Cajoeco LLC v. Bensi Enterprises, LLC
| Decision Date | 17 June 2021 |
| Docket Number | A-4562-18 |
| Parties | CAJOECO LLC, CAJOECO LLC PROFIT SHARING TRUST, CAJOECO LLC PROFIT SHARING PLAN, JEST TEXTILES, INC., JEST TEXTILES, INC. DEFINED BENEFIT PLAN AND TRUST, NORMAN MAIS, individually, as Trustee, Administrator and/or Beneficiary of Cajoeco LLC Profit Sharing Trust and as Trustee, Administrator and/or Beneficiary of Jest Textiles, Inc. Defined Benefit Plan and Trust, CARMEN MAIS, individually and as Trustee, Administrator and/or Beneficiary of Cajoeco LLC Profit Sharing Trust, Plaintiffs-Appellants/ Cross-Respondents, v. BENSI ENTERPRISES, LLC, BENSI OF OLD TAPPAN, LLC, BENSI OF OLD BRIDGE, LLC, BENSI OF HAMILTON, LLC, BENSI RESTAURANT GROUP, INC., BENSI MANAGEMENT ASSOCIATES, LLC, BENSI DEVELOPMENT GROUP LLC, BENSI INC., BENSI OF CLIFTON, LLC, BENSI OF DENVILLE, LLC, BENSI OF ENGLISH VILLAGE, LLC, BENSI OF FLEMINGTON, LLC, BENSI OF GILLETTE, LLC, BENSI OF GLOUCESTER, LLC, BENSI OF HAMPTON, LLC, BENSI OF HASBROUCK HEIGHTS, LLC, BENSI OF HH, LLC, BENSI OF HILLSDALE, INC., BENSI OF MANSFIELD, LLC, BENSI OF NORTH ARLINGTON, INC., CENTANNI RISTORANTE, LLC, BENSI OF PARAMUS PARK, LLC, BENSI OF ROSELAND, LLC, BENSI OF ROXBURY, LLC, BENSI OF WHIPPANY, LLC, SCALOPINI OF WHIPPANY, LLC, BENSI OF WHITEHOUSE STATION, LLC, BENSI OF WYOMISSING, LLC, AJO MANAGEMENT, LLC, TPR RESTAURANT PIZZERIA, INC., JOHN OSSO, individually, as limited liability company member and/or manager, and as shareholder, officer, director, or corporate agent, NANCY OSSO, individually, as limited liability company member and/or manager, and as shareholder, officer, director, or corporate agent, ELSA OSSO, individually, as limited liability company member and/or manager, and as shareholder, officer, director, or corporate agent, JORGE RAMIREZ, individually, as limited liability company member and/or manager, and as shareholder, officer, director, or corporate agent, OSCAR BENITEZ, individually, as limited liability company member and/or manager, and as shareholder, officer, director, or corporate agent, ROBERT DaSILVA, individually, as limited liability company member and/or manager, and as shareholder, officer, director, or corporate agent, JAMES KELLY, individually, as limited liability company member and/or manager, and as shareholder, officer, director, or corporate agent, FRANCESCO BERNARDO, individually, as limited liability company member and/or manager, and as shareholder, officer, director, or corporate agent, DENISE DiMEGLIO, individually, as limited liability company member and/or manager, and as shareholder, officer, director, or corporate agent, Defendants-Respondents, and BENSI OF NORTH BRUNSWICK, LLC, BENSI OF GARWOOD, LLC, RUDY'S OF GARWOOD, LLC, BARBARA BEN-YISHAY, individually, as limited liability company member and/or manager, and as shareholder, officer, director, or corporate agent, MARIO BERNARDO, individually, as limited liability company member and/or manager, and as shareholder, officer, director, or corporate agent, ARI BEN-YISHAY, individually, as limited liability company member and/or manager, and as shareholder, officer, director, or corporate agent, JOSE DARIO FERNANDEZ, individually, as limited liability company member and/or manager, and as shareholder, officer, director, or corporate agent, CLEMENTE OSSO, individually, as limited liability company member and/or manager, and as shareholder, officer, director, or corporate agent, and, RIZZIERO OSSO, individually, as limited liability company member and/or manager, and as shareholder, officer, director, or corporate agent, Defendants-Respondents/ Cross-Appellants. ARI BEN-YISHAY, Plaintiff, v. NORMAN MAIS, Defendant. |
| Court | New Jersey Superior Court — Appellate Division |
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted March 8, 2021
On appeal from the Superior Court of New Jersey, Law Division Bergen County, Docket Nos. L-3477-16 and L-6139-16.
Diktas Gillen, P.C., attorneys for appellants/cross-respondents (Christos J. Diktas, of counsel; Michael L. Kingman and Christine Gillen, on the briefs).
Sills Cummis & Gross, P.C., attorneys for respondents/cross-appellants Rizziero Osso and Mario Bernardo (Joseph B. Fiorenzo and Andrew W. Schwartz, of counsel and on the briefs).
