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Case 3:10-cv-06778-MAS-DEA Document 53 Filed 07/30/13 Page 1 of 11 PageID: 1021

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

ST. JAMES APARTMENTS, LLC,
et al.,

Plaintiffs,

v.

COINMACH CORPORATION,

Defendant.

SHIPP, District .Judge

Civil Action No. 10-6778 (MAS) (DEA)
Civil Action No. 11-0549 (MAS) (DEA)

(consolidated action)

OPINION AND FINAL JUDGMENT

This matter comes before the Court over disputed lease agreements between St. James

Apartments, LLC ("St. James"), J asontown Apartments, LLC ("J asontown") and Hackensack

Associates LP ("Hackensack") (collectively, "Plaintiffs" or "Properties") and Coinmach

Corporation ("Defendant" or "Coinmach"). A two-day bench trial commenced on April 2, 2013

and concluded on April 3, 2013. The Court has considered the evidence and testimony adduced

at trial, the Parties' legal positions, and the applicable law. The Court now enters final judgment

on the merits of all pending claims. The Court finds that the disputed leases were executed

without the requisite authority and are accordingly invalid, ineffective, and/or not in force.

I.

BACKGROUND

A.

Jurisdiction

This case comes before the Court based on diversity jurisdiction, pursuant to 28 U.S.C.

§ 1332(a)(1). The parties are citizens of different states. Plaintiffs' sole member or partner,

James Nuckel ("Mr. Nuckel" or "Nuckel"), is a resident of Florida. (Compl. <JrJ[ 2-4, ECF No. 1.)

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Defendant Coinmach is a citizen of both Delaware and New Jersey for purposes of federal

diversity jurisdiction. (Ans. <j[ 5, ECF No. 16.) In addition, the amount in controversy exceeds

the sum of $75,000. (Compl. <j[ 6.)

B.

Procedural History

This action is brought by Plaintiffs seeking a declaratory judgment pursuant to 28 U.S.C.

§ 2201 that certain disputed lease agreements are not legally binding and/or are otherwise

unenforceable. (Compl. <j[ 1.) On February 1, 2011, Defendant moved to dismiss Plaintiffs'

Complaint. (ECF No. 8.) On July 13, 2011, the Court denied Defendant's motion to dismiss.

(ECF Nos. 13, 14.) On July 16, 2012, Defendant moved for summary judgment. (ECF No. 27.)

The Court held oral argument and denied the motion for summary judgment on October 25,

2012. (ECF Nos. 36. and 37.) On April 2, 2013, a bench trial commenced during which four

witnesses testified. Following the trial, on May 10, 2013, the Parties each submitted Amended

Proposed Findings of Fact and Conclusions of Law. (Pls.' Amend. Proposed Findings, ECF No.

51.; Def.'s Amend. Proposed Findings, ECF No. 52.)

C.

Findings of Fact

Mr. Nuckel serves as the sole member or partner of the Properties. (Trial Testimony of

James Nuckel, Vol. I at 20:12-22:10.) In 2002, the Properties contracted with Coinmach to lease

space in each of the Properties for Coinmach to operate laundry machines. (Nuckel Vol. I 35:1-

8.) The 2002 contracts were signed by Joseph Andolina, who then served as the director of

operations for the Properties. (Nuckel Vol. I 35:9-25.) When they expired in 2010, Coinmach

sought to renew the agreements. (DelaVega Vol. I 81:5-23.) Based on Coinmach's supposed

weak profits on the Properties, Daniel Collins, Coinmach's sales representative, decided to

reduce the amount that Coinmach would pay to Plaintiffs. (Collins Vol. I 155:15-156:8.) In

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addition, the new leases were automatically renewable. (Collins Vol. I 17:10-23:21.) As a result,

Coinmach's lease proposals were based on new terms that were more beneficial to Coinmach.

(/d.)

Mr. Collins contacted Plaintiffs' residential property manager, Nina Dela Vega, to

discuss renewing the leases. (Collins Vol. I 155:16-23.) Coinmach identified and listed Ms. Dela

Vega as the Properties' contact person in Coinmach's internal system. (Collins Vol. I 155:21-

23.)

