FULTON BANK OF NEW JERSEY, ETC. VS. J.B. CONTRACTING, INC. (L-0344-16, SOMERSET COUNTY AND STATEWIDE) ( 2019 )

NOT FOR PUBLICATION WITHOUT THE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.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1684-17T2
FULTON BANK OF NEW
JERSEY, as successor by merger
from SKYLANDS COMMUNITY
BANK,
Plaintiff-Respondent,
v.
J.B. CONTRACTING, INC.,
STANLEY J. KAPUSTA, JR.,
and WILLIAM ALLEN CRAYNE,
Defendants,
and
JOHN KAPUSTA,
Defendant-Appellant.
______________________________
Submitted November 9, 2018 – Decided January 29, 2019
Before Judges Whipple and DeAlmeida.
On appeal from Superior Court of New Jersey, Law
Division, Somerset County, Docket No. L-0344-16.
Gray Law Group, attorneys for appellant (Bruce D.
Nimensky, on the brief).
Rudolph A. Palombi, Jr., attorney for respondent.
PER CURIAM
Defendant John Kapusta appeals from the October 27, 2017 order of the
Law Division denying his motion to vacate a default judgment entered against
him in this action to enforce a commercial loan guaranty. We affirm.
I.
The following facts are derived from the record. On May 7, 2008, Kapusta
sold his interest in defendant JB Contracting, Inc. (JB), which consisted of all
issued and outstanding shares of the corporation, to his nephew and another man
for more than $2.6 million.1 On that date, Kapusta resigned in writing as Chief
Executive Officer, President, Secretary, Treasurer, and Director of JB. Prior to
the sale, Kapusta secured a line of credit from Skylands Community Bank
(Skylands Bank) on behalf of JB. At the time of the sale, there was no amount
due on the line of credit.
1
The record refers to defendant Stanley J. Kapusta, Jr. alternatively as John
Kapusta's son, nephew, and brother. We accept as accurate a representation by
John's counsel that Stanley is John's nephew. The precise nature of their familial
relationship is not relevant to the outcome of this appeal.
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2
On August 25, 2008, Kapusta signed a $200,000 promissory note in favor
of Skylands Bank on behalf of JB, identifying himself as President of JB. It is
not clear whether Kapusta had reassumed the role of President of JB, or merely
represented himself as holding that office at the time of the loan. Kapusta also
signed a personal guaranty in favor of Skylands Bank for $200,000, in which JB
was identified as the borrower. The loan documents list Kapusta's guaranty as
security and collateral for JB's loan. Plaintiff Fulton Bank of New Jersey (Fulton
Bank) is the successor to Skylands Bank by merger.
In December 2015, JB defaulted on the promissory note. According to
the terms of the note, the default accelerated all amounts due.
On March 4, 2016, Fulton Bank filed a complaint in the Law Division
against JB, Kapusta, his nephew, and the other principal of JB. The bank alleged
that Kapusta, as a guarantor of the JB's promissory note, was obligated to pay
all amounts due under the note.
Kapusta concedes that he was served with the complaint on March 19,
2016. According to Kapusta, shortly after he received the complaint, he
contacted his nephew, who purportedly advised Kapusta that he would retain an
attorney to represent him in this matter. Kapusta took no further action to ensure
that his interests were represented. He did not request the name of the attorney
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retained to represent him, did not request a copy of any documents filed on his
behalf, and did not make any inquiries with respect to the progress of the matter.
No attorney was retained to represent Kapusta. As a result, an answer was
not filed on his behalf. On May 4, 2016, a default was entered against Kapusta
with notice. On October 28, 2016, the court entered a final judgment against
Kapusta and in favor of Fulton Bank in the amount of $214,473.18, plus accrued
interest to September 30, 2016.
Almost a year later, on October 3, 2017, Kapusta moved to vacate the final
judgment. He alleged excusable neglect for his failure to file an answer and
argued that he could raise a meritorious defense to the complaint. Kapusta
alleged that in September 2008, a representative of Skylands Bank, aware that
Kapusta had sold his interest in JB, and was no longer an officer of the company,
asked Kapusta to "work with him" to "roll over" JB's existing line of credit.
