GENERAL ELECTRIC CAPITAL CORPORATION v. IMAGING CENTER OF ORADELL, LLC

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-3001-11T4

A-3955-11T4

GENERAL ELECTRIC CAPITAL

CORPORATION,

Plaintiff-Respondent,

v.

IMAGING CENTER OF ORADELL, LLC,

Defendant,

and

JOHN M. MAVROUDIS, THOMAS DINARDO,

MICHAEL J. MAVROUDIS AND

JOSEPH F. BELASCO,

Defendants-Appellants,

and

IMAGING CENTER OF ORADELL, LLC,

Third-Party Plaintiff,

v.

NORTH MOUNTAIN HEALTHCARE, LLC

and GE HEALTHCARE,

Third-Party Defendants.

_______________________________________

June 12, 2013

Submitted May 7, 2013 Decided

Before Judges Reisner, Yannotti and Harris.

On appeal from Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-825-11.

Vincent P. Trovini, P.C., attorney for appellants Thomas Dinardo and Thomas F. Belasco.

Mavroudis, Rizzo & Guarino, L.L.C., attorneys for appellants John M. Mavroudis and Michael J. Mavroudis (John A. Rizzo, on the brief).

Vedder Price, P.C., attorneys for respondent General Electric Capital Corporation (Mitchell D. Cohen and Daniel C. Green, on the brief).

PER CURIAM

Defendants John M. Mavroudis (JM), Thomas Dinardo (Dinardo), Michael J. Mavroudis (MM), and Joseph F. Belasco (Belasco) appeal from an order filed by the Law Division on January 6, 2012, granting summary judgment in favor of plaintiff General Electric Capital Corporation (GECC), and a judgment entered on January 30, 2012, against defendants in the amount of $2,503,551.90, plus post-judgment interest and attorney's fees. We affirm.

I.

In 2009, GECC entered into two Master Leases with Imaging Center of Oradell, LLC (ICO), under which ICO leased several pieces of medical imaging equipment. The leases required ICO to make specified payments to GECC and provided, among other things, that ICO would be in default if it failed to pay any amounts when due. The leases stated that, upon ICO's default, GECC may declare that all amounts due and owing are payable.

In addition, the leases provided that ICO agreed to pay all of the costs and expenses incurred by GECC for enforcement and collection of the amounts due thereunder, including reasonable attorney's fees. The leases also provided that:

LESSEE ACKNOWLEDGES THAT IT HAS SELECTED THE EQUIPMENT WITHOUT ANY ASSISTANCE FROM LESSOR, ITS AGENTS OR EMPLOYEES. LESSOR DOES NOT MAKE, HAS NOT MADE NOR SHALL BE DEEMED TO MAKE OR HAVE MADE, ANY WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, WRITTEN OR ORAL, WITH RESPECT TO THE EQUIPMENT LEASED UNDER THIS AGREEMENT OR ANY COMPONENT THEREOF, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY AS TO DESIGN, COMPLIANCE WITH SPECIFICATIONS, QUALITY OF MATERIALS OR WORKMANSHIP, MERCHANTABILITY, FITNESS FOR ANY PURPOSE, USE OR OPERATION[.] . . . ALL SUCH RISKS, AS BETWEEN LESSOR AND LESSEE, ARE TO BE BORNE BY LESSEE.

Along with ICO's execution of the leases, JM, Dinardo, MM, and Belasco (collectively, the guarantors) executed guarantees in which they unconditionally agreed to pay ISO's obligations under the leases. In these agreements, the guarantors agreed that their respective liabilities are unconditional. The guarantees also stated:

THE UNDERSIGNED HEREBY UNCONDITIONALLY WAIVES ITS RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS GUARANTY, THE OBLIGATIONS GUARANTEED HEREBY, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN US RELATING TO THE SUBJECT MATTER HEREOF OR THEREOF, AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN US.

Among other things, the guarantors agreed that, upon ICO's default under the leases, GECC could proceed directly against them for the full amounts due and owing from ICO. The guarantors also agreed to pay all of the costs and expenses, including reasonable attorney's fees, incurred by GECC to enforce the guarantees.

