GIGI K COLLECTIONS, INC. AND GIGI K NYC VS. UNITEDMERCHANT SERVICES(DC-14792-15, BERGEN COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
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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-3204-15T4
GIGI K COLLECTIONS, INC.
and GIGI K NYC,
Plaintiffs-Appellants,
v.
UNITED MERCHANT SERVICES,
Defendant-Respondent.
_________________________________
Submitted May 16, 2017 – Decided August 24, 2017
Before Judges Reisner and Sumners.
On appeal from Superior Court of New Jersey,
Law Division, Bergen County, Docket No. DC-
14792-15.
Foley & Foley, attorneys for appellant
(Timothy J. Foley, on the brief).
Budd Larner PC, attorneys for respondent
(Philip C. Chronakis, on the brief).
PER CURIAM
In this commercial business dispute, plaintiffs Gigi K
Collections, Inc. and Gigi K NYC (collectively, Gigi) appeal from
a Special Civil Part order dismissing their complaint and entering
judgment for defendant United Merchant Services (UMS). For the
reasons that follow, we affirm.
We discern the following facts from the evidence adduced at
the one-day bench trial. Gigi operates retail-clothing stores in
New York City. To allow its customers to purchase merchandise
with credit cards, Gigi contracted with UMS to obtain Point of
Service (POS) credit-card processing equipment. As part of the
contract, UMS would also provide related services – charge the
customers' credit card accounts, collect the money from the credit
card company, retain a processing fee, and deposit the remaining
proceeds in Gigi's bank account.
In accordance with the parties' contract, Gigi emailed UMS
that it was providing thirty days' notice to terminate the
contract, and that it did not wish to renew the contract because
the parties could not agree on renewal terms. Thereafter, a
dispute arose and Gigi filed suit in the Special Civil Part
alleging that UMS "breached their agreement[] with [Gigi] by
failing to pay [Gigi] monies due to [Gigi] by virtue of
transactions effectuated on [Gigi's] credit card machines[,]" and
UMS "improperly converted [Gigi's] funds, and has failed to return
them to [Gigi] after demand[.]"
According to the testimony of Gigi's owner, Gigi Kwon, she
continued to use the credit card machines supplied by UMS during
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the thirty-day time span after the termination notice, and expected
UMS to pay Gigi for the credit card purchases. Kwon stated,
however, that, despite obtaining approval for the purchases from
the credit card companies, UMS failed to pay Gigi for the purchases
processed through UMS. She contended that in order for Gigi to
be paid by UMS for approved credit card purchases, the credit card
machines would "batch" the transactions by totaling all of the
signed credit card receipts at the end of each day. Gigi relied
upon UMS' records to attempt to prove that UMS owed it $9,300.86
in unpaid credit card transactions. Kwon admitted that she was
unaware if UMS received payment for the transactions in dispute.
UMS presented the testimony of Seng Yung Lee, who managed
Gigi's accounts with UMS. Lee maintained that UMS ceased
processing Gigi's credit card transactions upon receipt of Gigi's
written notice, which terminated the parties' contract. He
testified that when Gigi complained about not receiving payment
for credit card purchases, Gigi declined UMS' proposal to reprocess
American Express transactions that UMS claimed were never
processed.
Following the trial, the judge entered an order that same day
dismissing Gigi's complaint with prejudice, and attached a written
statement of reasons. The judge found both witnesses credible,
but determined there was no evidence to support Gigi's allegation
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that UMS breached their contract by collecting and retaining the
proceeds from the credit card purchases of Gigi's customers. The
judge noted:
Ms. [Kwon]'s proofs establish that her
company's failure to batch sales caused her
losses. Mr. Lee's testimony established that
Ms. [Kwon] declined to take the opportunity
to recoup at least the [American Express]
losses a year ago and that, contrary to
[Gigi's] allegations, [UMS] did not collect
and retain [Gigi's] sales proceeds.
On these facts, established by a preponderance
of the evidence, this [c]ourt cannot find that
[UMS] breached the agreement and is
responsible to [Gigi] for damages.
This appeal ensued.
Before us, Gigi argues that the trial judge erred in his
assessment of the evidence. In particular, Gigi contends that UMS
prematurely terminated their contract by not processing Gigi's
credit card transactions upon receipt of Gigi's thirty-day notice
that it was not renewing the contract. UMS' conduct constituted
a breach of contract resulting in losing credit card sales
proceeds. Gigi maintains that it was not obligated to batch each
day's receipts because it was done automatically by UMS' equipment.
