MANTTIF MANAGEMENT INC. VS. EMERSON DONUTS LLC (L-20089-14 AND L-20092-14, BERGEN COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE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-1528-17T4
MANTTIF MANAGEMENT INC.,
d/b/a MANTIFF MANAGEMENT,
INC.,
Plaintiff-Appellant,
v.
EMERSON DONUTS LLC,
CLIFFSIDE PARK DONUTS, INC.,
and RAJIV MEHTA,
Defendants/Third-Party
Plaintiffs-Respondents,
v.
FALGUN DHARIA, LOUIS
ALGIOS, ESQ., and MILLER,
ROSADO & ALGIOS, LLP,
Third-Party Defendants.
_______________________________
MANTTIF MANAGEMENT INC.,
d/b/a MANTIFF MANAGEMENT,
INC.,
Plaintiff,
v.
FAIRVIEW DONUTS LLC,
SMITA MODY, and RAJIV
MEHTA,
Defendants/Third-Party
Plaintiffs-Respondents,
v.
FALGUN DHARIA, LOUIS
ALGIOS, ESQ. and MILLER,
ROSADO & ALGIOS, LLP,
Third-Party Defendants.
______________________________
LOUIS ALGIOS, ESQ. and
MILLER, ROSADO & ALGIOS,
LLP,
Fourth-Party Plaintiffs,
v.
HARSHAD R. VAIDYA, ESQ.,
Fourth-Party Defendant.
_______________________________
DUNKIN' DONUTS, LLC,
Intervenor/Third-Party Plaintiff,
v.
MANTTIF MANAGEMENT INC.,
A-1528-17T4
2
d/b/a MANTIFF MANAGEMENT,
INC., and FALGUN DHARIA,
Third-Party Defendants.
_________________________________
Submitted May 7, 2019 – Decided July 5, 2019
Before Judges Fisher and Geiger.
On appeal from the Superior Court of New Jersey, Law
Division, Bergen County, Docket Nos. L-020089-14
and L-020092-14.
Christopher Dominick Ferrara, attorney for appellant.
Bendit Weinstock, PA, attorneys for respondents
(Sherri Davis Fowler and James F. Keegan, on the
brief).
PER CURIAM
Plaintiff Manttif Management Inc. d/b/a Mantiff Management, Inc.
(Mantiff) appeals from the dismissal of its remaining claims for recovery on two
promissory notes. After a two-day bench trial, the trial court found plaintiff did
not prove, by a preponderance of the evidence, there was any money owed to it
by defendants Emerson Donuts LLC (Emerson) and Fairview Donuts LLC
(Fairview) (collectively defendants). We affirm.
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I.
Third-party defendant Falgun Dharia, who is Mantiff's principal,
defendant/third-party plaintiff, Rajiv Mehta, and others were members of GFSV
Emerson Donuts Inc. (GFSV), with Dharia serving as the corporate officer.
Dharia and Mehta, along with defendant/third-party plaintiff Smita Mody, who
was a silent-partner, were also members of SVF Fairview Donuts Inc. (SVF),
with Dharia again serving as the corporate officer. GFSV and SVF were the
owners of two franchised Dunkin' Donuts stores. Mehta, Emerson, and Fairview
purchased Dharia's respective interests in GFSV and SVF in October 2003.
At the closing, defendants executed promissory notes in the amount of
$70,000, as to Emerson, and $105,000, as to Fairview. The notes provided for
repayment within seven years at an annual interest rate of six percent. In
addition to the promissory notes, Mehta tendered advance payments prior to the
closing and a lump sum at the closing. Mantiff commenced separate actions as
to Emerson and Fairview in 2014 to enforce the promissory notes. In those
actions, Mantiff also alleged defendants owed it unpaid consulting fees and
profit sharing under a purported retained equity ownership in the franchises.
