RASTELLI BROTHERS, INC. v. JUSTICE GOVERNMENT SUPPLY, INC.

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

CHAMBERS OF MITCHELL H. COHEN BUILDING &

CHRISTINE P. O’HEARN U.S. COURTHOUSE

UNITED STATES DISTRICT JUDGE 4TH & COOPER STREETS

ROOM 6050

CAMDEN, NJ 08101

856-757-5167

February 5, 2025

VIA CM/ECF

David R. Dahan

Beau Charles Wilson

HYLAND LEVIN SHAPIRO LLP

6000 Sagemore Drive

Suite 6301

Marlton, New Jersey 08053

Steven Pietro

555 Pacific Grove Drive

Unit #2

West Palm Beach, Florida

33401

Justice Government Supply, Inc.

555 Pacific Grove Drive

Unit #2

West Palm Beach, Florida

33401

LETTER ORDER

Re: Rastellis Brothers, Inc. v. Justice Government Supply, Inc., et al.

Civil Action No. 24-00390

Dear Counsel and Mr. Pietro:

This matter comes before the Court on a Motion for Default Judgment pursuant to Federal

Rule of Civil Procedure 55(b)(2), (ECF No. 13), and Motion for Sanctions under Rule 11, (ECF

No. 25), by Plaintiff Rastelli Brothers, Inc. d/b/a Rastelli Foods Group (“Plaintiff”) against

Defendants Justice Government Supply, Inc. (“JGS”) and Steven Pietro (“Pietro”) (collectively,

“Defendants”). The Court held an evidentiary hearing on November 6, 2024. For the reasons that

follow, Plaintiff’s Motion for Default Judgment is GRANTED and DENIED in part and

Plaintiff’s Motion for Sanctions is GRANTED.

I. BACKGROUND AND PROCEDURAL HISTORY

Plaintiff, a family-run business engaged in providing food products and services globally,

attended an exhibition in February 2021, where it was introduced to Defendant Steven Pietro,

acting on behalf of Defendant JGS. (Compl., ECF No. 1 at ¶¶ 1, 13–15, 18–22). Pietro expressed

a long-standing interest in doing business with Plaintiff. (Id. at ¶¶ 23–24). Following discussions,

a business relationship began in August 2022, with JGS placing small purchase orders, which were

duly paid. (Id. at ¶¶ 25–27).

By August 10, 2023, the parties formalized their relationship through a three-year

agreement (“Agreement”), under which the Plaintiff was to process, manufacture, and package

products for JGS’ customers, with all processing occurring in New Jersey. (Id. at ¶¶ 30–33, 35).

The Agreement required JGS to pay for these services within thirty days of invoicing. (Id. at ¶ 34).

Following the Agreement, the value of JGS’ purchase orders increased significantly, starting with

a $89,376.00 order. (Id. at ¶ 39).

Shortly thereafter, JGS failed to make timely payments, with Pietro representing that JGS’

customers had not paid JGS. (Id. at ¶¶ 40–42). Relying on these assurances, the Plaintiff continued

fulfilling purchase orders. (Id. at ¶¶ 43–45). However, during a business trip in December 2023,

Tony Rastelli, a shareholder of the Plaintiff, discovered that JGS had actually received full

payments from at least one customer and that customer provided documentary evidence

confirming all payments had been made to JGS. (Id. at ¶¶ 46–50). Yet, Pietro continued to deny

that JGS had been paid. (Id. at ¶ 52).

Due to JGS’ outstanding balance of $1,889,153.07, the Plaintiff halted further fulfillment

of purchase orders and, on December 27, 2023, sent a formal demand for payment. (Id. at ¶¶ 55–

58). JGS failed to respond. (Id. at ¶ 59).

During a later conference in January 2024, Pietro altered his explanation, then claiming the

funds were “tied up” due to international wire transfers. (Id. at ¶¶ 60–64). Despite these

representations, JGS has still not made any payments and remains in breach of the Agreement. (Id.

at ¶ 65).

