VINCENT O'HARA et al. v. FRANCIS RISPOLI

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-2925-04T12925-04T1

VINCENT O'HARA and

ROSALIE O'HARA,

Plaintiffs-Appellants,

v.

FRANCIS RISPOLI,

Defendant-Respondent,

and

CARLYLE TOWERS CONDOMINIUM

ASSOCIATION and A.P.C. PARKING,

INC.,

Defendants.

 

Submitted: October 12, 2005 - Decided:

Before Judges Stern and Fall.

On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket Number BER-L-919-03.

Mark Winkler, attorney for appellants.

Bruno & Ferraro, attorneys for respondent (Robert A. Ferraro, of counsel, on the brief).

PER CURIAM

Plaintiffs Vincent O'Hara and Rosalie O'Hara appeal from an order of January 4, 2005, entered after a non-jury trial conducted in the Law Division on November 9 and 10, 2004, dismissing their punitive damage claim against defendant Francis Rispoli. We affirm. The following factual and procedural history informs our conclusion.

Defendant Rispoli and plaintiff Vincent O'Hara had been friends for approximately thirty years. Plaintiff was in the deli business, but also owned a company called Universal Funding VTO, Inc., which made commercial loans to people. In May 2002, defendant became interested in purchasing a 1994 3.6 Turbo 'S' Porsche vehicle. Lacking the funds to fully cover the $83,000 asking price, the defendant asked Mr. O'Hara for a loan. Plaintiffs agreed to loan defendant $40,000 from Mrs. O'Hara's liquid assets to enable him to buy the car. Under the terms of the loan commitment, signed by both parties and dated June 5, 2002, defendant was to pay $20,000 by August 1, 2002; make monthly interest payments of $616; and make payment in full, plus $400, within six months of the date of closing of the loan. Defendant was to supply vehicle insurance coverage for one year, pay storage fees of $150 per month, and pay counsel fees should plaintiffs require an attorney. Finally, plaintiffs were to retain the bill of sale, the vehicle in his Lock Box at 100 Winston Drive in Cliffside Park, and the only set of keys to the vehicle, until defendant paid the loan in full.

Some time after the original commitment was issued defendant approached plaintiff, seeking another loan because his Mercedes vehicle had been seized by the Sheriff's Department to satisfy an outstanding judgment against him. At trial, the parties disagreed on the amount of this second loan. Defendant asserted that it was for $2,000, while Mr. O'Hara contended that it was for $12,600, the face amount of the loan commitment proffered by plaintiffs. At trial, defense counsel pointed out that the last page of the original $40,000 note had been photocopied and appended to the back of this second note; plaintiffs did not contest that point. Accordingly, the defendant argued that this second note was fraudulent. When the plaintiffs withdrew their claim relating to that loan, the defendant further argued that this claim would not have been withdrawn by plaintiffs unless it was invalid. The trial judge did not make any findings of fact as to the validity or amount of this second loan commitment.

The Porsche vehicle that was the subject of the first loan commitment was delivered to plaintiffs in July 2002, and kept in their possession in a secure and well-lit spot in the Carlyle Towers Condominium parking garage. Mrs. O'Hara was especially concerned about protecting the vehicle, as she considered it her only collateral on the loan.

Defendant made his first two payments on the Porsche loan, but failed to pay the $20,000 due on August 1, 2002. In November 2002, the parties were engaged in a dispute about the balance owed, and began communicating through counsel. It was contested between the parties at trial as to whether a check dated November 6, 2002, issued by defendant's corporation to the plaintiffs, had properly cleared at the bank. Mr. O'Hara testified to hearsay statements by bank personnel that the bank had rejected it, but there were no markings on the check showing that it had failed to clear. There was also a check from defendant's mother, which the plaintiffs claimed had initially been returned for insufficient funds prior to eventually clearing. There was no fact-finding by the judge as to whether one or both of these checks had cleared.

Plaintiffs' counsel sent defendant's attorney a letter dated November 7, 2002, demanding payment of $47,164.24 in satisfaction of the Porsche loan. Defendant's attorney responded on November 13, 2002, disputing certain amounts, but indicating that he would have the money to satisfy the obligation shortly. Another letter from defendant's attorney to plaintiffs' attorney, dated November 19, 2002, indicated that he was anticipating the funds to pay off the loan that week, but that there was still some dispute as to the amount. Plaintiffs' counsel sent letters to defendant's attorney dated November 19, and November 25, 2002, requesting that the defendant pay off the total outstanding balance, computed to be $47,164.24.

