Ascentium Capital LLC v. A&A Mgmt. Sys. Ltd. Liab. Co., DOCKET NO. A-3813-17T4
| Decision Date | 28 October 2019 |
| Docket Number | DOCKET NO. A-3813-17T4 |
| Parties | ASCENTIUM CAPITAL LLC, Plaintiff-Respondent, v. A&A MANAGEMENT SYSTEMS LIMITED LIABILITY COMPANY, and ALI R. MAZANDARANI, Defendants/Third-Party Plaintiffs-Appellants, and HELIOS ENERGY GROUP LLC, and JARED KUNISH, Third-Party Defendants. |
| Court | New Jersey Superior Court — Appellate Division |
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
Before Judges Rothstadt and Gilson.
On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-1419-16.
Vafa Sarmasti argued the cause for appellants (Sarmasti PLLC, attorneys; Vafa Sarmasti, on the briefs).
Robert L. Hornby argued the cause for respondent (Chiesa Shahinian & Giantomasi PC, attorneys; Robert L. Hornby and Ryan Patrick O'Connor, on the brief).
The opinion of the court was delivered by
ROTHSTADT, J.A.D.
Defendants A&A Management Systems (AMS) and its principal, Ali R. Mazandarani, appeal from the Law Division's January 23, 2018 order granting plaintiff Ascentium Capital LLC summary judgment and from a March 16, 2018 order denying reconsideration. The parties' dispute arose from agreements under which plaintiff financed AMS's purchase of a co-generation system from third-party defendant, Helios Energy Group, LLC (Helios), through its salesperson, third-party defendant, Jared Kunish. Helios delivered the equipment for the system but never had it installed.1
In moving for summary judgment, plaintiff relied on a "hell or high water" clause contained in paragraph four of each of the parties' financingagreements. It stated in bold and conspicuous lettering:
In opposition, defendants asserted that that clause did not bar their claims because Kunish and Helios acted as plaintiff's agent and they fraudulently failed to install the equipment. Moreover, defendants averred that despite that provision, they should have been relieved of any obligation to pay plaintiff because plaintiff imperfectly executed its internal policies to safeguard against vendor fraud.
In awarding summary judgment to plaintiff, the motion judge rejected defendants' contentions and enforced the "hell or high water" clause, entered judgment in plaintiff's favor, and awarded attorneys' fees. On appeal, defendants contend that the motion judge did not correctly apply the summary judgment standard, failed to recognize that plaintiff breached its "duty to protect [its] borrowers from vendor fraud," improperly dismissed their counterclaim for damages under the New Jersey Consumer Fraud Act (CFA),N.J.S.A. 56:8-1 to -211, and awarded damages and attorneys' fees that were excessive.
Having considered defendants' arguments in light of the record and the applicable law, we affirm the two orders under appeal as we conclude defendants' contentions are without merit, except as to the motion judge's award of attorneys' fees that we now vacate and remand for reconsideration.
The pertinent facts and the parties' factual contentions taken from the motion record, are viewed in a light most favorable to defendant, W.J.A. v. D.A., 210 N.J. 229, 237 (2012), and are summarized as follows. Plaintiff was in the nationwide business of financing companies' purchases or leasing of equipment. As part of the total amount that plaintiff provided to its customers, plaintiff financed up to forty percent for soft costs, such as installation and consulting fees. Helios was in the business of selling energy systems and related equipment to its customers so they could generate their own energy and not be dependent upon public utilities.
A few months before Kunish sold a co-generation system to AMS, Helios established a relationship with plaintiff. Under plaintiff's internal ranking system, it approved Helios as a "Tier 3" vendor. As a "Tier 3" vendor,in any transaction involving a Helios customer, plaintiff would not release funds to Helios until the equipment was on site and the customer notified plaintiff that the funding could be released. According to John Scott Linton, plaintiff's Vice President of Sales, although it was not unusual for some vendors to act as if plaintiff was the vendor's financing arm, plaintiff had no control over those representations being made.
Kunish first approached Mazandarani in 2014 and proposed that Helios install a solar co-generation system for AMS. Kunish represented that AMS could lease the system for a period of five years through Helios's in-house leasing company, and that once the lease payments concluded, AMS would only be responsible for monthly energy costs. Kunish also told AMS that lease payments would not begin until the system was installed and operational.