Robert G. Ricco, attorney for respondent/cross-appellant Ari Ben-Yishay.
Frederic C. Goetz, attorney for respondent/cross-appellant Clemente Osso.
Before Judges Rothstadt and Mayer.
Plaintiffs appeal from the March 21, 2019 dismissal of their complaint on summary judgment. Four defendants cross-appeal from the motion judge's May 10, 2019 denial of their motion for fees and sanctions.[1] The parties dispute arose from plaintiffs' unsuccessful investments in a restaurant franchise. Plaintiffs' complaint asserted numerous claims, including fraud, misrepresentation, breach of contract, conversion, unjust enrichment, negligence conspiracy, and tortious interference with contractual relations. The motion judge, Robert G. Wilson, issued the orders under appeal, setting forth his reasons for the dismissal of the complaint in a thorough and comprehensive forty-seven-page opinion on March 21, 2019, and for the denial of the motion for fees and sanctions in a written decision dated May 10, 2019.
On appeal, plaintiffs assert that "credibility issues" and "available inferences" should have resulted in the denial of summary judgment. The cross appealing defendants assert that frivolous litigation sanctions should have been awarded because there was no merit to any of plaintiffs' claims.
We have considered the parties' contentions in light of the record and the applicable principles of law. We affirm the orders under appeal substantially for the reasons stated by Judge Wilson in his written decisions.
We summarize the facts from the record leading to plaintiffs' failed investments and their ensuing claims viewed in the light most favorable to plaintiffs as the parties who opposed the entry of summary judgment. Ben Elazar v. Macrietta Cleaners, Inc., 230 N.J. 123, 135 (2017).
In an earlier unpublished opinion relating to the same failed investments, we described plaintiffs as follows:
Plaintiffs, Norman and Carmen Mais, are spouses, former owners of plaintiff Jest Textiles, Inc. (Jest), the current owners of plaintiff Cajoeco, LLC (Cajoeco), and the administrators and beneficiaries of the two companies' retirement and profit sharing plans, plaintiffs Defined Benefit Plan and Trust (Jest Plan), Cajoeco LLC Profit Sharing Plan (Cajoeco Plan), and Cajoeco LLC Profit Sharing Trust (Cajoeco Trust).
[Cajoeco LLC v. Benefit Plans Admin. Servs., No A-4364-16 (App. Div. April 25, 2019) (slip op. at 1-2).]
Norman was solely responsible for directing the investments and loans at issue in this litigation and he used, in part, funds taken from his companies' plans. He had no experience in owning or operating restaurants.
The investments at issue arose from Norman's relationship with his friend John.[2] The two became friends through Norman's frequenting of a restaurant that John owned and operated with others between 1983 and 2004.
In 2004, John sought to expand his businesses by forming defendant Bensi Enterprises, LLC (Bensi Enterprises) and soliciting investors through a Private Placement Memorandum (PPM). Bensi Enterprises sought to raise $4.5 million by offering for sale 30, 000 units of Class B membership interests at $150 per unit seeking to raise a total of $4.5 million.[3] About $3 million was ultimately raised through sale of the Class B units. The PPM contained explicit warnings about the risk of investing in Bensi Enterprises, including the loss of all investment funds. The PPM recommended investors perform their own investigations and evaluations of the investment, including consulting with legal, financial, and accounting advisors. At all times, as the majority holding Class A member and Managing Member of Bensi Enterprises, John controlled the business.
Because he trusted John, in August 2004, without reading the PPM or Bensi Enterprise's operating agreement, Norman made an initial investment of $210, 000 into Bensi Enterprises, purchasing 1, 400 Class B units. Later, Bensi Enterprises offered new Class AA units at $115 per unit to Class B members on a pro rata basis, seeking to raise an additional $3, 450, 000. On March 9, 2007, Norman purchased 1, 500 Class AA units, investing an additional $172, 500 in Bensi Enterprises.
Norman invested without seeking any independent legal or financial advice, understanding there was a "high degree of risk of loss." Moreover, he understood that John would be in charge and make the ultimate decisions for the business. Also, Norman did not rely upon any representations made by anyone else, including any of the other individual defendants. He relied only on his conversations with John.
After the 2004 investment, Bensi Enterprises opened new Bensi restaurants in multiple locations.[4] John managed each of the restaurants through his company, defendant Bensi Restaurant Group, Inc. (BRG). John was BRG's sole shareholder and President. In exchange for these services, each restaurant was required to pay BRG a management fee.
In 2007, John decided to open larger Bensi restaurants in "lifestyle shopping centers." The investment model for these restaurants was different than that used for those owned by Bensi Enterprises. Each of these restaurants was to be a separate entity, owned directly by investors, with John being the majority owner and manager of each entity. Bensi Enterprises had no ownership interest in these second-generation Bensi restaurants.[5]
Norman made initial investments totaling approximately $1, 632, 500 in these new Bensi restaurants, again relying solely on his conversations with John and without reviewing any...
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