Lombardi v. Electromet Co., 85-416

• Decision Date: 14 April 1988
• Docket Number: No. 85-416,85-416
• Citation: 540 A.2d 16
• Court: Rhode Island Supreme Court
• Parties: Ralph LOMBARDI et al. v. The ELECTROMET CO. et al. Appeal.

Page 16

540 A.2d 16

Ralph LOMBARDI et al. v. The ELECTROMET CO. et al.

No. 85-416 Appeal.

Supreme Court of Rhode Island.

April 14, 1988.

Z. Herschel Smith, DiSandro-Smith & Associates, P.C. Inc., Providence, for plaintiffs.

Milton Stanzler, Jonathan Stanzler, Abedon, Michaelson, Stanzler & Biener, Providence, for defendants.

OPINION

SHEA, Justice.

In this case the plaintiffs, Ralph Lombardi (Lombardi) and Marvin Antelman (Antelman), had brought suit against Electromet Company (Electromet) and Ezra Rosenbaum and Wayne Rosenbaum, principals of Electromet, individually, alleging breach of agreement and breach of fiduciary duty. The matter is before this court on the plaintiffs' appeal from a judgment entered for the defendants after the trial court granted the defendants' motion to dismiss under Rule 41(b)(2) of the Superior Court Rules of Civil Procedure. We affirm the judgment of the Superior Court.

The plaintiffs Lombardi and Antelman are principals of Tilaco Chemicals, Ltd. (Tilaco), a corporation doing business in Rhode Island. They alleged that in July 1981 Tilaco and Electromet entered into an agreement that required Tilaco to advance to Electromet the sum of $55,000 for the purpose of enabling Electromet to purchase gold ore and gold scrap. Electromet was required to process the gold ore and gold scrap and supply Tilaco with the refined gold. Under the terms of the agreement Electromet granted Tilaco a security interest in the gold ore and gold scrap to be purchased by Electromet.

The plaintiffs further allege that they directed Industrial National Bank of Rhode Island ¹ to lend the money for the agreement to Tilaco, which in turn advanced it to Electromet. The plaintiffs personally guaranteed the loan from the bank to Tilaco. They also allege that defendants were aware of the fact that the money provided was personally guaranteed by them.

The plaintiffs claim that defendants willfully breached the agreement by failing to purchase the gold ore and gold scrap after the money was provided to them by Tilaco. As a result of this alleged breach of agreement, Tilaco's security interest in the gold scrap and gold ore was defeated and plaintiffs as guarantors became personally liable for repayment of the loan.

The principal issue on appeal is whether the trial justice committed reversible error in rejecting plaintiffs' offer of proof, which attempted to show that Tilaco's claim for breach of agreement and breach of fiduciary duty against defendants actually belonged to plaintiffs as individuals. The plaintiffs contend that they own the claim against defendants because they repaid the loan to Industrial National Bank. They offered to prove at trial, through Tilaco's financial records and testimony of Tilaco's employee, that there was an effective assignment of Tilaco's claim against defendants to plaintiffs as individuals. It is undisputed that there was no assignment of the claim in writing.

The trial justice correctly rejected plaintiffs' offer of proof. General Laws 1956 (1985 Reenactment) § 9-2-8 states, "The assignee of a nonnegotiable chose in action which has been assigned in writing may maintain an action thereon in his own name, but subject to all defenses and rights of counterclaim, recoupment or setoff to which the defendant would have been entitled had the action been brought in the name of the assignor." (Emphasis added.) The plaintiffs concede there was no written assignment but argue that an assignment can be proven...