BRIDGETON COMMERCE CENTER INC. v. N.J. DEALERS AUTO MALL INC.

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

BRIDGETON COMMERCE CENTER,

INC., a New Jersey Corporation,

Plaintiff,

and

BRIAN ALTMAN, DENNIS ALTMAN

and ANNETTE ALTMAN,

Plaintiffs-Appellants,

v.

N.J. DEALERS AUTO MALL, INC., a

New Jersey Corporation, and

LOUIS CIVELLO, JR.,

Defendants-Respondents.

_____________________________

330 EAST COMMERCE STREET, INC.,

a New Jersey Corporation, THE

ESTATE OF STEVEN ALTMAN BY

SUZANNE ALTMAN, administrator,

SUZANNE ALTMAN, as a sole

beneficiary and heir at law

of Estate of Steven Altman,

MEREDITH SUSSMAN, formerly

Meredith Altman, as a

beneficiary and heir at law

of the Estate of Steven Altman,

JONATHAN ALTMAN, as beneficiary

and heir at law of the Estate

of Steven Altman, and ALICIA

ALTMAN, as a beneficiary and

heir at law of the Estate of

Steven Altman,

Plaintiffs,

v.

BRIDGETON COMMERCE CENTER,

INC., a New Jersey Corporation,

and TAMARA L. MCDONOUGH,

Defendants,

and

BRIAN ALTMAN, DENNIS ALTMAN and

ANNETTE ALTMAN,

Defendants-Appellants,

and

GLENN E. GROMANN,

Defendant-Respondent.

_____________________________

DENNIS ALTMAN,

Plaintiff-Appellant,

v.

BRIDGETON COMMERCE CENTER, INC.,

a New Jersey Corporation, SUZANNE

ALTMAN, MEREDITH ALTMAN, JONATHAN

ALTMAN, 330 EAST COMMERCE STREET,

INC., DONALD1 TERESCO, DAVID PRIMOST

and THE STATE OF NEW JERSEY,

Defendants,

and

LOUIS CIVELLO, JR., NEW JERSEY

DEALERS AUTO MALL, INC., and

ESTATE OF STEVEN ALTMAN,

Defendants-Respondents.

__________________________________

December 9, 2015

 

Before Judges Ostrer, Haas and Manahan.

On appeal from Superior Court of New Jersey, Law Division, Monmouth County, Docket Nos. L-5292-05, L-3776-07 and L-3430-08.

Dennis Altman, appellant, argued the cause pro se (Dennis Altman, Annette Altman and Brian Altman, on the pro se brief).

Jeffrey S. Mandel argued the cause for respondents N.J. Dealers Auto Mall, Inc. and Louis Civello, Jr. (Cutolo Mandel, LLC, attorneys; Mr. Mandel, of counsel and on the brief).

Respondents Estate of Steven Altman and Glenn E. Gromann have not filed a brief.

PER CURIAM

Plaintiffs Dennis, Brian, and Annette Altman (collectively plaintiffs) appeal from judgments entered against them in three consolidated actions (hereinafter designated the ownership, foreclosure, and deed actions). In the ownership action, a jury determined that defendant Louis Civello, Jr. was the sole owner of a holding company called Bridgeton Commerce Center, Inc. (BCC) for property located at 330 East Commerce Street in Bridgeton (the 330 ECS property). The trial court then dismissed the remaining counts of plaintiffs' complaint. A second jury in that action later found that Civello and defendant N.J. Dealers Auto Mall, Inc. (NJDAM) (collectively defendants) were entitled to $9,474.50 in damages on their counterclaim for conversion.

Following a bench trial in the foreclosure action, the trial court found that Dennis2 was not entitled to foreclose on the 330 ECS property because he failed to establish that he held a valid mortgage on that property. Finally, the court dismissed the deed action with prejudice.

On appeal, plaintiffs challenge a number of evidentiary and procedural rulings made by the trial court, and the trial court's decision dismissing plaintiffs' complaint in the ownership action in its entirety. With the exception of the trial court's decision to dismiss count six of plaintiffs' complaint in the ownership action, we affirm. We reverse the court's dismissal of count six and remand for further proceedings.

I.

A. Background

On November 4, 1993, Dennis's brother, Steven Altman, purchased the 330 ECS property. In April 1994, Dennis and Steven formed New Jersey Automobile Dealers Exchange, Inc. (the Exchange) for the purpose of leasing office space to automobile dealers at the site. Dennis and Meredith Altman, who was Steven's daughter, were listed as directors of the Exchange. Dennis also operated a separate business on the 330 ECS property, selling boats and making auto repairs.

