MFC RESOURCES, INC. VS. ESTATE OF JUERGEN VSHOMANN (L-9612-13, BERGEN COUNTY AND STATEWIDE) (CONSOLIDATED) ( 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NOT FOR PUBLICATION WITHOUT THE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
APPELLATE DIVISION
DOCKET NOS. A-5698-17T2
A-5710-17T2
MFC RESOURCES, INC., MFC
COMMODITIES GMBH, MFC
COMMODITIES U.S.A., L.P., INC.,
and MFC COMMODITIES U.S.A.,
G.P., INC.
Plaintiffs-Appellants,
and
POSSEHL MEXICO, S.A. D.E. C.V.,
Plaintiff,
v.
ESTATE OF JUERGEN HOMANN, 1
Defendant-Respondent,
and
YAN CHEN, JEFF TIANG, JOHN
HOYING, CJAM CORPORATION, INC.,
THYSSENKRUPP METALLURGICAL
PRODUCTS GMBH,
1
Because defendant Juergen Homann passed away during the pendency of this
appeal, the Estate of Juergen Homann was substituted in his place as a party
defendant pursuant to our June 27, 2019 order.
and THYSSENKRUPP MATERIALS
NA, INC.,
Defendants.
______________________________
MFC RESOURCES, INC., MFC
COMMODITIES GMBH, MFC
COMMODITIES U.S.A., L.P., INC.,
and MFC COMMODITIES U.S.A.,
G.P., INC.,
Plaintiffs,
and
POSSEHL MEXICO, S.A. D.E. C.V.,
Plaintiff-Appellant,
v.
ESTATE OF JUERGEN HOMANN,
Defendant-Respondent,
and
YAN CHEN, JEFF TIANG, JOHN
HOYING, CJAM CORPORATION, INC.,
THYSSENKRUPP METALLURGICAL
PRODUCTS GMBH, and
THYSSENKRUPP MATERIALS NA,
INC.,
Defendants.
__________________________________
A-5698-17T2
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Argued telephonically April 22, 2020 –
Decided May 21, 2020
Before Judges Fuentes, Mayer and Enright.
On appeal from the Superior Court of New Jersey, Law
Division, Bergen County, Docket No. L-9612-13.
Charles Michael (Steptoe & Johnson LLP) of the New
York bar, admitted pro hac vice, argued the cause for
appellants in A-5698-17 (Cole Schotz, PC, and Charles
Michael, attorneys; Christopher P. Massaro, Michael
Charles Klauder, and Charles Michael, of counsel and
on the briefs).
Aaron Van Nostrand argued the cause for appellant in
A-5710-17 (Greenberg Traurig LLP, attorneys; Aaron
Van Nostrand, on the briefs).
Jeremy B. Stein argued the cause for respondent in A-
5698-17 and A-5710-17 (Hartmann Doherty Rosa
Berman & Bulbulia, LLC, attorneys; Mark Allan
Berman, Jeremy B. Stein, and Janel R. Alania, on the
briefs).
PER CURIAM
These appeals, argued back-to-back, return to us after a remand to the trial
court for an evidentiary hearing on the enforceability of an oral settlement
agreement. MFC Resources, Inc. v. Homann, No. A-3866-14 (App. Div. July
11, 2017) (MFC I). Plaintiffs MFC Resources, Inc., MFC Commodities GMBH,
MFC Commodities U.S.A., L.P., Inc., MFC Commodities, U.S.A., G.P., Inc.
(collectively, MFC), and Possehl Mexico, S.A. D.E. C.V. (Possehl) argued there
A-5698-17T2
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was no enforceable oral settlement with Homann. We affirm the June 29, 2018
order and judgment, finding an enforceable oral settlement agreement between
the parties and awarding defendant the sum of $7,100,000 for the reasons set
forth in Judge James J. DeLuca's May 25, 2018 comprehensive written decision.2
We also affirm the August 6, 2018 amended order and judgment awarding
defendant the additional sum of $546,053.93, representing pre-judgment
interest.
The facts and procedural history are detailed in our opinion in MFC I.
Based on our remand instructions, Judge DeLuca conducted an evidentiary
hearing on two consecutive days. He heard testimony from seven witnesses and
reviewed documentary evidence to determine whether the parties entered into
an enforceable oral settlement agreement.
The testimony of the witnesses proffered by plaintiffs varied significantly
from the testimony of defendant's witnesses. Judge DeLuca made detailed
credibility determinations as to each witness and reviewed the written evidence
offered by the parties in conjunction with the testimony. Based on the credible
2
Judge DeLuca entered an amended written decision on July 6, 2018,
reaffirming his finding of an enforceable oral settlement agreement.
