Gary Raiczyk v. Ocean County Veterinary Hospital

PRECEDENTIAL
UNITED STATES COURT OF
APPEALS
FOR THE THIRD CIRCUIT
No. 02-1070
_______________
GARY RAICZYK,
Appellant
v.
OCEAN COUNTY VETERINARY
HOSPITAL;
DR. PETER M. FALK; DR. ALBERT M.
PAGANI;
GEORGE ELLIOT; MOKEL, VOGEL &
ELLIOT, A PROFESSIONAL
ASSOCIATION; PETER S. HENNES,
ESQ.;
BIELORY & HENNES, A
PROFESSIONAL CORPORATION;
DONALD COW AN; JOSEPH
GUNTESKI;
COWAN & GUNTESKI AND CO., A
BUSINESS ENTITY;
EDWARD F. LISTON, JR., ESQ.
________________
Appeal from the United States
District Court for the District of New
Jersey
(D.C. Criminal Action Nos. 98-cv-02892)
District Judge: Honorable Anne E.
Thompson
Argued on October 14, 2003
Before: SLOVITER, ROTH and
CHERTOFF, Circuit Judges
(Opinion filed: July 30, 2004)
Mario A. Iavicoli, Esquire (Argued)
43 Kings Highway West
Haddonfield, NJ 08033
Counsel for Appellant
John E. MacDonald, Esquire (Argued)
Stark & Stark
993 Lenox Drive
Princeton Pike Corporate Center
P.O. Box 5315
Princeton, NJ 08543
Counsel for Appellees
O P I N I O N
ROTH, Circuit Judge:
A judge may overturn a jury verdict
only when, “as a matter of law, ‘the record
is critically deficient of that minimum
quantity of evidence from which a jury
might reasonably afford relief.’” Dudley
v. S. Jersey Metal, Inc., 555 F.2d 96, 101
(3d Cir. 1977) (quoting Denneny v. Siegel,
407 F.2d 433, 439 (3d Cir. 1969)). In this
case, the District Court overturned two
awards granted by the jury. The jury
awarded plaintiff, Dr. Gary Raiczyk,
$113,431, for monies owed to him for sale
of his shares in a professional corporation
and an additional $22,500 to repay unpaid
officer loans that Dr. Raiczyk had made to
the corporation. The District Court ruled
that, as a matter of law, Dr. Raiczyk was
not entitled to either amount.

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We do not agree with the District
Court’s conclusion that, as a matter of law,
there was insufficient evidence in the
record to support the finding that Dr.
Raiczyk was entitled to the $22,500 for the
unpaid officer loans. We do agree,
however, that there was insufficient
evidence to support the jury’s verdict of
$113,431 for Dr. Raiczyk’s shares of
stock. We will therefore affirm the
District Court’s disallowance of the award
for the sale of the shares in the veterinary
hospital, but we will reverse the District
Court’s judgment against Dr. Raiczyk on
the $22,500 in officer loans, and we will
remand this case to the District Court with
instructions to reinstate the jury’s verdict
for that amount.
I. Factual Background and Procedural
History
The plaintiff, Dr. Gary Raiczyk, and
the defendants, Dr. Albert Pagani and Dr.
Peter Falk, practiced veterinary medicine
at Ocean County Veterinary Hospital. The
hospital was owned by OCVH, Inc., a
professional corporation, in which Drs.
Raiczyk, Pagani, and Falk were
shareholders. The shareholder agreement
between the parties called for a mandatory
buy-out if one of the doctors wanted to
leave the practice. On July 1, 1996, Dr.
Raiczyk informed the other doctors that he
wished to leave the practice and was
exercising his option to sell his shares of
stock in the corporation. A fter
negotiations, all parties signed a sales
agreement on December 31, 1996, which
included arguably ambiguous terms as to
how the final price for the shares would be
calculated. The sales agreement contained
an integration clause, stating that it was the
final and only document memorializing the
agreement. There was no mention in the
sales agreement of the outstanding loans
that Dr. Raiczyk claimed were owed to
him by the corporation.
The doctors conducted various
negotiations on the timing and final
payment amount for the buyout. On April
17, 1997, pursuant to the sales agreement,
Dr. Raiczyk was faxed a closing statement
that set a total price of $206,975.21 for his
shares. Dr. Raiczyk initialed this amount
in two places, signed the document, faxed
the closing statement back to the
defendants’ attorney that same day, and
later had his signature on the document
notarized.
Approximately six months later, Dr.
Raiczyk concluded that he was owed more
money under the agreement. On June 18,
1998, Dr. Raiczyk filed suit, asking that
the court reform the contract due to
mistake. He sued his former partners,
demanding to be paid an additional
$114,131.14 for the sale of his shares of
stock. Dr. Raiczyk claimed that he was in
a hurry on the day that he signed the
closing statement, did not have the
document reviewed by a lawyer or
accountant, and thus only later caught the
mistake. In addition, Dr. Raiczyk sought
the money owed him for the still unpaid
officer loans in the amount of $45,000.
Defendants responded that Dr. Raiczyk
was paid the full amount agreed upon for
his shares and that the officer loans were
included in the sales price. They argued
that the integration clause in the sales
agreement clearly covered those loans.