In March 2010, ICO defaulted on payments due under the leases. Thereafter, ICO, GECC and the guarantors entered into a restructuring agreement, which modified ICO's obligations under the leases. The restructuring agreement stated that

Each Guarantor hereby acknowledges and agrees that the Guaranty executed by such Guarantor remains in full force and effect as of the date hereof, subject to no defense, setoff or counterclaim and is hereby ratified and confirmed in all respects, and each Guarantor shall, pursuant to its Guaranty, guarantee the repayment and performance of the Obligations, as modified hereby and by the Amended Schedules. Each Guarantor acknowledges that it has received and reviewed each Amended Schedule and has agreed to all of the terms thereof. Each Guarantor represented that it has a direct and substantial economic interest in [ICO] and expects to derive substantial benefits from this restructuring and from any financings, credit transactions, financial accommodations, discounts, purchases of property and other transactions and events resulting therefrom.

The restructuring agreement also provided for the release of claims between ICO, GECC and the guarantors. It stated in pertinent part:

LESSEES AND GUARANTORS, ON BEHALF OF THEMSELVES AND THEIR SUCCESSORS, PREDECESSORS, ASSIGNS AND OTHER LEGAL REPRESENTATIVES, HEREBY ABSOLUTELY, UNCONDITIONALLY AND IRREVOCABLY RELEASE, REMISE AND FOREVER DISCHARGE LESSOR, AND ITS SUCCESSORS AND ASSIGNS, AND ITS PRESENT AND FORMER DIRECTORS, OFFICERS, ATTORNEYS, EMPLOYEES, AGENTS AND OTHER REPRESENTATIVES . . . OF AND FROM ALL DEMANDS, ACTIONS, CAUSES OF ACTION, SUITS, COVENANTS, CONTRACTS, CONTROVERSIES, AGREEMENTS, PROMISES, SUMS OF MONEY, ACCOUNTS, BILLS, RECKONINGS, DAMAGES, AND ANY AND ALL OTHER CLAIMS, COUNTERCLAIMS, DEFENSES, WHATSOVER

. . . OF EVERY NAME AND NATURE, KNOWN AND UNKNOWN, SUSPECTED OR UNSUSPECTED, BOTH AT LAW AND IN EQUITY, WHICH LESSEE OR ANY GUARANTOR OR ANY OF THEIR SUCCESSORS, ASSIGNS, OR OTHER LEGAL REPRESENTATIVES MAY NOW OR HEREAFTER OWN, HOLD, HAVE OR CLAIM TO HAVE AGAINST THE RELEASEES OR ANY OF THEM FOR, UPON, OR BY REASON OF ANY CIRCUMSTANCE, ACTION, CAUSE OR THING WHATSOEVER WHICH ARISES AT ANY TIME ON OR PRIOR TO THE DATE OF THIS AGREEMENT, . . .

In October 2010, ICO again failed to make payments due under the agreements. By letter dated October 5, 2010, GECC notified the guarantors and stated that, if ICO did not cure the defaults, it would declare all remaining payments immediately due and payable. ICO did not cure the defaults and the guarantors did not pay the amounts due, despite demands by GECC that they do so.

II.

In January 2011, GECC filed a verified complaint in the Law Division against ICO and the guarantors, claiming that defendants breached the leases, restructuring agreement and guarantees. GECC alleged that it was entitled to the amounts due under the agreements, plus attorney's fees and costs.

ICO, JM and MM filed an answer denying liability, and asserted certain counterclaims against GECC. JM and MM also asserted third-party claims against North Mountain Healthcare, LLC (NMH), an entity that ICO retained to provide certain professional services, and GE Healthcare (GEH), a "unit" of GECC which was involved in the lease agreements. Dinardo and Belasco also filed an answer denying liability and asserted a cross-claim against the other defendants for indemnification and/or contribution.

On June 30, 2011, GECC filed a motion seeking dismissal of the counterclaims asserted by ICO, JM and MM. On July 28, 2011, the trial court filed an order granting the motion in part. The court dismissed the counterclaims for breach of fiduciary duty, fraud, negligent misrepresentation, fraudulent inducement, and injunctive relief regarding certain letters of credit, but refused to dismiss the claims for violations of the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -20, and breach of the covenant of good faith and fair dealing.

In November 30, 2011, ICO filed a petition for bankruptcy in the United States Bankruptcy Court for the District of New Jersey. Consequently, all actions or proceedings against ICO were stayed.

On November 30, 2011, GECC again filed a motion for summary judgment against the guarantors. JM and MM opposed the motion and filed a cross-motion to dismiss the complaint without prejudice for failure to provide discovery. Dinardo and Belasco also opposed GECC's motion and filed a cross-motion to stay further proceedings in the case. Among other things, Dinardo and Belasco argued that the claims against them could only be determined after ICO's liability was established in the bankruptcy proceedings.

