                                NOT FOR PUBLICATION WITHOUT THE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
                                                         APPELLATE DIVISION
                                                         DOCKET NO. A-1978-18T1

HIGHLAND CAPITAL CORP.,

          Plaintiff-Respondent,

v.

SASSAN KAFAYI, DDS, a
Professional Corporation, and
SASSAN KAFAYI,

     Defendants-Appellants.
_____________________________

                    Argued February 4, 2020 – Decided February 26, 2020

                    Before Judges Yannotti and Hoffman.

                    On appeal from the Superior Court of New Jersey, Law
                    Division, Passaic County, Docket No. L-4094-17.

                    Philip Louis Guarino argued the cause for appellants
                    (Guarino & Co. Law Firm, LLC, attorneys; Philip Louis
                    Guarino, on the briefs).

                    Robert L. Hornby argued the cause for respondent
                    (Chiesa Shahinian & Giantomasi, PC, attorneys; Robert
                    L. Hornby, Elisa Marie Pagano, and Brigitte M. Gladis,
                    on the brief).
PER CURIAM

      Defendants Sassan Kafayi and his dental practice, Sassan Kafayi D.D.S.,

appeal from the January 16, 2019 amended Law Division order granting

summary judgment in favor of plaintiff Highland Capital Corp. (Highland), a

commercial lender which financed dental equipment purchased by defendants.

The order awarded Highland $164,964.04, plus attorney's fees and costs, for

defendants' breach of the parties' financing agreement. We affirm.

                                        I

      On October 20, 2016, defendant purchased two pieces of dental equipment

from Henry Schein Dental: I-CAT and TRIOS (the equipment). Defendant

sought to finance the purchase of the equipment through Highland. On October

13, 2016, Highland and defendants executed an "Equipment Finance

Agreement" (the finance agreement), whereby defendants financed the purchase

of, and granted Highland a security interest in, the equipment. The finance

agreement listed Dr. Kafayi's professional corporation as the customer and

Henry Schein Dental as the "equipment supplier." It required defendants to pay

eighty-four monthly installments of $2,271.92.

      The relevant paragraphs contained in the finance agreement provide:

            AGREEMENT: We agree to finance for you and you
            agree to finance from us the equipment described herein.

                                                                            A-1978-18T1
                                       2
              You promise to pay us the payments as shown above. The
              parties intend this Agreement to be a Finance Lease under
              Article 2A of the Uniform Commercial Code [(UCC)]
              THIS AGREEMENT IS NOT CANCELABLE.

                    ....

              Customer's obligation shall be absolute and unconditional
              without any abatement, set-off, defense or claim for any
              reason.[1]

                    ....

              NO WARRANTIES: We are financing the Equipment for
              you "AS IS." WE MAKE NO WARRANTIES, EXPRESS
              OR IMPLIED, INCLUDING WARRANTIES OF
              MERCHANTABILITY, OR FITNESS FOR A
              PARTICULAR PURPOSE. We transfer to you for the
              term of this Agreement any warranties made by
              manufacturer or supplier to us. NEITHER SUPPLIER
              NOR ANY AGENT OF SUPPLIER IS AN AGENT OF
              LENDER OR IS AUTHORIZED TO WAIVE OR
              MODIFY ANY TERM OR CONDITION OF THIS
              AGREEMENT. All of your obligations to make software
              license payments shall be absolute and unconditional
              regardless of any breach by the licensor.

                    ....

              OWNERSHIP: We have title to the Equipment until such
              time that all obligations are satisfied hereunder. If this
              Agreement is deemed to be a security agreement, you
              grant us a security interest in the Equipment and all
              proceeds therefrom. You hereby authorize us to file UCC
              Financing Statements, to sign such statements, grant us the


1
    The parties and the court refer to this clause as a "hell-or-high-water" clause.
                                                                            A-1978-18T1
                                          3
             right to execute your name thereto and agree to pay for
             such filings.

The finance agreement also contained a continuing guaranty, whereby Dr. Kafayi

personally guaranteed the obligations of his professional corporation.

