Summary
reversing grant of summary judgment on a written guarantee because the evidence demonstrated the existence of a material fact in dispute where the parties offered competing certifications about whether the guarantee was issued to induce performance on a separate contract
Summary of this case from Scarlet Kim & Co. v. Clocell, Inc.Opinion
DOCKET NO. A-3657-14T3
06-16-2016
M. SPIEGEL & SONS OIL CORP., d/b/a SOS FUELS, Plaintiff-Respondent, v. YUVAL AMIEL, a/k/a VAL AMIEL, a/k/a AMIEL YUVAL, a/k/a YOUVAL AMIEL, and GUY MADMON, a/k/a GUY HROMADKA, a/k/a GUY NADMON, a/k/a GUY KMADMON, Defendants-Appellants.
Stephen C. Gilbert, attorney for appellants (Mr. Gilbert, of counsel and on the briefs; John T. Knapp, of counsel and on the briefs). Winne, Banta, Basralian & Kahn, P.C., attorneys for respondent (Gary S. Redish and Christine R. Smith, of counsel and on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges St. John and Vernoia. On appeal from Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-2160-14. Stephen C. Gilbert, attorney for appellants (Mr. Gilbert, of counsel and on the briefs; John T. Knapp, of counsel and on the briefs). Winne, Banta, Basralian & Kahn, P.C., attorneys for respondent (Gary S. Redish and Christine R. Smith, of counsel and on the brief). PER CURIAM
Defendants Yuval Amiel and Guy Madmon appeal March 6, 2015 orders granting plaintiff's motion for summary judgment in the amount of $991,871.99 and denying defendants' cross-motion for summary judgment. Based upon our review of the record, we reverse the order granting plaintiff's motion for summary judgment, affirm the order denying defendants' motion for summary judgment, and remand for further proceedings.
I.
We discern the following undisputed facts from the record and view the facts and all reasonable inferences therefrom in the light most favorable to the respective non-moving parties. Robinson v. Vivirito, 217 N.J. 199, 203 (2014); Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). Plaintiff M. Spiegel & Sons Oil Corp. provides goods and services to the petroleum industry, including the delivery of fuel oil to retail gas stations. Defendants formed G & Y Realty, L.L.C. (G & Y) in 2009. G & Y operated two gas stations and purchased fuel oil from plaintiff.
In March 2012, plaintiff claimed that G & Y owed it over $1 million for fuel oil deliveries and ceased making deliveries to G & Y's stations. Plaintiff thereafter approached G & Y about converting the indebtedness into an agreement pursuant to which G & Y would make regular monthly payments to plaintiff.
On April 26, 2012, G & Y executed a promissory note in the amount of $1,052,143.85 in favor of plaintiff for the sum due and owing for the fuel oil deliveries. G & Y is identified as the "Maker" of the promissory note. Defendants signed the note on behalf of G & Y. During G & Y's discussions with plaintiff regarding the note, defendants were never requested to provide a personal guarantee of the obligations in the promissory note and never agreed to do so.
Following execution of the promissory note and later in the day on April 26, 2012, plaintiff presented defendants with a Personal Guarantee. In pertinent part it provided as follows:
To induce [plaintiff] (the "Payee") to extend credit or other financial accommodation to or on behalf of the Maker, G & Y REALTY LLC, the Guarantors hereby unconditionally, absolutely and irrevocably guarantee to Payee the full and punctual payment, performance and discharge of all indebtedness, liabilities and obligations of Maker to Payee now existing or hereafter arising or acquired.Defendants signed the personal guarantee.
In the certification supporting plaintiff's motion for summary judgment, its treasurer asserted that the personal guarantee was provided by defendants to induce plaintiff to continue to supply fuel oil to G & Y's stations. Defendants' affidavit, however, stated that at the time the personal guarantee was first presented, G & Y had already received the fuel which created the indebtedness, executed the promissory note for the payment of the indebtedness, made arrangements for the purchase of fuel from another supplier, and there was "no obligation taken on by [p]laintiff in exchange for receiving the [p]ersonal [g]uarant[ee]."
G & Y defaulted under the promissory note in January 2014. In February 2014, G & Y filed a Notice of Assignment for the benefit of creditors in the Hudson County Chancery Division. Plaintiff filed a proof of claim in the matter for $954,576.91 it claimed was due and owing under the promissory note as of February 20, 2014. Plaintiff has not received any payments as a result of its filing in that action.
On March 6, 2014, plaintiff filed a complaint against defendants alleging that they were obligated under the personal guarantee for the sums due and owing as a result of G & Y's default on the promissory note. Defendants filed a timely answer. After the discovery period ended, plaintiff filed a motion for summary judgment for the amount it claimed was due under the personal guarantee, including an amount for reimbursement of attorney's fees and costs. Defendants filed a cross-motion for summary judgment, arguing that the personal guarantee was void because of a lack of consideration. Defendants also argued that plaintiff failed to mitigate its damages.