On January 23, 2024, Plaintiffs filed a Complaint alleging ten causes of action against

Defendants, including, (1) breach of contract against JGS (Count One), (2) breach of the

implied covenant of good faith and fair dealing against JGS (Count Two), (3) unjust

enrichment against JGS and Pietro (Count Three), (4) conversion against JGS and Pietro

(Count Four), (5) violation of the New Jersey Consumer Fraud Act against JGS and Pietro

(Count V), (6) fraudulent inducement and misrepresentation against JGS and Pietro (Count Six),

(7) promissory estoppel against JGS and Pietro (Count Seven), (8) violation of the

New Jersey Racketeer Influenced and Corrupt Organizations Act, N.J. Stat. Ann §

2C:41-1 et seq., against JGS and Pietro (Count Eight), (9) civil conspiracy against JGS and Pietro

(Count Nine) and (10) injunctive relief in the form of a constructive trust against JGS and Pietro

(Count Ten).

On April 4, 2024, the Clerk of the Court entered default against Defendants. (ECF No.

12). Plaintiff, thereafter, filed this Motion for Default Judgment. (ECF No. 13). On June 24,

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2024, Defendant Pietro filed a motion to dismiss arguing that he had not been served. (ECF No.

15). The Court considered this filing as opposition to Plaintiff’s Motion for Default Judgment.

On November 6, 2024, the Court held an evidentiary hearing on the issue of service. (ECF No.

21). Defendants failed to appear. At the hearing, the Court heard witness testimony, received

documentary evidence, and determined that both Defendants had, in fact, been properly served.

Plaintiff thereafter filed a Motion for Sanctions against Defendants. (ECF No. 25). To date, no

counsel has entered an appearance for the corporate defendant and Defendant Pietro acting pro

se has not filed any responsive pleadings or response to the Motion for Default Judgment or

Motion for Sanctions.

II. LEGAL STANDARDS

a. Default Judgment

Pursuant to Federal Rule of Civil Procedure 55(a), a plaintiff may request an entry of

default by the clerk of court as to “a party against whom a judgment for affirmative relief is sought

[who] has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise[.]”

FED. R. CIV. P. 55(a). Once a default has been entered, the plaintiff may then seek the entry of a

default judgment—either by the clerk or the court itself—under Rule 55(b). FED. R. CIV. P. 55(b).

A party is not entitled to a default judgment as of right; “the entry of such a judgment is

left primarily to the discretion of the district court.” DirecTV, Inc. v. Asher, No. 03-01969, 2006

WL 680533, at *1 (D.N.J. Mar. 14, 2006) (citing Hritz v. Woma, 732 F.2d 1178, 1180 (3d Cir.

1984)). Because default judgments prevent the resolution of claims on their merits, courts

generally “do[ ] not favor entry of defaults and default judgments.’” United States v. Thompson,

No. 16-00857, 2017 WL 3634096, at *1 (D.N.J. July 20, 2017) (quoting United States v.

$55,518.05 in U.S. Currency, 728 F.2d 192, 194 (3d Cir. 1984)). When considering a motion for

default judgment, “[a] defendant is deemed to have admitted the factual allegations of the

Complaint . . . except those factual allegations related to the amount of damages.” DirecTV, 2006

WL 680533, at *1 (citing 10A Charles A. Wright, Arthur R. Miller & Mary Kay Kane, Fed. Prac.

& Proc. § 2688, at 58–59 (3d ed. 1998)). In contrast, “the Court need not accept the moving party’s

legal conclusions, because even after default it remains for the court to consider whether the

unchallenged facts constitute a legitimate cause of action, since a party in default does not admit

mere conclusions of law.” Id. (citing Wright, Miller & Kane, supra, § 2688, at 63).

Through this lens, the court must: “1) determine it has jurisdiction both over the subject

matter and parties; 2) determine whether defendants have been properly served; 3) analyze the

Complaint to determine whether it sufficiently pleads a cause of action; and 4) determine whether

the plaintiff has proved damages.” Chanel, Inc. v. Gordashevsky, 558 F. Supp. 2d 532, 535-36

(D.N.J. 2008).