A-5698-17T2
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testimony and written evidence, Judge DeLuca concluded a term sheet prepared
by Kevin Colosimo, Homann's personal attorney,
set forth specific . . . essential terms of the agreement
between MFC and Homann. MFC representatives
reviewed those items on receipt of the Colosimo Term
Sheet and did not dispute those terms. . . . MFC
representatives . . . advised third parties that MFC had
reached a deal. While the parties may have intended to
further "flesh out" the mechanics of the deal, the failure
to agree on such mechanics [did] not preclude
enforcement of the matter.
....
Homann has proven by a preponderance of the
credible evidence that MFC and Homann entered into a
settlement. While MFC may have had second thoughts
about its settlement with Homann or even the wisdom
of such a settlement, the court will not permit such
second thoughts or change of heart to thwart/undo such
settlement.
The judge instructed Homann's counsel to submit an order to the court.
Plaintiffs objected to defendant's form of order. On June 27, 2018, Judge
DeLuca held a hearing to settle the form of order and enter judgment. The judge
attempted to resolve the parties' disputes and allowed counsel until June 29 to
agree upon the form of the order. If the parties were unable to settle the form of
the order, the judge stated he would enter the order prepared by defense counsel.
A-5698-17T2
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The parties were unable to reach an agreement on the form of the order,
and Judge DeLuca adopted defendant's proposed order and judgment. The June
29, 2018 order entered judgment in favor of Homann and against "MFC
Industrial[] Ltd. n/k/a MFC Bancorp, Ltd. and/or 0778539BC, Ltd., MFC
Resources, Inc., MFC Commodities GMBH, MFC Commodities U.S.A., L.P.,
Inc., MFC Commodities U.S.A. G.P., Inc., and Possehl Mexico, S.A. DE C.V.,
jointly and severally, in the amount of seven million one hundred thousand
dollars[.]" In an August 6, 2018 amended order and judgment, Judge DeLuca
awarded defendant prejudgment interest accruing as of the date of the oral
settlement agreement.
On appeal, plaintiffs challenge the judge's determination that the parties
had an enforceable oral settlement agreement. Specifically, plaintiffs argue the
following: the underlying sale contracts required any change to be in writing
and provided that New York law, which does not recognize oral settlement
agreements, controlled all issues; under New Jersey choice of law rules , the
judge should have applied New York law in deciding whether the parties had an
enforceable agreement; the statute of frauds under both New Jersey and New
York law required the settlement to be in writing because the alleged agreement
A-5698-17T2
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included a guarantee of payment by MFC Industrial Ltd. (MFC Industrial), 3 the
parent company of MFC; and the facts did not support a finding that the parties
agreed to all material terms. Plaintiffs also contend the judge should have
declared the settlement unenforceable based on spoliation of evidence and
ethical violations. In addition, they challenge the final judgment, claiming MFC
Industrial and Possehl were improperly named as parties responsible to satisfy
the judgment.
Several of plaintiffs' arguments in these appeals were raised and rejected
in MFC I. In the prior appeal, plaintiffs argued: (1) the underlying sales
contracts required any changes to be in writing; (2) New York law does not
recognize oral settlements; (3) even under New Jersey law there was no
enforceable oral settlement agreement; and (4) any alleged agreement was the
product of an ethical violation by Homann's attorney. Alternative to these
dispositive legal arguments, plaintiffs claimed an evidentiary hearing was
required to determine whether the parties reached an enforceable oral settlement
agreement.
In deciding MFC I, we held
3
On February 16, 2016, MFC Industrial Ltd. changed its name to MFC Bancorp
Ltd. On July 14, 2017, MFC Bancorp Ltd. changed its name to 0778539 B.C.
Ltd.
A-5698-17T2
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MFC contends, in part, that the judge erred in finding
the parties reached an enforceable settlement
agreement. MFC argues the evidence was insufficient
to establish that the parties intended to be bound or had
agreed to the essential terms of the alleged settlement.
MFC posits that the court should have held an
evidentiary hearing to resolve the factual disputes
surrounding the alleged settlement. We agree.
[MFC I, slip op. at 5.]
In remanding the matter for an evidentiary hearing to determine whether
there was an enforceable agreement, plaintiffs' dispositive arguments that the
oral settlement was unenforceable as a matter of law were rejected as lacking
merit. Had plaintiffs prevailed on their purely legal arguments in MFC I, it
would have been pointless to remand the matter for an evidentiary hearing.