Mantiff filed amended complaints, defendants filed counterclaims and
third-party actions, and a fourth party action between the parties' attorneys at
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closing was filed and later settled. Dunkin' Donuts intervened on Mantiff's
claims regarding his supposed retained equity in the franchises and the
consulting agreements due to a pre-existing settlement agreement wherein
Dharia agreed to divest all ownership interests in Dunkin' Donuts franchises.
Dharia initially asserted the settlement did not prevent him from providing
consulting services or from retaining equity through Mantiff, a corporate entity.
Ultimately, Dharia abandoned these claims by stipulating to their dismissal with
prejudice.
The actions were consolidated at the trial level and on appeal. They
proceeded under the complex litigation track and were assigned to the vicinage's
designated complex business litigation judge. Following significant motion
practice, the parties engaged in discovery throughout 2015 and produced
voluminous documents. In November 2015, Mantiff successfully moved to
compel defendants to produce certain additional documents listed in two
supplemental notices to produce. Mantiff and Dharia violated discovery orders
requiring them to produce specific documents, including a forfeiture order
entered in a federal action brought by the government against Dharia.
In April 2016, the parties agreed to participate in private mediation with
a retired judge. At that point, the discovery end date (DED) was October 15,
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2016. Since the first mediation session was not going to be held until November
28, 2016, the DED was extended, by consent, to December 15, 2016 pursuant to
Rule 4:24-1(c). A second mediation session took place on January 13, 2017,
however, a complete resolution was not reached.
In a March 9, 2017 letter, counsel for defendants updated the trial court
on the status of discovery. After noting the DED was December 14, 2016,
counsel advised the court that no party moved for an extension of the DED prior
to its expiration, and there were no circumstances warranting a reopening of
discovery. Counsel asked the court to schedule the trial of the then three-year-
old case. Pertinent to this appeal, counsel's letter included the following
"proposed schedule of necessary events prior to trial:" (1) ordering Dharia to
produce an unredacted copy of the August 11, 2014 financial statement he
submitted to the United States Attorney that he was previously ordered to
provide and (2) depositions of expert witnesses, if desired by third party
defendant/fourth party plaintiff Louis Algios, Esq. 1 The letter further advised
that the DED had been informally extended by consent of the parties, but no
1
Algios represented Dharia with respect to the sale of his interests in GFSV
and SVF.
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party requested a further extension as the end of the mediation process
approached.
Although Mantiff claims it was unable to complete discovery by obtaining
additional financial records and completing the deposition of Mehta, it did not
move to reopen discovery.
The trial court subsequently issued a March 16, 2017 case management
order that stated discovery ended on December 14, 2016; dispositive motions
were to be filed by May 26, 2017; pretrial motions were to be filed by September
8, 2017; and trial was scheduled for October 10, 2017.
Dispositive motions followed. On June 23, 2017, the trial court granted
summary judgment to Mody, dismissing all claims against her. Subsequent
settlement negotiations resolved most of the remaining claims, including the
claims against the franchisor, Dunkin' Donuts, and the cross-claims filed by the
respective closing attorneys. As part of the partial settlement, Mantiff dismissed
its claims under the consulting agreements, and agreed its only remaining claim
against defendants was for amounts allegedly owed on the promissory notes.
The trial court conducted a two-day bench trial immediately following the
settlement of numerous claims. The only issue to be tried was whether Emerson,
Fairview or Mehta owed monies to Mantiff on either of the promissory notes.
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Dharia and Mehta testified at the trial. Nineteen exhibits were admitted
in evidence, including the promissory notes, asset purchase agreement, security
agreement, two HUD-1 statements, several checks, two K-1 tax returns, a ledger
of Ganesh Management, Inc., 2 defendants' responses to requests for admissions,
an affidavit in support of summary judgment, and several pleadings.
Mantiff claimed a total of $100,100 was paid on account of the two
promissory notes. Mantiff relied on the checks and ledger in support of that
claim. Mantiff alleged the last payment was received on January 20, 2008.
