NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ."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-2622-23
ESTATE OF ISAAC HERSKO, 1
Plaintiff-Appellant/Cross- Respondent,
v.
BARRY HERSKO, BELLA HERSKO, and CHAIM SIMKOWITZ,
Defendants-Respondents/ Cross-Appellants,
and
THE ROSEVILLE TOWER, LLC,2
Defendant-Respondent. ____________________________
Argued December 15, 2025 – Decided January 2, 2026
1 Regrettably, Isaac Hersko passed away while his appeal was pending. 2 Defendant-respondent The Roseville Tower, LLC, is not participating in this appeal. Before Judges Gilson, Firko, and Vinci.
On appeal from the Superior Court of New Jersey, Chancery Division, Essex County, Docket No. C-000220-21.
Anthony Genovesi (Abrams Fensterman, LLP) of the New York bar, admitted pro hac vice, argued the cause for appellant/cross-respondent (Greenbaum Rowe Smith & Davis, LLP, Anthony Genovesi and Melanie Wiener (Abrams Fensterman, LLP) of the New York bar, admitted pro hac vice, attorneys; Darren C. Barreiro and Anthony Genovesi, of counsel and on the briefs; Thomas K. Murphy, III, and Melanie Wiener, on the briefs).
Harris N. Cogan (Blank Rome LLP) of the New York bar, admitted pro hac vice, argued the cause for respondents/cross-appellants Barry Hersko and Bella Hersko (Blank Rome LLP, attorneys; Jonathan M. Korn, Michael R. Darbee, Harris N. Cogan and Craig Flanders (Blank Rome LLP) of the New York bar, admitted pro hac vice, on the briefs).
Michael D. Malloy argued the cause for respondent/cross-appellant Chaim Simkowitz (Finestein & Malloy, LLC, attorneys; Michael D. Malloy and Corrine LaCroix Tighe, on the briefs).
PER CURIAM
A-2622-23 2 Plaintiff Estate of Isaac Hersko (Isaac 3 or Estate) appeals from an April
15, 2024 order dismissing his claims with prejudice against defendants Barry
Hersko and Bella Hersko (collectively the Herskos), The Roseville Tower, LLC
(Roseville Tower), and Chaim Simkowitz following a bench trial. The Chancery
Division judge dismissed all claims asserted by all parties with prejudice
primarily based on the doctrine of unclean hands. Simkowitz cross-appeals from
the same order that dismissed his cross-claims against the Herskos. The Herskos
cross-appeal to protect their claims against Simkowitz in the event that his cross-
claims are restored on appeal. We affirm.
I.
Factual Background
We derive the pertinent facts from the record. Isaac and Barry were
brothers. They had various business relationships and owned residential
properties both in New York and New Jersey. Barry worked for Isaac selling
corrugated materials. Ultimately, Barry decided to start his own real estate
business. He acquired several properties in New York and enrolled in a special
program in New York City aimed at making his vacant apartment units available
3 Parties and individuals who share a last name with other parties and individuals are referred to by their first names for ease of reference. By doing so, we intend no disrespect. A-2622-23 3 to homeless individuals. When Isaac's corrugated materials business became
unsuccessful, causing him to struggle financially, Barry proposed that Isaac
form an entity to lease apartments from Barry's affiliated entities and manage
the apartments as an intermediate service provider. In response, Isaac created,
"We All Care, Inc.," which made apartments available for homeless individuals
under a New York City sponsored program. We All Care, Inc. paid a daily rate
to Barry's affiliated entities for the apartments. In return, We All Care, Inc.
received funding from New York City and earned the difference in profits.
On April 20, 2007, Roseville Tower, a New York limited liability
company, purchased a vacant and abandoned property located at 140-148
Roseville Avenue in Newark (the Roseville property) comprised of 270
residential units for $5.825 million from Shlomo Karpen, his wife Esther
Karpen, Israel Perlmutter, and his wife Esther Perlmutter. Shlomo and Israel
each own a 50% membership interest in Roseville Tower. Esther Karpen and
Esther Perlmutter guaranteed repayment of the first mortgage with their
husbands.
Roseville Tower signed and executed a promissory note and mortgage
with Isaac and Barry to acquire the Roseville property in the amount of $2.5
million at a 12% annual interest rate. In addition, Roseville Tower signed and
A-2622-23 4 executed a subordinate note and mortgage in the amount of $3.22 million with
GIAIP, LLC, a New York limited liability company. Gloria Adler is the
managing member of GIAIP, LLC. Subsequently, Roseville Tower defaulted
on its mortgage with Isaac and Barry.