Ms. DelaVega asked Mr. Collins to send her copies of the proposed lease agreements by

e-mail, which he did. (Collins Vol. I 162:14-163:8.) Ms. DelaVega then printed the proposed

lease agreements and left them in a folder for Mr. Nuckel to review. (DelaVega Vol. I 84:6-15.)

Mr. Nuckel, however, did not see the documents and Plaintiffs initially took no action vis-a-vis

the lease renewals. (Nuckel Vol. I 40:3-6; DelaVega Vol. I 85:9-12.)

Once the 2002 leases for Jasontown, St. James and Hackensack expired in July, August

and September of 2010, respectively, Coinmach continued to operate and collect revenue from

the laundry machines, but stopped making monthly payments to the Properties. (DelaVega Vol.

I 140:14-18; Dela Vega Vol. I 86:20-87:4.) In November, Ms. Dela Vega was advised that

Coinmach had stopped making its monthly payments. (Dela Vega Vol. I 86:20-24.) She

contacted Tony Perez, Coinmach's operations manager, who informed her that Plaintiffs would

have to renew the leases in order to receive Coinmach's past due payments. (DelaVega Vol. I

89:3-23.) Ms. Dela Vega, unable to contract on her own, spoke with Tony Perechino, a

consultant working for Mr. Nuckel, who instructed her to sign the lease. (DelaVega Vol. I 92:1-

93:2.) Ms. DelaVega understood that Mr. Perechino had discussed the contract with Mr. Nuckel,

but in fact he had not. (/d.) Ms. Dela Vega subsequently signed the disputed agreements on

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November 23, 2010. (DelaVega Vol. I 93:3-21.) Mr. Collins testified that he received the leases

via e-mail on Thanksgiving Day and processed them by printing, signing, and sending them back

to the main office on the same day. (Collins Vol. I 164:24-25).

On November 29, 2010, Mr. Nuckellearned for the first time that Ms. DelaVega had

signed the lease renewals. (Nuckel Vol. I 38:19-22.) He demanded that she inform Coinmach

that her execution of the disputed leases was an error and that she did not have authority to sign

them. (Nuckel Vol. I 39:13-23.) Ms. DelaVega complied, calling Mr. Perez and sending written

notices to Coinmach on that same day, November 29, 2010. (Dela Vega Vol. I 94:12-96:4;

97:11-98:19; Ex. P-3.) On the same day, Ms. Dela Vega received a voicemail from Jessica

Desmond-Judkins, the administrator at Coinmach responsible for processing agreements. (Dela

Vega Vol. I 96:5-8.) Ms. Desmond-Judkins indicated that no new agreement had been processed

as of that day. (Ex. P-4.) Nevertheless, Coinmach refused to nullify the agreements and insisted

on having them enforced. (Collins Vol. II 41:1-4.) Instead, on December 1, 2010, Coinmach

ordered new laundry machines for the Properties. (Collins Vol. II 32:23-37:14.) Further,

Coinmach has continued to operate its laundry machines at the Properties and to collect money

from them. (DelaVega Vol. I 140:14-18.)

I.

LEGAL DISCUSSION

The Court will analyze whether Ms. DelaVega had either actual or apparent authority to

sign the agreement and bind Plaintiffs. Plaintiffs allege that the lease agreements are invalid

because Ms. DelaVega did not have authority to execute the contracts on their behalf. (Compl.

<Jri[ 31-35.) An agent must be authorized by its principal in order for the principal to be bound.

See Rodriguez v. Hudson Cnty. Collision Co., 296 N.J. Super. 213, 220 (App. Div. 1997) ("An

agency relationship arises when one party authorizes another to act on its behalf while retaining

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the right to control and direct any such acts.") (internal quotations and citations omitted). "The

power of an agent to bind his principal is limited to such acts as are within his actual or apparent

authority." Carlson v. Hannah, 6 N.J. 202, 212 (1951) (internal citation omitted). As an initial

matter, the Court must examine whether or not Ms. Dela Vega was capable of binding Plaintiffs,

specifically, whether she had either actual or apparent authority.