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The matter was tried before a jury,
and on September 13, 2001, the jury
returned a verdict in favor of Dr. Raiczyk
on both issues. On December 3, 2001,
however, the District Court ruled as a
matter of law under Federal Rule of Civil
Procedure 50(b) that the jury verdict was
set aside and that the cause of action
dismissed with prejudice. The District
Judge explained in her ruling that Dr.
R a i c z y k h a d n o t o f f e r e d a n y
documentation of the officer loans,
including when the loans would be paid
back or if interest would accrue; she
concluded that there was not enough
evidence in the record to support existence
of the loans. The District Judge also ruled
that even though the sales agreement may
have been unclear as to the final price of
the shares of stock, the April 17th closing
letter was unambiguous. Dr. Raiczyk’s
argument that he had mistakenly signed
the closing letter in a hurry did not qualify
for application of the doctrine of unilateral
mistake and did not warrant reformation of
the contract.
Dr. Raiczyk appealed.
II. Jurisdiction and Standard of
Review
Jurisdiction in the United States
District Court for the District of New
Jersey was based on 28 U.S.C. §1332. We
have jurisdiction over the appeal pursuant
to 28 U.S.C. §1291.
Our review of a district court’s
grant of a judgment as a matter of law
under Fed.R.Civ.P. 50(b) is plenary.
Trabal v. Wells Fargo Armored Serv.
Corp., 269 F.3d 243, 249 (3d Cir. 2001).
Such a judgment should only be granted if
“the record is critically deficient of that
minimum quantity of evidence from which
a jury might reasonably afford relief.” Id.
(quoting Powell v. J.T. Posey Co., 766
F.2d 131, 133-34 (3d Cir. 1985)).
Furthermore, in reviewing the District
Court’s ruling, we “must expose the
evidence to the strongest light favorable to
the party against whom the motion is made
and give him the advantage of every fair
and reasonable inference.” Dudley v. S.
Jersey Metal, Inc., 555 F.2d 96, 101 (3d
Cir. 1977) (quoting Fireman’s Fund v.
Videofreeze Corp., 540 F.2d 1171, 1178
(3d Cir. 1976)).
III. Discussion
We must decide whether the
District Court was correct in concluding
that there was not a minimum quantity of
evidence to support the jury’s verdict with
respect to the sale of Dr. Raiczyk’s shares
and his claim of unpaid officer loans. As
discussed more fully below, because the
language of the closing statement is so
clear, we conclude that the District Court
was correct in overturning the jury’s
verdict with respect to the sales amount.
Dr. Raiczyk should not be paid more than
the price listed in the closing statement.
However, we find there is enough
evidence to support the verdict with
respect to Dr. Raiczyk’s unpaid officer
loans and we will reverse on that issue.
A. The Purchase Price
In the April 17, 1997, closing
statement, the amount Dr. Raiczyk was to
receive for his shares was clearly stated as
$206,975.21. Dr. Raiczyk initialed this
amount, initialed the net total on the
second page, signed the bottom of the two-