Additionally, the Court must consider the following three factors: “(1) whether the party

subject to default has a meritorious defense, (2) the prejudice suffered by the party seeking default,

and (3) the culpability of the party subject to default.” Doug Brady, Inc. v. N.J. Bldg. Laborers

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Statewide Funds, 250 F.R.D. 171, 177 (D.N.J. 2008) (citing Emcasco Ins. Co. v. Sambrick, 834

F.2d 71, 74 (3d Cir. 1987)). If these factors weigh in a plaintiff’s favor, the court may grant default

judgment.

III. ENTRY OF DEFAULT JUDGMENT

A. Jurisdiction and Service

This Court has original jurisdiction under 28 U.S.C. § 1332 because the parties are citizens

of different states and the amount in controversy exceeds $75,000.00 exclusive of interest and

costs.

Additionally, for the reasons stated on the record at the November 6, 2024 evidentiary

hearing, (ECF No. 23), the Court finds that Defendant Pietro was properly served on February 28,

2024, via personal service in his individual and corporate capacity as President of JGS. Thus, the

Court has jurisdiction over the matter and the parties.

B. Liability and Appropriateness of Default Judgment

Turning first to the appropriateness of an entry of default judgment, courts must consider

the following three factors: “(1) whether the party subject to default has a meritorious defense, (2)

the prejudice suffered by the party seeking default, and (3) the culpability of the party subject to

default.” Doug Brady, Inc., 250 F.R.D. at 177 (citation omitted). Based on the allegations in the

Complaint, Defendants do not appear to have a meritorious defense as Plaintiffs have provided

evidence that a debt is due and owing. Second, Plaintiffs will suffer in the absence of the entry of

default judgment as it is owed a significant amount under the Agreement. Finally, Defendants have

acted culpably in their actions prompting the filing of the Complaint. The entry of default judgment

in this case is appropriate.

1. BREACH OF CONTRACT, IMPLIED COVENANT OF GOOD FAITH AND

FAIR DEALING, AND UNJUST ENRICHMENT (COUNTS ONE

THROUGH THREE)

Accepting the Complaint’s allegations as to liability as true, the Court finds that Plaintiff

has stated a claim and Defendant lacks a meritorious defense with respect to Count I, alleging

breach of contract. Under New Jersey law, to state a claim for breach of contract, a plaintiff “must

allege (1) a contract between the parties; (2) a breach of that contract; (3) damages flowing

therefrom; and (4) that the party stating the claim performed its own contractual obligations.”

Frederico v. Home Depot, 507 F.3d 188, 203 (3d Cir. 2007). Plaintiff’s Complaint contains facts

that meet all four elements. It alleges that the parties entered into a contract pursuant to which

Plaintiff would process, manufacture, and package products for JGS’ customers and invoice

Defendants for that work. (Compl., ECF No. 1, ¶¶ 30–35). Defendants were required to pay those

invoices within thirty days or begin to accrue interest at the rate of 1.5 percent per month. (Id.;

Compl., ECF No. 1, Ex. C). Plaintiff performed its contracted services, but numerous invoices

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went unpaid. (Id. at ¶ 65). Defendant therefore breached the parties’ contracts, causing damages

to Plaintiff, which had performed its end of the deal.

As for Plaintiff’s claim for implied covenant of good faith and fair dealing, a plaintiff “may

not maintain a separate action for breach of the implied covenant of good faith and fair dealing

[where] it would be duplicative of [its] breach of contract claim.” Hahn v. OnBoard LLC, No. 09-

3639, 2009 WL 4508580, at *6 (D.N.J. Nov. 16, 2009). To state a claim for breach of the implied

covenant, a plaintiff must demonstrate that: “(1) a contract exists between the plaintiff and the

defendant; (2) the plaintiff performed under the terms of the contract unless excused; (3) the

defendant engaged in conduct, apart from its contractual obligations, without good faith and for

the purpose of depriving the plaintiff of the rights and benefits under the contract; and (4) the

defendant's conduct caused the plaintiff to suffer injury, damage, loss or harm.” TBI Unltd., LLC

v. Clear Cut Lawn Decisions, LLC, No. 12-3355, 2014 WL 3853900, at *3 (D.N.J. Aug. 5, 2014).

Here, Plaintiff has not demonstrated a plausible cause of action for breach of the covenant of good

faith and fair dealing because this claim arises from the same conduct underlying Plaintiff’s breach

of contract claim and Plaintiff’s Motion for Default Judgment on this count is denied.

Similarly, with respect to Plaintiff’s claim for unjust enrichment, where a valid contract

governs the parties’ rights and obligations, a party cannot bring a claim for unjust enrichment. See

Van Orman v. Am. Ins. Co., 680 F.2d 301, 311 (3d Cir. 1982). “[B]ecause unjust enrichment is an

equitable remedy resorted to only when there was no express contract providing for remuneration,

a plaintiff may recover on one of the other theory, but not both.” Caputo v. Nice-Pak Products,

Inc., 693 A.2d 494, 498 (N.J. Super. Ct. App. Div. 1997). Here, Plaintiff alleges that Defendants

were unjustly enriched because they benefited from the retention of the monies paid to JGS by its

customers for Plaintiff’s fulfillment of those orders. (Pla. Br., ECF No. 13 at 19). Given the

existence of the Agreement between the parties, which governs the parties’ obligation, Plaintiff

cannot recover for both breach of contract and unjust enrichment over the same conduct. Thus, the

Court finds no plausible unjust enrichment cause of action and Plaintiff’s Motion for Default

Judgment on this count is denied.

2. CONVERSION (COUNT FOUR)

Under New Jersey common law, conversion is “an unauthorized assumption and exercise

of the right of ownership over goods or personal chattels belonging to another, to the alteration of

their condition or the exclusion of an owner’s rights.” Barco Auto Leasing Corp. v. Holt, 548 A.2d

1161, 1164–65 (N.J. App. Div. 1988). Put differently, conversion is “to exercise a dominion or

control over the goods which is in fact inconsistent with the plaintiff’s rights.” Prosser & Keeton

on Torts § 15 (5th ed. 1984). Conversion is an intentional tort in that defendants must intend to

exercise control over the property, but they need not intend to act wrongfully. Id.; LaPlace v.

Briere, 962 A.2d 1139, 1144 (N.J. App. Div. 2009) (endorsing the treatise’s definition). Although

conversion usually concerns personal chattels, it has been applied to money as well. See Chi. Title

Ins. Co. v. Ellis, 978 A.2d 281, 284 (N.J. App. Div. 2009) (affirming summary judgment when

defendants unknowingly received fraudulently-obtained money but presented no evidence to

suggest that they received the money in exchange for fair value).

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Here, not only was Plaintiff’s property provided to Defendants, but Defendants were paid

by its customers without paying Plaintiff. As such, Plaintiff demonstrates a plausible conversion

because Defendants received Plaintiff’s property without having paid for it. See Slater v. Yum

Yum’s 123 ABC, No. 20-00382, 2021 WL 2188599, at *5 (E.D. Pa. May 28, 2021) (“Slater alleges

a cognizable conversion claim because Defendant has refused to return her personal items, an

allegation that we must accept as true.”). Plaintiff’s Motion for Default Judgment on this count is

granted.

3. NEW JERSEY CONSUMER FRAUD ACTION (COUNT FIVE)

To state a cause of action under the NJCFA, a plaintiff must show “1) unlawful conduct by

defendant; 2) an ascertainable loss by plaintiff; and 3) a causal relationship between the unlawful

conduct and the ascertainable loss.” Bosland v. Warnock Dodge, Inc., 197 N.J. 543, 557, 964 A.2d

741 (2009) (citing Int’l Union of Operating Eng’rs Local No. 68 Welfare Fund v. Merck & Co.,

Inc., 192 N.J. 372, 389, 929 A.2d 1076 (2007)). “The NJCFA does not require a direct relationship,

or privity, between plaintiff and defendant. To the contrary, it encompass[es] the acts of remote

suppliers . . . whose products are passed on to a buyer and whose representations are made to or

intended to be conveyed to the buyer.” T.J. McDermott Transp. Co. v. Cummins, Inc., No. 14-

04209, 2015 WL 1119475, at *5 (D.N.J. Mar. 11, 2015) (internal quotations and citations omitted).

However, breach of contract, alone, is insufficient to give rise to an NJCFA claim. Hunt

Const. Grp., Inc. v. Hun Sch. of Princeton, No. 08-3550, 2009 WL 1312591, at *5 (D.N.J. May

11, 2009) (explaining that “under the NJCFA . . . neither a claim for breach of contract nor fraud

in the fulfillment of the contract is actionable”); Barry by Ross v. New Jersey State Highway

Authority, 585 A.2d 420, 424 (N.J. Super. Ct. Ch. Div. 1990) (explaining that “reasonable limits

must be placed upon the operation of the Act in order that its enforcement will properly reflect

legislative intent” and that the New Jersey Legislature did not intend for the NJCFA to apply to

every breach of contract claim). “Rather, in order for a party’s failure to perform a contract to be

actionable under the NJCFA, courts require the plaintiff to allege that ‘the promisor knew at the

time the contract was formed that he did not intend to fulfill the promise.’” Corp. Incentives, Inc.

v. Unified Safe Guard, LLC, No. 20-13471, 2021 WL 2043092, at *2–3 (D.N.J. May 21, 2021)

(quoting Barry, 585 A.2d at 423–24); Mullin v. Auto. Prot. Corp., No. 07-3327, 2008 WL

4509612, at *2–3 (D.N.J. Sept. 29, 2008) (requiring evidence that defendant “never intended to

fulfill its obligations under the contract” for a breach of contract to constitute a fraudulent

misrepresentation under the CFA).

Here, Plaintiff merely alleges that Defendants failed to perform their obligations under the

Agreement; however, that is insufficient to establish a claim under the NJCFA. See Barry, 585

A.2d at 424 (“A failure to fulfill a promise may constitute a breach of contract, but it is not fraud

and the nonperformance of that promise does not make it so.”); see also Billings v. Am. Exp. Co.,

No. 10-3487, 2011 WL 5599648, at *10 (D.N.J. Nov. 16, 2011) (“[A] breach of a contract does

not alone violate the CFA and Plaintiff’ allegation does not state a CFA claim by way of Plaintiff’s

addition of a legal conclusion that such conduct was ‘unconscionable’ within the meaning of the

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Act.”). Indeed, Plaintiff has not alleged any facts suggesting that Defendants entered the contract

with the express intent of defrauding Plaintiff or that they never intended to fulfill their obligations.

See Corp. Incentives, Inc., 2021 WL 2043092, at *3 (“Plaintiff has not alleged any facts suggesting

that Defendants entered the contract with the express intent of defrauding Plaintiff or that they

never intended to fulfill their obligations.”); Hunt Const. Grp., Inc., No. 08-3550, 2009 WL

1312591, at *5 (rejecting a claim that a party’s failure to fully perform under a contract gave rise

to an actionable affirmative misrepresentation under the NJCFA).

As such, there is no plausible claim under the NJCFA and Plaintiff’s Motion for Default

Judgment with respect to the NJCFA against both Defendants is denied.

4. FRAUDULENT INDUCEMENT AND MISREPRESENTATION AND

PROMISSORY ESTOPPEL (COUNTS SIX AND SEVEN)

Under New Jersey law, the elements required to establish a claim of common law fraud,

fraudulent misrepresentation, and fraudulent inducement are identical: “(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.” Banco Popular N. Am. v. Gandi, 184 N.J. 161, 172–73,

876 A.2d 253 (2005) (quoting Gennari v. Weichert Co. Realtors, 148 N.J. 582, 610, 691 A.2d 350

(1997)); see also Jewish Center of Sussex County v. Whale, 86 N.J. 619, 624–25, 432 A.2d 521

(1981).

The elements of promissory estoppel are “1) a clear and definite promise, 2) made with the

expectation that the promisee will rely upon it, 3) reasonable reliance upon the promise, 4) which

results in definite and substantial detriment.” Lobiondo v. O’Callaghan, 815 A.2d 1013, 1020 (N.J.

App. Div.), certif. denied, 827 A.2d 291 (N.J. 2003).

Because Plaintiff’s tort claims are founded in the contractual relationship with

Defendants—and they have not provided an independent duty owed beyond that of the contract

terms— there are no plausible tort claims and Plaintiff’s Motion for Default Judgment with respect

to Counts Six and Seven is denied.

To be sure, the economic loss doctrine “bars a plaintiff from recovering in tort for damages

resulting from the failure of a defendant to perform under a contract.” Tidman v. Eminence

Hardscapes, LLC, No. 22-5441, 2023 WL 3224594, at *5 (D.N.J. May 3, 2023) (citing Duguesne

Light Co. v. Westinghouse Elec. Corp., 66 F.3d 604, 618 (3d Cir. 1995) (explaining that New

Jersey forbids recovery under a theory of fraud where a counterparty simply promises to perform

a contract but ultimately fails to do so)). There are, however, exceptions to the general rule where

“the alleged fraud is related to pre-contractual misrepresentations or is ‘extrinsic to the

performance of the contract,’ in other words, fraud in the inducement.” Id. (quoting D&D Assoc.,

Inc. v. Bd. of Educ. of N. Plainfield, 2007 WL 4554208, at *27 (D.N.J. Dec. 21, 2007)). “The

question then is whether the alleged fraud amounts to a breach of a contractual duty and is therefore

intrinsic and barred, id., or ‘if it breaches a duty separate and distinct from the performance of the

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agreement’s terms.’” Zurich Am. Ins. Co. v. Asphalt Paving Sys., Inc., No. 22-01535, 2023 WL

179962, at *4 (D.N.J. Jan. 13, 2023) (citing USI Int'l, Inc. v. Festo Didiactic, Inc., No. 15-08451,

2022 WL 345086, at *3 (D.N.J. Feb. 4, 2022)).

This is not a situation where “pre-contractual statements were misrepresentations on which

Plaintiff relied to enter into an agreement.” Tidman, 2023 WL 3224594, at *5 (permitting a claim

for fraudulent misrepresentation to proceed alongside a breach of contract claim where plaintiff

alleged that—before signing a contract—contractors represented to plaintiff that they were

“authorized dealers” to induce the plaintiff to hire their services). Rather, the same statements are

the basis for both the contract and fraud claims. It is, therefore, impossible to determine where

Plaintiff’s contract claim ends and its fraud claim begins—“[a]nd that is precisely the scenario that

the economic loss doctrine has been developed to avoid.” Zurich, 2023 WL 179962, at *4.

The same is true as to Count Seven, Plaintiff’s promissory estoppel claim. Corps Logistics,

LLC v. Dutil, No. 20-06683, 2021 WL 795198, at *10 (D.N.J. Feb. 28, 2021) (“[B]reach of contract

and promissory estoppel may be alternatively pled. Nonetheless, promissory estoppel cannot be

enforced when a court finds that the parties have entered into an enforceable contract.” (citations

omitted)).

Thus, in addition to their being no independent duty to support Plaintiff’s tort law claims,

they are barred by the economic loss doctrine.

5. VIOLATION OF NJ RICO AND CIVIL CONSPIRACY (COUNTS EIGHT

AND NINE)

Under New Jersey’s RICO statute, it is “unlawful for any person [to] receive[ ] any income

derived, directly or indirectly, from a pattern of racketeering activity . . . [and] to use or invest,

directly or indirectly, any part of the income, or the proceeds of the income, in acquisition of any

interest in, or the establishment or operation of any enterprise which is engaged in or the activities

of which affect trade or commerce.” N.J. Stat. Ann. § 2C:41–2. The statute defines a “person” as

“any individual or entity or enterprise . . . holding or capable of holding a legal or beneficial interest

in property.” Id.

