WILLIAM J. CUNNINGHAM v. FINANCIAL MODELING CONCEPTS, INC.

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-3714-04T23714-04T2

WILLIAM J. CUNNINGHAM,

Plaintiff-Respondent,

v.

FINANCIAL MODELING CONCEPTS, INC.,

Defendant,

and

NED BROWN, a/k/a EDMUND F. BROWN,

Defendant-Appellant/

Third-Party Plaintiff,

v.

JAY WOLFKIND, CHEROKEE SOLUTIONS,

INC., and CHEROKEE REALTY, INC.,

Third-Party Defendants-

Respondents.

__________________________________

 

Argued September 18, 2006 - Decided October 20, 2006

Before Judges Lintner, S.L. Reisner and Seltzer.

On appeal from the Superior Court of

New Jersey, Law Division, Monmouth County, L-5238-99.

Bruce J. Meltzer argued the cause for appellant.

Keith A. Bonchi argued the cause for respondents (Goldenberg, Mackler, Sayegh, Mintz, Pfeffer, Bonchi & Gill, attorneys; Toni Marie Vaccarino, on the brief).

PER CURIAM

Defendant, Edmund Brown, appeals from an order for summary judgment finding him liable on a settlement agreement and note and awarding plaintiff William Cunningham $40,000 damages, twelve percent interest ($28,439.17), attorney's fees ($54,968.68) and costs ($5,065.91). Brown also appeals orders (1) dismissing his counterclaim against plaintiff, (2) dismissing his third-party complaint against Cherokee Solutions, Inc. and Jay Wolfkind, and (3) denying his motion to file an amended third-party complaint against Cherokee Realty, Inc. for violation of the Fair Credit Reporting Act (FCRA), 15 U.S.C.A. 1681-1681x. On March 24, 2005, we stayed the judgment pending the outcome of this appeal.

We affirm the grant of summary judgment in favor of Cunningham and the award of damages and interest, and vacate our March 24, 2005, stay of the $40,000 judgment and twelve percent interest thereon. We reverse a portion of the summary judgment order assessing attorney's fees and costs, as well as the order dismissing Brown's third-party complaint against Cherokee Solutions and Wolfkind. We also reverse the order denying Brown's motion to file an amended third-party complaint to add Cherokee Realty, Inc. The matter is remanded for further proceedings consistent with this opinion.

Because they are intertwined, we combine the procedural history and relevant facts. In 1996, Cunningham instituted a breach of contract suit in Massachusetts state court against Brown and his company, Financial Modeling Concepts, Inc. (FMC). The case was subsequently removed to the United States District Court for the District of Massachusetts (District Court). On December 31, 1997, the parties settled the claims by executing a settlement agreement and promissory note. Under the settlement agreement, Brown and FMC were to pay Cunningham a total of $65,000 in three installments: $25,000 on or prior to January 31, 1998; $20,000 on or prior to December 31, 1998; and $20,000 on or prior to June 30, 1999. The note evidencing the settlement agreement provided that the $65,000 principal sum was without interest in accordance with the payment schedule. Cunningham represented and warranted in the agreement "that he does not have any books, records, documents or property belonging to FMC in his possession, custody or control." Furthermore, both the settlement agreement and note contained provisions allowing for reasonable attorney's fees, court costs and other reasonable collection charges not prohibited by law, should a party prevail in an action for breach or default of the agreement. Pursuant to the terms of the settlement, the District Court action was dismissed with prejudice, and a stipulation of dismissal was filed.

When Brown and FMC failed to make the first payment by January 31, 1998, Cunningham moved to vacate the dismissal, enforce the settlement agreement, and hold defendants in contempt of court. On June 26, 1998, the District Court ordered Brown and FMC to make the first payment under the settlement agreement. Consequently, Brown and FMC complied.

The following year, Cunningham moved for and obtained an order compelling the second payment under the settlement agreement. On March 8, 1999, the District Court entered an order compelling Brown and FMC to make the second payment of $20,000 by March 22, and ordered the accrual of twelve percent interest on the unpaid balance, until paid, as set forth in Mass. Ann. Laws ch. 231, 6C (1993). On March 24, 1999, Cunningham moved to enforce the March 8 order and filed an order to show cause why Brown should not be held in contempt for failing to make the court ordered payment. Brown opposed Cunningham's motion, asserting that the District Court lacked jurisdiction to enforce the settlement agreement. Cunningham concurred and withdrew his motion to enforce the March 8 order. The court vacated the order to show cause and closed its file.