Defendant claimed that he had a conversation with Mr. O'Hara in November 2002, in which he told Mr. O'Hara that he wanted to pay off the Porsche loan. According to defendant, Mr. O'Hara responded that the defendant had defaulted on his loan, and that the Porsche now belonged to plaintiffs. Specifically, defendant claimed that Mr. O'Hara had said to his wife, "you should be happy [defendant] defaults on the loan because then you'll get a car . . . for $40,000." The judge made no factual determination as to whether or not Mr. O'Hara had made those statements or had expressed an intent to try to keep the Porsche.

On November 24, 2002, the Sunday before Thanksgiving, defendant removed the Porsche from plaintiffs' parking garage. In order to do so, defendant obtained a key from the Porsche dealer, made arrangements for a flat bed truck, secured jumper cables, had his brother accompany him to the parking garage, jump-started the car and took it away on the truck to park it at a friend's house.

When the plaintiffs discovered the Porsche was missing, they called the police and informed them that they suspected the defendant had taken the vehicle. The police contacted the defendant, who admitted to taking the car.

According to the plaintiffs, shortly after this conversation with the police, defendant called them and threatened them, stating, "now we'll do it my way." However, according to the defendant's version of that conversation, both parties agreed that the defendant would send plaintiffs $44,400. The trial judge did not make a finding on this factual dispute. Defendant claimed that negotiations worsened when the plaintiffs later brought up the second loan commitment. Although the defendant alleged that the whole dispute over the Porsche centered around the second loan commitment, the trial judge made no findings of fact relating to the amount of, or the details surrounding, the second loan.

On December 11, 2002, through counsel, defendant sent a certified check payable to Mr. O'Hara for $44,400 to plaintiffs' attorney. In a reply letter from plaintiff's counsel dated December 13, 2002, plaintiffs returned the check; demanded additional funds to cover unpaid storage fees, insurance, and a missing monthly payment; and stated their intentions to initiate litigation.

On February 10, 2003, plaintiffs filed a six-count complaint against defendants, seeking compensatory damages from Rispoli in the amount of $40,000, plus interest, late fees, exit fee, insurance and storage costs, and attorneys fees, for default on the Porsche loan (count one); compensatory damages from Rispoli in the amount of $12,600, plus interest, attorneys fees, court costs and interest for default on the Mercedes loan (count two); punitive damages, compensatory damages, attorneys fees, interest and court costs from Rispoli for his conduct surrounding the wrongful taking and conversion of the Porsche vehicle from plaintiffs' garage (count three); for compensatory damages, punitive damages, attorneys fees, interest and court costs from Rispoli for fraudulent conduct that prevented plaintiffs from obtaining security for their loans to defendant (count four); compensatory damages, attorneys fees, interest and court costs against defendants Carlyle Towers Condominium Association and APC Parking, Inc. for breach of their contractual obligation by permitting defendant to take the Porsche vehicle from the garage (count five); and for compensatory damages, attorneys fees, interest and court costs against defendants Carlyle Condominium Association and APC Parking, Inc. for their negligence in permitting defendant to take the Porsche vehicle from the garage (count six).

On November 3, 2004, the parties reached a stipulation of settlement covering the compensatory damages aspects of all claims against the defendants, leaving for trial only plaintiffs' claim for punitive damages against defendant Francis Rispoli.

There was also a pending criminal complaint filed by plaintiffs against Rispoli in Cliffside Park Municipal Court. In those proceedings, Rispoli had submitted an affidavit dated December 22, 2003, asserting that he had not driven the Porsche vehicle since the taking in late November 2002. However, Rispoli later admitted during trial in these proceedings that he had driven the vehicle during that time. Rispoli claimed, however, that he had been busy working when he signed the affidavit and misread it. The trial judge made no factual findings concerning this affidavit, nor regarding Rispoli's credibility generally.