On January 4, 2010, Isaac and Barry entered into an agreement with
Roseville Tower and its owners to resolve the default. Under the agreement,
Roseville Tower agreed to make a $750,000 lump sum payment to reduce the
$1.5 million principal balance and to pay Isaac and Barry's legal fees. The
remaining principal balance was due on or before June 25, 2010, secured by
100% membership of Roseville Tower, assigned on a contingent basis to Barry's
wife, Bella.
Shlomo paid the $750,000 lump sum payment, which reduced the
principal balance to $750,000. Isaac claimed there was no evidence to prove
Bella provided any consideration for the 100% membership interest other than
the payment of one dollar since she had nothing to do with the existing
mortgages on the Roseville property. Roseville Tower defaulted a second time
and consequently, Bella became the 100% owner of Roseville Tower.
After Bella became the sole owner, Barry had discussions with Simkowitz
about acquiring 50% of Bella's interest in Roseville Tower. Eventually, an
A-2622-23 5 agreement was reached. On October 28, 2010, Bella executed a document
assigning 50% of her interest in Roseville Tower to Simkowitz. In addition, by
way of an assignment of mortgage, Isaac and Barry assigned 50% of the first
mortgage interest to Simkowitz. At the closing, Simkowitz wrote two checks:
one for $350,000 to Isaac, and the other for $150,000 to Barry.
Simkowitz wanted to satisfy the subordinate mortgage and commence
development. According to Barry, a plan was devised whereby he and Isaac
would use their leverage on the first mortgage to buy out the subordinate
mortgage at a significant discount. Isaac claimed he never participated in this
"sham" foreclosure because he had forfeited his interest in the first mortgage,
there was no communication about the foreclosure action that involved him, and
he had nothing to gain from the transaction. At trial, Barry and Simkowitz
testified that Isaac was included in the discussions. Simkowitz recommended
retaining the Feinsilver Law Group (FLG) to represent Barry and Isaac in a
foreclosure action against Roseville Tower and GIAIP, LLC. Isaac and Barry
signed the retainer agreement to retain FLG on the mortgage foreclosure matter.
Simkowitz paid FLG's retainer.
A-2622-23 6 On December 13, 2010, FLG filed a complaint in foreclosure of a
mortgage4 (the 2010 foreclosure action) on behalf of Isaac and Barry against
Roseville Tower, GIAIP, LLC, and Israel, seeking to foreclose the mortgage,
and alleging defendants owed $3.4 million on the note. Shortly thereafter, Isaac
and Barry negotiated to purchase the subordinate mortgage. On May 2, 2011,
GIAIP, LLC—through Adler—assigned the subordinate mortgage to Isaac and
Barry, LLC, for somewhere in the $220,000 to $300,000 range. Barry was the
sole owner of Isaac & Barry, LLC. On May 10, 2011, Simkowitz notified FLG
the foreclosure matter was settled, and the complaint was dismissed.
Barry claimed Simkowitz managed Roseville Tower's affairs through
Northside Towers, LLC (Northside). Simkowitz maintained a ledger of capital
inflows used to pay for Roseville Tower's expenses. The majority of Bella's
payment contributions were derived from Isaac's entity, We All Care, Inc. Barry
alleged he would advise Isaac to have We All Care, Inc. pay Northside for
Roseville Tower's expenses. These payments reduced the amount We All Care,
Inc. owed to Barry's affiliated entities for property rentals in the homeless shelter
4 Barry Hersko and Isaac Hersko v. The Roseville Tower, LLC, et al., Docket No. ESX-F-059134-10 (Ch. Div. Dec. 13, 2010). The complaint was filed on December 13, 2010, and dismissed by the court for lack of prosecution on December 12, 2012. A-2622-23 7 business while satisfying Bella's capital contributions to Roseville Tower. Isaac
alleged that these actions supported his claim for money had and received
because Roseville Tower and its owners received a benefit from him and
retention of this benefit would be inequitable.
On May 18, 2016, Roseville Park, LLC purchased a parking lot adjacent
to the Roseville property. Barry and Simkowitz each held a 50% membership
interest in Roseville Park, LLC. In July 2021, Simkowitz attempted to enter an
agreement to assign mortgages and LLC interest (the 2021 agreement) with
Bella and Barry to acquire the remaining 50% membership interest in Roseville
Tower and Roseville Park, LLC. Simkowitz claimed the parties scheduled a
closing in October 2021, but a run-down title search revealed that Isaac had filed
a notice of lis pendens on the Roseville property, and the closing did not go
forward.
The Litigation
On October 1, 2021, Isaac filed a complaint in the Law Division 5 against
the Herskos and Roseville Tower seeking a declaratory judgment, imposition of
a constructive trust, alleging conversion, money had and received, and for an
accounting from these defendants with respect to the finances and affairs of the
5 Docket No. ESX-L-7389-21. A-2622-23 8 Roseville property and the amounts Isaac was entitled to receive from Abraham
Weisel's escrow account. The complaint alleged Weisel acted as Barry's escrow
agent but had represented both Isaac and Barry. The complaint alleged Isaac
and Barry provided a loan for over $3 million to the former owners of the
Roseville property, the borrowers defaulted and agreed to permit the brothers to
take title in satisfaction of the private loan.
Isaac claimed he and Barry agreed to form separate and distinct entities to
purchase and hold title to the property and the Herskos were listed as the "sole
shareholder." Isaac alleged he and Barry were "equal partners" in their business
dealings related to Roseville Tower. In 2017, the brothers memorialized their
longstanding partnership in a written partnership agreement. According to
Isaac, he had a falling out with Barry upon learning he was collecting "rents and
other monies" far exceeding Isaac's withdrawals. Isaac claimed that Barry
withdrew $25,000,000 more than him from "their shared monies."
The Herskos filed an answer denying the allegations in Isaac's complaint
and seeking to discharge the lis pendens. Simkowitz moved to intervene in the
action. On November 19, 2021, the Law Division judge granted Simkowitz's
motion to intervene and permitted him to file an answer and counterclaim. The
Law Division judge also transferred the matter to the Chancery Division.
A-2622-23 9 In his answer, Simkowitz admitted that Bella is a member of Roseville
Tower but also asserted he is a member of Roseville Park, LLC. In his
counterclaim, Simkowitz alleged on October 28, 2010, he acquired a 50%
membership interest in Roseville Tower from Bella, and that he paid "good and
valuable consideration" for his interest. Simkowitz averred how at the time of
his acquisition of the Roseville Tower interest, the Herskos represented to him
that Bella was the "sole member" of Roseville Tower, possessed "all right,
title[,] and interest[,]" and had "authority" to transfer the interest he acquired.
According to Simkowitz, he had "no knowledge, actual or constructive,"
that Isaac had any interest in either Roseville Tower or the real property owned
by the entity. Simkowitz alleged Roseville Tower is encumbered by two
mortgages, one in the original face amount of $2,500,000 held by the Herskos,
and another in the amount of $3,220,000, held by Isaac & Barry, LLC.
Simkowitz alleged Roseville Tower is further encumbered by a first assignment
of rents/leases held by Isaac and Barry. Simkowitz alleged he "intends," after
acquiring both mortgages and the assignment of rents/leases, "to discharge them
of record."
Simkowitz further alleged in his counterclaim that he and Barry formed
Roseville Park, LLC to purchase the property adjacent to Roseville Tower's
A-2622-23 10 property and owned shares equally. Simkowitz claimed that since acquiring the
Roseville Tower interest in 2010, he "has directed day-to-day operations" and
"funded the carrying costs" in an amount "higher than" his 50% interest.
Simkowitz sought a declaratory judgment declaring he presently holds a 50%
membership interest in Roseville Tower, that Isaac does not have a membership
interest in Roseville Tower, discharge of the lis pendens, and for an order
discharging both mortgages and the assignment of rents/leases, establishing an
equitable lien for specific performance of the agreement with 50% of the sales
proceeds being deposited into court or held in escrow pending resolution of
Isaac's claims, compensatory damages, punitive damages, and counsel fees.
In his cross-claim against the Herskos, Simkowitz demanded specific
performance of the 2021 agreement by delivering to him the "instruments
contemplated by the [2021] agreement[,]" that the deposit monies be deposited
into court or otherwise held in escrow for an equitable lien to secure his interest,
and counsel fees.
Isaac filed an answer to Simkowitz's counterclaim denying the allegations
and seeking a judgment of no cause of action.
Simkowitz filed a motion to rescind the 2021 agreement between himself,
the Herskos, and Roseville Tower. The motion was unopposed. On October 11,
A-2622-23 11 2023, the judge rendered an oral decision granting Simkowitz's motion and
entered an order that day. The order provided the 2021 agreement is "hereby
rescinded and deemed null and void[,]" and the assignment documents
referenced in the 2021 agreement were also declared "null and void." The order
directed the Herskos's attorney to return Simkowitz's $540,007.60 deposit held
in escrow to him.
On October 23, 2023, Simkowitz filed amended cross-claims and alleged
an additional count under the New Jersey Revised Uniform Limited Liability
Company Act, N.J.S.A. 42:2C-1 to -94. Simkowitz maintained the Herskos
failed to pay their share of Roseville Tower's expenses since 2020, which led to
capital account shortfalls. Simkowitz sought to recoup the shortfalls and
dissolve the LLCs because the deadlock was preventing the LLCs from
functioning.
Following a period of discovery, the Herskos, Roseville Tower, and
Simkowitz filed partial motions for summary judgment. Simkowitz sought a
ruling declaring that he and Bella were Roseville Tower's co-owners. The judge
denied the motions. Isaac filed a motion for leave to file and serve a first
amended complaint, which did not add new causes of action but alleged facts he
claimed were uncovered during discovery. Simkowitz filed a second motion for
A-2622-23 12 summary judgment, which was later withdrawn. In response, Isaac filed a cross-
motion for leave to file and serve a second amended complaint, which the judge
converted to a motion in limine and heard on the first day of trial, January 23,
2024.
The Trial
On the first day of trial, Isaac orally withdrew his claims for any
ownership interest in Roseville Tower, Roseville Park, LLC, the subordinate
mortgage, and ownership of funds held in Barry's lawyer's escrow account.
Isaac's attorney withdrew these claims after "assessing the deposition testimony
. . . [and] the documentary proof[,]" and determining Isaac could not prove his
claims. The judge permitted the withdrawal but did not rule on whether
dismissal of the claims was with or without prejudice. Isaac pursued two
remaining claims at trial: (1) for a 50% interest in the first mortgage; and (2)
for money had and received to recoup funds that We All Care, Inc. allegedly
contributed to Roseville Tower's operations. Isaac's proposed second amended
complaint was never filed.
Trial was held on four non-consecutive days. At the onset of trial, the
judge struck Isaac's jury demand. Simkowitz, Barry, and Bella testified at trial
on Isaac's case. Isaac did not testify because of health reasons. Simkowitz
A-2622-23 13 testified regarding his acquisition of a 50% membership interest in Roseville
Tower and the blank assignee in the document that assigned the 50%
membership interest to him. Simkowitz claimed he did not know why the
assignee designation was blank but surmised he could "fill [it] in whenever [he]
want[s]." Simkowitz explained he had discussions with Isaac and Barry about
"squeezing down the [subordinate] lender" and investing in the Roseville
property. According to Simkowitz, Barry and Isaac signed the assignment of
his 50% membership interest on the first mortgage.
On cross-examination, Simkowitz testified about the 2010 foreclosure
action and his relationship with FLG. Simkowitz further testified about his
payments for the Roseville Tower and first mortgage assignments.
Barry testified about Isaac's relinquishment of the first mortgage and
clarified that there was no document to reflect this. Regarding the 2010
foreclosure action, Barry testified he never saw the foreclosure complaint until
he met with his attorney. Barry admitted the 2010 foreclosure action contained
a false allegation. Barry stated he never received emails from FLG about the
2010 foreclosure action and disputed the signatures on the foreclosure pleadings
and demand notices.
A-2622-23 14 When questioned about purchasing the subordinate mortgage at a lower
rate, Barry testified the plan was to always get it "cheaper." Barry confirmed
the mortgage payments from Isaac's entity, We All Care, Inc., represent the
payments Isaac owed to him. With regard to the assignment document with the
blank assignee's name, Barry testified it was implemented at Simkowitz's
request.
Bella testified she owned a 50% membership interest on the Roseville
property and made the mortgage payments. Bella stated she was unaware of the
2010 foreclosure action and that Barry handled it. Bella also testified about
selling and assigning a 50% membership interest to Simkowitz.
At the close of Isaac's case, the Herskos orally moved for involuntary
dismissal of certain claims pursuant to Rule 4:37-2(b). Isaac's counsel moved
for a directed verdict and argued the judge should apply the doctrine of unclean
hands to the Herskos based on their participation in the 2010 foreclosure action.
Isaac's counsel also argued that all of Barry's and Simkowitz's testimony should
be discredited based on the maxim, "falsus in uno, falsus in omnibus." The
judge reserved decision on the motions and instructed counsel to submit briefs
on the application of the unclean hands doctrine to Herskos's motion.
A-2622-23 15 On February 14, 2024, the next scheduled trial date, the judge dismissed
all of the parties' claims, counterclaims, and cross-claims before defendants
presented their cases. Citing Rule 4:37-2(b),6 the judge determined Isaac had
no proof to support his claim for money had and received. The judge reasoned
Isaac proffered no evidence that he "paid it for an interest in [Roseville Tower]"
or "established a superior right to those funds."