      On January 13, 2017, upon delivery and installation of the equipment,

Highland and defendants executed a second form entitled, "Acknowledgement &

Acceptance of Delivery By Borrower." Defendants acknowledged they agreed "that

any rights we may have against the supplier or manufacturer of the equipment will

not be asserted as a counterclaim or defense against Lender." Defendants further

authorized Highland "to make payment to the supplier(s) of the equipment . . . ."

      Defendants immediately began making untimely payments, eventually failing

to make payments altogether. As a result, on September 12, 2017, Highland referred

the account for collection to its outside counsel, who sent defendants a demand letter

on September 19, 2017.

      In response, Dr. Kafayi contacted Highland to discuss the collection of past

due amounts and arrange a payment plan going forward. Dr. Kafayi asserted that he

and Ross Juliano, an assistant vice president with Highland, came to an agreement

whereby Highland would forbear on collecting past due amounts and, going forward,

accept payments on the first and fifteenth of each month. Highland certified no such

agreement was reached.      The record reflects, in a September 29, 2017 email

                                                                              A-1978-18T1
                                          4
discussing defendant's arrears, that Juliano told Dr. Kafayi to begin thinking "about

how we will catch this up and what payment plan [he] would agree to . . . ."

      On October 3, 2017, Highland attempted to repossess the equipment, without

success. Dr. Kafayi refused to allow the repossession of the equipment, which

remains at his dental practice.

      On December 18, 2017, Align Technology, Inc., the makers of "Invisalign,"2

notified defendants that scans made using TRIOS – one of the two pieces of

equipment defendant financed through Highland – would no longer be accepted for

"Invisalign treatment" due to an ongoing patent infringement lawsuit.

      That same day, Highland filed a three-count complaint against defendants in

the Law Division, alleging breach of the finance agreement, conversion of the

equipment, and unjust enrichment. On March 23, 2018, defendants answered the

complaint, asserting fourteen separate defenses and an eleven-count counterclaim.

Among other claims, defendants asserted that Highland breached its implied

warranties, alleging that Highland was the actual seller of the equipment;

fraudulently induced the finance agreement; and defamed and damaged defendants'

business reputation. By the close of discovery, defendants failed to serve any



2
    Invisalign, an orthodontic product, is a clear aligner system used for
straightening teeth through a series of custom-made aligners.
                                                                               A-1978-18T1
                                         5
discovery requests upon Highland, nor did they respond to discovery requests served

by Highland. On October 12, 2018, Highland filed the motion for summary

judgment under review.

      On November 30, 2018, the motion court heard oral argument and then

delivered an oral opinion granting Highland's motion.          The court found the

transaction at issue constituted a three-party secured commercial transaction

governed by Article 9 of the UCC; that Highland is a lender and "in no way, shape

or manner, a seller of the equipment [nor] held [itself] out to be." As a result, the

court held that defendants' claims concerning problems with the equipment are

against the seller of the equipment, Henry Shine Dental, not against Highland.

      Although the motion court noted Article 9 of the UCC "does not impute

certain protections to a third-party lender by statute like Article 2A does to a lessor

in a true lease transaction," it found Highland was afforded such protections under

the "hell-or-high-water" clause contained in the finance agreement. The court

further noted, the "unconditional promise to make payments and not assert a defense

to payments is valid under New Jersey Law. The courts have acknowledged that the

enforcement of a hell-or-high-water provision is essential to the equipment leasing

industry." Accordingly, the court found defendants "absolutely barred from raising




                                                                               A-1978-18T1
                                          6
the defenses and counter-claims" asserted against Highland because the clause is

unambiguously set forth in the finance agreement.

      Regarding defendants' fraudulent inducement claim, the motion court found

the finance agreement contained a clear, express provision, "in all capital letters,

stating that [Highland] makes no warranties about the equipment." Further, absent

the warranty provision, the court noted defendants admitted that neither party had

knowledge of any potential infringement issues at the time they executed the finance

agreement.

      As to the parties' purported forbearance agreement, the motion court found

the agreement as alleged by defendants unenforceable under New Jersey's Statute of

Frauds, N.J.S.A. 25:1-5f.     The court also found defendants' defamation and

commercial disparagement claims meritless, as Highland properly exercised both its

contractual and statutory rights. N.J.S.A. 12A:9-609.