In addition, Gigi argues that its refusal to accept UMS' offer to
re-process American Express transactions related to a "discounted
settlement offer," which under N.J.R.E. 408 was not admissible to
prove liability or damages.
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Our standard of review of the trial court's determinations
following a non-jury trial is a limited one. Petrozzi v. City of
Ocean City, 433 N.J. Super. 290, 316 (App. Div. 2013), certif.
denied, 217 N.J. 623 (2014) (citing Rova Farms Resort, Inc. v.
Inv'rs Ins. Co., 65 N.J. 474, 484 (1974)). We must "give deference
to the trial court that heard the witnesses, sifted the competing
evidence, and made reasoned conclusions." Griepenburg v. Twp. of
Ocean, 220 N.J. 239, 254 (2015) (citing Rova Farms Resort, Inc.,
supra, 65 N.J. at 483-84). Reviewing courts "should 'not disturb
the factual findings and legal conclusions of the trial judge'
unless convinced that those findings and conclusions were 'so
manifestly unsupported by or inconsistent with the competent,
relevant and reasonably credible evidence as to offend the
interests of justice.'" Ibid. (quoting Rova Farms Resort, Inc.,
supra, 65 N.J. at 484). Review on appeal "does not consist of
weighing evidence anew and making independent factual findings;
rather, our function is to determine whether there is adequate
evidence to support the judgment rendered at trial." Cannuscio
v. Claridge Hotel & Casino, 319 N.J. Super. 342, 347 (App. Div.
1999) (citing State v. Johnson, 42 N.J. 146, 161 (1964)).
We, however, owe no deference to the trial court's
"interpretation of the law and the legal consequences that flow
from established facts." Manalapan Realty, L.P. v. Twp. Comm. of
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Manalapan, 140 N.J. 366, 378 (1995) (citations omitted). We review
such decisions de novo. 30 River Court E. Urban Renewal Co. v.
Capograsso, 383 N.J. Super. 470, 476 (App. Div. 2006) (citing Rova
Farms Resort, Inc., supra, 65 N.J. at 483-84; Manalapan Realty,
supra, 140 N.J. at 378).
Guided by these principles, Gigi's complaint was properly
dismissed. Although we have some reservations concerning the
trial judge's finding that Gigi caused its own losses because it
failed to batch its credit card transactions, we nevertheless
conclude there is sufficient credible evidence to support the
trial judge's order entering judgment in favor of UMS. Gigi did
not allege that UMS was negligent in failing to process Gigi's
credit card transactions, but claimed that UMS improperly
converted its funds. However, Gigi presented no evidence to
support its allegation that UMS collected Gigi's credit card sales
proceeds and failed to give it to Gigi.
Moreover, we do not view the judge's admission of UMS'
proposal to re-process the American Express purchases as evidence
of a settlement offer in violation of N.J.R.E. 408. Under the
rule, "offers of compromise or any payment in settlement of a
related claim, shall not be admissible to prove liability for, .
. . or amount of the disputed claim." N.J.R.E. 408. Here, UMS'
proposal was not a settlement offer, but was evidence of Gigi's
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failure to mitigate its damages. A party alleging a breach of
contract has "a common law obligation to take reasonable steps to
mitigate their damages." State v. Ernst & Young, L.L.P., 386 N.J.
Super. 600, 617-18 (App. Div. 2006) (citations omitted). The
doctrine of mitigation of damages embodies the principle that a
claimant should not be entitled to damages that reasonably could
have been avoided. Covino v. Peck, 233 N.J. Super. 612, 617 (App.
Div. 1989) (citing Ostrowski v. Azzara, 111 N.J. 429, 437 (1988)).
The judge properly considered Gigi's refusal to accept UMS'
proposal to re-process American Express purchases by Gigi's
customers, and reasonably determined that Gigi failed to fulfil
its obligation to mitigate its damages. See Ingraham v. Trowbridge
Builders, 297 N.J. Super. 72, 84 (App. Div. 1997) (quoting
Fanarjian v. Moskowitz, 237 N.J. Super. 395, 406 (App. Div. 1989)
("the proper standard in a non-jury case regarding the judge's
decision on mitigation of damages 'is whether the judge's findings
are supported by sufficient, credible evidence in the record.'").
Affirmed.
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