On November 9 and 10, 2004, a non-jury trial was held in the Law Division to determine the issue of plaintiffs' punitive damage claims against defendant Rispoli. The trial judge issued a letter opinion dated January 4, 2005, and entered judgment for the defendant, finding that the plaintiff had failed to prove by clear and convincing evidence that defendant's actions were sufficiently malicious, egregious, or wanton to justify an award of punitive damages under N.J.S.A. 2A:15-5.12. In so ruling, the judge stated, in pertinent part:

To prove a punitive damages claim the totality of facts must objectively prove (some violation of public policy) that defendant's actions were malicious, egregious or wanton behavior that subjectively affected plaintiffs in that manner. This anger producing private riff between parties who knew all about one another is neither objectively or subjectively sufficient to meet the statutory threshold and certainly does not come close to the clear and convincing evidence required to prove a claim pursuant to N.J.S.A. 2A:15-5.12.

Defendant's self-help possession of his vehicle was a continuing breach of his contract for which punitive damages are not available. The debt had been paid in full. . . .

An order dismissing plaintiffs' punitive damages claim was issued on January 4, 2005.

On appeal, plaintiffs present the following arguments for our consideration:

POINT I

DEFENDANT ADMITTED TAKING THE COLLATERAL WITHOUT PERMISSION AND WITHOUT HAVING THE MONEY TO PAY THE DEBT. THE TRIAL COURT ERRED IN DENYING PLAINTIFFS' CLAIM FOR PUNITIVE DAMAGES.

POINT II

AS A MATTER OF PUBLIC POLICY PUNITIVE DAMAGES SHOULD BE ASSESSED AGAINST DEFENDANT FOR HIS IMPROPER TAKING OF COLLATERAL WITHOUT PERMISSION AND WITHOUT AUTHORITY.

Pursuant to N.J.S.A. 2A:15-5.12a, punitive damages may be appropriate if:

the plaintiff proves, by clear and convincing evidence, that the harm suffered was the result of the defendant's acts or omissions, and such acts or omissions were actuated by actual malice or accompanied by a wanton and willful disregard of persons who foreseeably might be harmed by those acts or omissions.

In determining whether punitive damages should be awarded in a particular case, the trier of fact should weigh all relevant evidence, including but not limited to, the following:

(1) The likelihood, at the relevant time, that serious harm would arise from the defendant's conduct;
 
(2) The defendant's awareness of reckless disregard of the likelihood that the serious harm at issue would arise from the defendant's conduct;
 
(3) The conduct of the defendant upon learning that its initial conduct would likely cause harm; and
 
(4) The duration of the conduct or any concealment of it by the defendant.

[N.J.S.A. 2A:15-5.12b.]

The decision whether to award punitive damages is generally within the sound discretion of the trial court judge. Maudsley v. State, 357 N.J. Super 560, 590 (App. Div. 2003). Thus, on review, the trial court's determination of punitive damages will not be disturbed unless there was a clear misapplication of discretion. Ibid. Applying these factors to this case, we conclude that the trial court judge did not misapply her discretion in holding for the defendant.

Regarding the first factor, the likelihood of physical harm to the plaintiffs and to the vehicle was only speculative, and never actually occurred. Plaintiffs argued that a parking garage confrontation might have caused someone to get hurt and Mrs. O'Hara testified that she feared that the "collateral [was] out there being driven and . . . destroyed." However, defendant surreptitiously removed the vehicle in the middle of the night, thereby avoiding any confrontation. Furthermore, there is no evidence of any physical damage to the vehicle as a result of the taking, let alone any destruction.

The trial judge acknowledged the emotional harm involved, commenting that, "Mrs. O'Hara has been severely aggravated by all of the described events . . . [a]ll of this is unfortunate and clearly upsetting to the plaintiffs." However, there was no expert testimony as to any emotional harm suffered by her. Mrs. O'Hara's constant concern, and the source of her anxiety, was the financial loss of her $40,000. However, from delivery of the car in July 2002 through the taking in late November 2002, plaintiffs possessed the collateral on her $40,000. It was only the brief period in between the taking of the car and the receipt of $44,400 payment by the defendant on December 11, 2002, that plaintiffs lacked collateral. Thus, there was a very low likelihood that serious physical, emotional, or financial harm would have resulted from defendant's conduct.

