. 2011)). "An abuse of discretion occurs when a decision was
'made without a rational explanation, inexplicably departed from established
policies, or rested on an impermissible basis.'" Id. at 459 (quoting Flagg v.
Essex Cty. Prosecutor, 171 N.J. 561, 571 (2002)).
Rule 1:10-3 "allow[s] for judicial discretion in fashioning relief to
litigants when a party does not comply with a judgment or order." North Jersey
Media Grp., Inc. v. State, Office of Governor, 451 N.J. Super. 282, 296 (App.
Div. 2017) (alteration in original) (quoting In re N.J.A.C. 5:96 & 6:97, 221 N.J.
1, 17-18 (2015)). However, "before punitive or coercive relief can be afforded,
the court must be satisfied that the party had the capacity to comply with the
order and was willfully contumacious." Pressler & Verniero, Current N.J. Court
Rules, comment 4.3 on R. 1:10-3 (2020). Thus, to find a violation of litigant's
rights, the court must be satisfied that the offending party's actions were willful
and unjustified. See P.T. v. M.S., 325 N.J. Super. 193, 206-07 (App. Div. 1999)
A-3511-18T3
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(holding it was in error to find ex-wife in contempt without finding that her
failure to comply was willful and unjustified); see also Gonzalez v. Safe &
Sound Sec. Corp., 185 N.J. 100, 115 (2005) (when determining a violation under
R. 1:10-3, we must consider, "whether the plaintiff acted willfully and whether
the defendant suffered harm, and if so, to what degree.").
The motion judge found the parties' failed to make a definitive inventory
of the memorabilia in Bisignano's possession at the time they agreed to settle
their case by entering into a consent order. Additionally, she found the email
exchanges between the parties failed to establish a definitive inventory list.
Absent a definitive inventory, the judge reasonably concluded she lacked an
adequate basis to determine if there was willful non-compliance on the part of
Bisignano.
Based upon our review of the motion record, we conclude the judge did
not abuse her discretion in denying plaintiffs' motion to enforce litigants' rights.
Plaintiffs failed to establish that the judge's decision was made without a rational
explanation, inexplicably departed from established policies, or rested on an
impermissible basis.
The certifications of Ousmane and Bisignano dispute key parts of
Inselberg's certification, creating genuine issues of material fact regarding
A-3511-18T3
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exactly what memorabilia remains unreturned, if any. Nevertheless, we do not
view the denial of plaintiffs' motion as leaving Inselberg without a remedy. "A
consent order is, in essence, an agreement of the parties that has been approved
by the court." Hurwitz v. AHS Hosp. Corp., 438 N.J. Super. 269, 292 (App.
Div. 2014). As such, a consent order operates as a contract between the parties.
Ibid. Bisignano's obligation to return the memorabilia was an important part of
the settlement agreement between the parties. Bisignano's alleged breach of his
obligation under the settlement agreement occurred later, after the case was
dismissed, when Bisignano allegedly failed to return all the sports memorabilia
held as collateral to Inselberg. We discern no reason why Inselberg cannot now
file a separate action alleging breach of the settlement agreement. 3 If Inselberg
can establish that Bisignano breached the settlement agreement by failing to
return certain items of memorabilia, then he would be entitled to specific
3
We note the entire controversy doctrine "does not apply to bar component
claims either unknown, unarisen or unaccrued at the time of the original action."
Pressler & Verniero, Current N.J. Court Rules, comment 2 on R. 4:30A (2020);
K-Land Corp. No. 28 v. Landis Sewerage Auth., 173 N.J. 59, 70 (2002).
A-3511-18T3
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performance or damages in the amount of the fair market value of the unreturned
items.4
We next turn to whether the motion judge abused her discretion in denying
plaintiffs' request for attorney's fees. A court may award attorney's fees as a
sanction under Rule 1:10-3, which "allows any litigant to invoke relief in aid of
a judgment or order of a court." In re Daniels, 118 N.J. 51, 60 (1990). The
purpose of the rule "is to provide a mechanism, coercive in nature, to afford
relief to a litigant who has not received what a [c]ourt [o]rder or [j]udgment
entitles that litigant to receive." D'Atria v. D'Atria, 242 N.J. Super. 392, 407
(Ch. Div. 1990) (discussing R. 1:10-5, later amalgamated with R. 1:10-3). A
court may thus order monetary sanctions or equitable relief under Rule 1:10-3,
"related to the litigant's damages" and not "primarily punitive in nature[,]" id. at
408, or an award of counsel fees "to be paid by any party to the action to a party
accorded relief under this rule." R. 1:10-3. Thus, pursuant to the rule, "a party
who willfully fails to comply with an order or judgment entitling his adversary
to litigant's rights is properly charged with his adversary's enforcement
4
Of course, the determination of any such damages would likely involve
additional discovery and expert testimony. The absence of such evidence
provides additional support for the judge's decision to deny plaintiffs' motion
without scheduling a plenary hearing.
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expenses." Pressler & Verniero, Current N.J. Court Rules, cmt. 4.4.5 on R. 1:10-
3 (2020).
The decision to award counsel fees "rests within the sound discretion of
the trial court." Maudsley v. State, 357 N.J. Super. 560, 590 (App. Div. 2003).
We disturb such determinations "only on the rarest occasions, and then only
because of a clear abuse of discretion." Packard-Bamberger & Co. v. Collier,
167 N.J. 427, 444 (2001) (quoting Rendine v. Pantzer, 141 N.J. 292, 317
(1995)).
The judge denied plaintiffs' request for attorney's fees because the motion
record failed to establish that Bisignano was a "disobedient party," who was able
to comply and then failed to comply. Absent clear evidence of willful non-
compliance, we discern no basis to conclude the judge abused her discretion in
denying plaintiffs' request for attorney's fees. Maudsley, 357 N.J. Super. at 590.
Any arguments not specifically addressed lack sufficient merit to warrant
discussion in a written opinion. R. 2:11-3(e)(1)(E).
Affirmed.
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