Opinion
DOCKET NO. A-1981-13T4
05-21-2015
THE PROVIDENT BANK, Plaintiff-Respondent, v. INTERSTATE TRANSPORT, INC., Defendant-Appellant.
Philip L. Guarino argued the cause for appellant (Mavroudis & Guarino, L.L.C., attorneys; Mr. Guarino, on the brief). Joseph R. McCarthy argued the cause for respondent (Meyner and Landis, L.L.P., attorneys; Mr. McCarthy and David B. Grantz, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Fuentes, Ashrafi and O'Connor. On appeal from the Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-1676-12. Philip L. Guarino argued the cause for appellant (Mavroudis & Guarino, L.L.C., attorneys; Mr. Guarino, on the brief). Joseph R. McCarthy argued the cause for respondent (Meyner and Landis, L.L.P., attorneys; Mr. McCarthy and David B. Grantz, on the brief). PER CURIAM
In this commercial debt collection action, defendant appeals from an order granting plaintiff summary judgment and dismissing defendant's counterclaim. We affirm.
I
The record reveals the following. On March 4, 2010, plaintiff approved a term loan for defendant for $250,000, as well as a loan from its credit line for $500,000. Each note provided plaintiff a first lien security interest in all of defendant's assets. Each loan agreement provided that any modification to the agreement had to be in writing and signed by the party sought to be charged or bound by modification. Further, plaintiff could not be deemed to have waived any rights under either agreement unless the waiver were in writing and signed by plaintiff.
The agreement pertaining to the line of credit loan required defendant to pay interest monthly from April 1, 2010 to October 1, 2010, at which time the outstanding principal, interest, and fees became due. The agreement also provided that defendant would be in default if it failed to make any payment; if in default, all payments under the agreement became due.
For reasons not clear in the record, plaintiff later extended the October 1, 2010 maturity date to January 1, 2011.
The agreement for the term loan required defendant to pay principal and interest monthly from April 1, 2010 to March 1, 2015, when the principal was due in full. In addition, defendant was to maintain a tangible net worth of one million dollars. If defendant failed to make any payment under the agreement, defendant would be in default and all payments would become due.
In a letter dated December 2, 2010, plaintiff notified defendant that it was closing the account deposits defendant maintained with plaintiff because of frequent overdrafts. In a letter dated December 15, 2010, plaintiff advised defendant that the loan from the line of credit was not going to be renewed once it expired on January 1, 2011.
Defendant did not pay the outstanding principal, interest, and fees when the loan from the line of credit matured on January 1, 2011. In a letter dated January 10, 2011, plaintiff notified defendant that the loan was in default. However, to enable defendant to refinance the loan at another institution, plaintiff extended the maturity date to April 1, 2011.
At that time, the total owed on the loan was $504,263.63, of which $499,907 was principal.
On March 2, 2011, defendant's principal and its accountant met with plaintiff. Plaintiff claims it again told defendant that it did not wish to continue a business relationship with defendant, although plaintiff did advise it was willing to extend the maturity date on the line of credit loan to facilitate defendant's efforts to find new financing.
Defendant contends that, during the meeting, plaintiff "suddenly and without any advance notice" announced that it was uncertain whether it wanted to continue its relationship with defendant, but that plaintiff promised to let defendant know if their relationship were going to continue. Defendant also claims that there had not been any previous problems with [payment?] and that both loans were current. Defendant does not address or even deny that it received plaintiff's December 15, 2010 letter advising that the loan from the line of credit was not going to be renewed after the January 1, 2011 maturity date, or that it received plaintiff's January 10, 2011 letter declaring that loan to be in default.
On April 8, 2011, plaintiff again extended the maturity date on the line of credit loan to July 1, 2011, which was later extended to October 1, 2011, and then to January 1, 2012. Plaintiff extended the maturity date for the sole purpose of affording defendant more time to get financing.
On June 23, 2011, defendant received a letter, referred to by the parties as a "term sheet," from Abrams & Company, Inc. (Abrams), a lending institution from which defendant sought a loan. The term sheet stated that Abrams would "consider providing ongoing secured financing" to defendant, but that the term sheet "should be viewed as an indication of interest only regarding a financing transaction on the general terms and conditions outlined" in the letter. The term sheet further stated that it does not "constitute an offer, agreement, agreement-in-principle or commitment to provide financing." Abrams requested defendant to sign and return the term sheet if the terms were acceptable.
According to the term sheet, any loan Abrams issued required that it have a first priority security interest in defendant's personal property. Although the term sheet stated defendant could borrow up to $1.5 million, defendant claims Abrams told defendant it could borrow only $400,000 up front, that the balance defendant wanted to borrow to pay off plaintiff's loan would have to be disbursed over the course of four or five years, and that plaintiff's loan to defendant had to be subordinated to Abrams's loan. There is no documentation in the record that Abrams required terms different from those set forth in the term sheet, or that plaintiff was made aware Abrams sought to deviate from the proposal in the term sheet.
Defendant contends that because plaintiff was not going to be paid immediately in full under Abrams's proposed loan, plaintiff's approval of Abrams's loan was required. In this vein, defendant's principal, Daniel Tropp, certified that he contacted plaintiff
about this new financing and informed [it] of its specific terms, and thereafter [plaintiff's loan officer] [Tom] Spencer and Senior Vice President of Provident's Business Banking, Stephen H. Guidette, urged [defendant] to proceed. Indeed, [Abrams] had sent a Term Sheet to me which I in turn emailed to Spencer on June 30, 2011.
Although Spencer did receive the term sheet and did tell Tropp that he could sign it, as indicated by this excerpt from Tropp's certification, the terms of Abrams's loan were those contained in the term sheet, which says nothing about Abrams lending only $400,000 to defendant up front and requiring that the balance owed plaintiff be paid over time.