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page document, and had the document
notarized. Dr. Raiczyk claimed that he
made a mistake when he initialed and
signed this document, arguing that he did
so in a hurry, without the aid of a lawyer or
accountant. The jury was persuaded, and
awarded him $113,431 in compensation
for his shares. The District Court,
however, ruled that Dr. Raiczyk did not
satisfy his legal burden of establishing why
the contract should be reformed. The
court found that there was no evidence of
fraud and that Dr. Raiczyk’s mistake did
not fall under the doctrine of unilateral
mistake.
When considering a document that
is as clear as is the closing statement in
this case, it is rare that such a document
will be reformed by a court. First and
foremost, it is well settled that signing a
contract creates a “conclusive presumption
that the signer read, understood, and
assented to its terms.” Fleming Cos. Inc.
v. Thriftway Medford Lakes, Inc., 913 F.
Supp. 837, 842-43 (D.N.J. 1995). If the
terms of the contract are clear, a court’s
interference could undermine the stability
of contract negotiations. For that reason,
if one of the parties has made a mistake,
reformation is not automatically granted,
but is available only at a court’s discretion.
Intertech Assocs., Inc. v. City of Paterson,
604 A.2d 628, 631 (N.J. Super Ct. App.
Div. 1992). The power of reformation
should be used only when the mistake is
material, when there would not be
prejudice to the other party (besides the
loss of the bargain), and upon a showing
that the plaintiff exercised reasonable care.
Fleming Cos. Inc., 913 F. Supp. at 843;
Lowenschuss v. Resorts Int’l, Inc., 181
F.3d 505, 512 (3d Cir. 1999) (requiring
that the mistake must have occurred
“notwithstanding the exercise of
reasonable care”) (quoting Intertech, 604
A.2d at 632). We see from the facts as
stated above that Dr. Raicyzk’s mistake
does not rise to this very high standard.
Dr. Raiczyk cites a number of
contract bidding cases where rescission or
reformation based on unilateral mistake
was granted, but the harried and urgent
nature of those situations is not present
here. For example, in Intertech, 604 A.2d
628, the court did reform the contract due
to mistake, but that was only because the
office was short-staffed, the language in
the contract was ambiguous, the bid had to
be completed in a very short amount of
time, and the head of the office, the mayor,
had just died. None of these factors
parallels Dr. Raiczyk’s situation. In a less
extreme case, a court also granted
reformation in Cataldo Construction Co. v.
County of Essex, 265 A.2d 842 (N.J.
Super. Ct. Ch. Div. 1970), where the only
excuse was the time pressure of compiling
a complex bid quickly. Id. at 846-47.
However, Dr. Raiczyk was not in a similar
time-pressured situation, despite his
counsel’s dramatic remark that one of the
defendants “put a gun to his head.” As
noted by the District Court in ruling on the
post-trial motions, Dr. Raiczyk admitted
on the stand that he did not have to sign
the settlement sheet for seven more days
and could have simply put off the closing.
In addition, unlike a company bidding for
a contract, Dr. Raiczyk did not have to
make multiple calculations in a short