On October 15, 1999, Cunningham filed a Law Division suit against Brown and FMC to collect $40,000 plus interest for the payments that were in default. On May 24, 2002, default judgment was entered against Brown for $55,175.52. On July 16, 2004, Cunningham assigned the judgment to Cherokee Solutions, Inc., n/k/a Cherokee ReSolutions, Inc. (Cherokee Solutions). According to the terms of the assignment, Cunningham made "no covenants, warranties or representations whatsoever as to the quality of the Judgment or its collectibility" and he transferred the judgment "AS IS, WHERE IS."

Following the assignment, Cherokee Solutions obtained a credit report on Brown through an account that its affiliate, Cherokee Realty Partners, Inc. (Cherokee Realty), maintained with Quality Mortgage Reporting (QMR), purportedly seeking to execute on the judgment. A writ of execution was issued on August 4, 2004, and the Monmouth County sheriff commenced efforts to levy on Brown's automobile.

Brown moved to vacate the default judgment, arguing that he had not been properly served with the summons and complaint. On November 9, 2004, a Law Division order was entered, vacating the judgment for ineffective service and permitting Brown thirty-five days to answer the complaint.

On November 29, 2004, Brown filed an answer, counterclaim and third-party complaint. In his answer, Brown asserted that the note was not obtained for value, Cunningham failed to perform under the terms of the settlement agreement, and Cunningham had unclean hands. Brown's counterclaim against Cunningham alleged breach of the settlement agreement for Cunningham's failure "to return all information, documents, etc. to Defendants as required by the agreement." Brown's third-party complaint sought damages, alleging that Cherokee Solutions, as assignee of the vacated judgment, and its principal, Wolfkind, harassed, intimidated, and interfered with Brown's business and improperly used and abused the legal process.

Cunningham, Cherokee Solutions, and Wolfkind moved to dismiss the counterclaim and third-party complaint. Brown filed a cross-motion to amend the third-party complaint to add Cherokee Realty for knowing and willful violation of the FCRA, 15 U.S.C.A. 1681b. During the pendency of those motions, QMR temporarily suspended Cherokee Realty's account while TransUnion, the source of the credit report, investigated a complaint made by Brown regarding Cherokee Solutions' acquisition of the credit report. TransUnion concluded that no FCRA violations were committed and QMR reactivated Cherokee Realty's account.

On January 21, 2005, the motion judge denied Brown's motion to amend his third-party complaint and dismissed Brown's counterclaim and third-party complaint. Cunningham moved for summary judgment on his claims under the settlement agreement and note and Brown responded and filed a cross-motion for reconsideration of the prior order denying his motion to amend his third-party complaint and dismissing both his counterclaim and third-party complaint. On March 24, 2005, the motion judge granted Cunningham's motion for summary judgment and entered the award for damages, interest, and attorney's fees. He also denied Brown's motion for reconsideration.

On appeal, Brown asserts that the motion judge erred in awarding attorney's fees, claiming (1) Cherokee Solutions and Wolfkind do not have standing to collect attorney's fees generated on their behalf, (2) it was improper to assess attorney's fees for services rendered to enforce a void judgment, (3) neither the settlement nor the note permits Cunningham to recover post-judgment attorney's fees, and (4) the attorney's fees awarded were unreasonable and the supporting affidavits of service were factually and legally deficient. Brown also asserts that the judge erred in assessing interest under Massachusetts law, arguing that the note called for zero percent interest. He also maintains that the District Court order awarding interest is void because the court recognized that it lacked jurisdiction to enforce its prior order and Cunningham consented by withdrawing his motion. Brown also contends that the motions for summary judgment in favor of Cunningham and for dismissal of his counterclaim were improperly granted because he presented sufficient facts to establish his claim that Cunningham was in breach of the settlement agreement. Finally, Brown contends that the judge erred in dismissing his third-party complaint because he asserted viable claims of malicious abuse of process and violation of the FCRA.

