DEL-PAT LEASING, INC. v. FALCON MANAGEMENT, INC.

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0372-05T30372-05T3

DEL-PAT LEASING, INC.,

a New Jersey Corporation,

Plaintiff-Appellant,

v.

FALCON MANAGEMENT, INC.,

a New Jersey Corporation, and

TONY MANN,

Defendants-Respondents,

and

ATLANTIC BEVERAGE COMPANY, INC.

Defendant. ____________________________________________

 

Submitted November 8, 2006 - Decided December 22, 2006-

Before Judges Weissbard and Payne.

On appeal from Superior Court of New

Jersey, Law Division, Somerset County,

Docket No. L-1528-03.

DiFrancesco, Bateman, Coley, Yospin,

Kunzman, Davis & Lehrer, attorneys for appellant (Timothy P. Beck, on the brief).

The Sanchez Law Firm, attorneys for respondents (Frank J. Castucci, on the brief).

PER CURIAM

Plaintiff, Del-Pat Leasing, Inc., (Del-Pat) appeals from that portion of a jury verdict in its favor that limited plaintiff's damages against defendant Tony Mann (Mann) pursuant to a written guaranty. We reverse.

Del-Pat is in the business of leasing commercial trailers. Patricia and Timothy Delaney, husband and wife, were the owners of Del-Pat. In August 2002, Mann contacted Del-Pat to lease three trailers to be used by Mann's business, defendant Falcon Management, Inc. (Falcon). On August 31, 2002, Rodney Frieson, a representative of Falcon, visited the Del-Pat facility to inspect and pick up three trailers. Frieson, on behalf of Falcon, signed separate leases for each of the three trailers at a monthly rental charge of $325 each. The lease also specified tread wear and pick-up charges.

The leases contained a default provision that provided for repossession in the event of failure to make the required payments. The lease also required Falcon to obtain insurance coverage for physical damage to the trailers. On September 26, 2002, however, Del-Pat received a fax from Falcon's insurance carrier that disclosed that its policy with Falcon would be cancelled on December 12, 2002, for non-payment of premiums. In addition, Falcon had not made any of the required rental payments to Del-Pat for the trailers.

In early February 2002, after many unsuccessful attempts by Mr. Delaney to contact Mann, plaintiff decided to exercise its right of repossession; however, it did not know where the trailers were located. As a result, Delaney began to search for the trailers. Remembering that Falcon had business dealings with Atlantic Beverage Company (ABC) in South Plainfield, Delaney went there and saw two of the leased trailers in ABC's yard. One trailer was repossessed and removed from the yard, but the other could not be moved because of a problem with its braking system. The trailer that was removed was found to be substantially filled with ABC product. There was physical damage to the trailer that had not been present when it was leased, as well as substantial tread wear, indicating heavy use of the trailer.

Delaney arranged to have ABC's product stored in a warehouse. As it turned out, the product in question was to have been delivered by ABC to a customer in Philadelphia the day after the repossession. ABC made the delivery using substitute stock. Meanwhile, Mann contacted plaintiff seeking to resolve the outstanding issues concerning past-due rentals and the two trailers still in Falcon's possession.

Because of these events, ABC decided to terminate its business relationship with Falcon. Plaintiff and ABC agreed to the following, as set forth in a letter of February 13, 2003: ABC agreed to pay plaintiff $5000, representing money owed by ABC to Falcon for services rendered; plaintiff agreed to turn over the repossessed ABC product (with ABC to cover warehousing charges); ABC was given the right to claim the $5000 as set-off against any obligation of ABC to Falcon; plaintiff agreed to set off the money against any funds owed to it by Falcon, although the payment would not constitute an accord and satisfaction of whatever debt Falcon owed to Del-Pat. The agreement further stated that Falcon would execute an assignment of funds due to it from ABC to satisfy its defaulted obligation to Del-Pat, an assignment that ABC agreed to honor. Falcon did, in fact, execute an assignment to the extent of 28% of any money owed by ABC to Falcon.

Most important to the issues under review, Mann executed a document entitled "Guaranty," dated February 14, 2003, and signed on February 24, 2003. Because of its significance, we set out the writing in full:

GUARANTY

TO: DEL-PAT LEASING, INC.

P.O. BOX 151

Stanton, New Jersey 08885

I am the principal of Falcon Management, Inc. In consideration of your having, at my request, agreed to forego and discontinue all legal and other proceedings which you are entitled to maintain or exercise against Falcon Management, Inc., P.O. Box 379, South Plainfield, New Jersey, including the right to repossess trailers leased by Falcon Management, Inc., in respect to the sum of not less than $7,660.00 now due and owing to you from Falcon Management as of this date, I hereby guarantee the payment thereof, together with all reasonable costs, charges and expenses as well as a continuing guarantee on the part of this guarantor to pay any lease payments and other fees on those leases between Falcon Management, Inc. and Del-Pat Leasing, Inc.