The remand instructions in MFC I established the law of the case,
concluding an evidentiary hearing was necessary to resolve factual disputes and
determine whether the parties agreed to an enforceable oral settlement. See
Henebema v. Raddi, 452 N.J. Super. 438, 450-51 (App. Div. 2017). The law of
the case doctrine provides that once an issue is litigated and decided in a suit,
relitigation should be avoided absent new evidence, a recent change in the
controlling law, or a clearly erroneous prior decision. Sisler v. Gannett Co.,
Inc., 222 N.J. Super. 153, 159 (App. Div. 1987). "The law-of-the-case doctrine
'most commonly applies to the binding nature of appellate decisions upon a trial
A-5698-17T2
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court if the matter is remanded for further proceedings, or upon a different
appellate panel which may be asked to reconsider the same issue in a subsequent
appeal.'" Brown v. Twp. of Old Bridge, 319 N.J. Super. 476, 494 (App. Div.
1999) (quoting Slowinski v. Valley Nat'l Bank, 264 N.J. Super. 172, 179 (App.
Div. 1993)). "Where the rule is applied to a prior appellate decision in the same
case, the doctrine is more stringent." Sisler, 222 N.J. Super. at 160.
An appellate remand is not an opportunity to reassert the same legal
arguments raised in the first appeal absent a change in the law or newly
discovered facts. Plaintiffs failed to argue any recently decided case law or
newly discovered facts justifying our review of identical arguments considered
and rejected in MFC I and therefore we decline to address plaintiffs' repeat
arguments in this appeal. However, we note plaintiffs asserted new arguments
that could not have been raised in MFC I because those arguments were not ripe
until Judge DeLuca rendered his findings of facts and conclusion of law after
the remand hearing. Thus, we limit our review in these appeals to plaintiffs'
challenges to Judge DeLuca's determinations.
We first consider plaintiffs' argument that the judge should have applied
New York law to determine whether the oral settlement agreement was
enforceable. Plaintiffs claimed that the underlying sales contracts with Homann
A-5698-17T2
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provided New York law would govern. Judge DeLuca rejected this argument
and applied New Jersey law because he found the oral settlement agreement was
separate from and independent of the underlying sales contracts. We are
satisfied that the choice of law provision in the underlying sales contract,
applying New York law, was irrelevant to the separate oral settlement agreement
and therefore the judge's application of New Jersey law was proper.
In addition, New Jersey had the most significant relations under New
Jersey's choice of law principles. Gilbert Spruance Co. v. Pennsylvania Mfrs.'
Ass'n Ins. Co., 134 N.J. 96, 102 (1993) (focusing choice of law decisions "on
the state that has the most significant connections with the parties and the
transaction"). Here, plaintiffs filed suit in New Jersey, Homann resided in New
Jersey, at least one corporate plaintiff had its principal place of business in New
Jersey, and the oral settlement agreement resolved a New Jersey civil litigation.
Therefore, New Jersey law had the more significant relationship regarding the
parties' oral settlement agreement and New Jersey law applied.
We next review plaintiffs' argument that the statute of frauds required a
written agreement as a result of Judge DeLuca's inclusion of MFC Industrial as
A-5698-17T2
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an entity agreeing to guarantee plaintiffs' debts. 4 Plaintiffs contend that if MFC
Industrial, which was not a party to the litigation, agreed to guarantee payment
of the settlement sum on behalf of plaintiffs, the statute of frauds required the
agreement to be in writing to be enforceable.
We disagree. MFC Industrial did not guarantee a debt requiring a writing
under the statute of frauds. N.J.S.A. 25:1-15 compels "[a] promise to be liable
for the obligation of another . . . to be enforceable, shall be in a writing[.]" Here,
the term sheet provided "MFC Industrial[] Ltd. et al. (parent for and on behalf
of relevant subsidiaries)" agreed to be bound by the terms of the settlement
agreement. MFC Industrial did not agree to guaranty a payment obligation of
another. Rather, on its own behalf and on behalf of all plaintiffs, MFC Industrial
agreed to be bound by the terms of the settlement in return for dismissal of the
litigation. Moreover, there was no promise to pay a financial obligation to
Homann at the time of the oral settlement because litigation was still pending
with each party claiming the other owed money. Therefore, the statute of frauds
was inapplicable.
4
Plaintiffs were unable to raise this issue in MFC I because MFC Industrial was
not named in the order and judgment that gave rise to that appeal.