On July 13, 2012, Spencer emailed Tropp inquiring whether defendant had received a commitment from Abrams and when the loan was expected to close. Tropp argued that plaintiff's interest in the status of the loan led Tropp "to believe that Provident was consenting to the new financing upon the terms that I had provided to Provident." Tropp contends that after plaintiff "urged" defendant to close on the loan, defendant invested money to obtain a loan from Abrams, but after defendant obtained a commitment letter from Abrams, plaintiff "suddenly and in bad faith and with absolutely no notice refused to permit the new financing."
Our review of the "commitment letter" Abrams issued to defendant reveals that it is merely a replica of the "term sheet" Abrams forwarded to defendant the previous June, which states Abrams is merely willing to consider providing a loan to defendant and that the letter is not an offer, agreement, agreement-in-principle, or commitment to provide financing. There is no evidence Abrams ever issued a formal commitment to defendant to provide any loan.
Plaintiff did not extend the maturity date on the line of credit loan beyond January 1, 2012. Because defendant failed to pay the full amount owed on this loan, plaintiff declared defendant in default. Defendant also failed to maintain a net worth of one million dollars and pay the amount due in January and February 2012 on the term loan. Plaintiff declared defendant in default on the term loan as well, and filed a complaint in the Law Division seeking to enforce the loan agreements and collect on the notes. Defendant filed an answer and counterclaim raising various claims and defenses.
On November 12, 2013, the court granted plaintiff summary judgment on its complaint and dismissed defendant's answer and counterclaim. On appeal, defendant argues, as it did before the trial court, that plaintiff: (1) breached the implied covenant of good faith and fair dealing; (2) is estopped from declaring a default; (3) caused defendant to default on the loans; (4) is precluded from pursuing its action under the doctrine of unclean hands; and (5) violated the Consumer Fraud Act, N.J.S.A. 56:8-1 to -195.
After carefully reviewing the record and briefs, we conclude there is no merit to any of defendant's arguments and affirm.
II
In reviewing a summary judgment decision, we apply the same standard as the trial court. Murray v. Plainfield Rescue Squad, 210 N.J. 581, 584 (2012). Viewing the evidence "in a light most favorable to the non-moving party," we determine "if there is a genuine issue as to any material fact or whether the moving party is entitled to judgment as a matter of law." Rowe v. Mazel Thirty, LLC, 209 N.J. 35, 38, 41 (2012) (citing Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 529 (1995)). We review questions of law de novo. State v. Gandhi, 201 N.J. 161, 176 (2010).
It is well established that "'conclusory and self-serving assertions' in certifications without explanatory or supporting facts will not defeat a meritorious motion for summary judgment." Hoffman v. Asseenontv.com , Inc., 404 N.J. Super. 415, 425-26 (App. Div. 2009) (quoting Puder v. Buechel, 183 N.J. 428, 440, (2005)); see also Pressler & Verniero, Current N.J. Court Rules, comment 2.2 on R. 4:46-2 (2015) ("[S]elf-serving assertions alone will not create a question of material fact sufficient to defeat a summary judgement motion." (citing Fargas v. Gorham, 276 N.J. Super. 135 (Law Div. 1994))).
Defendant argues that the trial court erred by granting summary judgment because Tropp's certification created issues of fact concerning its defenses. However, Tropp's certification is replete with self-serving allegations that are either unsupported by the record or are immaterial to the issues in dispute.
Defendant's primary argument on appeal is that plaintiff breached the implied covenant of good faith and fair dealing because, after telling defendant it could sign the term sheet, plaintiff not only refused to approve the Abrams's loan but also declared defendant in default.
"'[E]very contract in New Jersey contains an implied covenant of good faith and fair dealing.'" Wood v. N.J. Mfrs. Ins. Co., 206 N.J. 562, 577 (2011) (citing Kalogeras v. 239 Broad Ave., L.L.C., 202 N.J. 349, 366 (2010)). This obligation requires that "neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract." Ibid. (quoting Kalogeras, supra, 202 N.J. at 366).
However, the implied covenant of good faith cannot "'alter the terms of a written agreement,'" and therefore "may not be invoked by a commercial debtor to preclude a creditor from exercising its bargained-for rights under a loan agreement." Glenfed Fin. Corp., Commercial Fin. Div. v. Penick Corp., 2 76 N.J. Super. 163, 175 (App. Div. 1994) (citations omitted), certif. denied, 139 N.J. 442 (1995). The covenant of good faith imposes no obligation upon a creditor to accept a debtor's proposed refinancing or restructuring.
Here, first and most important, there is no evidence Abrams ever approved or offered a loan to defendant. Second, even if Abrams had offered a loan to defendant, the record reveals that the only proposal about which plaintiff was aware was the one set forth in the term sheet. The term sheet suggests that defendant would be able to borrow up to $1.5 million from Abrams, a sum that would have amply covered plaintiff's loan to defendant. Third, there is no evidence plaintiff signed a document stating it consented to being bound by the terms of any loan issued by Abrams. The loan agreements between the parties required that any modification to these agreements had to be in writing and signed by the party which was going to be bound by the modification. Accordingly, there is no evidence plaintiff breached the implied covenant of good faith and fair dealing.
Although the proposed loan outlined in the term sheet would have required that plaintiff's loan be subordinated to Abrams's loan, there was nothing in the term sheet to suggest plaintiff's loan was not going to be immediately paid off.
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We conclude defendant's remaining arguments are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E). We affirm the order granting plaintiff summary judgment on its complaint and dismissing defendant's counterclaim.
Affirmed. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION