OPINION
Below, I have discussed the contentious areas that appear in the outline of facts. I have provided an analysis of the facts and the applicable law.
- Steven Bridgehoman falsely held out as Parmar yet Parmer is a completely different entity, owned by Kenny Suleiman.
Steven made various representations that he is the rightful owner of the property. For instance, he stated that he had “full legal authority to enter into and exercise its obligations under the agreement”, that he is “exclusively entitled to possess and dispose” of the business. However, he had no title, rights, or interest over the fuel supply/distribution, yet he failed to inform you.
His attitude changed when your lawyer asked him to produce more documentation/evidence of the details of your sale agreement. In response, Steven expressed questionable concerns and stated, “since your attorney want to do the bulk of sales, I’m going to get hit with a capital gains tax of 20 percent, and like I said I need to clear 40k for the loan, I’m willing to comply but I’ma have to up the price to 50k so when I pay the capital gains I’ll be left with 40k,”. The doubts were confirmed when he stated, “… as a lawyer he probably gonna say no cause they do things by the books, that’s why I told u before when u involve lawyer the process gets kinda cloudy.” His response above clearly indicated and confirmed his ulterior fraudulent motives.
Steven went ahead to represent his good title and stated that “… There is no violations on the business I could … guarantee that when I take u to our inspection company. This is a new lease soo my business technically doesn’t have the right to do business there unless I sign the new lease, there aren’t any assets under my LLC so there’s no tax liens to worry about”. Steven further proceeded to state that, “There is no business to search up cause I ran the business under my name”.
Steven was also doubtful as to his rights under the Fuel Supply Agreement. He stated in this regard that, “It (the Assignment Agreement between Steven and you) doesn’t say anything about the 10k security deposit, can I draft a short document acknowledge that the security deposit will be transferred, and u can sign it for him so both u guys have a copy”. Steven’s bad title is evidenced from the Assignment Agreement between MADA and Parmar, for the assignment of rights under the Fuel Supply Agreement between Parmar and Creative Management. If Steven had good title, the said Assignment Agreement could have borne his name.
Steven’s bad title is also evidenced by/from Vickram’s message to you that Creative Management received no notice from its customer (Parmar) of any intention to lease the property or to assign the security deposit agreement. And that it had the discretion to withhold its consent. The message from Vickram stated that, “… We never received any notice from our customer of his intent to transfer the lease of the station to you or for the assignment of the supply agreement. As per the supply agreement clause #13.2, Creative Management, Inc has the right of first refusal to buy the lease…”. It follows; Creative Management specifically contracted with Parmar. Therefore, Creative Management knew all along that it was dealing with Parmar with respect to fuel supply. Steve had no right whatsoever to engage the transfer of the security deposit. It is therefore clear that Steven was not privy to the fuel supply contract entered between Creative Management and Parmar.
Based on the facts above, I find Steven liable for fraud. To state a claim for common law fraud, a plaintiff must allege facts that, if proven, would establish the following five elements: “(1) a material misrepresentation of a presently existing or past fact; (2) knowledge or belief by the defendant of its falsity; (3) an intention that the other person rely on it; (4) reasonable reliance thereon by the other person; and (5) resulting damages”. In your case, Steven’s conduct fully satisfied all of the elements above. Notably he made false representations in his contact with you. For instance, he represented that he had good title of the filling station- which did not have. When he was making the representations, the defendant was aware that he was doing a misrepresentation because he kept critical information about the Motor Fuel Supply Agreement from you. Accordingly, you relied on the representations and entered into the invalid agreement with him, thus making the payments.
Steven is also liable for equitable fraud. To rescind a contract on the grounds of equitable fraud, a party must demonstrate: (1) a material misrepresentation of a presently existing or past fact; (2) the maker’s intent that the other party rely on the misrepresentation; and (3) detrimental reliance by the other party. You should note that the equitable doctrine includes instances of fraudulent misrepresentations that do not exist in the law. It broadens the scope for fraudulent misrepresentation. A party claiming equitable fraud must prove the required elements by clear and convincing evidence. In your case, the same analysis of facts for the claim of common law fraud apply here.
- Steven Informed You that He was Selling You a Turnkey Business
In your negotiations with Steven, he informed you that there were no assets being transferred because the sale was for a turnkey business. I find this to be far from the truth. Under Section 1, of the Sale Agreement between Kenny Suleiman and Steve Bridgemohan, the sale included, among others, “all assets and property used by the seller”.
Further, in the “Assignment and Assumption of Sublease” that Steve Bridgemohan signed with Kenny, Steve was assigned “all rights and interests” in the said property, including all assets therein.
Also, Section 3 of the Agreement for Sale of Business between you and Steven stated that the sale included, among others, “all of seller’s rights … assets and property used by the seller in the business”.
Lastly, in one of the text messages, Steven texted you thus “I definitely understand your concerns but this isn’t a retail shop where they can kick u out after 3 years, u still have tanks in the ground and assets above the ground. But like I told you before, I want the new owner to be comfortable taking over, so no worries…”.
Based on the facts above, I find Steven’s conduct blameworthy. Under New Jersey law, a seller has the duty to deliver goods that conform precisely to the contract. Accordingly, Steven had a duty to provide you complete ownership of the filling station, just like the contract stated.
In conclusion, I find that you have a valid case against Steven.
REFERENCE
Gennari v. Weichert Co. Realtors, 148 N.J. 582, 610 (1997).
Jewish Center of Sussex County v. Whale, 86 N.J. 619, 624-25 (1981).
Liebling v. Garden State Indem., 337 N.J. Super. 447, 453 (App. Div. 2001).
N.J.S.A. 12A:1-101 et seq.
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