Mantiff alleged the remaining balance owed on the promissory notes was
$178,237.69 plus additional interest accruing thereafter at the default rate of
sixteen percent per annum. Mantiff also sought an award of attorney's fees and
costs pursuant to the terms of the notes. Mantiff disputed any claim by
defendants that they were entitled to credits for additional payments or advances
prior to closing that were not reflected on the HUD-1 statements or any contract
or other writing.
Emerson and Fairview argued Mantiff failed to meet its burden of proof
that the notes existed and contended Mantiff was unable to prove what was owed
and what was paid on the alleged notes. They asserted the exhibits and Mehta's
2
Mehta is the principal of Ganesh Management, Inc.
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testimony established the payments made against the notes and the credits they
were entitled to for payments made prior to closing. They also contended
Mantiff did not demand payment after the payments stopped in 2003. They
alleged the notes were made payable by October 2, 2010; yet Mantiff did not
serve a notice of default on Emerson or Fairview until November 27, 2013. The
notices did not demand payment or state the outstanding balance. Finally,
defendants averred Mantiff did not produce documentation showing it was
entitled to enforce the notes.
Following closing arguments the trial court issued an oral decision. It
found the promissory notes were entered into as part of the secured asset
purchase agreements. The parties introduced extensive documentation
concerning the closings but the original notes could not be found. The court
characterized the claims as "a simple case of two promissory notes and we come
down to credibility, simple credibility."
The court made the following findings. Defendants paid substantial sums
to the plaintiff that equaled their obligation under the notes to a large extent.
Defendants explained they stopped making payments in 2008 because they
advanced large amounts of money for other business ventures that were not paid
back. This was known to Mantiff, and ratified by it, as evidenced by the failure
A-1528-17T4
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to demand satisfaction of the notes. Dharia lacked specific knowledge as to
payments made on account of the notes or the consulting agreements because no
accounting records were kept. The only accounting records and other tangible
evidence about the payments came from the defendant. Dharia offered
unsupported opinions in response to mostly leading questions.
The trial court concluded Mantiff:
failed to prove by a preponderance of the evidence that
there is any money due and owing, that all the evidence
in this case clearly establishes that any right to assert
non-payment on the promissory note was long since
waived, that the actions of the parties clearly showed
that there was a ratification and acceptance of the
discharge of any obligation under those notes, that the
claim would have been known and should have been
discharged and that the plaintiff himself had no idea
what was paid or what wasn't paid under the notes and
just merely testified without any records, without any
documents, without any business records concerning
this payment. He really had no ability to testify at all
about any of this. . . . [T]he defendant has proved
categorically that . . . the claim was discharged by the
duly recorded payments in the check register and the
. . . prior to closing payments that were admitted into
evidence.
The court entered judgment in favor of defendants and dismissed plaintiff's
claims against Emerson and Fairview with prejudice. This appeal followed.
Mantiff raises the following issues: (1) it established a prima facie case
for recovery on the notes; (2) the trial court committed reversible error and an
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abuse of discretion by awarding certain alleged credits or setoffs claimed by
Mehta; (3) the trial court committed reversible error in finding it ratified
defendants' decision to stop making payments on the promissory notes, and in
finding plaintiff never made any demand; (4) the trial court committed reversible
error in finding it did not know how much was actually paid on account of the
notes because plaintiff failed to keep accounting records; (5) the trial court
committed reversible error in finding the parties stipulated there were no further
payments due on the notes; (6) the trial court committed reversible error in
finding it waived its right to assert any further payment was due; (7) the trial
court committed reversible error in finding it discharged, satisfied, or ratified
defendants' decision not to make further payments on the notes; (8) the trial
court's comments concerning the failure of the parties to adhere to corporate
formalities is irrelevant dicta; and (9) the trial court erred in not allowing it to
obtain full discovery.
II.
We first address Mantiff's argument the trial court erred in not allowing it
to obtain full discovery. For the following reasons, we are unpersuaded by this
argument.