Next, the judge addressed Isaac's motion for a directed verdict based on
the unclean hands doctrine. The judge dismissed all of the counterclaims and
cross-claims based on the doctrine of unclean hands noting the record "is replete
with admissions of fraudulent filings, unethical and otherwise questionable
conduct, which[,] without any doubt, includes the filing of a sham foreclosure
complaint, hiding the true ownership interest in [Roseville Tower]." The judge
found the "sham foreclosure complaint"—the 2010 foreclosure action—was
filed to "deceive and defraud the subordinate mortgagee" and cause her to sell
the subordinate mortgage "for pennies on the dollar."
6 Rule 4:37-2(b) allows the movant to "move for a dismissal of the action or of any claim on the ground that upon the facts and upon the law . . . plaintiff has shown no right to relief" after completing "the presentation of . . . evidence on all matters." A-2622-23 16 The judge highlighted that Simkowitz "fully admitted his role in the
scheme[,]" and since Isaac and Barry were named as parties in the 2010
foreclosure complaint, they "cannot believabl[y] feign ignorance thereof." The
judge stressed:
Isaac was, at best, . . . complicit in the bogus assignment of the mortgage and the fake foreclosure. He was a party to both and there is no evidence that would negate his participation. . . . Simkowitz and Barry . . . were at the core of the bad conduct.
As to . . . Bella . . . , the [c]ourt has no reason to discount her testimony nor the supporting evidence that she was merely a nominal participant in the entirety of all of the relevant transactions. However, she was put forward as the party in interest and legally shall be treated as such.
....
The self-dealing of all the parties may not something on its own would cause necessarily concern or the application of this doctrine but here, it provides further evidence of a systematic approach by the parties to cutting corners and utilizing the very documents at the core of the legal system: mortgages, notes, [LLCs] and other government sponsored programs, in a manner that goes beyond the intent of those instruments, which is namely to provide a system that can be relied on by those likely to rely on such documents.
Those likely to come into contact with these parties whose proclivity to skate upon the outskirts and use these constructs of legitimate processes to serve what are less than honorable mechanisms to further
A-2622-23 17 their own questionable schemes, including using the [c]ourts to promote a false narrative and outright lie about the status of financial arrangements and misrepresent mortgages, loans, [LLC] ownerships, all to further their own purposes.
However, the judge reserved decision as to dismissal of the claims with
or without prejudice until she received all of the parties' submissions. The judge
recalled Simkowitz back to the stand for the limited purpose of authenticating
the FLG retainer agreement and establishing his possession of it. The judge
moved the FLG retainer agreement into evidence. The judge then gave the
parties until February 23, 2024 to file their submissions to the court.
On April 15, 2024, the judge issued an order granting Isaac's motion for
voluntary dismissal of certain claims under Rule 4:37-1, and dismissing his
remaining claims with prejudice. In addition, the judge granted the Herskos's
motion to dismiss Isaac's claim for money had and received under Rule 4:37-2,
with prejudice. The judge also dismissed the parties' remaining claims based on
unclean hands—including the Hersko's cross-claims and Simkowitz's
counterclaim and cross-claims—with prejudice.
In her comprehensive statement of reasons annexed to the order, the judge
determined that Isaac's voluntarily withdrawn counts were deemed to be "with
prejudice." The judge reasoned Isaac filed three complaints, each alleging five
A-2622-23 18 causes of action as stated, and he never "minimized" or withdrew any of the
counts until the first day of trial. The judge emphasized Isaac continued to claim
an interest in Roseville Tower and the Roseville property, as evidenced by his
filing of a lis pendens.
Further, the judge found Isaac "sought to expand his purported interests"
by later claiming an interest in the first and second mortgages, and Isaac &
Barry, LLC. The judge highlighted Isaac also filed several litigation actions,
which are pending in the Supreme Court of the State of New York, Kings
County, related to his allegation that he and Barry were "partners in several real
estate investments." The judge noted two of those actions "involve similar (if
not the exact same) allegations and causes of action" as the instant matter.
Citing our decision in Shulas v. Estabrook, 385 N.J. Super. 91, 96-97
(App. Div. 2006), the judge considered the impact of Isaac's motion to
voluntarily dismiss claims on defendants at this "late stage of litigation[.]" The
judge found Isaac sought to amend his complaint twice, which resulted in the
filing of amended answers and crossclaims by defendants. The judge recounted
the extensive motion practice in the case, including discovery and summary
judgment motions, the five depositions taken, and the "voluminous pre-trial
submissions" prepared by all parties.
