RREF II IB-NJ, LLC v. LEASE GROUP RESOURCES INC

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

RREF II IB-NJ, LLC, successor

in interest to Roma Bank,

successor by merger to

Sterling Bank,

Plaintiff-Respondent,

v.

LEASE GROUP RESOURCES, INC.,

Defendant,

and

LUIS G. ROGERS,

Defendant-Appellant.

____________________________________________

December 30, 2015

Submitted December 8, 2015 Decided

Before Judges St. John and Vernoia.

On appeal from Superior Court of New Jersey, Law Division, Camden County, Docket No. L-2598-13.

Luis G. Rogers, appellant pro se.

Edward A. Stein and Ben H. Harris, III (Jones Walker LLP) of the Florida bar, admitted pro hac vice, attorneys for respondent (Messrs. Stein and Harris, on the brief).

PER CURIAM

Defendant Luis G. Rogers (defendant) appeals from December 6, 2013, orders granting summary judgment in favor of plaintiff Roma Bank (plaintiff) and denying his motion for leave to file an amended answer and counterclaim. We reverse.

I.

We discern the following facts from the record. On or about March 26, 2008, defendant Lease Group Resources, Inc. (LGR) borrowed $710,000 from Sterling Bank. The loan was evidenced by a mortgage note (note) and secured by two mortgages. Defendant executed a surety agreement, thereby personally guaranteeing LGR's performance of its obligations under the note.

Plaintiff, as the successor by merger to Sterling Bank (Sterling)1, filed a complaint against LGR and defendant2 alleging breach of contract (count one), unjust enrichment (count two), and breach of the implied covenant of good faith and fair dealing (count three). The asserted basis for the claims was that LGR defaulted under the note by failing to make payments and maintain insurance as required. An answer with affirmative defenses was filed on behalf of LGR and defendant by their counsel.

Plaintiff moved for summary judgment against LGR and defendant. LGR and defendant cross-moved for leave to amend their answer and to file a counterclaim. The putative counterclaim alleged that LGR and defendant were entitled to reimbursement or credit from plaintiff for approximately $6 million in payments they made to plaintiff under a series of non-recourse loans. The counterclaim alleged that LGR and defendant had no obligation to make the payments under the non-recourse loans, but did so based upon plaintiff's representations and their understanding that LGR's accounts with plaintiff would be reconciled, and they would receive either credits or reimbursement for the payments.

After hearing arguments on the motions and for reasons set forth in an oral opinion, the court entered summary judgment against LGR and defendant in the amount of $612,469.91, plus interest and costs. The court denied LGR's and defendant's motion for leave to file an amended answer and counterclaim.

LGR and defendant appealed. We thereafter granted their counsel's motion to be relieved. On July 8, 2014, we were advised by counsel for LGR's federal court appointed receiver that LGR would no longer pursue this appeal. We dismissed the appeal in its entirety on July 22, 2014, but subsequently granted defendant's pro se motion to vacate the dismissal and reinstate the appeal as to him only.

II.

A court may grant summary judgment only if "the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact challenged . . . ." R. 4:46-2(c). A genuine issue of material fact exists where "the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party." Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995).

A party moving for summary judgment must submit "a concise statement of each material fact as to which the movant contends there is no genuine issue together with a citation to the portion of the motion record establishing the fact or demonstrating that it is uncontroverted." R. 4:46-2(a). The moving party is "initially [] responsible for showing the absence of disputed material facts . . . ." Lyons v. Township of Wayne, 185 N.J.426, 435 (2005). The party opposing the entry of summary judgment must "file a responding statement either admitting or disputing each of the facts in the movant's statement." R. 4:46-2(b).

We review an order granting summary judgment de novo, applying the same standard as the trial court. Manahawkin Convalescent v. O'Neill, 217 N.J. 99, 115 (2014). We "must review the competent evidential materials submitted by the parties to identify whether there are genuine issues of material fact and, if not, whether the moving party is entitled to summary judgment as a matter of law." Bhagat v. Bhagat, 217 N.J. 22, 38 (2015); see also R. 4:46-2(c). Based upon the record, we are convinced the court erred when it granted plaintiff's motion for summary judgment.

In its moving papers, plaintiff submitted a statement of material facts supported by an affidavit from G.W., an officer of the bank. The affidavit asserted in conclusory fashion that LGR was in default under the note because it failed to make payments when due and did not maintain the required insurance. In response, a statement of material facts was submitted on behalf of LGR, and was supported by defendant's affidavit in which he denied G.W.'s assertions that LGR had failed to maintain insurance and make payments under the note.

Based upon those submissions, there was a genuine issue of fact regarding whether LGR was in default under the note. That issue was material to a resolution of each of the causes of action in the complaint because LGR's alleged default provided the singular basis upon which each of the causes of action was based. In addition, defendant's obligations under the personal guaranty were solely contingent upon a default by LGR under the note.