A-5698-17T2
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We also reject plaintiffs' contention that Judge DeLuca's findings of fact
and conclusions of law were unsupported by the evidence in the record. Our
scope of review of a judgment following a bench trial is limited. Final
determinations of a trial court "premised on the testimony of witnesses and
written evidence at a bench trial" are deferentially reviewed. D'Agostino v.
Maldonado, 216 N.J. 168, 182 (2013). We also defer to a trial judge's credibility
determinations. In re Return of Weapons to J.W.D., 149 N.J. 108, 117 (1997).
Here, the evidentiary hearing turned on witness credibility, and the judge
found defendant's witnesses to be more credible than plaintiffs' witnesses. We
are not free to disregard Judge DeLuca's factual findings so long as those
findings are supported by the record. See Willingboro Mall, Ltd. v. 240/242
Franklin Ave., L.L.C., 421 N.J. Super. 445, 455 (App. Div. 2011), aff'd, 215
N.J. 242 (2013). We are satisfied the judge's factual determinations are fully
supported by the credible evidence in the record.
Plaintiffs also assert that the judge failed to address their spoliation of
evidence claim related to the loss of the meeting notes from which Homann's
attorney prepared the term sheet. Spoliation is the intentional destruction or
hiding of evidence. See Rosenblit v. Zimmerman, 166 N.J. 391, 400-01 (2001).
A-5698-17T2
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There is no evidence in the record that Homann's attorney destroyed the
notes to conceal facts from plaintiffs. Homann's attorney testified he diligently
searched for the notes unsuccessfully and speculated they were probably lost
when he relocated his office. Plaintiffs failed to present any evidence to
contradict or impugn this testimony. In this light, Judge DeLuca correctly
concluded plaintiffs' spoliation allegation lacked merit.
We next address plaintiffs' argument that the judge erred in signing
defendant's form of order and final judgment. According to plaintiffs, the
executed order and judgment improperly included Possehl and MFC Industrial
as liable parties. Possehl argued it was not a party to the purported oral
settlement agreement. MFC Industrial argued it cannot be liable because it was
not a party to the litigation.
Generally, a judgment cannot bind a non-party. See N. Haledon Fire Co.
No. 1 v. Borough of N. Haledon, 425 N.J. Super. 615, 628 (App. Div. 2012).
However, under circumstances where a non-party's interest has been represented
by a party in a litigation, the non-party may be bound by the judgment. Id. at
628-29 (citing Morris Cty. Fair Hous. Council v. Boonton Twp., 197 N.J. Super.
359, 364-65 (Law Div. 1984), aff'd o.b., 209 N.J. Super. 108 (App. Div. 1986)).
"[I]f it appears that a particular party, although not before the court in person, is
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so far represented by others that his interest received actual and efficient
protection, the decree will be held to be binding upon him." Morris Cty. Fair
Hous. Council, 197 N.J. Super. at 365 (quoting Rynsburger v. Dairymen's
Fertilizer Co-op., Inc., 72 Cal. Rptr. 102, 107 (Ct. App. 1968)).
During an in-chambers discussion with counsel prior to addressing the
proposed form of order and judgment, Judge DeLuca discussed his views on
reconciling the form of order. While we do not have the benefit of the judge's
in-chambers comments regarding the form of order and judgment, Judge DeLuca
explained in his May 25, 2018 written decision that plaintiffs' representatives ,
the Chief Executive Officer (CEO) and Chief Financial Officer (CFO) of MFC
Industrial, met with Homann and his attorney to discuss resolution of the
underlying litigation. The judge accepted as credible Homann's testimony that
plaintiffs' CEO, Gerardo Cortina, and its CFO, Samuel Morrow, represented that
they had authority to settle the litigation. The term sheet also reinforced the
judge's finding because it was an agreement between Homann and "MFC
Industrial[] Ltd. et al. (parent for and on behalf of relevant subsidiaries)."
Even though MFC Industrial was not named as a party in the litigation, it
chose to negotiate with Homann and to enter into a settlement on its own behalf.
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MFC Industrial was bound by the oral settlement agreement because it was
represented in this matter and benefitted from the dismissal of the litigation.
We are also satisfied that Possehl was properly included in the order and
judgment. The litigation was filed on behalf of Possehl as a named plaintiff. In
its complaint, Possehl sought money from Homann and, in the counterclaim,
Homann sought money from Possehl. The oral settlement agreement benefitted
Possehl by ending the litigation in its entirety, including the counterclaim. In
addition, Possehl was a "relevant" subsidiary at the time of the oral settlement
and included as such in the term sheet.
Having reviewed the record, we are satisfied judgment was properly
entered against MFC Industrial and Possehl.
Affirmed.
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