The second factor addresses the defendant's awareness of reckless disregard of the likelihood that his conduct would cause serious harm. N.J.S.A. 2A:15-5.12b(2). Defendant was aware that his taking of the vehicle placed him in an advantageous bargaining position with the plaintiffs, thereby causing the plaintiffs harm. In fact, Mrs. O'Hara testified that the defendant had called her after the taking and stated, "now we'll do it my way." However, it is not clear that defendant's desire to harm rose to the level of maliciousness, especially in light of defendant's subsequent actions.

The third factor concerns the conduct of defendant after learning that his taking of the Porsche would likely cause harm. N.J.S.A. 2A:15-5.12b(3). Although there is no clear point that can be identified as to when the defendant "learned" that his conduct would cause harm, defendant's actions following the taking do not reveal a desire to cause serious harm to the plaintiffs. Within a couple of weeks, defendant remitted the face amount of the loan, recognizing his obligation and thus, to a degree, remediating the initial wrongful conduct.

Finally, the fourth factor addresses the duration of wrongful conduct and concealment by the defendant of that conduct. N.J.S.A. 2A:15-5.12b(4). The defendant breached his contract with the plaintiff by defaulting on his payments and then by taking the Porsche before tendering full payment. The trial judge stated that "[w]hen defendant took his car from plaintiffs' garage he again breached the agreement he had been breaching for six months. The breach continued for ten more days until a valid certified check for $44,000 was sent to plaintiffs." Thus, the defendant's wrongful conduct persisted for a period of time spanning four months, and culminated in the one-week to two-week period in which defendant retained the Porsche without having tendered payment.

Additionally, defendant concealed his wrongful taking by removing the car without plaintiffs' knowledge and driving it for a week before they discovered that it had been taken. It was not until the plaintiffs called the police that the defendant was found to be in possession of the vehicle. Afterwards, the defendant retained the vehicle and did not tender payment until December 11, 2002.

However, regarding both the duration of the defendant's wrongful conduct and the concealment, the trial judge stated, in relevant part:

All of plaintiffs' testimony proved that those ten days were no more aggravating, anger and anxiety producing to plaintiffs than was any other period during which the plaintiffs had not received payment (August - December 10, 2002). . . . Plaintiffs and defendant were not strangers[;] that is why plaintiffs knew who had the car, found out almost immediately where the car was located, were in constant contact with defendant's family or his attorney.

As the trial judge noted, the harm arising from the taking was not any different from the harm caused by the defendant's previous loan defaults. Thus, weighing these four factors, we cannot overturn the conclusion of the trial judge that defendant's conduct did not rise to the level of actual malice or wanton and willful disregard.

Furthermore, even in the face of actual malice or wanton and willful disregard, plaintiffs' damages may be limited by the nature of the underlying cause of action. "Where the essence of a cause of action is limited to a breach of [a commercial] contract, punitive damages are not appropriate regardless of the nature of the conduct constituting the breach." Sandler v. Lawn-A-Mat Chem. and Equip. Corp., 141 N.J. Super. 437, 449 (App. Div.), certif. denied, 71 N.J. 503 (1976). In actions based on private contracts, "even where the breach is malicious and unjustified, exemplary damages are not allowable." Ibid.

There are several limited exceptions to the general rule that punitive damages will not be awarded for a breach of contract. Ibid. The most common exceptions involve fiduciary relationships, such as a real estate broker and seller or a principal and agent. Id. at 449-50. Limited exceptions have also been carved out for breach of a marriage contract, and for a public utility's failure to comply with its special statutory public duty. Id. at 449. This case does not fit within any of these exceptions.

Here, the parties contracted that plaintiffs would retain the collateral until the defendant tendered full payment. Thus, defendant's premature taking of the vehicle certainly constituted a breach of contract. Considering that the contract encompassed both the payment terms and the withholding of the collateral by the plaintiffs, this taking was an extension of the same breach of contract that arose when the defendant missed his first loan payment. As punitive damages are not generally awarded in contract actions, "even where the breach is malicious and unjustified," Sandler, supra, 141 N.J. Super. at 449, they are not appropriate here.