In order to induce Del-Pat Leasing, Inc. to discontinue the repossession of the aforesaid trailers, and the forebearing on taking direct legal action against Falcon Management, Inc. I personally guarantee the payment of the following sums:

$5,000 paid or assigned by Falcon and made payable to Del-Pat Leasing, which shall be credited and applied against debt as follows:

One trailer door damage $560;

Freight invoice $400;

Repossession expenses $850;

Rent presently in arrears $3,190

I agree that the remaining balance of $2,660.00 representing current past due rent will be paid within three weeks of this agreement. Amounts for damages and tire wear to trailer 200/2 and any damages and tire wear to the other two trailers leased by Falcon will be paid within thirty (30) days of invoicing.

The undersigned has read and understands this Agreement and agrees to abide and be bound by the terms hereof. I understand that by executing this Guaranty, I am personally liable for the debt and obligations of Falcon Management, Inc. to Del-Pat Leasing, Inc.

Thereafter, ABC paid $5000 to Del-Pat and retrieved its product from the warehouse, while Falcon retained the other two Del-Pat trailers. However, Mann did not pay the $2660 as called for by the Guaranty, nor did he make any payments on the remaining leases. Plaintiff was unsuccessful in seeking return of the two remaining trailers. Plaintiff eventually located and repossessed one trailer, but was unable to find the other. As a result, plaintiff filed a stolen vehicle report with the police. The remaining trailer was eventually found by the police in February 2004 at a Wakefern Foods facility in Raritan. Upon return, inspection revealed damage to both trailers, which plaintiff charged to Falcon along with transportation fees.

None of the outstanding amounts having been paid, plaintiff filed this action against Falcon, Mann, and ABC on October 31, 2003. Mann answered the complaint, asserting in part that Falcon "is no longer in business." ABC cross-claimed against Mann for contribution and counterclaimed against plaintiff for compensatory and punitive charges based on plaintiff having unlawfully exercised dominion over ABC's goods and having extorted money from ABC for return of the goods.

The case was tried before a jury in early March 2005. Prior to the close of all the evidence, plaintiff moved for a directed verdict against Mann on the basis of his guaranty. The judge denied the application. The jury returned its verdict as follows: (1) $13,650 damages in favor of Del-Pat against Falcon for breach of the lease agreements, plus $13,700 for attorney's fees; (2) $7660 in favor of Del-Pat against Mann on his guaranty; (3) $5982.21 in favor of ABC against Del-Pat for conversion ($4300) and economic coercion and duress ($1550). Final judgment was entered on the verdicts in the amount of $5982.21 in favor of ABC against Del-Pat, $22,350 in favor of Del-Pat against Falcon, and $2660 in favor of Del-Pat against Mann. The last two amounts were arrived at by giving Falcon credit for the $5000 received from ABC. Plaintiff moved for judgment notwithstanding the verdict and other relief, seeking (1) additional judgment against Mann on his guaranty, (2) additional attorney's fees, and (3) contractual interest on the jury verdict. In a thoughtful written opinion, the judge denied plaintiff's motion in its entirety.

On appeal, plaintiff argues that it was entitled to a judgment against Mann, pursuant to his guaranty, for the full amount of damages awarded against Falcon. Plaintiff also seeks $3022.50 in additional attorney's fees.

Regarding the first argument, the judge rejected plaintiff's contention, echoed on appeal, "that the written Guaranty executed by Tony Mann left no issue for the jury to decide as to his liability independent of the jury's verdict as to Falcon Management's liability . . . that the language of the Guaranty is clear on its face and that Mann's liability must be co-extensive with that of Falcon Management." As the judge put it,

"the question is whether any reasonable jury could understand the Guaranty quoted previously to be limited to the amount owed by Falcon Management as of the date of its execution, $7660, as opposed to a continuing guarantee to be responsible also for the future debts of Falcon Management to Del-Pat leasing with respect to the lease of the three trailers.

With commendable candor, the judge noted that he had "struggled with that question." In answering the question against plaintiff's contention, the judge stated:

Here, the language of the Guaranty as a whole, quoted previously, could have led the jury to find ambiguity as to its scope and to conclude that Mann agreed to be liable for the then-existing debt of $7,660 and not future lease obligations. With the exception of the clause regarding future obligations quoted earlier, the Guaranty focuses with detail on the amounts owed as of February 24, 2003, together with the credit for the $5,000 paid on behalf of Falcon Management by Atlantic Beverage Co. After the statement, "I personally guarantee the payment of the following sums," the document itemizes specific charges and states that the balance due is $2,660 after credit for the $5,000 payment. Taking note of the specific listing of amounts owed and guaranteed, the jury could reasonably have inferred that defendant Mann was only agreeing to pay personally the amounts then owed by Falcon Management. In Center 48 Ltd. [P'ship v. May Dep't Stores Co.], the Court said:

Of course, a meeting of the minds is an essential element of the valid consummation of any contract. (Citation omitted). While a unilateral mistake by a guarantor as to the nature of the underlying transaction is not a basis for relief, if the mistake is such that the parties never mutually agreed to the terms of the guarantee contract, then the document will not be enforced against the guarantor.