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amount of time. Dr. Raiczyk knew what
the amount should be, and all he had to do
was read the amount on the closing
statement and see if it matched the amount
with which he had previously agreed. We
will therefore affirm the District Court’s
ruling setting aside the jury’s award with
respect to the sale of Dr. Raiczyk’s shares.
B. The Officer Loans
The District Court also set aside the
jury’s award of $22,500 to Dr. Raiczyk for
unpaid officer loans. The District Court
ruled that the plaintiff “offered no
documentation of his own with respect to
the loan[s],” noting in particular that there
was nothing in the record to indicate
“when the money was to be paid back” or
“whether there was interest on the loan.”
Alternatively, the defendants also argued
in the District Court that the integration
clause in the sales agreement clearly
covered the loans. Thus, even if the loans
did exist, they were included in the agreed
upon sales price for the shares. We
conclude, however, that the integration
clause does not clearly cover the loans and
that there is ample evidence in the record
for a jury to find that Dr. Raiczyk is still
owed these amounts.
We consider first the defendants’
argument that the integration clause in the
sales agreement precludes us from looking
at other evidence in the record.
Defendants rely on Filmlife, Inc. v. Mal
“Z” Ena, Inc., 598 A.2d 1234, 1235 (N.J.
Super. App. Div. 1991), to argue that,
given the integration clause, non-
documentary evidence of the loans cannot
be considered. Filmlife, however, merely
invoked the parol evidence rule. Id. The
parol evidence rule is applicable only if we
find as a matter of law that the integration
clause clearly covers the officer loans.
The loans are not mentioned anywhere in
the sales agreement. Defendants argue
that, because the loans are not mentioned,
they should not be considered separately
from the sales agreement. Usually,
however, when a contract does not
mention a subject, it is because the
contract was not meant to cover that
subject. At the very least, a reasonable
jury could have found that the loans were
not meant to be included in the
computations of the sales agreement.
Because the jury could reasonably
have held that the integration clause does
not end the inquiry, we turn to the ruling of
the District Court that there was no
evidence in the record of when the loans
were to be repaid or at what interest rate.
While this may be true, we know of no
authority under New Jersey law that voids
a loan if it does not have these two
characteristics. An officer who lends
money to a corporation has the same rights
and obligations as any other person who
lends it money. The fact that Dr. Raiczyk
did not earn any interest on the loans does
not void them and, in fact, erases any
questions regarding the propriety of an
officer lending money to his corporation.
Additionally, the fact that there is not a
document evidencing the loan does not
defeat Dr. Raiczyk’s case as the Statute of
Frauds does not apply to such a loan. See
N.J. Stat. § 25:1-5(f) (2003) (stating that
only loans in excess of $100,000 and made
by a person whose business it is to extend

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credit or loans fall under the Statute of
Frauds).1 In short, there is nothing wrong
with proving the existence of Dr.
Raiczyk’s officer loans through testimony
and the corporation’s books, both of which
were offered into evidence.
In light of the entire record in this
case, the jury had ample evidence to
conclude that the officer loans were due
Dr. Raiczyk. In his testimony, Dr. Raiczyk
specifically averred that he personally lent
$45,000 to Ocean County Veterinary
Hospital over a long period of time
beginning in 1992. Furthermore, he
testified that he paid taxes on those loans.
Dr. Raiczyk said unequivocally that he was
never repaid those amounts. He also
testified that they were bona fide loans and
not a result of creative bookkeeping.
Finally, Ocean County Veterinary
Hospital’s books and records were put into
evidence, which clearly showed the loans’
existence. This evidence certainly
surpasses the “minimum quantity of
evidence” necessary to uphold a jury
verdict on the issue. Trabal, 269 F.3d at
249. Therefore we will reverse the District
Court’s disallowance of recovery of these
loans and we will remand the case with
instructions to reinstate the $22,500 jury
award for the unpaid officer loans.
IV. Conclusion
For the reasons stated above we
will affirm the judgment of the District
Court with respect to the sale of the
partnership interest, but we will reverse
and remand the case with respect to the
unpaid officer loans with instructions to
reinstate the jury’s verdict of $22,500 for
the unpaid loans.
1Moreover, the Statute of Frauds is an
affirmative defense, and there is no
indication that it was pled or formed the
basis of the District Court’s decision.

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