A-2622-23 19 The judge explained Isaac "acknowledged that the counts were being
dismissed for lack of proof." The judge observed that after Isaac became
"incapacitated," and was unable to participate in the litigation, he was still
represented by counsel, who could have attempted to "temporarily stay the
matter or minimize the volume of discovery." In addition, the judge pointed out
Isaac's children had a durable power-of-attorney but no appearance by any
family member was made on his behalf "during discovery or trial itself." The
judge underscored Isaac's counsel "was warned from the bench" that no "special
treatment or any undue advantage" would be extended in continuing the trial
without his participation. Based on the parties' "nefarious conduct in this
matter," the judge did not "countenance" an award of counsel fees to any party
relative to Isaac's voluntarily withdrawn counts.
Regarding the judge's previous dismissal of Isaac's "money had and
received" claim from the bench, the judge ruled that dismissal was "with
prejudice," as a "matter of completeness." The judge dismissed all remaining
claims between the parties with prejudice based on the unclean hands doctrine.
The judge relied on her February 14, 2024 oral decision and stressed the
equitable doctrine of unclean hands "is a direct result of the conduct of the
parties." The judge reiterated her finding that a "sham foreclosure complaint"
A-2622-23 20 had been filed in 2010, which included "knowingly fraudulent allegations
related directly to the mortgages put before this court by all parties. . . ."
The judge recognized dismissal with prejudice is a "drastic remedy" and
should be used "sparingly[,]" citing Zaccardi v. Becker, 88 N.J. 245, 253 (1982).
However, the judge determined that here, "the acts of the litigants are directly
at issue." The judge found the "blameworthiness" of the litigants as discussed
weighed "heavily in favor of a with prejudice dismissal."
The judge noted there "has been no attempt by any party" to minimize the
impact on the second mortgagee. The judge specifically rejected Isaac's attempt
to "carve out his conduct from the other partie[s]" finding "the parties acted in
pari delicto[.]" The judge highlighted examples in the record of Isaac's
involvement in the foreclosure on the first mortgage and "related plans ":
• Isaac was a signatory to the January 4, 2010 agreement.
• Simkowitz testified that Isaac participated in the plan to foreclose the first mortgage.
• Isaac was a signatory to the October 2010 assignment of mortgage.
• Isaac is identified as a "client" on the retainer agreement with FLG, and he "ostensibly" signed it.
A-2622-23 21 • Isaac was a party to the 2010 foreclosure complaint.
• In his proposed second amended complaint, Isaac alleged that he was an owner of Isaac and Barry, LLC, which held the second mortgage. After the judge "expressed skepticism of the foreclosure procedure" did Isaac seek to "distance himself" from ownership of the second mortgage. Isaac continued to seek a benefit by maintaining an ownership interest in the alleged "sham" in the form of an interest in the first mortgage.
This appeal followed.
Before us, Isaac argues:
(1) the factual record does not support a finding of unclean hands on his part;
(2) the facts clearly support a finding he has a 50% interest in the first mortgage;
(3) involuntary dismissal of his money had and received claim pursuant to Rule 4:37 was incorrect; and
(4) the claims he voluntarily dismissed prior to trial should be dismissed without prejudice.
The Herskos counter that the judge did not abuse her discretion in
dismissing Isaac's claims with prejudice. In their cross-appeal, the Herskos seek
a reciprocal ruling as to their accounting claims against Simkowitz, who asserted
competing cross-claims for an accounting relating to Barry and Bella's interests
in Roseville Tower and Roseville Park, LLC.
A-2622-23 22 Simkowitz cross-appeals contending the judge erred:
(1) in dismissing a claim she incorrectly identified as having been made by Roseville Tower;
(2) in determining that the standard for the application of the unclean hands doctrine had been met and using that as a basis to dismiss all of his claims;
(3) in dismissing his claims with prejudice against Barry and Bella for insufficient capital contributions to Roseville Park LLC and for the dissolution of that entity;
(4) in abruptly ending the trial immediately after Isaac testified, denying Simkowitz his right to prosecute his claims for capital contributions, for dissolution of the LLCs, and for discharge of the mortgages on the Roseville property; and
(5) by applying an omnibus application of the unclean hands doctrine and assuming arguendo it was justified, the judge properly refused to except therefrom Isaac's first mortgage claim. Simkowitz also contends the judge could not have made a finding as to whether Isaac has a 50% interest in the first mortgage.
II.