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This case was assigned to Track IV as a complex commercial action. As
a result, it was subject to active case management by the designated judge, with
discovery to be completed within 450 days. R. 4:5A-1; R. 4:24-1(a); Civil Case
Information Statement, Pressler & Verniero, Current N.J. Court Rules,
Appendix XII-B1 to R. 4:5A-1, www.gannlaw.com (2017).3
Following a sixty-day consensual extension, the DED was December 14,
2016. The case management order, which reiterated that discovery ended on
December 14, 2016, was entered on March 16, 2017, more than three months
after the DED. Although Mantiff claims it was unable to complete discovery by
obtaining additional financial records and completing Mehta's deposition, it did
not move to extend or reopen discovery. Mantiff had more than sufficient time
to formally request to reopen discovery before the case management order was
entered. Mantiff can hardly complain that discovery was not extended if it did
not move for such relief.
The case management order scheduled trial for October 10, 2017. Mantiff
could have moved to reopen and extend discovery after the case management
order was entered. Had it done so, the motion would have been governed by
3
Subsequent to the trial in this case, our Supreme Court adopted rules governing
the Complex Business Litigation Program effective September 1, 2018. Rules
4:102-1 to 4:105-9.
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Rule 4:24-1(c), which provides that "[n]o extension of the discovery period may
be permitted after an arbitration or trial date is fixed, unless exceptional
circumstances are shown."
To demonstrate exceptional circumstances, we generally require a
showing that the attorney diligently pursued the information sought during the
discovery period but was frustrated from obtaining the discovery by
circumstances largely beyond counsel's control. Bender v. Adelson, 187 N.J.
411, 429 (2006). Specifically, the moving party must show: (1) why discovery
was incomplete and the diligence in pursuing discovery; (2) the additional
discovery is essential; (3) an explanation for why an extension was not sought
within the original discovery period; and (4) the circumstances were beyond the
party's and counsel's control. Garden Howe Urban Renewal Assocs., LLC v.
HACBM Architects Eng'r Planners, LLC, 439 N.J. Super. 446, 460 (App. Div.
2015).
Mantiff has not demonstrated that such "exceptional circumstances"
existed warranting the reopening and extension of discovery. A voluntary
decision to postpone discovery pending completion of mediation, without court
approval, does not constitute exceptional circumstances beyond the party's and
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counsel's control. Thus, Mantiff has not shown a motion to reopen and extend
discovery would likely have been granted had it been filed.
In any event, we generally "accord substantial deference to a trial court's
disposition of a discovery dispute. We will not ordinarily reverse a trial court's
disposition of a discovery dispute 'absent an abuse of discretion or a judge's
misunderstanding or misapplication of the law.'" Brugaletta v. Garcia, 234 N.J.
225, 240 (2018) (quoting Capital Health Sys. v. Horizon Healthcare Servs., 230
N.J. 73, 79-80 (2017)). "This deferential approach 'cautions appellate courts not
to interfere unless an injustice appears to have been done.'" Quail v. Shop-Rite
Supermarkets, Inc., 455 N.J. Super. 118, 133 (App. Div. 2018) (quoting Abtrax
Pharms., Inc. v. Elkins-Sinn, Inc., 139 N.J. 499, 517 (1995)). Mantiff has not
demonstrated it suffered an injustice.
III.
We next address Mantiff's attack on the trial court's factual findings and
conclusions. Our review of the factual findings made by the trial judge in a non-
jury case is limited. Cumberland Farms, Inc. v. N.J. Dep't of Envtl. Prot., 447
N.J. Super. 423, 437 (App. Div. 2016) (citing Seidman v. Clifton Sav. Bank,
S.L.A., 205 N.J. 150, 169 (2011)). "Factual findings premised upon evidence
admitted in a bench trial 'are binding on appeal when supported by adequate,
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substantial, credible evidence.'" Potomac Ins. Co. of Illinos ex rel. OneBeacon
Ins. v. Pa. Mfrs.' Ass'n Ins., 215 N.J. 409, 421 (2013) (quoting Cesare v. Cesare,
154 N.J. 394, 411-12 (1998)). We will "'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.'" Allstate Ins. v. Northfield Med. Ctr., P.C., 228 N.J. 596, 619 (2017)
(quoting Griepenburg v. Twp. of Ocean, 220 N.J. 239, 254 (2015)).
