ERIC INSELBERG VS. FRANK BISIGNANO (L-4954-15, HUDSON COUNTY AND STATEWIDE)

                                NOT FOR PUBLICATION WITHOUT THE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
                                                         APPELLATERIE DIVISION
                                                         DOCKET NO. A-3511-18T3

ERIC INSELBERG and
INSELBERG INTERACTIVE,
LLC,

           Plaintiff-Appellant,
v.


FRANK BISIGNANO and
FIRST DATA CORPORATION,

     Defendants-Respondents.
_______________________________

                    Argued telephonically March 24, 2020 –
                    Decided May 4, 2020

                    Before Judges Yannotti, Hoffman and Currier.

                    On appeal from the Superior Court of New Jersey, Law
                    Division, Hudson County, Docket No. L-4954-15.

                    Brian C. Brook argued the cause for appellants (Brook
                    & Associates, PLLC, attorneys; Brian C. Brooks on the
                    briefs).

                    Kevin H. Marino argued the cause for respondents
                    (Marino, Tortorella & Boyle, PC, Michael B.
                    Carlinsky, (Quinn, Emanuel, Urquhart and Sullivan,
            LLP) of the New York Bar, admitted pro hac vice, R.
            Corey Worcester, (Quinn, Emanuel, Urquhart and
            Sullivan, LLP) of the New York Bar, admitted pro hac
            vice, and Matthew A. Traupman, (Quinn Emanuel
            Urquhart and Sullivan, LLP) of the New York Bar,
            admitted pro hac vice, attorneys; Kevin H. Marino,
            John B. Boyle, Michael B. Carlinsky, R. Corey
            Worcester, and Matthew A. Traupman, on the brief).

PER CURIAM

      Plaintiffs appeal from an order entered by the Law Division on February

15, 2019, denying their motion to enforce litigants' rights. Plaintiffs claim

defendants failed to comply with an October 27, 2017 consent order, which

dismissed the entire case with prejudice and required defendants to return all

sports memorabilia previously delivered as security for a $500,000 loan.

Concluding the motion judge did not abuse her discretion, we affirm.

                                           I

      This case represents another chapter in long-running, contentious

litigation between plaintiff Eric Inselberg and defendant Frank Bisignano. We

begin with a summary of the relevant facts, which we derive from the motion

record and our opinion on plaintiff's direct appeal. Inselberg v. Bisignano, No.

A-1718-17 (App. Div. March 12, 2019).




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      In August 2010, Bisignano loaned $500,000 to plaintiff Inselberg

Interactive, LLC (Interactive), a company owned by Inselberg.1 The parties

memorialized the terms of the loan in a seven-page agreement (the Loan

Agreement). In addition to guaranteeing the loan, Inselberg secured it with

certain patents and "additional security," consisting of "two boxes containing

sports memorabilia owned by him[,] which he value[d] at $232,000." The

parties attached to the Loan Agreement a three-page handwritten list itemizing

the specific memorabilia.

      In 2011, Interactive defaulted on the loan, after a federal grand jury

indicted Inselberg for mail fraud. Interactive never made any payments on the

loan, despite Bisignano extending the time for plaintiffs to cure the default.

      As a result, in February 2013, the parties entered into an assignment

agreement (the Assignment Agreement), whereby plaintiffs assigned the patents

to Bisignano in partial payment and satisfaction of the loan. In pertinent part,

the agreement provided:

            Interactive wishes to transfer, convey and assign all of
            its right, title and interest in and to the [patents] in
            partial payment and satisfaction of the indebtedness and
            other obligations under the Loan Agreement and the

1
   Inselberg created Interactive to provide marketing services for business
technology he invented. After patenting the technology, Inselberg transferred
the patents to Interactive.
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              other Loan Documents and Bisignano is willing to
              accept such [p]atents in partial payment and
              satisfaction of the indebtedness and other obligations
              under the Loan Agreement and other Loan Documents.

In addition, Interactive "waived in full" any obligation to transfer the patents

back to Inselberg and any right to a "realization of proceeds" related to the

patents.

      In May 2013, Inselberg secured dismissal of the indictment against him.

Thereafter, Inselberg sought the return of the patents, claiming the value of the

sports memorabilia held by defendants exceeded the amount due under the loan.

      In May 2014, Inselberg requested access to the sports memorabilia in

Bisignano's possession for the purpose of exchanging certain memorabilia of

equivalent value. According to Inselberg, he brought $156,000 worth of his

sports memorabilia to Bisignano's home, but his personal assistant – Moussa

Ousmane – prevented Inselberg from taking any memorabilia in exchange. In

March 2015, Inselberg contends that he went to Bisignano's home and "swapped

out some of the memorabilia held by Bisignano for replacement memorabilia."