A.

Ms. Dela Vega had no Actual Authority to Execute the Disputed Leases

1.

Standard

"Actual authority is the authority that a principal expressly or implicitly gives an agent."

Automated Salvage Transp., Inc. v. NV Koninklijke KNP BT, 106 F. Supp. 2d 606, 617 (D.N.J.

1999) (internal citation omitted). Actual authority can be either express or implied. !d. Express

authority stems from the principal's instructions to the agent to perform a specific task. !d. at

618. ("For example, if a principal instructs his agent to buy a certain piece of property, the agent

possesses express authority- the power to dispense cash for the property.") "Express authority

is manifested through the principal's words or other conduct." !d. at 617. Additionally, express

authority can only be given to the agent by the principal; a third party lacking authority does not

have the ability to authorize the agent. See Avon Sheet Metal Co. v. Heritage House Assoc., 107

N.J. Super. 487, 493 (Dist. Ct. Essex Cty. 1969).

Implied authority exists where an agent performs a task within the scope of his implied

duties. The principal's authority is presumed to have been granted in accordance with the agent's

job responsibilities. See Carlson, 6 N.J. at 212 (Implied authority stems "from the nature or

extent of the function to be performed, the general course of conducting the business, or from

particular circumstances of the case.")

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Specifically, implied authority exists when an agent carries out an action that is necessary

to fulfill his expressly authorized obligations. See Automated Salvage Transp., 106 F. Supp. at

617 ("For the most part, an agent has implied authority to undertake all transactions necessary to

fulfill the duties required of an agent in exercise of express authority." (citing Thomas v. l.N.S.,

35 F.3d 1332, 1338 (9th Cir.l994)). For instance, if a principal empowers an agent "to 'sell my

car', the only fully expressed power is to transfer title in exchange for money." Restatement

(Second) of Agency§ 7 cmt. c. However, other powers necessary to carry out such a transaction,

such as the power to convey, give possession of, or extend credit to, may be "implied or inferred

from the words used, from customs and from the relations of the parties." /d. "Implied authority

is incidental to a grant of express authority. As mentioned, implied authority consists of those

powers incidental and necessary to carry out a grant of express authority." Sylvan Learning Sys.,

Inc. v. Gordon, 135 F. Supp. 2d 529, 544 (D.N.J. 2000) (internal citations omitted).

2.

Analysis

Coinmach argues that Ms. Dela Vega had actual authority to sign the disputed leases.

According to Coinmach, Ms. Dela Vega was authorized to consult with Mr. Perechino in the

event that Mr. Nuckel could not be reached. (Def.' s Amend. Proposed Findings, Concl. of Law '1[

8.) In addition, Coinmach argues that Mr. Nuckel gave Mr. Perechino the authority to approve

the contract. (/d.) Therefore, according to Defendant, when Ms. DelaVega asked and was told

by Mr. Perechino to sign the contract, she had express authorization to do so. (/d. at '1[ 9.). The

Court does not agree. The Court may have found express authority if the evidence demonstrated

that Mr. Nuckel instructed Ms. Del a Vega to execute the disputed leases. However, the record

and trial testimony reflect no indication of any such direction by Mr. Nuckel to Ms. Dela Vega.

Rather, the uncontroverted evidence reflects that Mr. Nuckel was unaware that Ms. DelaVega

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executed the leases until after the disputed agreements were signed and sent to the Defendant.

(Nuckel Vol. I 38:7-24.)

Mr. Perechino lacked the requisite authority to execute the disputed leases. In absence of

such authority, he was unable to delegate authority to Ms. Dela Vega. As discussed, authority

must flow exclusively from the principal. The Court finds to be credible Mr. Nuckel's testimony

stating that Mr. Perechino's role at the Properties was exceedingly limited. (Nuckel Vol. I 30:3-

32:21.) According to Mr. Nuckel, Mr. Perechino was hired as a consultant to review the

Properties' activities and was not authorized to approve any contracts. (ld.) Accordingly, the

Court finds that Mr. Perechino, as an unauthorized third party, could not have conferred express

authority upon Ms. DelaVega.