Plaintiffs must establish “five elements in a substantive [New Jersey] RICO offense: (1)

the existence of an enterprise; (2) that the enterprise engaged in or its activities affected trade or

commerce; (3) that defendant was employed by, or associated with the enterprise; (4) that he or

she participated in the conduct of the affairs of the enterprise; and (5) that he or she participated

through a pattern of racketeering activity.” State v. Ball, 661 A.2d 251 (N.J. 1995).

A civil conspiracy in New Jersey is defined as “a combination of two or more persons

acting in concert to commit an unlawful act, or to commit a lawful act by unlawful means, the

principal element of which is an agreement between the parties to inflict a wrong against or injury

upon another, and an overt act that results in damage.” Banco Popular N. Am. v. Gandi, 876 A.2d

253, 263 (N.J. 2005).

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There are no allegations in the Complaint of a pattern of racketeering activity or that two

or more persons acted together to commit an unlawful act in this case on which to grant default

judgment on these Counts. Thus, there is no plausible NJ RICO or conspiracy claim and the Motion

is denied as to Counts Eight and Nine.

6. CONSTRUCTIVE TRUST (COUNT TEN)

“A constructive trust is an equitable remedy and not a cause of action in and of itself.”

Starland v. Fusari, No. 10-4930, 2015 WL 468333, at *2 (D.N.J. Feb. 4, 2015) (citation omitted).

New Jersey courts have traditionally applied a two-part test when determining whether a

constructive trust is an appropriate remedy. D’Ippolito v. Castoro, 242 A.2d 617, 619 (N.J. 1968).

There must be a showing of (1) a wrongful act, which (2) resulted in an unjust enrichment. Id.

“The essential element for the imposition of a constructive trust is unjust enrichment.” Starland,

2015 WL 468333, at *2 (citation omitted).

Here, similar to Counts Eight and Nine, there is insufficient evidence to warrant the

imposition of a constructive trust; this was a standard breach of contract case. And to be sure,

“breach of contract alone is not sufficient and does not qualify as the type of wrongful act or fraud

which would warrant the imposition of a constructive trust. Otherwise, a constructive trust might

be available whenever there was a breach of an . . . agreement.” Id. at *3 (citing Presten v. Sailer,

542 A.2d 7 (N.J. App. Div. 1988)). Thus, there is no plausible claim under this theory and

Plaintiff’s Motion on this count is denied.

C. Damages

Plaintiff seeks $9,529,797.00, which is five times the amount of money owed,

$1,905,959.40, under the New Jersey Punitive Damages Act. (Pl. Br., ECF No. 13-3 at 29).

Plaintiff’s request for punitive damages is denied. There are simply no facts to support an award

of punitive damages in this case. As stated above, while there is no doubt a significant amount of

money due and owing Plaintiff, this is a standard and ordinary breach of contract case. See

Nebraskaland, Inc. v. River St. Idealease, LLC, 188 F. Supp. 3d 390, 400 (D.N.J. 2016) (“The law

generally does not permit a plaintiff to recover punitive damages for breach of contract claims.”);

Buckley v. Trenton Saving Fund Soc., 544 A.2d 857, 865 (N.J. 1988) (internal quotations omitted)

(“With rare exceptions, punitive damages are not available in an action for a breach of contract . .

. and have been restricted to tort actions[.]”); Jayme v. MCI Corp., 328 F. App’x 768, 771 (3d Cir.

2008) (unpublished) (“Under New Jersey law, punitive damages for breach of contract generally

are not recoverable.”). Thus, Plaintiff fails to state a plausible claim for punitive damages.

The Court finds it appropriate to award Plaintiff $1,905,959.40—the amount of money

owed—and default judgment is entered against Defendants in that amount. Additionally, because

the Court did not grant the Motion under the statutes which provide for an award of attorney’s

fees, that request is denied.