We consider first the propriety of the entry of summary judgment awarding $40,000 and the dismissal of Brown's counterclaim against Cunningham. Challenging Cunningham's motion for summary judgment, Brown certified that "[s]ince the signing of the initial [settlement] agreement, nothing has been turned over by . . . Cunningham," and after Cunningham's failure "I individually felt he had breached our agreement." (emphasis omitted). In his answer and counterclaim, Brown asserted that Cunningham breached the settlement agreement by not turning over the FMC documents. On appeal, Brown repeats these claims, asserting in his appellate brief that it was after he entered into the settlement agreement that he "later learned that [Cunningham] did improperly retain such . . . papers, and documents despite his averment that he had returned such documents." Conspicuously absent were any proofs supporting Brown's claim. Nothing was submitted to indicate how or when he later learned that Cunningham had retained documents or what those documents were. Indeed, the judge noted that by signing the agreement, Brown accepted Paragraph 3.2 in which Cunningham represented and warranted that he did not have any such documents in his possession.

In a summary judgment motion, the court must grant the non-moving party all favorable inferences from the competent evidence presented. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). We do not pass upon the credibility of Brown's assertions, as that is reserved for the trier of fact. However, as the Brill Court re-emphasized, it is within our province "'to determine whether there is a genuine issue for trial.'" Ibid. (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S. Ct. 2505, 2511, 91 L. Ed. 2d 202, 212 (1986)). That the trier of fact makes determinations as to credibility "does not require a court to turn a blind eye to the weight of the evidence; the 'opponent must do more than simply show that there is some metaphysical doubt as to the material facts.'" Big Apple BMW, Inc. v. BMW of N. Am., Inc., 974 F.2d 1358, 1363 (3rd Cir. 1992) (quoting Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S. Ct. 1348, 1356, 88 L. Ed. 2d 538, 552 (1986)), cert. denied, 507 U.S. 912, 113 S. Ct. 1262, 122 L. Ed. 2d 659 (1993). Brown has done no more than that. His claims that Cunningham breached the agreement are not supported by any facts, but instead are merely conclusory.

The judge also alluded to the March 8, 1999, District Court order as conclusive. Brown claims that the March 8 order is void because the District Court subsequently entered an order that it did not have jurisdiction. He essentially claims that Cunningham's voluntary withdrawal of his enforcement motion prevents Cunningham from now relying on the orders requiring Brown to make payment pursuant to the settlement agreement. Brown's claims lack merit.

The March 8, 1999, order compelling Brown and FMC to make the second required payment pursuant to the settlement agreement plus twelve percent interest on the unpaid balance was never vacated, nor was it appealed. Cunningham never agreed that the District Court did not have jurisdiction to enter a judgment that Brown was required to make payment under the settlement agreement. Instead, Cunningham's order to show cause and motion to enforce, which sought to have Brown held in contempt for failing to comply with the March 8 order, were withdrawn. Our courts are required to enforce the judgments entered by the courts of sister states unless there has been a denial of due process, such as when the court "'1) lacked personal jurisdiction over the judgment debtor, 2) lacked subject matter jurisdiction, [or] 3) failed to provide the judgment debtor adequate notice and an opportunity to be heard.'" Sonntag Reporting Serv., Ltd. v. Ciccarelli, 374 N.J. Super. 533, 538 (App. Div. 2005) (quoting Choi v. Kim, 50 F.3d 244, 248 (3d Cir. 1995)). "[R]es judicata precludes raising anew any defenses that litigants could have raised in the forum state." Ibid. (citing DeGroot, Kalliel, Traint & Conklin, P.C. v. Camarota, 169 N.J. Super. 338, 343 (App. Div. 1979)). None of these exceptions apply here. The summary judgment and dismissal of Brown's counterclaim against Cunningham were properly entered.

We next address the assessment of attorney's fees. The underlying principles are well settled. Parties to a contract are permitted to agree to shift liability for attorney's fees. See Cohen v. Fair Lawn Dairies, Inc., 86 N.J. Super. 206, 214-16, (App. Div.), aff'd, 44 N.J. 450 (1965). However, even where controlled by contractual provisions, attorney's fee-shifting provisions will be strictly construed in light of the general policy disfavoring the award of attorney's fees. N. Bergen Rex Transp., Inc. v. Trailer Leasing Co., 158 N.J. 561, 570 (1999). Generally, therefore, contracts that permit the aggrieved party "to recover fixed or 'reasonable' attorney's fees as part of any damages [are] enforceable unless some larger public policy mandates a contrary result." Ctr. Grove Assocs. v. Hoerr, 146 N.J. Super. 472, 474 (App. Div. 1977) (citations omitted). Our cases that uphold enforcement of such fee-shifting provisions generally involve breach of agreements entered into in the commercial setting. Dare v. Freefall Adventures, Inc., 349 N.J. Super. 205, 222 (App. Div.), certif. denied, 174 N.J. 43 (2002).