We review a decision on a motion for involuntary dismissal de novo
applying the same standard that governs the trial courts. ADS Assocs. Grp., Inc.
v. Oritani Sav. Bank, 219 N.J. 496, 511 (2014). Rule 4:37-2(b) provides that
after a plaintiff has rested their case, the defendant may move to dismiss "on the
ground that upon the facts and upon the law the plaintiff has shown no right to
A-2622-23 23 relief. . . . [S]uch motion shall be denied if the evidence, together with the
legitimate inferences therefrom, could sustain a judgment in plaintiff's favor."
"If the court, 'accepting as true all the evidence which supports the
position of the party defending against the motion and according [them] the
benefit of all inferences which can reasonably and legitimately be deduced
therefrom,' finds that 'reasonable minds could differ,' then 'the motion must be
denied.'" ADS Assocs., 219 N.J. at 510-11 (quoting Verdicchio v. Ricca, 179
N.J. 1, 30 (2004)). "[T]he judicial function here is quite a mechanical one. The
trial court is not concerned with the worth, nature or extent (beyond a scintilla)
of the evidence, but only with its existence, viewed most favorably to the party
opposing the motion." Dolson v. Anastasia, 55 N.J. 2, 5-6 (1969). "Ordinarily,
the dismissal motion should be denied if the plaintiff's case rests upon the
credibility of a witness." Pressler & Verniero, Current N.J. Court Rules, cmt.
15 on R. 4:37-2 (citing Ferdinand v. Agric. Ins. Co. of Watertown, N.Y., 22 N.J.
482, 494 (1956)).
A.
Isaac argues the judge erred in dismissing his claims against the Herskos
and Simkowitz under the doctrine of unclean hands because the record lacked
clear and convincing evidence that he had unclean hands when this litigation
A-2622-23 24 commenced, citing Kars 4 Kids, Inc. v. Am. Can!, 98 F. 4th 436, 449-50 (3d.
Cir. 2024). The Herskos counter that the judge did not err because the evidence
supported her conclusion Isaac had unclean hands going into the case.
In his cross-appeal, Simkowitz maintains the judge erred in dismissing his
cross-claims against the Herskos because: (1) the Hageman7 case relied on by
the judge is not binding authority and is distinguishable from this case; (2) the
judge misapplied the doctrine of unclean hands under Untermann8; and (3) the
judge failed to consider that the conduct must have been directed at the party
defending against the claim, citing City of Paterson v. Schneider, 31 N.J. Super.
598, 607 (App. Div. 1954).
Isaac counters that the judge did not err in dismissing Simkowitz's cross-
claims under the doctrine of unclean hands because Barry and Simkowitz
engaged in wrongful and criminal conduct. The Herskos contend the judge did
7 Hageman v. 28 Glen Park Assoc., L.L.C., 402 N.J. Super. 43 (Ch. Div. 2008). Hageman is a published Chancery Division opinion. Once an opinion is published, "[t]he precedential reach of a published opinion depends on the place in the judicial hierarchy of the court issuing the opinion. In general, opinions of higher courts bind all lower courts but opinions of co-equal courts do not bind each other." Pressler & Verniero, Current N.J. Court Rules, cmt. 3.1 on R. 1:36- 3 (2026). 8 Untermann v. Untermann, 19 N.J. 507 (1955). A-2622-23 25 not err in dismissing all claims because the record supports a finding of unclean
hands.
In order to recover in equity, a party "must be with clean hands." Heuer
v. Heuer, 152 N.J. 226, 238 (1998). The unclean hands doctrine provides, "a
court should not grant relief to one who is a wrongdoer with respect to the
subject matter in suit." Faustin v. Lewis, 85 N.J. 507, 511 (1981).
However, there are limits to the doctrine's application. Heuer, 152 N.J. at
238. For example, the unclean hands doctrine "should not be used as
punishment[,] but to further the advancement of right and justice." Pellitteri v.
Pellitteri, 266 N.J. Super. 56, 65 (App. Div. 1993) (citing Heritage Bank, N.A.
v. Ruh, 191 N.J. Super. 53, 71-72 (Ch. Div. 1983)). The doctrine:
does not repel all sinners from courts of equity, nor does it apply to every unconscientious act or inequitable conduct on the part of the complainants. The inequity which deprives a suitor of a right to justice in a court of equity is not general iniquitous conduct unconnected with the act of the defendant which the complaining party states as his ground or cause of action; but it must be evil practice or wrong conduct in the particular matter or transaction in respect to which judicial protection or redress is sought.
[Heuer, 152 N.J. at 238 (quoting Neubeck v. Neubeck, 94 N.J. Eq. 167, 170 (E. & A. 1922)).]