Plaintiff's response to defendant's denial of the default was in the form of a December 2, 2013 brief submitted to the court. In a footnote, the brief addressed defendant's denial of default under the note, stating that proof of LGR's failure to maintain insurance was established in a "declarations page for forced-place insurance coverage" annexed to the brief, and evidence LGR failed to make required payments was provided in a "copy of a full payment history for the loan demonstrating the payment default." These assertions and the documents annexed to the brief provided the only support for the court's finding that there was no genuine issue of material fact as to whether LGR defaulted under the note.

The assertions contained in plaintiff's brief were not supported by an affidavit or certification and there is no evidence the information supplied was within the personal knowledge of the brief's author. R. 1:6-6. Conclusory assertions without support in an affidavit or certification based upon the personal knowledge of the affiant cannot support or defeat a motion for summary judgment. Brae Asset Fund, L.P., v. Newman, 327 N.J. Super. 129, 134 (App. Div. 1999); Ridge At Back Brook, LLC, v. Klenert, 437 N.J. Super. 90, 97-98 (App. Div. 2014).

Moreover, although plaintiff's brief noted that the declarations page and payment history had been produced in plaintiff's discovery responses, without a sworn statement as to their meaning and content they did not properly support the court's finding that there was no genuine issue of material fact as to whether LGR was in default. A party does not establish facts sufficient for the granting of summary judgment by merely attaching documents to a brief. Lyons, supra, 185 N.J. at 435.

Critical documents which are alleged to support facts upon which a motion for summary judgment is based must be submitted "to the court by way of affidavit or testimony." Celino v. Gen. Accident Ins., 211 N.J. Super. 538, 544 (App. Div. 1986); see also, Mazur ex rel. Armstrong v. Crane's Mill Nursing Home, 441 N.J. Super. 168, 180 (App. Div. 2015) (finding Rule 1:6-6 requires that documents relied upon to support a motion be incorporated by reference in an affidavit or certification). "These are not merely formal requirements. They go to the heart of procedural due process." Celino, supra, 211 N.J. Super. at 544.

We also conclude the court did not have competent evidence sufficient to find there was no genuine issue of material fact as to whether there were "deficiencies" in the payment of the non-recourse loans. As noted, the only support in the record for the court's finding were the assertions contained in plaintiff's December 2, 2013 brief and the attached "spreadsheets" which plaintiff argued established the purported deficiencies. Again, the assertions and spreadsheets were unsupported by any affidavit or certification and, for that reason, did not provide a proper foundation for the court's findings. R. 1:6-6; Mazur, supra, 441 N.J. Super. at 180.

We therefore are convinced that the court did not have competent evidence supporting its finding that there was no genuine issue of material fact regarding LGR's alleged default under the note or the alleged deficiencies under the non-recourse loans. As a result, we are compelled to reverse the court's entry of summary judgment.

III.

Defendant also appeals the court's denial of his motion for leave to file a counterclaim. The court denied defendant's motion based upon its determination the counterclaim was "futile." While the court did not make the required findings and fact and conclusions of law supporting its determination, R. 1:7-4(a), it appears it was based upon the court's findings that LGR defaulted on the note and that there were deficiencies in the payment of the non-recourse loans.

Motions to amend pleadings are to be liberally granted in the discretion of the court, but "exercise of [that] discretion requires a two-step process: whether the non-moving party will be prejudiced, and whether granting the amendment would nonetheless be futile." Notte v. Merchs. Mut. Ins. Co., 185 N.J. 490, 501 (2006). A proposed amendment will be deemed futile if the "newly asserted claim is not sustainable as a matter of law." Ibid. That determination "must be made in 'light of the factual situation existing at the time'" the request is made. Ibid. (quoting Interchange State Bank v. Rinaldi, 303 N.J. Super. 239, 256 (App. Div. 1997)).

We are satisfied that the court erred in its determination that defendant's counterclaim was "futile." It was based upon facts that were in dispute and not supported by competent evidence in the record. Under such circumstances, the court was without a sufficient factual basis upon which it could determine whether defendant's counterclaim was "not sustainable as a matter of law." Notte, supra, 185 N.J. at 501.

We do not address the merits of plaintiff's legal arguments regarding defendant's claimed entitlement to set-off, the application of the Statute of Frauds, N.J.S.A. 25:1-5, or whether the cause of action asserted in the counterclaim is "sustainable as a matter of law." Ibid. Resolution of those issues requires consideration of a record based upon competent evidence that was not present before the court here.

Reversed and remanded for further proceedings consistent with this opinion. We do not retain jurisdiction.

1 After the filing of the complaint, RREF II IB-NJ, LLC, became the successor in interest to Sterling Bank and plaintiff.

2 Defendant's wife, M.R., was named as a defendant in the complaint, but the complaint was voluntarily dismissed as against her. We use the initials of some of the individuals to protect their privacy.