A claim for attorney's fees pursuant to a contractual agreement . . . is an element of damages which must be proved in the same manner as any other item and which must be assessed by the finder of fact as a matter of right and in the actual amount established by the proofs.

[Belfer v. Merling, 322 N.J. Super. 124, 141 (App. Div.) (citing Jennings v. Cutler, 288 N.J. Super. 553, 567 (App. Div. 1996)), certif. denied, 162 N.J. 196 (1999).]

The enforcement and award of attorney's fees to an aggrieved party pursuant to contractual provisions is tantamount to "adjudicating damages for breach of contract." Cohen, supra, 86 N.J. Super. at 215.

Section 7.3 of the settlement agreement specifically provides:

In the event of any action or proceeding between or among any of the Parties to enforce this Agreement or any of the other Settlement Documents . . . or for damages or other relief as a result of a breach or default of any of the terms of this Agreement or any of the other Settlement Documents (whether by assertion of a claim, counterclaim or affirmative defense), the prevailing Party in such action or proceeding shall be entitled to recover from the other Party his or her costs and expenses of action, including as a part thereof reasonable compensation to the attorneys for the prevailing Party for all services rendered in that connection. No remedy herein conferred upon either Party is intended to be exclusive of any other remedy, and each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or otherwise. (emphasis added).

The note provided that if collection were sought against the maker after default "the Makers agree to pay, upon demand by the Holder, in addition to all amounts due and payable . . . court costs and reasonable attorneys' fees and other reasonable collection charges, unless prohibited by law."

Cunningham, Cherokee Solutions, Wolfkind, and Cherokee Realty are all represented by the same counsel. Brown maintains that that the judge should not have considered the attorney's fees incurred by Cherokee Solutions and Wolfkind. Cunningham counters, arguing that it does not matter whether he incurred the costs and fees or whether Cherokee Solutions did because "[t]he fees applied for by Cunningham were all incurred in enforcement of Brown's obligation as a result of his breach." In support of his position, Cunningham relies on the proposition that an assignee of a judgment enjoys "all rights and remedies for collection which the assignor as the holder of such judgments possessed." Roth v. Gen. Cas. & Sur. Co., 106 N.J.L. 516, 518 (E. & A. 1929).

First, it is necessary to distinguish the assignment of the May 24, 2002, judgment from an assignment of rights under the settlement agreement and note. Neither Cherokee Solutions nor Wolfkind received an assignment of rights to enforce the settlement agreement or note. Indeed, unilateral assignment of rights under the settlement agreement was specifically prohibited by paragraph 7.11 of the agreement: "No Party may transfer, assign or delegate any of its or his rights or obligations under this Agreement without the prior written consent of the other Parties." The only assignment made by Cunningham was the May 24, 2004, default judgment and the right to collect under it. Cherokee Solutions was the only assignee. Once the judgment was vacated, it no longer existed and any rights Cherokee Solutions obtained to collect on it were extinguished. Moreover, because the assignment of the judgment was made without any warranties or representations and transferred "AS IS, WHERE IS," Cherokee Solutions lost any remedy that it might have had to seek reimbursement from Cunningham.

We note that the March 24 order awarding attorney's fees is in favor of Cunningham, not Cherokee Solutions. However, the record reflects that a significant portion of the attorney's fees awarded was incurred for services rendered between the time of the assignment, July 21, 2004, and vacation of the November 19, 2004, judgment. Those fees were necessarily incurred by Cherokee Solutions, not Cunningham. "Ordinarily, a litigant may not claim standing to assert the rights of a third party" unless "the litigant can show sufficient personal stake and adverseness so that the Court is not asked to render an advisory opinion." Jersey Shore Med. Ctr.-Fitkin Hosp. v. Estate of Baum, 84 N.J. 137, 144 (1980) (citing State v. Norflett, 67 N.J. 268, 276 n.7 (1975); Frazier v. Liberty Mut. Ins. Co., 150 N.J. Super. 123, 137 (Law Div. 1977)). When Cunningham assigned the judgment, he relinquished a personal stake or interest in enforcing it. Cherokee Solutions was not a party to the settlement agreement and was not entitled to attorney's fees under its provisions. The attorney's fees generated between July 21 and November 19, 2004, are not recoverable by Cunningham under either the note or the settlement agreement.