      After stating its findings and conclusions of law, the motion court granted

summary judgment in favor of Highland and against defendants, and dismissed their

answer, affirmative defenses and counterclaims with prejudice. On November 30,

2018, the court entered an order for summary judgment against defendants, jointly

and severally, for $164,964.04, plus attorney's fees in the amount of $11,075.04, for

a total of $176,389.29. It also awarded Highland immediate and permanent title and


                                                                             A-1978-18T1
                                         7
possession of the equipment. On January 16, 2019, the motion court entered an

amended order, awarding Highland additional attorney's fees and costs of

$13,698.80, which increased the total amount awarded to $189,738.09.

      On appeal, defendants argue the motion court erred by failing to recognize the

validity of the alleged oral debt forbearance agreement, which Highland purportedly

breached. Defendants also contend the court erred by finding Highland was solely

a financier or lender and that defendants' remedies lie elsewhere.

      Defendants further argue the provision of the finance agreement that

essentially requires them to pay the amounts due come "hell-or-high-water" does not

bar their defenses and claims, claiming Highland fraudulently induced defendants'

execution of the finance agreement. Accordingly, they contend Highland is not

entitled to possession of the equipment or a money judgment.

                                           II

      We review a decision granting summary judgment de novo, using the same

standard the motion court applied. Townsend v. Pierre, 221 N.J. 36, 59 (2015)

(citing Davis v. Brickman Landscaping, Ltd., 219 N.J. 395, 405 (2014)). We will

affirm a court's grant of summary judgment if the record establishes there is "no

genuine issue as to any material fact challenged and that the moving party is entitled

to a judgment or order as a matter of law." R. 4:46-2(c).


                                                                              A-1978-18T1
                                          8
       "An issue of material fact is 'genuine only if, considering the burden of

persuasion at trial, the evidence submitted by the parties on the motion, together with

all legitimate inferences therefrom favoring the non-moving party, would require

submission of the issue to the trier of fact.'" Grande v. Saint Clare's Health Sys., 230

N.J. 1, 23-24 (2017) (quoting Bhagat v. Bhagat, 217 N.J. 22, 38 (2014)). "If there

exists a single, unavoidable resolution of the alleged disputed issue of fact, that issue

should be considered insufficient to constitute a 'genuine' issue of material fact for

purposes of Rule 4:46-2." Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540

(1995).

       Defendants' contentions on appeal are entirely without merit. The finance

agreement is just that – a finance agreement. It clearly and unambiguously states

that Highland made no warranties, express or implied, regarding the merchantability

of the equipment or its fitness for a particular purpose.

       The finance agreement defendants executed falls under the purview of Article

9 of the UCC. Article 2 of the UCC applies to "transactions in goods" and does not

apply "to any transaction which although in the form of an unconditional contract to

sell or present sale is intended to operate only as a security transaction . . . ." N.J.S.A.

12A:2-102. A transaction, "regardless of its form, that creates a security interest in

personal property or fixtures by contract" is a secured transaction and is instead


                                                                                   A-1978-18T1
                                             9
subject to Article 9 of the UCC. N.J.S.A. 12A:9-109. A security interest is an

interest in property which "secures payment or performance of an obligation."

N.J.S.A. 12A:1-201(35). Whether title of the secured collateral is in the secured

party or the debtor is immaterial. N.J.S.A. 12A:9-202.

      Consequently, the alleged breach of warranties is not a defense to Highland's

claims under the finance agreement.          As the motion court correctly found,

defendants' obligation to make the payments required under the clear, express terms

of the finance agreement is unconditional. Furthermore, the record is devoid of any

evidence supporting defendants' claim that Highland fraudulently induced them into

entering into the finance agreement.

      In addition, defendants' claim that Highland entered into, and was bound by,

an oral forbearance agreement fails because the alleged oral agreement cannot vary

the clear and unambiguous terms of the written financing agreement. N.J.S.A. 25:1-

5f. Further, the record contains no evidence, even if the oral agreement were not

subject to a writing requirement, that defendants suffered an injustice requiring an

equitable solution. See Mazza v. Scoleri, 304 N.J. Super. 555, 560 (App. Div. 1997).

      Any arguments not specifically addressed lack sufficient merit to warrant

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

      Affirmed.


                                                                            A-1978-18T1
                                        10