355 N.J. Super. [390] at 406 [(App. Div. 2002)]. Having heard Mann's testimony at trial, the jury could have found that Mann understood the Guaranty as applying to the existing debt rather than also to future obligations.

Interpreting the Guaranty strictly against Del-Pat Leasing as the party that drafted it, Center 48 Ltd., 355 N.J. Super. at 405, and also accepting as true all evidence and legitimate inferences that support the jury's apparent reading of the Guaranty, Dolson v. Anastasia, 55 N.J. [2] at 5-6 [(1969)], this court concludes that plaintiff is not entitled to a judgment notwithstanding the verdict as to defendant Mann's personal liability.

We find ourselves unable to agree with the able trial judge.

While it is undoubtedly true that the guaranty focused on the amounts then due and owing to plaintiff from Falcon, the language of the instrument could scarcely be any clearer that, in addition to amounts then owed, it constituted "a continuing guarantee on the part of [Mann] to pay any lease payments and other fees on" the Del-Pat/Falcon leases. The judge's finding of an ambiguity in the "continuing guarantee" language would simply read that provision out of the agreement. While ambiguous meanings of contract provisions may be left to the jury, Michaels v. Brookchester, Inc., 26 N.J. 379, 387 (1958), "the words of an agreement are given their 'ordinary' meaning." Flanigan v. Munson, 175 N.J. 597, 606 (2003).

The "ordinary" meaning of continuing is "to go on," "to exist over an extended period of time," "to remain in the same state," "to carry forward," "to carry further in time," or "to cause to last." Webster's II New College Dictionary 244 (1999). Likewise, Black's Law Dictionary defines continuing as "uninterrupted" or "enduring." Black's Law Dictionary 316 (7th ed. 1999). In our view, the "continuing guarantee" to make payments has only one reasonable meaning; Mann agreed to attach his personal liability to the strained Falcon and Del-Pat contractual relationship going forward. There are no other "lease payments and other fees" Mann could have committed to continue. In other words, he agreed to owe the past debts "as well as" offer a "continuing guarantee" to stand behind other payments not yet accrued. If, as Mann contends, the "continuing guarantee" did not apply to future payments, and it did not apply to the past-due amounts listed on the guaranty, then what did it apply to? There are no other possibilities, which is why "continuing guarantee" is not ambiguous.

We conclude that the Guaranty had only one unambiguous, meaning: Mann was personally responsible for all debts of Falcon owed to Del-Pat. As a result, plaintiff's motion for a directed verdict to that effect should have been granted, or his motion for judgment n.o.v. should have been granted. The final judgment should reflect Mann's liability in full for the judgment against Falcon.

Plaintiff's claim for increased legal fees was based on the "Remedies" provision in the lease agreements which provided for a number of remedies on default and stated:

Lessee shall pay to Lessor on demand all costs and expenses incurred by Lessor in enforcing its right hereunder including attorney's fees.

On the final day of trial, Mrs. Delaney testified to plaintiff's attorney's fees incurred up to March 4, 2005, a few days before her testimony. The jury awarded that full amount, $13,700. Post-trial, plaintiff moved to increase that award by $3022.50, representing 15.5 hours (at $195/hour) expended by counsel during the last two days of trial that were not, and could not have been, presented to the jury. In denying this request in his written decision, the trial judge stated:

Although the court has authority to supplement the jury's award of attorney's fees for work performed after presentation of evidence to the jury, it declines to do so in this case. An award of attorney's fees, even under a contractual provision, must be reasonable. N. Bergen Rex Transp. v. Trailer Leasing Corp., 158 N.J. 561, 570 (1999). The threshold issue is whether the party seeking the fee prevailed in the litigation. Id. "[T]he focus should be on the ultimate results achieved through litigation." Id. In this case, the favorable results achieved by plaintiff, the net damages award of $8,650 against Falcon Management, Inc. and $2,660 against Tony Mann, are adequately and reasonably compensated by the jury's award of $13,700 in attorney's fees. Some of plaintiff's legal expenses were incurred in pursuing an unsuccessful claim against Atlantic Beverage Co. Also, a significant part of the attorney's work was performed in unsuccessfully defending the counterclaim.

Plaintiff is not entitled to any additional attorney's fees beyond that already awarded by the jury.

We discern no abuse of discretion and reject this aspect of plaintiff's argument substantially for the reasons stated by the judge. See Kellam Assocs. v. Angel Projects, 357 N.J. Super. 132, 135-42 (App. Div. 2003).

Affirmed in part, reversed in part and remanded for entry of an amended judgment in favor of plaintiff and against defendant Mann.

 

The trial evidence on this issue was sparse and unhelpful. Mr. Delaney testified generally to the Guaranty, while Mann stated that the "guarantee was for $7660." Mann's attorney did not mention the Guaranty in his summation and plaintiff's attorney likewise said nothing about the meaning of the Guaranty. Further, we find nothing in the jury instructions specifically directed to this issue.

(continued)

(continued)

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A-0372-05T3

December 22, 2006