Steven incorporated 330 East Commerce Street, Inc. (330 ECS) in April 1995 to manage the business at the site and he was named as its sole director. In conjunction with the incorporation of this business, Steven executed a deed transferring ownership of the property from himself to 330 ECS.

BCC was incorporated in June 1996, with Civello as its sole director. According to Civello, 330 ECS then transferred the 330 ECS property to BCC. BCC acted as a holding company for the property. Glenn Gromann, an attorney, filed BCC's certificate of incorporation. In that same month, the Exchange was re-incorporated as N.J.A.D.E., Inc. (NJADE), with Civello listed as its sole director.

Civello testified he treated Dennis "like an uncle" even though the two men were not related. Because Dennis's boat business was failing, Civello hired Dennis to manage NJADE.

In June 1998, Civello re-incorporated NJADE as N.J. Dealers Auto Mall, Inc. (NJDAM). Civello was listed as incorporator and director. NJDAM continued to lease space to used car dealers at the 330 ECS property and Dennis remained as the manager of the new corporation.

Steven passed away in December 2003. In October 2005, two of his heirs, Steven's wife, Suzanne, and his daughter, Meredith, filed for bankruptcy without listing the 330 ECS property as an asset. They were discharged from bankruptcy in February 2006. In December 2007, Steven's daughter, Alicia, and his son, Jonathan, also filed for bankruptcy without listing the property as an asset. They were discharged from bankruptcy in April 2008.

B. The Ownership Action

Despite the documentary evidence indicating that Civello was the sole owner of the 330 ECS property and the sole owner and director of BCC and NJDAM, plaintiffs claimed that Dennis's son, Brian Altman, actually owned BCC, and that Dennis owned 50% of NJDAM. The parties are fully aware of the twists and turns that followed on the heels of plaintiffs' allegations in what the trial court aptly described as the "long and tortured history" of this matter. Therefore, we will focus on the pleadings, testimony, and rulings that are most relevant to the issues presented on appeal.

On November 28, 2005, plaintiffs and BCC filed a complaint against defendants NJDAM and Civello seeking possession of the 330 ECS property because of defendants' failure to pay BCC one-half of NJDAM's profits per an alleged agreement between Civello and Brian, as well as damages. On April 8, 2006, defendants filed an answer, which included a counterclaim alleging conversion or misappropriation, breach of the duty of good faith and fair dealing and the duty of loyalty, fraudulent inducement, breach of contract, tortious interference with contract or prospective business relations, and unjust enrichment.

On January 31, 2007, the trial judge granted plaintiffs' motion to amend their complaint to add a sixth count seeking dissolution of NJDAM pursuant to N.J.S.A. 14A:12-7, or to have defendants buy out Dennis's alleged 50% interest in NJDAM. In count six, plaintiffs claimed that Civello's father had made an oral agreement with Dennis in 1993 or 1994 in which Dennis was given the 50% interest in the corporation. In March 2007, defendants filed an answer to the amended complaint, which included their previous counterclaim.

On September 25, 2009, the trial judge issued the first of a series of orders directing Gromann, who had worked on BCC's incorporation as well as the deed by which Steven transferred ownership of the 330 ECS property to BCC, to produce all the documents defendants requested in discovery. Gromann did not comply. The order also barred Gromann from testifying as a witness at trial pending further court order.

On January 22, 2010, the judge denied plaintiffs' motion for leave to file a second amended complaint in the ownership action to add Civello's father as a party and to add ten new counts alleging, among other things, promissory estoppel, breach of fiduciary duty, tortious interference with prospective economic advantage, conspiracy to commit fraud, conversion, and unjust enrichment. On that same date, the trial judge denied plaintiffs' motion for summary judgment.

After Gromann ignored a February 1, 2010 order again directing him to provide discovery, the court issued an order barring him from testifying in the ownership action.3

On September 16, 2010, the trial judge granted defendants' motion to preclude plaintiffs from introducing any evidence as to the bankruptcy filings made by Steven's heirs.

On October 15, 2012, with the trial court's permission, defendants filed an amended answer in the ownership action to add an additional counterclaim seeking judgment declaring that Brian was not the president of BCC and was not authorized to make decisions on behalf of BCC, and that Civello was the sole director with the sole right to make decisions on behalf of BCC.