In November 2015, Bisignano retained a sports memorabilia dealer, Steiner

Sports, to provide a preliminary valuation of the sports memorabilia held as

collateral.   Steiner emailed Bisignano a list of the items together with a

preliminary valuation of each item.

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      After Bisignano's appointment as CEO of defendant First Data

Corporation (First Data), Inselberg accused First Data of using his patented

technology without a license and demanded the corporation purchase either the

patents or an exclusive license to them. Shortly thereafter, Bisignano granted

First Data a license to use or sell the patented technology, without requiring

royalties for their use.

      In December 2015, plaintiffs filed a ten-count complaint, alleging

defendants breached specific provisions of the Uniform Commercial Code

(UCC) and asserting various other claims, including the invalidity of the

Assignment Agreement. Plaintiffs sought monetary damages for royalties from

the transfer of the patents to First Data. Plaintiffs also asserted a conversion

claim regarding the sports memorabilia.

      After their efforts to remove all proceedings to federal court proved

unsuccessful, defendants moved for dismissal of plaintiffs' complaint under

Rule 4:6-2(e), arguing the assignment agreement constituted a strict foreclosure

under N.J.S.A. 12A:9-620. In a written statement of reasons, the motion judge

found the Loan Agreement entered into by the parties was valid and enforceable.

The judge further concluded the Assignment Agreement transferring the patents

constituted a valid strict foreclosure under N.J.S.A. 12A:9-620(a) and (c)


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because it established the necessary record authenticated after default; in

addition, he found that plaintiffs consented to Bisignano's acceptance of the

collateral as partial satisfaction of plaintiffs' obligation under the Loan

Agreement. Nevertheless, the judge declined to dismiss the complaint, finding

the Assignment Agreement contained "no agreed upon value for the partial

satisfaction" of plaintiffs' debt. The judge directed the parties to engage in

discovery to determine the value of the patents and the amount that should be

applied to plaintiffs' outstanding debt.

      After the parties disagreed as to the scope of the ordered discovery, the

judge issued the following clarification on October 5, 2017:

            The court did not 'deny in entirety' [d]efendants'
            motion. Clearly, the statement of reasons provided, at
            a minimum, the 'partial grant' of [d]efendants' motion,
            limiting the [p]laintiffs' recovery to any excess value
            greater than $500,000 that valuation of the collateral
            may produce. Thus, discovery will be limited to
            VALUATION of patents and sports memorabilia and
            nothing more.

      After a conference with the motion judge later that month, defendants

submitted a proposed order (the Final Order) that would result in the dismissal

of all remaining claims while allowing plaintiffs to appeal without further delay.

The Final Order submitted by defendants provided for the dismissal of plaintiffs'

remaining claims with prejudice and defendants' agreement to:

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                a) Assign the [p]atents a value at least equal to the
                   outstanding amount owed to Bisignano (thus
                   effectively forgiving the entire $500,000 debt
                   and all accrued interest);

                b) Dismiss their counterclaims with prejudice; and

                c) Return the sports memorabilia held as collateral
                   to Inselberg.

Plaintiffs consented to the form of the order, but not its entry (to preserve their

right to appeal the strict foreclosure ruling). The judge signed the Final Order

on October 27, 2017, resulting in the dismissal of the action "in its entirety with

prejudice."

      Plaintiffs appealed and we affirmed, concluding the motion judge

"correctly determined the [A]ssignment [A]greement constituted a valid strict

partial foreclosure," which served to extinguish plaintiffs' rights and interests in

the patents. Bisignano, slip op. at 9. We held that Bisignano became the owner

of the patents upon execution of the [A]ssignment [A]greement, and that "the

debt has been satisfied as defendant[s] agreed to assign the value of the loan and

accrued interest as the value of the patents." Id. at 10. We further noted

defendants' contention that plaintiffs' "conversion claim regarding the sports

memorabilia" was rendered "moot" because "defendants agreed to return all of

the sports memorabilia under the final order." Id. at 4 n.1.


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      On December 4, 2017, Inselberg and his attorney traveled to the office of

defendants' attorney to retrieve all the sports memorabilia Inselberg previously

provided as collateral. While extensive memorabilia was returned, Inselberg

immediately determined that four pieces of memorabilia were missing.

       On December 26, 2018, plaintiffs filed a motion to enforce litigants'

rights, asserting Bisignano failed to return the following four items of sports

memorabilia, as required by the Final Order: 1) a pair of Muhammad Ali boxing

trunks worn during his 1977 fight against Ernie Shavers; 2) a football helmet

worn by Larry Fitzgerald in 2010; 3) a Leroy Neiman serigraph of Michael

Jordon; and 4) a Peter Max painting of Michael Jordan.2 In a supporting ten-

page certification, Inselberg provided extensive details regarding the sports

memorabilia provided to Bisignano as collateral, and the various items that were

"swapped out" over time. According to Inselberg, on March 24, 2015, he

"created a final inventory of the items that [Bisignano] was keeping as

collateral."    He recounted that he "wrote out [the inventory] by hand at

[Bisignano's] house," and that Ousmane worked with him to create it and made

a copy of it.