We next focus on those attorney's fees incurred for services rendered for Cunningham. A threshold issue in determining the reasonableness of an attorney's fee award is "whether the party seeking the fee prevailed in the litigation." N. Bergen Rex Transp., Inc., supra, 158 N.J. at 570 (citing Singer v. State, 95 N.J. 487, 494, cert. denied, 469 U.S. 832, 105 S. Ct. 121, 83 L. Ed. 2d 64 (1984)). "[A] two-pronged test has been established to determine when a party . . . [is] a prevailing party." Ibid. First, there must be "a factual causal nexus between the pleading and the relief ultimately received." Ibid. Second, "the party seeking attorneys' fees [must] show that 'the relief granted had some basis in law.'" Id. at 571 (quoting Singer, supra, 95 N.J. at 494). Neither Cunningham nor his assignee qualified as a prevailing party under the original default judgment because it was vacated as improperly served. Thus, any fees generated by Cunningham for services rendered in obtaining the default judgment are not recoverable.

Brown challenges the assessment of attorney's fees, asserting that Cunningham is not entitled to post-judgment fees because the great majority of the fees were generated pursuing a void judgment. The agreement by its very terms permitted recovery of "reasonable compensation to the attorneys for the prevailing Party" for "any action . . . between or among any of the Parties to enforce this Agreement . . . or other relief as a result of a breach or default." The vacation of the default judgment on November 9, 2004, effectively reinstated Cunningham's original complaint and thus, under the expressed words of the settlement agreement, Cunningham was entitled to reasonable attorney's fees generated by his counsel in prosecuting the action up until summary judgment was entered on March 24, 2005. The record reflects that the fees assessed here do include fees for services rendered after the December 31, 2004, summary judgment order. Indeed, the summary judgment order is the same order assessing the quantum of fees. Thus, the fees are not post-judgment fees and Brown's contentions that they should be so treated because they were incurred after entry of the default judgment is devoid of merit.

Brown's contentions that the fees assessed are unreasonable because they exceed the amount of the judgment are rendered moot by our decision that the fees on behalf of Cherokee Solutions and those incurred in obtaining default judgment are not recoverable. We observe in passing that, although the amount of damages a party recovers is relevant to the amount of attorney's fees to be awarded, there is no strict requirement that an attorney's fee be proportionate to damages. See Packard-Bamberger & Co. v. Collier, 167 N.J. 427 (2001); Szczepanski v. Newcomb Med. Ctr., Inc., 141 N.J. 346 (1995). Our decision requiring a remand to reduce the attorney's fees by those incurred on behalf of Cherokee Solutions and those incurred in obtaining the default judgment necessitates new submissions regarding the time spent by counsel on behalf of Cunningham in prosecuting the complaint up until entry of judgment on March 24, 2005. We, therefore, forgo any further decision on the plaintiff's claim respecting the reasonableness of the fees and the sufficiency of counsel's affidavit of services.

We move on to Brown's contention regarding interest. The note, in pertinent part, provided that Brown and FMC promise to pay

the principal sum of SIXTY FIVE THOUSAND UNITED STATES DOLLARS (U.S. $65,000), without interest, in accordance with the following schedule:

On or before Amount

January 31, 1998 $25,000.00

December 31, 1998 $20,000.00

June 30, 1999 $20,000.00

Brown argues on appeal, as he did before the motion judge, that a fair reading of the note is that the $65,000 was to be paid without interest. Again, we disagree. The judge reached the following conclusion:

Well, if it says without interest in accordance with the following schedule, if the schedule is not followed then how does that provision apply?

. . . .

This has got to be the easiest case I've ever had. Without interest, what does it say right before the -- 65,000 on the following schedule. On or before January 30, '98, $25,000. Paid, I know that. December 31, '98, 20,000, unpaid. June 30, '99, 20,000 unpaid. Therefore, the without interest doesn't apply because he didn't comply with the schedule. That's easy.

The principles of contractual construction are well settled.