On March 14, 2013, the trial court granted defendants' motion for partial summary judgment on count eight of their counterclaim by declaring that Civello was the sole director of BCC.

The court then conducted a five-day jury trial in May 2013 on the issue of whether, contrary to plaintiffs' contentions, Civello was the sole owner of BCC. Civello testified that BCC was a holding company that rented out space for used car dealers, and that he had incorporated BCC in order to reduce his personal liability exposure, as well as for tax advantages. Civello asserted that he was always the owner and director of both BCC and NJDAM.

Civello testified that he hired Dennis to be NJDAM's manager in 1996. While Dennis had access to the NJDAM checkbook, Civello stated that Dennis was only permitted to sign checks for the payroll company that was responsible for issuing employee paychecks. In October 2004, Civello noticed that money was missing from the company when there was not enough money in NJDAM's account to pay for a lobbyist's fee.

Civello stated that he never gave Brian the authority to sign Civello's name to any company document, and never authorized Brian, or anyone else, to put their name on BCC's tax returns or NJDAM checks. Dennis was the only person, other than Civello, who had access to the NJDAM checkbook.

Dennis and Brian testified that they were BCC's true owners. Dennis claimed that Steven sold him the 330 ECS property in return for Dennis paying back taxes that Steven owed on the property, and that therefore he, and not Civello, owned the property. According to Dennis, he paid the back taxes on the property from his personal funds, but used a BCC corporate account to pay the monthly real estate taxes.

Dennis also claimed that he was a co-owner of NJDAM and, therefore, entitled to 50% of NJDAM's profits. In late 2004, Dennis asked Civello and his father to buy him out. Specifically, Dennis wanted them to purchase the property and his 50% interest in NJDAM. The Civellos did not agree to the proposal.

On May 9, 2013, the jury unanimously rejected plaintiffs' claims and found that Civello was "the 100[%] owner of" BCC. On May 24, 2013, the court entered an order memorializing the jury's verdict.

The ownership of BCC was the only issue decided by the jury. After the verdict, defendants filed a motion to dismiss the remaining counts of plaintiffs' complaint which, with the exception of count six, were dependent upon plaintiffs' claim that Dennis and Brian, rather than Civello, were BCC's owners. At the time the motion was filed, plaintiffs did not have an attorney and they did not file a response to defendants' motion. On September 12, 2013, the court granted defendants' motion and dismissed the ownership action in its entirety, including count six, which involved plaintiffs' claim that NJDAM should be dissolved. On November 12, 2013, the court denied plaintiffs' motion for reconsideration.

In October 2013, the court conducted a three-day jury trial on defendants' counterclaim for conversion. Civello testified that, in late 2004, he wanted to hire a lobbyist for $50,000 to help him with issues regarding the automobile business. Civello stated that Dennis delayed turning over the company's checkbook and ledger. Upon examining them, Civello determined that there was not enough money in the account to hire the lobbyist. Civello also discovered that there were checks written by Dennis on NJDAM's company account that Civello had not authorized. In his testimony, Dennis disputed Civello's contention that he had converted NJDAM's funds to his own personal use.

On October 18, 2013, the jury returned a unanimous verdict finding that plaintiffs had converted $9,474.50 from NJDAM to themselves. On that same date, the court entered a judgment in this amount against plaintiffs.

C. The Foreclosure Action

On November 15, 2007, two years after plaintiffs commenced the ownership action, Dennis filed a separate foreclosure action against defendants, BCC, and Steven's estate and heirs.4 Dennis claimed that he held a mortgage on the 330 ECS property. On June 25, 2008, the court consolidated the foreclosure action with the ownership and deed actions.

On October 22, 2013, the court conducted a one-day bench trial on Dennis's claim. Dennis testified that, on September 18, 1996, Steven assigned Dennis a mortgage5 on the 330 ECS property in return for a $150,000 loan that Steven used to repay a debt to Civello. Dennis did nothing to enforce, or to seek payment on, the alleged mortgage until he filed his foreclosure complaint in 2007. Dennis admitted that he did not have a copy of the mortgage he allegedly held on the property.

Dennis did not present any other witnesses. At the conclusion of Dennis' testimony, the court granted defendants' motion for an involuntary dismissal under Rule 4:37-2(b). The judge found that Dennis failed to produce sufficient proofs to substantiate his claim that he held a mortgage on the property. On October 22, 2013, the judge entered a judgment memorializing this ruling.