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IV. SANCTIONS

Federal Rule of Civil Procedure 11 authorizes courts to sanction—

the signatory to any pleading, motion or other paper which is not well grounded in fact nor

warranted by existing caselaw or a good faith argument for the extension, modification, or

reversal of existing law, or which is interposed for any improper purpose, such as to harass

or to cause unnecessary delay or needless increase in the cost of litigation.

Landon v. Hunt, 938 F.2d 450, 452 (3d Cir. 1991). “The standard for testing conduct under Rule

11 is reasonableness under the circumstances. The rule imposes on counsel a duty to look before

leaping[.]” Keister v. PPL Corp., 318 F.R.D. 247, 255 (M.D. Pa. 2015) (citations omitted).

Sanctions under the Rule are particularly appropriate when the offending party demonstrates “a

deliberate indifference to obvious facts.” Id. at 256 (quoting Baker v. Alderman, 158 F.3d 516, 524

(11th Cir. 1998)).

The Rule applies to “any attorney, law firm, or party that violated the Rule or is responsible

for the violation.” FED. R. CIV. PRO. 11(c)(1); Lai v. Wei, No. 07-179, 2007 WL 1963331, at *4

(D.N.J. June 29, 2007) (“The fact that plaintiff appears pro se does not immunize [them] from

sanctions pursuant to Rule 11.”). Courts must tailor Rule 11 sanctions to the particular

circumstances of the case, keeping in mind the Rule’s purpose to hold parties accountable and

deter frivolous lawsuits and filings. See Keister, 318 F.R.D. at 256–57. “The basic principle

governing the choice of sanctions is that the least severe sanctions adequate to serve the purpose

should be imposed.” Id. (quoting Doering v. Union Cty. Bd. of Chosen Freeholders, 857 F.2d 191,

194 (3d Cir. 1988)). Courts may consider a number of factors in determining the appropriate

sanction, but the ultimate decision remains in the courts’ discretion. See id.

Plaintiff maintains that Pietro’s “Application for Motion to Dismiss for Failure of Proper

Service of Process” and his argument that he was not properly served was a blatant

misrepresentation to the Court. (Pl. Br., ECF No. 25 at 7). The Court agrees. Defendant Pietro’s

assertion in his filings that he was never served and that he had no notice of this action, when there

is concrete, undisputed evidence (both testimony and photographs of the effectuation of service

clearly depicting Mr. Pietro) that he was indeed personally served was a blatant misrepresentation

to the Court. Indeed, Defendant Pietro filed an application to dismiss, which the Court considered

as opposition to Plaintiff’s Motion for Default Judgment, but then failed to appear for the

evidentiary hearing the Court held based on his representations. And it was not simply that

Defendant Pietro failed to appear. He needlessly and frivolously caused the Court to hold a hearing,

for the Plaintiff to be present with counsel, and for several witnesses to testify to establish proper

service. All of which was unnecessary. For these reasons, regardless of his pro se status, Defendant

Pietro’s actions and frivolous filings warrant the imposition of reasonable sanctions in the amount

of the costs and attorneys’ fees related to the hearing. Plaintiff shall submit a certification regarding

the costs and attorneys’ fees incurred related to the hearing on November 6, 2025. Yet, the sanction

is only as to Defendant Peitro as Defendant JGS has never appeared in this matter and Mr. Peitro’s

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filings and actions were on his behalf as an individual only since a corporation must be represented

by counsel.

V. CONCLUSION

Therefore, for the reasons expressed above, it is ordered that Plaintiffs’ Motion for Default

Judgment is GRANTED in part and DENIED in part. (ECF No. 13). Plaintiffs’ Motion for

Sanctions is GRANTED. (ECF No. 25). Plaintiff shall submit a certification and any supporting

documentation regarding the costs and attorneys’ fees incurred related to the hearing on November

6, 2025, within fourteen (14) days of this Order. The Clerk of the Court shall serve a copy of this

Order on Defendants.

SO ORDERED.

/s/ Christine P. O’Hearn

CHRISTINE P. O’HEARN

UNITED STATES DISTRICT JUDGE

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