The court makes the determination whether a contractual term is clear or ambiguous. Nester v. O'Donnell, 301 N.J. Super. 198, 210 (App. Div. 1997). "'An ambiguity in a contract exists if the terms of the contract are susceptible to at least two reasonable alternative interpretations. . . . [T]he terms of the contract must be given their "plain and ordinary meaning."'" Ibid. (quoting Kaufman v. Provident Life and Cas. Ins. Co., 828 F. Supp. 275, 283 (D.N.J. 1992), aff'd, 993 F.2d 877 (3d Cir. 1993)). The court should examine the document as a whole and the "'court should not torture the language of [a contract] to create ambiguity.'" Ibid. (quoting Stiefel v. Bayly, Martin & Fay of Conn., Inc., 242 N.J. Super. 643, 651 (App. Div. 1990)). In determining the "'common intention of the parties to a contract, the court must consider the relations of the parties, the attendant circumstances, and the objects they were trying to attain.'" Ibid. (quoting Anthony L. Petters Diner, Inc. v. Stellakis, 202 N.J. Super. 11, 27 (App. Div. 1985)).

The schedule of payments mandated payment "on or before" the prescribed dates. The "without interest" clause applied to the payment of $65,000 "in accordance with" that schedule. The plain meaning of the note was that, so long as payment was made in compliance with the schedule, the $65,000 note carried no interest. The note provided for recovery of "other reasonable collection charges, unless prohibited by law" in addition to costs and attorney's fees. Therefore, interest on the amount owed following the due dates is warranted.

Next, Brown asserts that the judge erred in assessing twelve percent interest. Brown relies on what we have already decided is his unsuccessful argument that the March 8 judgment of the District Court was voided by that court. Mass. Ann. Laws ch. 231, 6C provides:

Interest to Be Computed and Added by Clerk of Court to Damages Recovered in Actions Based on Contractual Obligations.

In all actions based on contractual obligations, upon a verdict, finding or order for judgment for pecuniary damages, interest shall be added by the clerk of the court to the amount of damages, at the contract rate, if established, or at the rate of twelve per cent per annum, from the date of the breach or demand. If the date of the breach or demand is not established, interest shall be added by the clerk of court, at such contractual rate, or at the rate of twelve per cent per annum from the date of the commencement of the action, provided, however, that in all actions based on contractual obligations, upon a verdict, finding or order for judgment against the commonwealth for pecuniary damages, interest shall be added by the clerk of the court to the amount of damages, at the contract rate, if established, or at a rate calculated pursuant to the provisions of section six I from the date of the breach or demand. If the date of the breach or demand is not established, such interest shall be added by the clerk of the court from the date of the commencement of the action.

The purpose of the Massachusetts statute is "'to compensate a damaged party for the loss of use or unlawful detention of money.'" Sterilite Corp. v. Cont'l Cas. Co., 397 Mass. 837, 841 (1986) (quoting Perkins Sch. for the Blind v. Rate Setting Comm'n, 383 Mass. 825, 835 (1981)). As such, it awards interest to ensure that a party who is wrongfully deprived of the use of his or her money is made whole. Ibid.

The note expressly provided that it "shall be governed by and interpreted in accordance with the laws (other than the laws governing conflict-of-laws matters) of The Commonwealth of Massachusetts." Brown does not raise a conflicts issue. Moreover, as we have previously indicated, we must give deference to the March 8 District Court order. The motion judge correctly found that the Massachusetts rate of interest should be applied to both the second and final installments.

Lastly, we address the judge's dismissal of Brown's third-party complaint against Cherokee Solutions and the denial of his motion to amend the third-party complaint to include Cherokee Realty. Cherokee Solutions' motion to dismiss Brown's third-party complaint was filed at the same time as Cunningham's motion to dismiss Brown's counterclaim, just over a month after Brown filed his answer and third-party complaint. Cunningham's motion sought dismissal of the counterclaim based upon R. 4:6-2(e), whereas Cherokee Solutions' motion sought dismissal of the third-party complaint based upon R. 4:6-4(b) and R. 4:8-1(a). Again, Cherokee Solutions, Wolfkind, and Cunningham were represented by the same counsel who also objected to Brown's attempt to amend his third-party complaint to bring in Cherokee Realty. In support of the motions to dismiss Brown's pleadings, counsel provided an attorney's affidavit along with a copy of the settlement agreement and note.

Argument on the motion took place on January 21, 2005.