The motions were argued on January 6, 2012, and the judge thereafter placed his decision on the record, concluding that there was no genuine issue of material fact and GECC was entitled to summary judgment on its claims against the guarantors. The judge stated:

[T]here is no question that the guarantors have no valid defenses to GECC's enforcement of the guarantees. . . . The guarantors' unconditional promise to pay and their express waiver of all claims and defenses requires that summary judgment be granted. When they signed their respective guarantees, the guarantors, number one, unconditionally promised to pay all amounts due under the contracts; and two, expressly waived all claims and defenses.

The judge also stated that the counterclaims asserted by ICO did not preclude the grant of summary judgment against the guarantors. The judge said:

In an effort to defend against plaintiff GECC's claims as set forth in the complaint, ICO, which filed bankruptcy, had set forth several counterclaims arising out of a vaguely articulated alleged conspiracy. None of these claims, however, preclude the grant of summary judgment against the guarantors because the guarantees are unconditional promises to [pay] and [are] absolute and unconditional in all events, without abatement, diminution, deduction and setoff, or defense for any reason.

The judge memorialized his decision in an order dated January 6, 2012. In addition, on January 30, 2012, the judge entered a judgment in favor of GECC and against the guarantors, jointly and severally, in the amount of $2,503,551.90, as of November 4, 2011, with post-judgment interest and attorney's fees. The judge noted on the order that GECC sought $229,518.08 in attorney's fees and costs but it had not provided sufficient information for a determination as to whether the amounts sought were fair and reasonable.

JM and MM later filed a motion for reconsideration or, alternatively, for a stay pending appeal. Dinardo and Belasco filed a motion for reconsideration and/or for clarification. The judge entered an order dated March 16, 2012, denying the motions. The order stated, however, that the prior order granted judgment in favor of GECC and against the guarantors jointly and severally, and also dismissed with prejudice the guarantors' counterclaims. The order also stated that the motion for a stay pending appeal was denied.

On February 21, 2012, Dinardo and Belasco filed their notice of appeal. On April 4, 2012, JM and MM filed a notice of appeal. On May 30, 2012, we entered an order consolidating the appeals.

III.

As we noted previously, the motion judge entered a judgment for GECC and against the guarantors on January 30, 2012, in the amount of $2,503,551.90, as of November 4, 2011, with post-judgment interest and attorney's fees. The judgment stated, however, that GECC had not presented sufficient information to allow the court to assess the fairness and reasonableness of the fees and costs it had requested.

There is no indication in the record that the court thereafter addressed GECC's claim for attorney's fees and costs and did not award a specific amount to GECC on this claim.1 Thus, the order of January 6, 2012, granting summary judgment to GECC, the judgment of January 30, 2012, and the order of March 6, 2012 denying reconsideration did not resolve all issues as to all parties in this case.

Therefore, there is no final judgment from which an appeal could be taken as of right pursuant to Rule 2:2-3(a)(1). See General Motors Co. v. City of Linden, 279 N.J. Super. 449, 454-56 (App. Div. 1995) (judgment not final even if all that remains to be adjudicated is application for attorney's fees), rev'd on other grounds, 143 N.J. 336 (1996); N.J. Mfrs. Inc. v. Prestige Health, 406 N.J. Super. 354, 358 (App. Div.) (an order is not a final judgment if it does not dispose of counsel fee issues) certif. denied, 199 N.J. 543 (2009)).

Nevertheless, because issues raised by appellants have been fully briefed and argued, we are convinced that it would be in the interests of the parties to resolve these issues without further delay. Accordingly, we will grant leave to appeal nunc pro tunc pursuant to Rule 2:4-4(b)(2).

IV.

The guarantors argue that the motion judge erred by granting summary judgment in favor of GECC because there were genuine issues of material fact regarding the claim that GECC fraudulently induced defendants to enter into the leases, guarantees and restructuring agreement. We do not agree.

Summary judgment may be granted when there are no genuine issues of material fact, and the moving party is entitled to judgment as a matter of law. R. 4:46-2(c); Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). When reviewing an order granting or denying summary judgment, we apply the same standard that the trial court applies when ruling on a summary judgment motion. Liberty Surplus Ins. Corp. v. Nowell Amoroso, P.A., 189 N.J. 436, 445-46 (2007); Stoffels v. Harmony Hill Farm, 389 N.J. Super. 207, 209 (App. Div. 2006).

