ASSOCIATED BUSINESS TEL. SYS. v. Greater Capital

• Decision Date: 06 February 1990
• Docket Number: Civ. A. No. 87-2697.
• Citation: 729 F. Supp. 1488
• Parties: ASSOCIATED BUSINESS TELEPHONE SYSTEMS CORPORATION, Plaintiff, Counter-claim Defendant, v. GREATER CAPITAL CORPORATION, Mark Cohn and Steve Cohn, Defendants, Counter-claim Plaintiffs, v. Dominic DALIA, Counter-claim Defendant.
• Court: U.S. District Court — District of New Jersey

729 F. Supp. 1488

ASSOCIATED BUSINESS TELEPHONE SYSTEMS CORPORATION, Plaintiff, Counter-claim Defendant, v. GREATER CAPITAL CORPORATION, Mark Cohn and Steve Cohn, Defendants, Counter-claim Plaintiffs, v. Dominic DALIA, Counter-claim Defendant.

Civ. A. No. 87-2697.

United States District Court, D. New Jersey.

February 6, 1990.

COPYRIGHT MATERIAL OMITTED

Wolff & Samson, P.C. by Thomas R. O'Brien, Robert E. Nies, Roseland, N.J., for plaintiff.

Mesirov, Gelman, Jaffe, Cramer & Jamieson by David L. Creskoff, Edward G. Rendell, Jerry M. Gewertz, Cherry Hill, N.J., and Szaferman, Lakind, Blumstein, Walter & Blader by Jeffrey P. Blumstein, Lawrenceville, N.J., for defendants.

OPINION

COHEN, Senior District Judge:

BACKGROUND

Following a three week jury trial, in this tort of conversion and breach of contract action, the following verdicts were returned:

$1,370,386.85 for compensatory damages in favor of the plaintiff, Associated Business Telephone Systems Corporation ("Associated or ABTS") against the defendant, Greater Capital Corporation ("Greater Capital"); $200,000 for punitive damages against each of the defendants, Mark Cohn and Steven Cohn ("Cohns"), totalling $400,000; and, further, "No Cause for Action" on the defendants' counterclaim against plaintiff and the counterclaim-defendant, Dominic Dalia.

Presently before the court is a motion by the defendants for Judgment Notwithstanding the Verdict ("J.N.O.V."), or, in the alternative, a New Trial, or, in the alternative, an Order of Remittitur.

The plaintiff, Associated, is a New Jersey Corporation engaged in the selling, installing and maintenance of telephone systems and related telecommunication services on the premises of various hotels¹ throughout the United States.

The defendant-counterclaimant, Greater Capital, is a California corporation, with its principal place of business in California. The officers of Greater Capital are the Cohn family, Steven Cohn, Mark Cohn, Ethel Cohn², and Alexis Llewellyn, as well as Terri Jones and David Pierson.

Greater Capital is the owner and operator of the Sheraton O'Hare Hotel ("Hotel") located near the O'Hare International Airport (Mannheim Road) in Chicago, Illinois, which is a franchisee of the Sheraton Hotel chain.

Defendants-counterclaimants, Mark Cohn and Steven Cohn reside in California. They each own a part of the Hotel individually.³ They also are vice-presidents of Greater Capital, and Ethel Cohn is its president. The defendant-counterclaimant, Dominic Dalia, is the president of the plaintiff corporation, Associated. He resides in Berlin, New Jersey and maintains his principal place of business there, as well as an office in Chicago, Illinois.

As to counsel for the parties, the plaintiff, Associated, and the defendant-counterclaimant, Dalia, are represented by Thomas O'Brien, Esquire and Robert E. Nies, Esquire, associates of the former law firm of Kimmelman,⁴ Wolf and Samson, now Wolf and Samson. The defendants were represented initially by David Creskoff, Esquire, Edward Rendell, Esquire, and Jerry M. Gewertz, Esquire, associates of the law firm of Mesirov, Gelman, Jaffe, Cramer and Jamieson, Esquires, and presently by Jeffrey P. Blumstein, Esquire, a partner in the firm of Szaferman, Lakind, Blumstein, Walter and Blader, Esquires.⁵

On January 21, 1986, plaintiff entered into a written contract ("Agreement") with Greater Capital, pursuant to which, in June of 1986, plaintiff installed a telephone system at the Sheraton Hotel which supplied local and long distance telephone service to hotel guests and management. The system was installed by employees from plaintiff's New Jersey office.

In accordance with the terms of the contract, Greater Capital was obligated to deposit the monthly revenues, generated by use of the telephone system, with a designated commercial checking account in a federally insured bank. A portion of these revenues would subsequently be repaid to Greater Capital, with the remainder to be retained by plaintiff to pay, among other things, the Hotel's local and long distance telephone bills.

