BMW FINANCIAL SERVICES NA, LLC VS. DONALD PLOETNERÂ VS. BMW OF NORTH AMERICA, LLC(F-32595-09, MORRIS COUNTY AND STATEWIDE)
A-1671-14T4
| N.J. Super. Ct. App. Div. | Jul 25, 2017Background
- Donald and Madeline Ploetner (the Ploetners) and their businesses (Towne, Inc. and DMD Towne, LLC) borrowed from BMW Financial and defaulted; BMW Financial held mortgages on two New Jersey parcels securing personal loans.
- BMW Financial and the Ploetners executed a written Forbearance Agreement (signed by the Ploetners; BMW Financial performed by temporarily forbearing) under which the Ploetners broadly released claims against BMW Financial in exchange for short-term forbearance.
- Towne and DMD later entered bankruptcy; the Chapter 7 trustee sold assets and executed Trustee Releases, broadly releasing BMW Financial and BMW of North America (BMW NA) from claims belonging to Towne/DMD and claims derivative of them.
- The Ploetners asserted counterclaims against BMW Financial and third-party claims against BMW NA alleging franchise‐related wrongful conduct and tortious interference; the BMW entities moved to dismiss/judgment on the pleadings (and alternatively for summary judgment) relying on the Forbearance Agreement and Trustee Releases.
- The trial court concluded the Ploetners’ asserted claims were derivative of the bankrupt entities and barred by the Trustee Releases (and the Forbearance Agreement as to BMW Financial), dismissed the counterclaims/third-party complaint, granted summary judgment in the foreclosure action, and entered final judgment of foreclosure.
Issues
| Issue | Plaintiff's Argument (Ploetner) | Defendant's Argument (BMW entities) | Held |
|---|---|---|---|
| Validity/enforceability of Forbearance Agreement (consideration/signature/illusory promise) | Forbearance lacked consideration, BMW Financial didn’t sign, and the forbearance promise was illusory because it left termination to BMW Financial’s discretion | Forbearance is valid: forbearance itself is consideration; performance by BMW Financial (actual short forbearance) and conduct demonstrate mutual assent; discretion to terminate was limited by contractual standards and subject to good faith | Agreement enforceable: forbearance is valid consideration; signature not required where assent shown by performance; discretion to terminate did not render promise illusory |
| Effect of Trustee Releases executed in bankruptcy | Trustee Releases are invalid/unauthorized as to Ploetners’ personal claims or otherwise unenforceable | Trustee Releases were authorized by the Bankruptcy Court, released debtor and derivative claims, and are res judicata; challenges belong in Bankruptcy Court appeal process | Releases valid and preclusive as to claims of Towne/DMD and claims derivative of them; collateral attack barred; Ploetners’ repackaged claims are released |
| Whether Ploetners alleged personal, non-derivative claims that survive releases | Ploetners insisted claims were personal and not derivative of Towne/DMD (special injury theory) | BMW entities: the pleaded claims arose from dealership operation and belong to the entities or are derivative | Court found pleaded claims were derivative/derivative-in-nature and therefore barred; Ploetners failed to amend to state personal claims |
| Availability of discovery / prematurity argument against summary judgment | Summary judgment was premature without discovery; issues of validity require factual development | No factual dispute material to validity of releases and forbearance that would be cured by discovery; documentary records and performance resolve the questions | Court properly decided dismissal/summary judgment; discovery would not alter enforceability outcome |
Key Cases Cited
- Strasenburgh v. Straubmuller, 146 N.J. 527 (N.J. 1996) (distinguishing personal "special injury" claims from derivative claims belonging to a corporation)
- HomEq Servicing Corp. v. Schwamberger, 908 N.E.2d 423 (Ohio 2009) (forbearance from exercising rights constitutes consideration)
- Richard A. Berjian, D.O. v. Ohio Bell Tel. Co., 375 N.E.2d 410 (Ohio 1978) (signature not always required where assent is shown by conduct/performance)
- Bruzzese v. Chesapeake Exploration, 998 F. Supp. 2d 663 (S.D. Ohio 2014) (discretion to approve performance does not render promise illusory when objective standards constrain discretion)
- Hendrick v. Avent, 891 F.2d 583 (5th Cir. 1989) (collateral attack on a bankruptcy sale/order is barred; direct appeal is proper vehicle)
- Regions Bank v. J.R. Oil Co., 387 F.3d 721 (8th Cir. 2004) (res judicata effect of bankruptcy court approvals on parties who participated)
- In re Continental Airlines, 203 F.3d 203 (3d Cir. 2000) (discusses discharge/release issues in bankruptcy context)