Furthermore, the Court finds that Ms. Dela Vega had no implied authority to sign the

contract. Coinmach has failed to demonstrate that Ms. Dela Vega was acting within the scope of

her duties. The record reflects that Ms. Dela Vega's duties were simply those of a residential

property manager of an apartment complex. (Dela Vega Vol. I 77:19-79:16.) Her primary

obligation was to rent apartments to tenants. (DelaVega Vol. I 79:10-16.) There is no evidence

that Ms. Dela Vega ever executed any contracts on behalf of the Properties, other than those in

dispute. Nor is there evidence that executing the disputed leases was within the scope of carrying

out her express job responsibilities. Further, the Court finds that neither the particular

circumstances of this case, nor the nature of Ms. DelaVega's responsibilities, support a finding

of implied actual authority. Ms. Dela Vega operated "with no policy-making authority, could

not act contrary to the policy of the [Properties], and thus did not have the actual authority to

agree to [the terms of the disputed leases.]" Farmers & Merchs. Nat. Bank v. San Clemente Fin.

Grp. Sec., Inc., 174 F.R.D. 572,578-79 (D.N.J. 1997).

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For the reasons set forth above, the Court finds that Ms. Dela Vega had no actual

authority to sign the agreements.

B.

Ms. Dela Vega had no Apparent Authority to Execute the Disputed Leases

1.

Standard

When an agent acts with apparent authority, he can bind the principal to an agreement.

Carlson, 6 N.J. at 212. Apparent authority exists when: 1) there is an appearance of an agent's

authority based on the principal's conduct; 2) the third party relied on that apparent authority;

and 3) the third party's reliance was reasonable. Mercer v. Weyerhaeuser Co., 324 N.J. Super.

290, 318 (1999). The court must determine whether the principal acted in a manner that

conveyed to the third party that the agent was acting with the principal's approval. !d. It is the

actions of the principal, not the agent, that determine whether or not authority was present.

Greene v. BMW of N. Am., No. 11-04220 (WJM), 2012 WL 5986461, at *5 (D.N.J. Nov. 28,

2012). In addition, the third party must have relied on the agent's apparent authority in a manner

related to the principal's actions and not that of the agent. Mercer, 324 N.J. Super. at 318. Lastly,

the third party's reliance on the agent's apparent authority must be within reason. /d. The party

seeking imposition of authority has the burden of proof to establish that these factors are

satisfied. /d.

2.

Analysis

The Court finds that Coinmach failed to demonstrate that Ms. Dela Vega had apparent

authority to sign the leases. Coinmach, as the party seeking to prove the existence of authority,

must demonstrate that, based on the Properties' actions, Ms. Dela Vega had the requisite

authorization to execute the contracts. The Properties, with Mr. Nuckel serving as the sole

member or partner, are the principals. Coinmach argues that Mr. Nuckel and Coinmach having

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had no prior contact, is indicative of the existence of apparent authority. (Def.'s Amend.

Proposed Findings, Concl. of Law <j[<j[ 17, 25.) However, the Court finds the absence of contact

between the two Parties supports Plaintiffs' position that the Properties took no action affording

apparent authority.

Coinmach makes much of its 2002 lease agreements with Plaintiffs, which were not

signed by Mr. Nuckel. Those contracts were signed by Mr. Andolina, who served as the Director

of Operations for the Properties in 2002. With regard to the disputed lease agreements, however,

Mr. Andolina was not the signatory. Rather, Ms. Dela Vega affixed her signature. Mr.

Andolina's signature on the 2002 agreements does not undermine Plaintiffs' position that Ms.

DelaVega did not have apparent authority. As an initial matter, Ms. DelaVega does not hold

the same or even a similar title to Mr. Andolina. Further, any apparent authority that may have

been vested in Mr. Andolina does not extend to Ms. DelaVega.

The Court credits Mr. Nuckel's testimony that he was unaware of the 2002 contracts with

Coinmach until a year after the documents were executed. This execution, once more, represents

actions taken by an agent that do not reflect the authority of the principal. In addition, there is a

sharp contrast between Mr. Andolina and Ms. Dela Vega. Specifically, although the 2002

contracts were executed without authorization, Mr. Nuckel' s testimony indicates that, on other

occasions, Mr. Andolina was involved in negotiating agreements with the consultation of Mr.

Nuckel. It was a component of his job responsibilities as the Director of Operations. However,

with respect to Ms. Dela Vega, as property manager, the record indicates that she had not

executed a single contract prior to those in dispute. Thus, the Court finds the evidence of the

principals' actions in the instant matter insufficient to vest Ms. Dela Vega with apparent

authority.

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Additionally, Coinmach's alleged reliance is unfounded. "[T]he essential element of

reliance must be present before apparent authority can be found." Simpkins v. 7-Eleven, Inc., A-

3702-06T3, 2008 WL 918482 (N.J. Super. Ct. App. Div. Apr. 7, 2008) (internal citation

omitted). Coinmach argues that it relied on the Properties' portrayal of Ms. Dela Vega as

authorized to sign the disputed leases. In this regard, the 2002 lease agreements do not support

the existence of reliance because the clear, uncontroverted testimony from Coinmach's

representatives is that when the disputed lease agreements were negotiated, Coinmach's agent

was not aware of who signed the 2002 lease agreements. (Collins Vol. I 164:24-25.)

Accordingly, the fact that an unauthorized agent signed the 2002 lease agreements was not a

factor insofar as Coinmach's reliance interests are concerned.

In addition, Coinmach alleges that the disputed leases were processed upon receipt on

Thanksgiving Day. Mr. Collins testified that he received the signed leases via e-mail on

Thanksgiving Day and proceeded to print, sign and process them on that same day. (Collins Vol.

I 169:12-171:11.) However, Coinmach has failed to produce any records to support this

testimony. Rather, the evidence supports that Coinmach had not processed the leases until after it

was informed by Ms. Del a Vega that her execution of the disputed leases was not authorized.

Ms. DelaVega received a voicemail on November 29, 2010 from Ms. Desmond-Judkins, the

Coinmach agent responsible for processing new contracts, indicating that no new lease had been

executed as of that day. (Ex. P-4.) Furthermore, Coinmach contends that it relied on Ms. Dela

Vega's apparent authority when it processed an order for new laundry machines. However, Mr.

Collins admitted that this work order was processed on December 1, 2010, two days after Ms.

DelaVega informed Coinmach of her lack of authority. (Collins Vol. II 36:23-37:14.)

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Furthermore, to the extent Coinmach argues that its reliance flows from Ms. DelaVega's

actions, this is insufficient. "[A]pparent authority by which a principal is bound is only that

which a person of ordinary prudence is justified in presuming from the conduct of the principal.

Such authority is not expanded by the carelessness and indifference of the third party nor erected

upon the misrepresentations of the agent." Farmers & Merchs. Nat. Bank v. San Clemente Fin.

Grp. Sec., Inc., 174 F.R.D. 572, 579 (D.N.J. 1997) (internal citation and quotations omitted)

(emphasis added).

The Court finds that the record and trial testimony do not support the existence of

apparent authority. Specifically, there is insufficient conduct from the principal to support that

Ms. DelaVega was vested with apparent authority. Furthermore, the record does not support that

Coinmach reasonably relied on any manifestations of authority flowing from the principal. 1

III. CONCLUSION

For the reasons set forth above, the Court concludes that Ms. Dela Vega did not have the

requisite authority to execute the disputed lease agreements. Therefore, the disputed lease

agreements are not enforceable. The Court will enter an Order consistent with this Opinion.

MICHAEL A. SJiJ
UNITED STATES DISTRICT JUDGE

1 The Court does not reach the Properties' alternative theories addressing the invalidity of the
disputed lease agreements. Specifically, since the Court holds that Ms. Dela Vega did not have
the requisite authority, it is unnecessary to explore whether her amended statement constituted a
counteroffer, and/or whether the installation of new machines was equivalent to a necessary
condition of the disputed lease.

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