The personal guarantee provided for plaintiff's recovery of attorney's fees and costs in any action against defendants to collect sums due as a result of G & Y's default under the promissory note. --------
On March 6, 2015, the court heard oral argument and for reasons stated in an oral opinion granted plaintiff's motion and denied defendants' cross-motion. The court found that the "personal guarantee [was] very clear and direct," G & Y did not make the required payments under the promissory note, and the "forbearance of the plaintiff to forego collection of the full amount" and to "span out a payment plan" provided consideration supporting defendants' obligations under the personal guarantee. The court entered orders granting plaintiff's motion and denying defendants' cross-motion. This appeal followed.
II.
When reviewing an order of the trial court granting summary judgment, we apply the same standard that the trial court applies when ruling on a summary judgment motion. State v. Perini Corp., 221 N.J. 412, 425 (2015). Summary judgment may be granted when there is no genuine issue of any material fact, and the moving party is entitled to judgment as a matter of law. R. 4:46-2(c).
"An issue of fact is genuine only if, considering the burden of persuasion at trial, the evidence submitted by the parties on the motion, together with all legitimate inferences therefrom favoring the non-moving party, would require submission of the issue to the trier of fact." Ibid. 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 (2014); see also R. 4:46-2(c). Based upon the record, we are convinced the court erred by granting plaintiff's motion for summary judgment.
"As a basic premise, it is true that 'no contract is enforceable . . . without the flow of consideration — both sides must "get something" out of the exchange.'" Oscar v. Simeonidis, 352 N.J. Super. 476, 484 (App. Div. 2002) (alteration in original) (quoting Cont'l Bank of Pa. v. Barclay Riding Acad., Inc., 93 N.J. 153, 170, cert. denied, 464 U.S. 994, 104 S. Ct. 488, 78 L. Ed. 2d 684 (1983)). However, consideration does not have to pass directly between parties who enter into a guaranty agreement because "any consideration moving from the original obligor[] to the guarantor . . . is sufficient" consideration for the guaranty. Great Falls Bank v. Pardo, 263 N.J. Super. 388, 401 (Ch. Div. 1993), aff'd, 273 N.J. Super. 542 (App. Div. 1994).
If a guarantee is not executed at the same time or as part of the same agreement as a loan, it "'must be supported by separate [sic] consideration moving to the guarantor or the renunciation of something substantial [by the guarantee].'" Id. at 400-01 (quoting S. Kosson & Sons v. Harris, 108 N.J.L. 162, 166 (E. & A. 1931)). "A mere promise to pay an antecedent debt of another is not generally regarded as consideration for a guaranty." Id. at 401. There must be at least "a slight benefit to the promisor or a trifling inconvenience to the promisee." Ibid.
Defendants opposed plaintiff's summary judgment motion, arguing that there was no consideration provided for the personal guarantee. Plaintiff supported its motion with a singular factual assertion concerning the consideration provided for the personal guarantee. Plaintiff's supporting certification stated that defendants provided the personal guarantee "to induce [p]laintiff to continue to supply the fuel" to G & Y's stations. Plaintiff did not offer any other factual assertion supporting its position that it provided consideration for defendants' personal guarantee.
We are convinced the court erred in granting plaintiff's motion for summary judgment because defendants' opposition certification directly disputed plaintiff's singular factual assertion concerning consideration. Defendants' certification stated that at the time the personal guarantee was signed, G & Y had not received fuel from plaintiff for more than one month, had obtained another fuel supplier, and never again received a delivery of fuel from plaintiff. The certification states that defendants did not execute the personal guarantee to induce plaintiff to make future fuel deliveries to G & Y.
We are satisfied that the parties' submissions presented the court with a genuine issue of material fact as to whether there was consideration for defendants' grant of the personal guarantee. Resolution of the fact issue was required for the court to decide whether there was sufficient consideration supporting defendants' personal guarantee as a matter of law.
The trial court did not address the factual issue directly raised in the parties' submissions, instead finding that plaintiff's forbearance from its right to collect the sums due from G & Y provided consideration for defendants' agreement to the personal guarantee. There was no evidence in the record supporting the court's finding. See Brill, supra, 142 N.J. at 540 (holding that a court may only consider "competent evidential materials" in deciding a motion of summary judgment).
Although it appears that plaintiff's forbearance from its right to collect the sum due from G & Y provided consideration for G & Y's execution of the promissory note, plaintiff's supporting certification does not state that such forbearance provided the basis for defendants' execution of the personal guarantee. As noted, plaintiff's supporting certification stated only that the personal guarantee was provided to induce plaintiff to continue supplying fuel oil to G & Y. As a result, there was no evidence supporting the court's finding that plaintiff's forbearance provided consideration for defendants' execution of the personal guarantee.
We are therefore convinced that there was a genuine issue of material fact which precluded the court's award of summary judgment to plaintiff. The factual issue also precluded an award of summary judgment to defendants.
Because we reverse the court's award of summary judgment to plaintiff, it is unnecessary to address defendants' argument regarding plaintiff's alleged failure to mitigate damages, which is an issue of fact and law which the court will address as appropriate on remand. We also need not address the propriety of the court's award of attorney's fees because the award was based upon the court's grant of summary judgment to plaintiff.
The court's award of summary judgment to plaintiff is reversed. The court's denial of defendants' cross-motion for summary judgment is affirmed. We do not express an opinion on the merits of the parties' claims and remand the matter for further proceedings. We do not retain jurisdiction. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION