PER CURIAM.
Defendants Cinemacar II, Inc. (Cinemacar) and Guy J. Carnazza (Carnazza) appeal from an order entered by the Law Division on June 24, 2014, granting summary judgment in favor of plaintiff Valley National Bank (the Bank). We affirm in part, reverse in part, and remand for further proceedings.
This appeal arises from the following facts. Cinemacar is a New Jersey corporation with a principal place of business in Westwood. Cinemacar is licensed by the State of New Jersey as a dealer in the sales of new and used motor vehicles. Carnazza is the President of Cinemacar.
On November 3, 1994, Cinemacar and the Bank entered into an "Agreement for Purchase of Retail Installment Sales Agreements," dated October 3, 1994 (the Agreement), which provides that the Bank would purchase from Cinemacar certain retail installment sales contracts (RISC) arising out of Cinemacar's sales of motor vehicles to its customers. In the Agreement, Cinemacar is referred to as the "Dealer." According to the Agreement, the Bank's purchases of the contracts are made "in reliance upon information and documentation" submitted by Cinemacar and its customers.
In the Agreement, Cinemacar represents and warrants that, as of the date any contract is sold to the Bank: all of the warranties of the assignor are true and correct, whether or not executed by Cinemacar; the customer's obligations in the RISC are valid, binding, and enforceable against the customer and any guarantor; the description of the vehicle and the sales transactions are true and complete in all respects; Cinemacar has not orally or in writing misstated to the Bank any facts about the sale or the amount of any dealer invoice; and all aspects of the transactions comply with applicable law.
The Agreement further provides that when the Bank purchases a RISC, "the Dealer agrees to repurchase from the Bank, within 10 days following demand by the Bank, any [RISC] with respect to which the Dealer breached any representation, warranty or covenant contained in this Agreement or the [RISC]." The repurchase price is the unpaid principal balance on the RISC, with accrued and unpaid interest, plus any costs that the Bank incurs in connection with the [Agreement] or "the enforcement thereof."
Each RISC identifies the buyer and seller of the vehicle, includes a description of the vehicle, and sets forth the amount financed. In the RISC, the purchaser grants a security interest in the vehicle to the seller. Each RISC also includes a section entitled "Assignment and Assignor's Warranties," which provides in pertinent part:
In 2012, the Bank asserted that from sometime in September 2011 and continuing through 2012, Cinemacar violated the Agreement by assigning to the Bank certain RISCs which financed purchases of vehicles by persons who were not Cinemacar's customers. The Bank claimed that there were fourteen such RISCs. The Bank stated that the obligors under these RISCs had defaulted in their payments. The Bank demanded that Cinemacar repurchase the RISCs; however, Cinemacar refused to do so.
On April 8, 2013, the Bank filed a complaint in the Law Division against Cinemacar and Carnazza. The Bank also named as defendants other entities and persons who were allegedly involved in the sale of the vehicles: Auto Palace, Inc. and its Chief Executive Officer (CEO) Fereshteh Kohanano; Auto Gallery Imports, Inc. and its CEO Salch Harounian; DZ Motors, LLC, and its managing member, Dmitry Zholobov; Route 1 Luxury Autos; and Wills Wheels NY. In the complaint, the Bank asserted claims of breach of contract, conversion, and fraud against all defendants. The Bank also claimed that Carnazza, Kohanano, Harounian, and Zholobov were personally liable for their own torts, even though they may have been acting on behalf of the respective corporate entities.
On August 1, 2013, Cinemacar and Carnazza filed an answer, separate defenses, a counterclaim, and cross-claims against the other defendants. In its counterclaim, Cinemacar alleged that the Bank had wrongfully cancelled the Agreement to Cinemacar's detriment. Auto Gallery Imports and Route 1 Luxury Autos also filed answers to the complaint.
On April 10, 2014, the Bank filed a motion for summary judgment on the claims against Cinemacar and Carnazza, Route 1 Luxury Autos, and DZ Motors. In support of the motion, the Bank submitted certifications from Thomas Sparkes, Mark Kochan, and Thomas G. Russomano.
According to his certification, Sparkes is the First Senior Vice President of the Bank. Sparkes said Cinemacar violated the provisions of the Agreement by refusing to repurchase the RISCs from fourteen named purchasers. Sparkes stated that Cinemacar failed to disclose the true identities of the selling dealers, and the places where the underlying sales were made. Sparkes also said Cinemacar had breached the Agreement by violating certain regulations which prohibit a used car dealer from engaging in sales activities at a location other than its established place of business.
In his certification, Kochan, the Bank's Vice President, discussed the fourteen RISCs that Cinemacar was required to repurchase pursuant to the Agreement. Kochan stated that the Bank had contacted these purchasers, and they informed the Bank that they did not purchase their vehicles from Cinemacar. Kochan said the purchasers identified the dealers who sold them the cars, and some reported that information on their credit applications was not true.