Kapusta alleged that he "made it clear" to the representative that he was not
guarantying JB's loan, and was only assisting him to "avoid going back to his
bosses at the Bank" and to circumvent "the steps needed to secure a new line of
credit." Kapusta alleged that the representative assured him orally that he was
not guarantying JB's loan. Kapusta did not allege that his signatures on the
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promissory note or personal guaranty were forged. He did not explain why he
identified himself as JB's President on the promissory note. 2
In response, the bank representative involved in the transaction certified
that in August 2008, Kapusta had not informed him nor the bank that he had sold
his interest in JB. In addition, he certified that with respect to Kapusta's
allegation that the bank was "rolling over" an existing line of credit, "each loan
to this borrower was evaluated on its own merits at the time it was made" and
that "had . . . Kapusta not agreed to guaranty the loan, [JB] would not have
received the $200,000[.]"
On October 27, 2017, the trial court denied Kapusta's motion. In his
thorough written opinion, Judge Thomas C. Miller concluded that Kapusta had
demonstrated neither excusable neglect nor a meritorious defense. The court
concluded that "[e]ven minimal diligence requires . . . Kapusta to take other
steps more than one call to [his nephew] before his actions could be
demonstrated as 'excusable.'" With respect to the merits of Kapusta's defense,
the court concluded that it was clear that Kapusta executed both the promissory
note and the guaranty, that he identified himself as President of JB when doing
2
Although Kapusta alleges the transaction took place in September 2008, both
the promissory note and the guaranty are dated August 25, 2008.
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so, and that the terms of those contracts were unambiguously stated in writing.
In addition, the court found that Kapusta's claim that he was released from
personal liability by a verbal representation of a bank official was barred by the
parol evidence rule, given the integrated nature of the contracts.
On October 27, 2017, the trial court entered an order denying Kapusta's
motion. This appeal followed.
II.
Rule 4:43-3 provides that the court may set aside a default judgment in
accordance with Rule 4:50-1. An application to vacate a judgment pursuant to
Rule 4:50-1 is addressed to the motion judge's sound discretion, which should
be guided by equitable principles. Hous. Auth. v. Little, 135 N.J. 274, 283
(1994). "[T]he opening of default judgments should be viewed with great
liberality, and every reasonable ground for indulgence is tolerated to the end that
a just result is reached." Marder v. Realty Constr. Co., 84 N.J. Super. 313, 319
(App. Div. 1964). A trial court's determination under Rule 4:50-1 is entitled to
substantial deference and will not be reversed in the absence of a clear abuse of
discretion. US Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449, 467 (2012). To
warrant reversal of the trial court's order, Kapusta must show that the decision
was "made without a rational explanation, inexplicably departed from
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established policies, or rested on an impermissible basis." Guillaume, 209 N.J.
467-68 (quoting Iliadis v. Wal-Mart Stores, Inc., 191 N.J. 88, 123 (2007)
(internal quotations omitted)).
Kapusta seeks relief under subsection (a) of Rule 4:50-1, which allows a
judgment to be set aside for "mistake, inadvertence, surprise, or excusable
neglect[.]" "Generally, a defendant seeking to reopen a default judgment
because of excusable neglect must show that the failure to answer was excusable
under the circumstances and that a meritorious defense is available." Little, 135
N.J. at 284 (citing Mancini v. EDS, 132 N.J. 330, 334-35 (1993)). "Carelessness
may be excusable when attributable to an honest mistake that is compatible with
due diligence or reasonable prudence." Mancini, 132 N.J. at 335.
Having carefully reviewed Kapusta's arguments in light of the record and
applicable legal principles, we affirm the October 27, 2017 order for the reasons
stated by Judge Miller in his thorough and well-reasoned written opinion. As
the trial court found, Kapusta's failure to take any steps to ensure that an answer
was filed on his behalf does not constitute excusable neglect. Nor has he
demonstrated a meritorious defense, given that as a sophisticated businessman
he signed an unambiguous guaranty of JB's loan, which clearly stated that the
parties' agreement was fully integrated in the written document, precluding his
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proffered evidence of an oral promise that directly contradicts the central
covenant of the guaranty.
Affirmed.
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