2
  According to Inselberg, each artwork depicting Michael Jordan was signed by
both the artist and Jordan himself.
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      On January 17, 2019, Bisignano filed opposition, which included his own

certification, stating he returned all the memorabilia Inselberg left with him as

collateral for the loan. He certified, "As far as I know, I never possessed the

Peter Max [artwork], the Ali trunks, or the Larry Fitzgerald helmet"; however,

he acknowledged that these items of memorabilia could have been "swapped out

by Inselberg on one of the two occasions" when he came to Bisignano's home in

2014 and 2015. Bisignano did confirm he possessed the Leroy Neiman artwork,

claiming Inselberg gave it to him "as a gift."        Despite this understanding,

Bisignano gave the Neiman artwork to his attorneys, on the date he signed his

certification, and instructed them to return it to Inselberg.

      Bisignano also provided a certification from his personal assistant,

Moussa Ousmane, who handled the exchanges when Inselberg came to

Bisignano's home to swap out items of memorabilia. Ousmane denied ever

receiving the Mohammad Ali trunks or the Neiman artwork from Inselberg.

Ousmane also disputed Inselberg's claim that Inselberg gave him the Peter Max

painting and the Neiman artwork on February 23, 2015, as he "was out of the

country in Africa" at that time. Ousmane acknowledged observing Inselberg, in

March 2015, with a handwritten inventory list, but denied participating in its

creation.


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      On February 15, 2019, the motion judge denied plaintiffs' application to

enforce litigants' rights. Citing Milne v. Goldenberg, 428 N.J. Super. 184, 198

(App. Div. 2012), the judge ruled:

            The [c]ourt does NOT find that . . . Bisignano, as the
            'disobedient party,' was able to comply or that he failed
            to comply. Had the parties made a definitive inventory
            of the items and made same part of their settlement
            agreement, the [c]ourt would have some basis to
            determine if there was non-compliance. Instead the
            'list' of items seems to be a moving target of sorts that
            has changed and has been subject to differing
            interpretations, causing both parties to resort to
            recollections of a third party (Ousmane). Unilateral
            emails and lists that do not indicate assent or agreement
            do not and cannot satisfy the burden associated with the
            relief requested. Inasmuch as the primary relief
            requested is denied, so too is the application for costs
            and fees.

      Plaintiffs now appeal the denial of their motion to enforce litigants' rights.

                                            II

      Plaintiffs argue the motion judge erred by treating Bisignano's agreement

to return the memorabilia as part of a "settlement agreement"; as a result, they

contend the judge mistakenly focused on whether the parties ever finalized the

list of items Bisignano agreed to return. Additionally, plaintiffs contend the

judge erred when she failed to find that Bisignano "implicitly accepted" a




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memorabilia list prepared by plaintiffs in November 2017, when Bisignano's

counsel did not object to the list.

      We review a trial court's enforcement of litigant's rights pursuant to Rule

1:10-3 under an abuse of discretion standard. Wear v. Selective Ins. Co., 455

N.J. Super. 440, 458-59 (App. Div. 2018) (citing Barr v. Barr, 418 N.J. Super.

18, 46 (App. Div. 2011)). "An abuse of discretion occurs when a decision was

'made without a rational explanation, inexplicably departed from established

policies, or rested on an impermissible basis.'" Id. at 459 (quoting Flagg v.

Essex Cty. Prosecutor, 171 N.J. 561, 571 (2002)).

      Rule 1:10-3 "allow[s] for judicial discretion in fashioning relief to

litigants when a party does not comply with a judgment or order." North Jersey

Media Grp., Inc. v. State, Office of Governor, 451 N.J. Super. 282, 296 (App.

Div. 2017) (alteration in original) (quoting In re N.J.A.C. 5:96 & 6:97, 221 N.J.

1, 17-18 (2015)). However, "before punitive or coercive relief can be afforded,

the court must be satisfied that the party had the capacity to comply with the

order and was willfully contumacious." Pressler & Verniero, Current N.J. Court

Rules, comment 4.3 on R. 1:10-3 (2020). Thus, to find a violation of litigant's

rights, the court must be satisfied that the offending party's actions were willful

and unjustified. See P.T. v. M.S., 325 N.J. Super. 193, 206-07 (App. Div. 1999)


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(holding it was in error to find ex-wife in contempt without finding that her

failure to comply was willful and unjustified); see also Gonzalez v. Safe &

Sound Sec. Corp., 185 N.J. 100, 115 (2005) (when determining a violation under

R. 1:10-3, we must consider, "whether the plaintiff acted willfully and whether

the defendant suffered harm, and if so, to what degree.").