Plaintiffs also assert, however, that punitive damages should be awarded because the defendant committed an act akin to a conversion. "The tort of conversion is the wrongful exercise of dominion and control over property owned by another in a manner inconsistent with the owner's rights." Advanced Enterprises Recycling, Inc. v. Bercaw, 376 N.J. Super. 153, 161 (App. Div. 2005). Plaintiffs cite Winkler v. Hartford Accident and Indem. Co., 66 N.J. Super. 22, 28 (App. Div. 1961) for the proposition that "[p]unitive damages are warranted where there has been an intentional and wrongful conversion." Regardless of whether or not the plaintiffs proved that there was a conversion in this case which they have not done nonetheless,

[s]omething more than the mere commission of a tort is always required for punitive damages. There must be circumstances of aggravation or outrage, such as spite or "malice," or a fraudulent or evil motive on the part of the defendant, or such a conscious and deliberate disregard of the interests of others that his conduct may be called wilful or wanton.

 
[Nappe v. Anschelewitz, Barr, Ansell & Bonello, 97 N.J. 37, 50 (1984) (quoting W. Prosser, Handbook on the Law of Torts, 2, at 9-10 (2d ed. 1955)).]

In Intermilo, Inc. v. I.P. Enterprises, Inc., 19 F.3d 890, 893 (3rd Cir. 1994), the Third Circuit Court of Appeals, applying New Jersey law, determined that although the plaintiffs had proven that the defendant had committed a tortious interference with prospective economic advantage, they had failed to prove that defendant's conduct was based on an "evil motive" or "wanton recklessness," and therefore were not entitled to a punitive damage award. It was not sufficient that the defendant was motivated by his own pecuniary interests, or that the tort was intentional. Id. at 894.

Here, there is insufficient evidence of an evil motive on the part of defendant. According to his testimony, prior to taking the car defendant attempted to resolve payment with the plaintiffs. It was only when it appeared to him that plaintiffs were trying to keep the car and refusing to accept payment that the defendant exercised self-help and removed the Porsche from the garage. Thereafter, defendant tendered payment on December 11, 2002, an act that mitigated much of the harm to the plaintiffs, and lessened the likelihood that defendant was acting out of a desire to cause harm or for an evil motive.

However, we cannot disregard the number of factual disputes that were not resolved by appropriate findings by the trial judge, including the unresolved issue of whether plaintiffs expressed an intention to retain the Porsche prior to defendant's taking. It is therefore necessary to determine whether the body of unresolved facts, if viewed in the light most favorable to the plaintiffs, would yield a different result, namely, a finding that the defendant's conduct was malicious and wanton.

Viewing the facts in the light most favorable to the plaintiffs, we assume the following findings for the purposes of this analysis:

1. Plaintiffs issued a second loan commitment with defendant for $12,600;

2. Defendant's check payment of November 6, 2002 did not clear with the bank;

3. A check paid by defendant's mother to plaintiffs initially was returned for insufficient funds before clearing;

4. Plaintiffs never told defendant that they intended to keep the Porsche, nor did they claim that it was their car;

5. Defendant called plaintiffs after taking the car and threatened them with the statement, "now we'll do it my way;" and

6. The plaintiffs did not seek compensation for the second loan commitment while negotiating and resolving the claim for the first loan commitment.

Even assuming the trial judge had found in favor of plaintiffs on the factual disputes and made these findings, plaintiffs have not met their burden of proof by clear and convincing evidence. Even if there was a conversion in this case, "conduct more outrageous than that comprising the tort at issue" must be proven. Intermilo, supra, 19 F.3d at 894. Plaintiffs have shown that defendant took the vehicle without permission; however, such a taking is a basic element of the conversion tort and not something more outrageous. Under these facts, in which defendant tendered his loan payment shortly after taking the car, defendant's conduct was actually less outrageous than a standard conversion. In a standard conversion, the victim is deprived of the full value of the property permanently, not just temporarily until payment is tendered, and usually one uses the property as his own while the collateral is held separately.

Defendant's actions, even assuming the above-mentioned facts, do not reflect an evil motive or a malicious desire to harm the plaintiffs. It is clear from the uncontested correspondence during November 2002 that defendant intended to make payments to the plaintiffs. Even if defendant had taken the car to gain bargaining leverage and "do it [his] way," defendant still paid the plaintiffs. He could not have possessed the desire to permanently deprive or harm the plaintiffs if he remitted virtually full compensation to them shortly after the taking. Therefore, we find no misapplication of discretion by the trial court's rejection of plaintiffs' punitive damage claim.

Affirmed.

 

Plaintiffs' claim for compensatory damages was settled.

(continued)

(continued)

20

A-2925-04T1

October 31, 2005