Because a trial court presides over the case and hears the witnesses testify,
"it has a better perspective than a reviewing court in evaluating the veracity of
witnesses." Cesare, 154 N.J. at 412 (quoting Pascale v. Pascale, 113 N.J. 20, 33
(1988)). "[W]e give deference to the trial court that heard the witnesses, sifted
the competing evidence, and made reasoned conclusions." Allstate, 228 N.J. at
619 (alteration in original) (quoting Griepenburg, 220 N.J. at 254). "Deference
is especially appropriate 'when the evidence is largely testimonial and involves
questions of credibility.'" Cesare, 154 N.J. at 412 (quoting In re Return of
Weapons to J.W.D., 149 N.J. 108, 117 (1997)). "Thus, '[w]e do not weigh the
evidence, assess the credibility of witnesses, or make conclusions about the
evidence.'" Mountain Hill, L.L.C. v. Twp. of Middletown, 399 N.J. Super. 486,
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498 (App. Div. 2008) (alteration in original) (quoting State v. Barone, 147 N.J.
599, 615 (1997)). On the other hand, "[a] trial court's interpretation of the law
and the legal consequences that flow from established facts are not entitled to
any special deference." Hayes v. Delamotte, 231 N.J. 373, 386-87 (2018)
(alteration in original) (quoting Manalapan Realty, L.P. v. Twp. Comm., 140
N.J. 366, 378 (1995)).
The trial court found, despite the litigation's "long, tortuous" history, the
trial involved nothing more than "a simple case of two promissory notes" and
the assessment of "simple credibility." The court had "no doubt" defendants
"paid substantial sums to [Mantiff] and those payments equaled their obligation
under those notes to a large extent." The judge further found the evidence was
clear Mantiff "had no idea actually what was paid on the notes and what wasn't
because" it did not keep "any accounting records." The only accounting records
and the evidence regarding the loan payments came from the defendants. The
court described Dharia as offering net opinions and viewpoints, mostly in
response to leading questions, and testified without the benefit of any business
records concerning payments. The court found Dharia "had no idea" whether
payments were made on account of the consulting agreements or the promissory
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notes. The court concluded Dharia "had no ability to testify" about payments
and otherwise found his testimony "was certainly not accurate."
Based on its assessment of Dharia's testimony and demeanor, the trial
court determined Dharia "doesn't actually believe" defendants owe Mantiff
money and "knew there was nothing due and owing from [defendants]," which
explains why it did not pursue its claim for many years. Taking into account
"the course of conduct of the parties," the judge found "there was no credible
evidence" that demonstrated "anything other than a complete discharge,
satisfaction and ratification of the decision of [defendants] to make no further
payments." Accordingly, the judge determined Mantiff "failed to prove by a
preponderance of the evidence that there was any money due and owing."
Although they had no burden of proof, the judge found defendants "had proved
categorically" that Mantiff's claim "was discharged by the duly recorded
payments in the check register and the . . . prior to closing payments that were
admitted into evidence."
Applying our deferential standard of review and considering the proofs as
a whole, we hold there was sufficient credible evidence in the record to support
the finding that Mantiff failed to prove by a preponderance of the evidence that
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there was any money due and owing from Emerson or Fairview on either
promissory note. We discern no basis to disturb the trial court's decision.
In light of our holding, we need not address the trial court's additional
rulings that Mantiff waived its right to pursue its claims or ratified defendants'
decision to make no further payments.
We have considered Mantiff's other contentions in light of the record and
applicable legal principles, and conclude they are without sufficient merit to
warrant further discussion in this opinion. R. 2:11-3(e)(1)(E).
Affirmed.
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