      The motion judge found the parties' failed to make a definitive inventory

of the memorabilia in Bisignano's possession at the time they agreed to settle

their case by entering into a consent order. Additionally, she found the email

exchanges between the parties failed to establish a definitive inventory list.

Absent a definitive inventory, the judge reasonably concluded she lacked an

adequate basis to determine if there was willful non-compliance on the part of

Bisignano.

      Based upon our review of the motion record, we conclude the judge did

not abuse her discretion in denying plaintiffs' motion to enforce litigants' rights.

Plaintiffs failed to establish that the judge's decision was made without a rational

explanation, inexplicably departed from established policies, or rested on an

impermissible basis.

      The certifications of Ousmane and Bisignano dispute key parts of

Inselberg's certification, creating genuine issues of material fact regarding


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exactly what memorabilia remains unreturned, if any. Nevertheless, we do not

view the denial of plaintiffs' motion as leaving Inselberg without a remedy. "A

consent order is, in essence, an agreement of the parties that has been approved

by the court." Hurwitz v. AHS Hosp. Corp., 438 N.J. Super. 269, 292 (App.

Div. 2014). As such, a consent order operates as a contract between the parties.

Ibid. Bisignano's obligation to return the memorabilia was an important part of

the settlement agreement between the parties. Bisignano's alleged breach of his

obligation under the settlement agreement occurred later, after the case was

dismissed, when Bisignano allegedly failed to return all the sports memorabilia

held as collateral to Inselberg. We discern no reason why Inselberg cannot now

file a separate action alleging breach of the settlement agreement. 3 If Inselberg

can establish that Bisignano breached the settlement agreement by failing to

return certain items of memorabilia, then he would be entitled to specific




3
   We note the entire controversy doctrine "does not apply to bar component
claims either unknown, unarisen or unaccrued at the time of the original action."
Pressler & Verniero, Current N.J. Court Rules, comment 2 on R. 4:30A (2020);
K-Land Corp. No. 28 v. Landis Sewerage Auth., 173 N.J. 59, 70 (2002).



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performance or damages in the amount of the fair market value of the unreturned

items.4

      We next turn to whether the motion judge abused her discretion in denying

plaintiffs' request for attorney's fees. A court may award attorney's fees as a

sanction under Rule 1:10-3, which "allows any litigant to invoke relief in aid of

a judgment or order of a court." In re Daniels, 118 N.J. 51, 60 (1990). The

purpose of the rule "is to provide a mechanism, coercive in nature, to afford

relief to a litigant who has not received what a [c]ourt [o]rder or [j]udgment

entitles that litigant to receive." D'Atria v. D'Atria, 242 N.J. Super. 392, 407

(Ch. Div. 1990) (discussing R. 1:10-5, later amalgamated with R. 1:10-3). A

court may thus order monetary sanctions or equitable relief under Rule 1:10-3,

"related to the litigant's damages" and not "primarily punitive in nature[,]" id. at

408, or an award of counsel fees "to be paid by any party to the action to a party

accorded relief under this rule." R. 1:10-3. Thus, pursuant to the rule, "a party

who willfully fails to comply with an order or judgment entitling his adversary

to litigant's rights is properly charged with his adversary's enforcement



4
   Of course, the determination of any such damages would likely involve
additional discovery and expert testimony. The absence of such evidence
provides additional support for the judge's decision to deny plaintiffs' motion
without scheduling a plenary hearing.
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                                        14
expenses." Pressler & Verniero, Current N.J. Court Rules, cmt. 4.4.5 on R. 1:10-

3 (2020).

      The decision to award counsel fees "rests within the sound discretion of

the trial court." Maudsley v. State, 357 N.J. Super. 560, 590 (App. Div. 2003).

We disturb such determinations "only on the rarest occasions, and then only

because of a clear abuse of discretion." Packard-Bamberger & Co. v. Collier,

167 N.J. 427, 444 (2001) (quoting Rendine v. Pantzer, 141 N.J. 292, 317

(1995)).

      The judge denied plaintiffs' request for attorney's fees because the motion

record failed to establish that Bisignano was a "disobedient party," who was able

to comply and then failed to comply. Absent clear evidence of willful non-

compliance, we discern no basis to conclude the judge abused her discretion in

denying plaintiffs' request for attorney's fees. Maudsley, 357 N.J. Super. at 590.

      Any arguments not specifically addressed lack sufficient merit to warrant

discussion in a written opinion. R. 2:11-3(e)(1)(E).

      Affirmed.




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