A business owner who closed up shop to avoid paying a half million dollars owed to his former girlfriend almost got away with it.

A trial judge dismissed her fraudulent-transfer suit as time-barred, but on Thursday a New Jersey appeals court reinstated it, finding the judge misjudged defendant Philip Grimado's credibility and failed to consider evidence that contradicted his testimony about when his business actually closed.

The timing of the closure was critical, because the state's Uniform Fraudulent Transfer Act, N.J.S.A. 25:2-20, sets a four-year limit on claims.

Ordering a new trial before a different judge, the court also revived plaintiff Rhonda DelMastro's claim that Grimado committed spoliation by falsely claiming that the financial records of his business were destroyed by a computer virus.

The Bergen County case stemmed from a $531,820 judgment in an earlier tort suit. DelMastro claimed Grimado, whom she dated for nine months, sent explicit photos of her to her family, friends and business clients. The August 2005 judgment consisted of compensatory and punitive damages for intentional infliction of emotional distress and invasion of privacy.

Grimado owned a company, Industrial Concepts Inc., also known as ICI, which sold electric motors for use in medical devices and whose gross income was $1.7 million in 2004.

But in April 2005, Grimado told his customers he was shutting down ICI and for future motor purchases they could contact David McKee, operator of Precision Device Associates. The shutdown came that July, after Grimado paid all the company's debts. In August, he began working for PDA, using the same phone number and selling motors to the same customers.

DelMastro garnished Grimado's wages but was otherwise unable to collect on the judgment.

On July 31, 2009, she filed the current suit under the UFTA, alleging Grimado had deliberately made himself judgment-proof with help from McKee, who was a co-defendant.

Superior Court Judge Alexander Carver III found the suit was time-barred because it was filed a few weeks after the four-year period that began July 12, 2005, when Grimado said he paid all his business' debts and shut ICI down.

But that result depended entirely on Grimado's credibility. Appellate Division Judges Marie Lihotz, Mitchel Ostrer and John Kennedy weren't quite so willing to accept it — especially since testimony by Grimado and his expert witness in the tort case was inconsistent.

He had testified to the active and robust operation of ICI, which the expert valued at $250,000. He also failed to mention during the tort trial that he had shut it down. By dint of both, Grimado "teeters on the edge of dissembling," and his explanation that "no one asked" if the business was closed displays "neither candor nor forthrightness," but, rather, "an attitude which impugns the integrity of the court," the appeals court said.

Carver's findings were "inconsistent with the competent, relevant and reasonably credible evidence," the judges said, finding the inconsistencies so irreconcilable that judicial estoppel applied.

Stephen Falanga, a creditor's rights lawyer not involved in the case, observes that Grimado "didn't come across very well." He was undone because he was required to discuss his assets during the punitive-damages phase of the tort trial, and the two testimonies didn't match.

A central issue on remand will be the dollar value of the customer list, says Falanga, of Connell Foley in Roseland.

The lawyer for DelMastro, Peter Mac Isaac of Chasan, Leyner & Lamparello in Secaucus, says the appeals court "made the right decision."

Grimado's lawyer, Freehold solo Stuart Moscovitz, was out of his office and unavailable for comment. •