After discussing the agreement and the District Court orders, the motion judge initially thought that Cunningham had already obtained summary judgment. Counsel informed the judge that a motion for summary judgment on behalf of Cunningham would be next if he granted the motions to dismiss. Concentrating on the motion to dismiss Brown's counterclaim against Cunningham for breach of the agreement, the judge focused on Cunningham's representation in Paragraph 3.2 of the agreement, the District Court's orders, and the fact that Brown had not produced any evidence that Cunningham had retained documents in violation of the agreement. Finding that Brown was attempting to avoid the debt, the judge dismissed Brown's counterclaim, as well as his third-party claim for malicious prosecution against Cherokee Solutions. He denied Brown's motion to amend the third-party complaint to assert violation of the FCRA against Cherokee Realty based upon his decision to dismiss the third-party complaint against Cherokee Solutions.

The judge made no specific findings respecting Brown's claims against the Cherokee entities, saying only, "[t]here's no basis, whatsoever, to any . . . third-party complaint . . . [and I am] denying the defendant's attempt to further amend the third party complaint to add [the] Fair Credit Reporting Act." The order memorializing the judge's decision, prepared by the moving parties, provided that Brown's third-party complaint was dismissed pursuant to R. 4:6-4(b) and R. 4:8-1(a).

R. 4:6-4(b) permits dismissal of pleadings that are "overall, scandalous, impertinent, or, considering the nature of the cause of action, abusive of the court or another person; or . . . immaterial or redundant." No such findings were made by the judge. Moreover, dismissals under R. 4:6-4(b), although generally conditional, are without prejudice. R. 4:37-2(a). R. 4:8-1(a) requires leave of court to file a third-party complaint after the expiration of ninety days following service of the original answer. Brown's answer and third-party complaint, dated November 29, 2004, was presumably served less than ninety days before the filing of his motion to amend the third-party complaint. Accordingly, leave of court was not required to file the amended third-party complaint.

Where there is a conflict between a judge's oral opinion and a subsequent written order, the former controls. State v. Pohlabel, 40 N.J. Super. 416, 423 (App. Div. 1956); see also State v. Warmbrun, 277 N.J. Super. 51, 58 n.2 (App. Div. 1994), certif. denied, 140 N.J. 277 (1995). Although not specified in the order, it is clear from the transcript of the judge's oral opinion that he considered facts outside the pleadings, specifically the agreement, note, and District Court orders relevant to Brown's counterclaim against Cunningham, and effectively treated the motions to dismiss the counterclaim and the third-party complaint as motions for summary judgment.

R. 4:6-2(e) provides that a defense of failure to state a claim upon which relief may be granted may be raised by motion, without the filing of an answer. However, if on such a motion matters outside the pleadings are presented to and not excluded by the court, "the motion shall be treated as one for summary judgment and disposed of as provided by R. 4:46, and all parties shall be given reasonable opportunity to present all material pertinent to such a motion." R. 4:6-2(e). As we have previously held, the facts presented were sufficient to warrant dismissal of Brown's counterclaim against Cunningham. They were not, however, sufficient to support a dismissal of Brown's third-party complaint.

The principles and purposes governing summary judgment are well settled. The most significant aspect of these principles is that all reasonable doubts as to the presence of genuine issues of fact are to be resolved against the movant. Ruvolo v. Am. Cas. Co., 39 N.J. 490, 499 (1963). Credibility issues, typically reserved for the trier of fact, are not to be considered by a judge in determining a motion for summary judgment. Brill, supra, 142 N.J. at 540; Judson v. Peoples Bank and Trust Co. of Westfield, 17 N.J. 67, 75 (1954).

Generally, a case is not ripe for summary judgment where the critical facts are not fully developed. Velantzas v. Colgate-Palmolive Co., 109 N.J. 189, 193 (1988) (citing Martin v. Educ. Testing Serv., Inc., 179 N.J. Super. 317, 326 (Ch. Div. 1981), overruled on other grounds, Brady v. Dep't of Personnel, 149 N.J. 244 (1997)); Salomon v. Eli Lilly and Co., 98 N.J. 58 (1984). Thus, a trial court should not grant summary judgment sua sponte where discovery has not been entertained or completed. J. Josephson, Inc. v. Crum & Forster Ins. Co., 293 N.J. Super. 170, 203 (App. Div. 1996). This is especially so where critical facts are particularly within the moving party's knowledge. The motion should be denied to permit the opposing party an opportunity for complete discovery. Bilotti v. Accurate Forming Corp., 39 N.J. 184, 206 (1963).