Mazandarani agreed to Kunish's proposal and completed Helios's "Commercial Credit Application" on behalf of AMS, as well as plaintiff's "Commercial Credit Application." One week later, Mazandarani learned that Helios and plaintiff had approved AMS's applications.
On October 1, 2014, "Kunish and [plaintiff] presented AMS with" documents on plaintiff's letterhead for AMS's signature, which plaintiff required relative to AMS's leasing of the equipment being supplied by Helios.These documents consisted of an "Authorization to Perform Verbal Verification," an "Equipment Finance Agreement No. 2141980" (Agreement #1), an "Authorization for Pre-Authorized Payments," and a "Delivery and Acceptance Certificate." Mazandarani signed Agreement #1, the "Authorization for Pre-Authorized Payments," and the "Delivery and Acceptance Certificate," and he executed a personal guaranty of Agreement #1. The next day, AMS paid an initial payment of $2130.86 to plaintiff. Plaintiff later secured repayment by filing a UCC-1 financing statement, establishing a lien on the leased equipment.
According to Mazandarani, when he signed Agreement #1 there was no "Schedule A" attached to it describing the equipment, despite the reference to the schedule in the upper-right corner of the agreement. "Schedule A" was to be a copy of Helios's invoice, breaking down the prices for the equipment, LED lighting, a ten-year maintenance contract, labor for installation, and a fee for project management and consulting, which totaled $46,169.00. According to Linton, plaintiff typically did not provide customers with the vendor's invoice from the "Schedule A" information, as it was up to the vendor to provide that information to its customer. Before signing the agreement, Mazandarani did not ask plaintiff or Kunish for the "Schedule A" information.
On October 3, 2014, plaintiff's representative called Mazandarani to verify that the system had been "delivered and installed." During the conversation, plaintiff's representative asked if AMS had "received everything yet." Mazandarani answered "[y]eah," and authorized plaintiff to "release payment to the vendor and start [AMS's] agreement." Plaintiff then "paid the entire amount" owed by AMS to Helios and commenced its electronic withdrawal of monthly lease payments from AMS's account, as previously authorized by Mazandarani. However, unbeknownst to plaintiff, although AMS received all of the equipment from Helios, the system had not been installed.
In March 2015, Kunish informed Mazandarani that the cost of the project and equipment went over budget and that additional funds had to be secured, which would increase AMS's lease payments. Plaintiff provided the additional funds pursuant to a new set of agreements that Mazandarani signed. The second set of documents included plaintiff's form "Equipment Finance Agreement No. 2152350" (Agreement #2) that also referenced a "Schedule A," which Mazandarani claimed was not attached at the time of signing. They also included plaintiff's "Authorization for Pre-Authorized Payments" form and"Delivery and Acceptance Certificate." In addition, Mazandarani signed a personal guaranty of Agreement #2.
The "Schedule A," which was intended to accompany Agreement #2 listed miscellaneous equipment, including a generator, two heat exchangers, a UPS battery, backup systems, and installation costs, totaling $8400.00. In connection with Agreement #2, AMS paid an initial payment of $567.20. Plaintiff filed another UCC-1 financing statement concerning the equipment listed in Agreement #2. However, Mazandarani claims AMS never received the equipment listed.
On March 26, 2015, plaintiff's representative called Mazandarani to verify that the equipment subject to Agreement #2 had been "delivered and installed," and to obtain his authorization for the release of funding to Helios. On that call, Mazandarani confirmed that he had "received everything from the vendor" and that "everything . . . is completed." Plaintiff's representative then asked Mazandarani if he knew "the completion date," to which Mazandarani responded, "in a few days, hopefully." The representative evidently misheard him and asked, "[y]ou said a few days ago?" Mazandarani responded affirmatively. Based on that authorization, plaintiff commenced withdrawals from the AMS account, as provided for in the signed documents.
In October 2015, although Helios had still not completed installation of the co-generation system, Mazandarani realized that plaintiff had been withdrawing lease payments from an AMS bank account that he claimed was not monitored regularly. AMS stopped the withdrawals and "demanded the return of the money" taken based on its understanding that the lease payments were not to begin until the system was operational.
After Mazandarani stopped plaintiff's automatic withdrawals, AMS ceased making payments and plaintif...
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