Kochan added that two purchasers stated that they were not the true owners of the vehicles, and another purchaser indicated that she was told to state she purchased the car from Cinemacar even though she purchased it from another dealer. Various documents relating to the sales of the vehicles, including the relevant RISCs, certificates of ownership, and statements signed by the purchasers, were appended to Kochan's certification.
Russomano, the Bank's attorney, submitted a certification which detailed the allegations in the complaint. Russomano noted that discovery requests had been served upon Cinemacar and Carnazza, as well as upon Route 1 Luxury Autos. These defendants did not respond to the discovery requests before the discovery end date. Russomano also noted that because DZ Motors had filed its answer after the discovery end date, the Bank did not conduct any discovery as to that defendant.
Cinemacar and Carnazza opposed the motion, and filed a cross-motion for summary judgment. Carnazza submitted a certification dated May 24, 2014, in which he denied the Bank's allegations. He stated that Cinemacar had never fabricated, altered or misstated any information in the credit applications, which had been submitted to and approved by the Bank.
Carnazza also stated that it is "not uncommon in the new and used car industry for a dealer to attempt to obtain a vehicle for its customers from another dealer's inventory, or at auction." Carnazza said that "[w]here the vehicle came from is not the cause of the default." He stated that the default "occurred for no reason other than the fact that the customer[s] [were] unable to make the required payments."
Kochan submitted a supplemental certification dated May 30, 2014. He again stated that Cinemacar had breached the Agreement and the warranties in the RISCs. Kochan said Cinemacar's response to the Bank's motion and its cross-motion were without merit. He stated that, in order to prevail on its claim, the Bank only had to establish that it had determined Cinemacar breached a warranty in the RISC, demanded that Cinemacar repurchase the RISC, and Cinemacar had refused to repurchase the RISC.
Carnazza filed a supplemental certification dated June 10, 2014. He disputed the Bank's assertions regarding the specific sales reflected in the RISCs at issue. He stated that the RISCs and the related bills of sale identified Cinemacar as the seller of the vehicles. He attached copies of the bills of sale to his certification. He also provided copies of certificates of ownership issued by the New Jersey Motor Vehicle Commission which indicated that Cinemacar was the seller of the vehicles.
It appears that Route 1 Luxury Autos and DZ Motors did not oppose the Bank's motion. It also appears that the amount due on one of the fourteen RISCs at issue was paid in full. Therefore, the Bank sought relief regarding thirteen RISCs.
On June 20, 2014, the motion judge heard oral argument on the motions, and on June 24, 2014, placed an oral decision on the record. The judge found that the Bank was entitled to summary judgment. The judge stated that the evidence established that Cinemacar had breached certain warranties and was obligated to repurchase thirteen RISCs. The judge found that Cinemacar and Carnazza were liable to the Bank in the amount of $278,093.23; however, the judge provided no reasons for imposing individual liability upon Carnazza.
In addition, the judge determined that Route 1 Luxury Autos was liable in the amount of $36,295.17, which was the amount due on the RISC for the sale of one vehicle. The judge indicated that any monies that the Bank collected from Route 1 Luxury Autos would be credited to the amount due from Cinemacar and Carnazza.
The judge also determined that under the Agreement, the Bank was entitled to an award of attorney's fees. The Bank was directed to submit a certification of services from its attorney, with notice to the other parties. The judge indicated he would review the certification and award attorney's fees. The judge memorialized his decision in an order dated June 24, 2014.
On July 30, 2014, the court entered a judgment against Cinemacar and Carnazza in the amount of $288,953.23, which represents damages of $253,093.23, and attorney's fees in the amount of $35,860. Judgment also was entered against Route 1 Luxury Autos in the amount of $36,295.17. Cinemacar and Carnazza thereafter filed a notice of appeal. Route 1 Luxury Autos has not appealed.
On appeal, Cinemacar and Carnazza argue that: (1) there are material issues of fact which precluded the grant of summary judgment; (2) the certifications filed by the Bank in support of its motion did not support the grant of summary judgment; and (3) the motion judge failed to make adequate findings of fact and conclusions of law to support his decision.
Initially, we note there is a question as to whether the appeal is properly before us.
Here, the trial court's judgment of July 30, 2014, resolved the Bank's claims against Cinemacar, Carnazza, and Route 1 Luxury Autos, and essentially resolved Cinemacar's counterclaim against the Bank. We have been provided with copies of stipulations of dismissal that were filed in the trial court dismissing with prejudice the Bank's claims against Auto Gallery Imports, Harounian, DZ Motors, and Zholobov. There is, however, nothing in the record indicating that the Bank's claims against Auto Palace and Kohanano have been resolved.
Furthermore, there is no indication in the record that Cinemacar and Carmazza's cross-claims have been resolved. In response to our inquiry, counsel for Cinemacar and Carnazza asserted that none of the other defendants filed an answer to the cross-claims. There is, however, nothing in the record indicating that Cinemacar and Carnaza ever sought the entry of default against any co-defendant, or that the cross-claims were dismissed pursuant to
Thus, the record indicates that the trial court's order of July 30, 2014 may not be a final judgment that is appealable as of right pursuant to
We turn to Cinemacar and Carnazza's contention that the judge erred by granting the Bank's motion for summary judgment. Cinemacar and Carnazza contend that summary judgment should not have been granted since there were genuine issues of material fact as to whether Cinemacar breached any warranties in the Agreement or RISCs.