D. The Deed Action

Finally, on August 24, 2006, the corporation Steven had formed, 330 ECS, Steven's estate, and his heirs (collectively the 330 ECS plaintiffs) filed a complaint seeking to invalidate a deed conveying the 330 ECS property from Steven's corporation to BCC. The 330 ECS plaintiffs claimed that the deed had been forged, and they named Dennis, Brian, and Annette, BCC, and Gromann as defendants.6 On July 6, 2007, the court entered an order consolidating the deed action with the then-pending ownership action. On September 16, 2010, the court denied Dennis, Brian, and Annette's motion for summary judgment. In March 2013, Civello and NJDAM intervened in the deed action.

On April 21, 2014, the 330 ECS plaintiffs agreed to dismiss the deed action with prejudice against all of the defendants. On that date, the court entered an order memorializing the dismissal. With the entry of this order, all of the matters in dispute between the parties were finally resolved in the trial court. This appeal followed.

II.

On appeal, plaintiffs challenge several of the trial court's procedural and evidentiary rulings. In the ownership action, plaintiffs assert that the court erred by: (1) denying their motion for leave to file a second amended complaint in the ownership action; (2) denying plaintiffs' attempt to admit documents relating to a settlement Civello allegedly proposed; (3) barring Gromann from testifying after he refused to comply with numerous court orders requiring him to provide discovery to defendants; (4) prohibiting plaintiffs from introducing information concerning the bankruptcy filings made by Steven's heirs; (5) denying plaintiffs' request to call one of Dennis's attorneys, Martin Margolis, as a witness at the trial; (6) barring plaintiffs from introducing evidence that Civello had contributed to the 330 ECS plaintiffs' counsel fees in the deed action; and (7) granting plaintiffs' motion to dismiss the remaining counts of the complaint after the jury found that Civello was BCC's only owner, including count six, which dealt with plaintiffs' claim that Dennis owned 50% of NJDAM.

In the deed action, plaintiffs argue that the court erred by: (1) denying their motion for summary judgment; and (2) denying their motion to intervene in the deed action if they were ever dismissed from that action.

We have carefully considered plaintiffs' arguments in light of the record and the applicable law. With the exception of plaintiffs' contention concerning the dismissal of count six of the amended complaint they filed in the ownership action, we conclude that plaintiffs' arguments are without sufficient merit to warrant extended discussion in a written opinion. R. 2:11-3(e)(1)(E). Before discussing count six of the complaint, we add the following brief comments concerning plaintiffs' other contentions.

In the ownership action, plaintiffs filed a motion seeking permission to file a second amended complaint naming Civello's father as a defendant in the ownership action and to add ten additional counts. By January 22, 2010, when the judge considered the motion, the case had already been pending for five years and the discovery end date was only nineteen days away. Because such a late amendment would unduly prolong the litigation, we are satisfied that the judge did not abuse his discretion by denying plaintiffs' motion. See Du-Wel Prods., Inc. v. U.S. Fire Ins. Co., 236 N.J. Super. 349, 364 (App. Div. 1989) (stating that a court's exercise of discretion in denying a motion to amend a complaint "will be sustained where the trial court refuses to permit new claims and new parties to be added late in the litigation and at a point at which the rights of other parties to a modicum of expedition will be prejudicially affected"), certif. denied, 121 N.J. 617 (1990).

We also discern no abuse of discretion in the trial court's evidentiary rulings. See Hisenaj v. Kuehner, 194 N.J. 6, 12 (2008) (holding that, "[i]n reviewing a trial court's evidential ruling, an appellate court is limited to examining the decision for abuse of discretion"). Contrary to plaintiffs' claim, the settlement offers they assert were made by Civello were not admissions of liability. See N.J.R.E. 408 (providing in part that "evidence of statements or conduct by parties . . . in settlement negotiations . . . including offers of compromise or any . . . settlement of a related claim, shall not be admissible to prove liability for . . . the disputed claim").

The court also properly found that the probative value of evidence concerning the bankruptcy filings made by Steven's heirs was outweighed by its prejudicial nature. Plaintiffs' argued that the heirs' failure to list the 330 ECS property in their filings raised an issue as to their credibility. However, plaintiffs did not offer any of the bankruptcy parties as witnesses at the ownership trial.

The judge properly denied plaintiffs' request to call Gromann as a witness at trial. "Trial courts have the 'inherent discretionary power to impose sanctions for failure to make discovery.'" Manorcare Health Servs., Inc. v. Osmose Wood Preserving, Inc., 336 N.J. Super. 218, 230 (App. Div. 2001) (quoting Aetna Life & Cas. Co. v. Imet Mason Contractors, 309 N.J. Super. 358, 365 (App. Div. 1998)). We "will not disturb such sanctions 'if they are just and reasonable under the circumstances.'" Ibid. (quoting Aetna, supra, 309 N.J. Super. at 365). Gromann failed to respond to any of defendants' discovery requests, and did not comply with the court's repeated orders that he do so.

Plaintiffs never identified what specific information Margolis, another of their attorneys, would provide at trial. In addition, because Margolis had also represented NJDAM, defendants would have been able to invoke their attorney-client privilege to prevent his testimony. Therefore, we are satisfied that the judge properly barred plaintiffs from calling Margolis as a witness.

In the ownership trial, the judge also correctly excluded evidence concerning Civello's counsel fee arrangement with the 330 ECS plaintiffs in the deed action. Plaintiffs argue that they wanted to present this evidence to impeach Civello's credibility. However, Civello's offer to pay the counsel fees in an action to quiet title to the property was not inconsistent with his claim that he owned the property. Therefore, we detect no error in the judge's ruling.

Plaintiffs' contentions concerning the deed action are moot. Plaintiffs argue that the judge should have granted their motion for summary judgment and dismissed the complaint filed by Steven's heirs. They also wanted an order permitting them to intervene in the action if they were ever dismissed as defendants. However, because Steven's heirs voluntarily dismissed their complaint in the deed action with prejudice, plaintiffs have already received all the relief they sought.

Finally, we turn to plaintiffs' contention that the judge erred in dismissing their amended complaint in the ownership action after the jury found that Civello was "the 100[%] owner of" BCC. As noted above, plaintiffs claimed in the complaint that they owned BCC. In counts one and two, they asserted that NJDAM failed to make monthly payments to BCC for NJDAM's use of the 330 ECS property. Thus, plaintiffs sought possession of the property.

In count three, plaintiffs sought damages because of defendants' failure to pay BCC one-half of NJDAM's profits. In count four, plaintiffs sought damages for defendants' breach of the alleged agreement to make plaintiffs co-owners of BCC. Count five sought damages for defendants' alleged misrepresentation regarding that agreement.

Thus, counts one through five were entirely dependent upon plaintiffs' claim that they, rather than Civello, were the true owners of BCC. Once the jury concluded that plaintiffs' claim was without merit, the factual underpinnings for these counts collapsed. Thus, the judge properly dismissed counts one through five of the amended complaint.

In count six, however, plaintiffs claimed that defendants fraudulently omitted Dennis as a 50% shareholder of NJDAM when Civello reincorporated NJADE as NJDAM. Plaintiffs sought an order dissolving NJDAM, and compelling defendants to purchase Dennis's 50% share of NJDAM and pay plaintiffs all of the profits that should have been paid to Dennis as a co-owner of NJDAM.

Thus, contrary to the trial court's ruling, this was a stand-alone claim and was not dependent on who the jury determined owned BCC.7 Therefore, the court erred in dismissing this count of the amended complaint based solely on the jury's verdict. Accordingly, we reverse this ruling and remand plaintiffs' claims concerning count six to the trial court for further proceedings.

In sum, we affirm all of the orders entered by the trial court in this matter, with the exception of the portion of the September 12, 2013 order dismissing count six of plaintiffs' amended complaint.

Affirmed in part, reversed in part, and remanded. We do not retain jurisdiction.

1 The parties used the name David in their captions.

2 Because Dennis, Brian, and Annette share the same surname, we refer to them by their first names. We will do the same for other parties who also share the Altman surname. We intend no disrespect to any of the parties.

3 The court also struck Gromann's answer in the consolidated deed action.

4 Dennis also named two individuals who had obtained judgments against Steven, Donald Teresco and David Primost, as defendants.

5 Dennis alleged that the mortgage was dated October 27, 1993.

6 The 330 ECS plaintiffs also named Tamara McDonough, who had notarized the deed, as a defendant.

7 As previously noted, plaintiffs were between counsel at the time defendants filed their motion to dismiss and did not file papers opposing that motion. However, they did file a timely motion for reconsideration on the ground that count six was not impacted by the jury's verdict on the question of whether Civello owned BCC.