Here, Brown's allegations of malicious abuse of process and knowing and willful violation of the FCRA against the Cherokee entities and Wolfkind necessarily involved the state of mind of those parties sued. "[I]t is especially inappropriate to grant summary judgment when discovery is incomplete" and "'critical facts are peculiarly within the moving party's knowledge.'" Velantzas, supra, 109 N.J. at 193 (quoting Martin, supra, 179 N.J. Super. at 326); see also Fielder v. Stonack, 141 N.J. 101, 128-29 (1995); Standridge v. Ramey, 323 N.J. Super. 538, 547-48 (App. Div. 1999). In Standridge, we recognized that, in order to establish a defendant's state of mind, a plaintiff will generally be required to depose the defendant who is alleged to have acted willfully.

A trial court is required to "find the facts and state its conclusions of law thereon . . . on every motion decided by a written order that is appealable as of right." R. 1:7-4(a). "Naked conclusions do not satisfy the purpose of R. 1:7-4. Rather, the trial court must state clearly its factual findings and correlate them with the relevant legal conclusions." Curtis v. Finneran, 83 N.J. 563, 570 (1980) (citations omitted). Here, the motion judge failed to make specific factual findings in reaching his conclusion that there was no basis for Brown's third-party actions. We conclude that the judge prematurely dismissed Brown's third-party claims against Cherokee Solutions and Wolfkind, and mistakenly denied Brown's motion to amend the third-party complaint against Cherokee Realty. We, therefore, reverse those orders and remand to permit discovery on Brown's purported actions against both Cherokee third parties. Our decision should not be interpreted as inferring that we have reached any conclusions regarding the merits of Brown's third-party claims. We have not.

We affirm the grant of summary judgment in favor of Cunningham and the award of $40,000 damages and twelve percent interest thereon and vacate the stay previously entered by us. We reverse that portion of the summary judgment order assessing attorney's fees and costs that were incurred by Cherokee Solutions and incurred by Cunningham in obtaining the default judgment. The matter is remanded for reassessment of attorney's fees incurred by Cunningham and permitted by this opinion and for further proceedings on Brown's third-party complaint.

 

FMC is named as a defendant. However, the notice of appeal has been filed in Brown's name only.

Brown argued that the federal court lacked jurisdiction because the settlement agreement did not contain a provision that reserved to the court the right to enforce the terms of the settlement, as required under Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 114 S. Ct. 1673, 128 L. Ed. 2d 391 (1994).

Brown contends that Jay Wolfkind, a principal of Cherokee Solutions, obtained this judgment solely in order to "pursue a vendetta against defendant that germinated from contentious litigation between various entities headed by Wolfkind and defendant."

Cherokee Realty had entered into a Mortgage Reporting Service Contract (Reporting Contract) with QMR on November 6, 2001. In the Reporting Contract, Cherokee Realty certified, "inquiries will be made only for the purpose of granting credit, which is a permissible purpose" as defined by the FCRA, 15 U.S.C.A. 1681b. (emphasis omitted). Cherokee Realty also certified in the Reporting Contract that it was a "REAL ESTATE OWNER & LENDER (MORTGAGE)" and that its permissible purposes for obtaining credit reports were: (1) "In connection with a credit transaction involving the consumer on whom the information is to be furnished and involving the extension of credit to, or review or collection of an account of the consumer;" and (2) "In connection with a tenant screen application involving the consumer."

Jay Wolfkind, as Vice President of Cherokee Realty, signed an addendum to the Reporting Contract, agreeing that he had read and understood the Reporting Contract and that he certified to "USE THE QMR CREDIT REPORT FOR NO OTHER PURPOSE OTHER THAN WHAT IS STATED IN THE PERMISSIBLE PURPOSE SECTION OF THE [FCRA]." Wolfkind also stated in that addendum that the permissible use of the QMR report was for the processing of "TENANT APPLICATIONS & REVIEW CREDIT ACCOUNTS [SIC] ON EXISTING MORTGAGES (WITH AUTHORIZATION)."

Neither party has demanded a trial by jury, but of course, the Brill standard applies equally to a judicial factfinder.

(continued)

(continued)

29

A-3714-04T2

 

October 20, 2006