When reviewing an order granting or denying summary judgment, we apply the same standard that the trial court applies when ruling on the motion.
We are convinced that the trial court correctly found that there were no genuine issues of material fact as to Cinemacar's liability under the Agreement. As noted previously, the Agreement provides that Cinemacar will "repurchase from the Bank, within 10 days following demand by the Bank, any [RISC] with respect to which the Dealer breached any representation, warranty or covenant contained in this Agreement or the [RISC]." The RISCs set forth the applicable warranties, and state that the Bank may in its "sole discretion" determine whether the Dealer has breached any warranty, in which case the Bank may demand that Cinemacar repurchase the RISC.
Here, the Bank's certifications established that it had conducted an investigation and determined that Cinemacar had breached certain warranties in thirteen of the RISCs. According to Kochan's certification, the Bank had determined that those RISCs related to the sales of vehicles by dealers other than Cinemacar. It is undisputed that the Bank demanded that Cinemacar repurchase those RISCs and Cinemacar refused to do so. Because the Bank established the material facts pertaining to Cinemacar's liability, and the Bank showed that it was entitled to judgment as a matter of law, the motion judge correctly determined that the Bank was entitled to summary judgment on its claims against Cinemacar.
Cinemacar argues, however, that the Bank's certifications did not provide a sufficient factual basis for the grant of summary judgment. Cinemacar maintains that the Bank failed to present competent evidence that the thirteen customers purchased the vehicles from dealers other than Cinemacar. We note that the Bank did not provide the trial court with affidavits or certifications from these customers, but Kochan included in his certification statements from these individuals. We are convinced, however, that in order to prevail on its claims against Cinemacar, the Bank was only required to show that it had determined in its "sole discretion" that Cinemacar had breached a warranty in the Agreement or RISCs. The Bank established that it had, in fact, made those determinations regarding thirteen RISCs. The Bank was not required to prove the underlying facts regarding its determinations. Thus, the purchasers' statements in Kochan's certification were not essential to establishing Cinemacar's liability under the Agreement.
Cinemacar also argues that there were genuine issues of material fact as to whether the Bank breached the covenant of good faith and fair dealing, which was an implied term of the Agreement. Cinemacar maintains that Carnazza's supplemental certification raised a genuine issue of fact as to whether Cinemacar had title to the vehicles on the dates the RISCs were assigned to the Bank. As Carnazza noted in his supplemental certification, the RISCs and bills of sale identify Cinemacar as the seller of the thirteen vehicles at issue.
"[E]very contract in New Jersey contains an implied covenant of good faith and fair dealing."
Because Cinemacar claimed that the Bank breached the implied covenant, it was Cinemacar's burden to show that the Bank acted in bad faith when it demanded that Cinemacar repurchase the RISCs. The evidence that Cinemacar presented to the trial court did not raise a genuine issue of material fact as to whether the Bank acted in bad faith when it determined that Cinemacar breached warranties in the Agreement and RISCs.
Here, the Bank established that it acted in good faith when it demanded that Cinemacar repurchase the thirteen RISCs. The Bank showed it made its determinations regarding the RISCs following an investigation, which revealed that the RISCs pertained to sales of vehicles by dealers other than Cinemacar. Cinemacar presented no evidence from which it could be reasonably inferred that the Bank acted in bad faith when it decided that Cinemacar breached warranties in the Agreement and RISCs.
Furthermore, Carnazza's supplemental certification did not specifically refute the factual basis upon which the Bank acted, which was that the purchasers of the vehicles bought their cars from dealers other than Cinemacar. The fact that the RISCs and bills of sale identified Cinemacar as the seller of the vehicles did not directly address the Bank's claim that Cinemacar was the seller of the vehicles, even though the RISCs and bills of sale may have stated otherwise.
We therefore conclude that the trial court did not err by granting summary judgment in favor of the Bank on the claims against Cinemacar. However, we reach a different conclusion with regard to the claims against Carnazza. As we have explained, the Bank asserted that Carnazza was personally responsible for the monies that Cinemacar owed the Bank. According to the complaint, Carnazza was liable for his own "torts" even though he "may have been acting on behalf of" Cinemacar.
In
In this matter, the motion judge did not make any findings of fact or conclusions of law explaining the basis, if any, for imposing personal liability upon Carnazza. The judge did not identify the tort in question, or the evidence that established Carnazza's liability. We note that, other than indicating that Carnazza was Cinemacar's President, the Bank's certifications did not set forth the factual basis for imposing personal liability upon Carnazza. Accordingly, we reverse the judgment against Carnazza and remand the matter to the trial court for further proceedings on the Bank's claim against him.
Affirmed in part, reversed in part, and remanded to the trial court for further proceedings in accordance with this opinion. We do not retain jurisdiction.