Here, the motion judge correctly determined that there was no genuine issue of material fact and GECC was entitled to judgment on its claims against the guarantors as a matter of law. There is no dispute as to the terms of the leases, the guarantees or the restructuring agreement. As we have explained, the guarantors unconditionally guaranteed payment of all monies due from ICO under the leases and the restructuring agreement. There also is no dispute as to the fact that the guarantors waived the right to assert any legal or equitable defenses to enforcement of their obligations.

The guarantors argue, however, that there was a genuine issue of material fact relating to their defense of fraud in the inducement. The guarantors recognize that in the guarantees and restructuring agreement, they expressly waived all defenses to enforcement of the agreements. They nevertheless argue that they may assert a fraud-in-the-inducement defense to enforcement of the leases, guarantees and restructuring agreement. See Ramapo Bank v. Bechtel, 224 N.J. Super. 191, 197-98 (App. Div. 1988) (noting that fraud operates to discharge a guarantor from liability on a guaranty).

In support of this argument, the guarantors rely upon statements set forth in JM's affidavit, which was submitted in opposition to GECC's summary judgment motion. In that affidavit, JM claimed that ICO and the guarantors were fraudulently induced to enter into the leases and guarantees. He asserted that, in the period before the leases and guarantees were executed, (1) GECC falsely represented that NMH had the skill, knowledge and expertise to properly advise ICO, when it knew the contrary was true; (2) GECC knowingly omitted and failed to inform ICO of material facts concerning NMH, including certain relationships with GECC that provided an incentive for NMH to recommend that ICO acquire unsuitable and unnecessary radiology equipment; (3) GECC falsely represented and advertised on its internet site and otherwise that it had the requisite skill, knowledge and expertise to render advice to ICO, when it knew the contrary was true; and (4) GECC falsely represented and advertised that it was looking after ICO's best interests.

JM additionally asserted that in May 2009, ICO acquired the radiology equipment pursuant to the leases executed with GECC. He said that, as part of this financing arrangement, GECC required the guarantors to personally guaranty payment of ICO's obligations. According to JM, the leases contained terms, representations and disclaimers that were untrue, but the leases were presented to ICO on a "take it or leave it basis."

JM also stated that, because the terms of the leases were "so onerous, ICO was compelled to enter into a restructuring agreement" in April 2010. He said ICO had no bargaining power when it entered into that agreement, and GECC "was able to insert virtually whatever terms it wanted in the restructuring agreement."

JM claimed that, at that point in time, ICO had not yet discovered "the many fraudulent misrepresentations and omissions and other wrongful [and] egregious conduct of GECC" as detailed in the affidavit. He stated, had ICO known of the "misrepresentations and omissions and other wrongful conduct, ICO never would have entered into the restructuring agreement."

We are satisfied that the motion judge correctly determined that statements in JM's affidavit did not raise a genuine issue of fact which precluded the grant of summary judgment to GECC. JM's affidavit sets forth allegations of fraudulent and wrongful acts and omissions that purportedly occurred before the leases and guarantees were executed in May 2009.

Even assuming that these allegations are sufficient to support a claim of fraudulent inducement regarding the initial agreements, the guarantors waived any such defense when they entered into the restructuring agreement. The guarantors agreed to the restructuring, and unconditionally released GECC from any claims, known or unknown, that the guarantors might have, which arose at any time prior to the date of that agreement.

The guarantors additionally argue that summary judgment should not have been granted because they were entitled to the benefit of GECC's discovery responses before any decision was made on GECC's motion. Again, we disagree.

ICO served interrogatories upon GECC, and GECC provided answers thereto. JM and MM apparently believed that two of GECC's answers to the interrogatories were inadequate. However, JM and MM never served their own interrogatories. Furthermore, JM and MM did not submit a copy of the interrogatories or GECC's answers to the motion judge, thereby providing the judge with no basis to deny GECC's summary judgment motion as premature, or to dismiss the complaint for failure to provide discovery.

We have considered the guarantors' other arguments and conclude that they are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

Affirmed and remanded to the trial court for consideration of GECC's claim for attorney's fees and costs. We do not retain jurisdiction.

1 As we indicated previously, GECC's claims against ICO were stayed after ICO filed its bankruptcy petition. The record does not indicate whether the trial court dismissed those claims, and ICO's third-party claims against NMH and GEH, or whether those claims have been or will be adjudicated in the bankruptcy court.