The contract between the parties was to have remained in force for a period of ten years. Agreement ¶ 2(B). It granted plaintiff the exclusive right to act as general contractor and facility manager for the telephone system, Agreement ¶ 4, and provided plaintiff with access to the system twenty four hours a day for the purposes of maintenance. The equipment remained the property of plaintiff, although Greater Capital had the option to buy it after ten years for the sum of One Dollar, Agreement ¶ 5. Plaintiff retained the right to remove the system from the Hotel upon default of any terms of the Agreement, ¶ 2. The Agreement expressly provided that it was governed by Illinois law, Agreement, ¶ 20.

Both the Hotel and the plaintiff were able to keep track of phone usage by way of a monitor programmed and installed by plaintiff which apparently printed out a record of each phone call and its cost to the Hotel. The monitor remitted this information to plaintiff's New Jersey office.

Subsequently, disputes arose as to billing; the Hotel believed that plaintiff was overcharging guests for their calls. Following meetings in Chicago regarding these disputes, plaintiff apparently installed some new equipment and trained the Hotel's employees on how to use it. The training was performed by employees from plaintiff's New Jersey office. On April 10, 1987, after another meeting in Chicago, plaintiff and Greater shook hands and entered into an accord and satisfaction agreement in which they reconciled their differences. They agreed that Greater Capital would pay to plaintiff in installments, approximately $135,000, which sum represented the money owed to plaintiff for the months of October, 1986 through March, 1987. Their agreement further provided that charges due to plaintiff for the month of April, 1987 were to be paid by May 15, 1987.

The record indicates that both Mark and Steven Cohn, played an important role in the aforementioned meetings and in various other respects participated in attempts to resolve the billing problems.

Although the bulk of the $135,000 payment due under the April 10th Agreement apparently was paid to plaintiff, billing disputes arose once again as to the amount due plaintiff for the period subsequent to the agreement. The parties were unable to reconcile these differences and on July 13, 1987, plaintiff filed its complaint in the instant case. Plaintiff alleges that Greater Capital is in breach of the contract by, inter alia, disconnecting or otherwise wrongfully interfering with the remote monitor mechanism through which plaintiff, in New Jersey, monitored the use of the telephone system. Plaintiff further alleges that Greater Capital has failed to remit the monthly revenue generated by the system as required; further, plaintiff claims that it has received no payments from the Hotel since April of 1987. Plaintiff also charges both Greater Capital and the individual defendants with conversion of plaintiff's property by failing to remit payments due and for their conversion of the plaintiff's telephone system.

In response to the plaintiff's claims, the defendants contend that on July 7, 1987, plaintiff without notice caused the long distance telephone service at the Sheraton to be terminated, making it impossible for the hotel and its guests to directly dial long distance telephone calls, and that it took nearly a week to completely restore telephone service. Defendants further maintain that the monitor was still registering the information it ordinarily did, but was not sending the data to plaintiff because the modem⁶ would be used by Associated to further disrupt hotel telephone service.

Defendants further assert that payments have not been remitted to plaintiff, as requested, because they have not received monthly bills itemizing the use of the telephone system, and also because after plaintiff allegedly terminated long distance service defendants "were forced to make their own arrangements with local and long distance carriers whose charges (which previously had been paid by plaintiff) are being paid by Sheraton."

In November, 1987, Associated sought partial summary judgment to enforce paragraph 6(b)⁷ of the Agreement as a matter of law. On December 8, 1987, this court granted plaintiff partial summary judgment and ordered defendant to "make payments of the gross telephone operating revenue and other charges under the Agreement to a federally insured bank for further distribution therefrom pursuant to the terms of the Agreement," which they failed to do. Associated Business Telephone Systems Corp. v. Greater Capital Hotel Corp., No. 87-2697, slip op. at 9 (D.N.J. Dec. 8, 1987). The opinion and order very clearly specified that, pending a final resolution of the factual issues as to which party was in breach of contract, Greater Capital must fully perform its obligation under the undisputed terms of the agreement. Id. at p. 8.

Subsequently, in a second order dated March 2, 1988, we amended the order to specifically direct the defendants to deposit $338,269.17 into the New Jersey National Bank. Again, in April 22, 1988, we found defendants breached the agreement, and we ordered defendants to allow plaintiff to remove its telephone system from defendants' hotel facility. Defendants appealed both the March 2, 1988 and April 22, 1988 opinions and orders to the Third Circuit Court of Appeals. The Third Circuit dismissed the appeal from the March 2, 1988 opinion and order on the ground that it was not a final appealable order, pursuant to Fed.R.Civ.P. 54(b), and affirmed our decision concerning the April 22, 1988 opinion and order. 861 F.2d 793 (3d Cir.1988) (Gibbons, C.J.).

Ever since the complaint was filed, in this never ending saga of litigation, numerous motions have been submitted by counsel, during the pre-trial period and during and after the three week...