A-2622-23 26 Applying the doctrine of unclean hands is within the court's discretion. Borough
of Princeton v. Bd. of Chosen Freeholders of Mercer, 169 N.J. 135, 158 (2001).
"While '[u]sually applied to . . . plaintiff[s], this maxim means that a court
of equity will refuse relief to [any] party who has acted in a manner contrary to
the principles of equity.'" Chrisomalis v. Chrisomalis, 260 N.J. Super. 50, 54
(App. Div. 1992) (quoting Johnson v. Johnson, 212 N.J. Super. 368, 384 (Ch.
Div. 1986)). "One well known treatise has described the effect of appl[ying]
. . . the doctrine as follows":
[w]henever a party, who, as an actor, seeks to set the judicial machinery in motion and obtain some remedy, has violated conscience or good faith, or other equitable principles, in his prior conduct, then the doors of the court will be shut against him in limine; the court will refuse to interfere on his behalf, to acknowledge his right, or to award him any remedy.
[Hageman, 402 N.J. Super. at 48-49 (quoting 2 Pomeroy, Equity Jurisprudence § 397 (5th ed. 1941)).]
Here, the judge properly relied on Hageman to assert her inherent
equitable power to sanction the perpetration of a fraud. See also Triffin v.
Automatic Data Processing, Inc., 394 N.J. Super. 237, 253 (App. Div. 2007).
In Untermann, our Supreme Court offered guidance on applying the
doctrine of unclean hands:
A-2622-23 27 It is the effect of the inequitable conduct on the total transaction which is determinative whether the maxim shall or shall not be applied. Facades of the problem should not be examined piecemeal. Where fraudulent conduct vitiates in important particulars the situation in respect to which judicial redress is sought, a court should not hesitate to apply the maxim.
[19 N.J. at 518.]
We conclude the judge's application of the doctrine of unclean hands as
to all parties was supported by substantial credible evidence in the record. The
judge provided detailed reasons in her oral opinion and statement of reasons in
applying the doctrine. Moreover, in her well-reasoned opinion, the judge
determined these parties "knowingly introduced fraudulent evidence to a court
in a sworn complaint." The judge stressed there had been "no attempt by any
party" to minimize the impact of the fraudulent conduct upon the subordinate
mortgagee, who gave up her interest in the mortgage "at a fraction of its potential
value."
We discern no grounds for disturbing the trial court's finding that Isaac's
conduct should not be "carve[d] out" from the other parties' conduct and to
impose a "lesser sanction" on him. The record supports the judge's conclusion
that the parties acted in pari delicto, and we discern no error.
A-2622-23 28 For similar reasons, we reject Simkowitz's argument that the judge erred
in applying the doctrine of unclean hands in dismissing his cross-claims against
the Herskos. In her oral opinion, the judge observed Simkowitz was at "the core
of the bad conduct." Contrary to Simkowitz's contention, the record shows he
"fully admitted his role in the scheme," which included filing the sham 2010
foreclosure complaint, hiding the true ownership interest in Roseville Tower, to
"deceive and defraud the subordinate mortgagee" to sell the subordinate
mortgage "for pennies on the dollar." The judge noted Simkowitz's actions
"infected this very subject matter" in the litigation. The self-dealing between
the parties to further their own "questionable schemes" based on "less than
honorable mechanisms" and "outright lie[s]" about financial arrangements and
documents warranted application of the doctrine of unclean hands and dismissal
of all claims with prejudice.
B.
Next, we address Isaac's argument that the facts support a finding he has
a 50% interest in the first mortgage. Isaac challenges the judge's ruling because
he contends it is "undisputed" there have been no other assignments or
satisfactions of the first mortgage, and he and Barry are both listed as mortgage
holders. Isaac argues there were no other agreements in the record that
A-2622-23 29 extinguished his ownership interest in the first mortgage. Isaac asserts Barry's
and Simkowitz's contradicting testimony should be disregarded on this issue.
The Herskos counter the judge properly dismissed Isaac's claim under the
doctrine of unclean hands. Simkowitz seeks a remand on this issue. Again, we
are unpersuaded.
The judge did not reach this issue because her unclean hands ruling against
Isaac barred him from pursuing this claim. We decline to make findings of fact
and conclusions of law as to whether Isaac owns 50% of the first mortgage as
he suggests we do. R. 2:10-5.9 Therefore, we conclude Isaac's argument is
unavailing.
C.
Isaac also argues the judge erred in granting the Herskos's motion to
involuntarily dismiss his claim for money had and received 10 because he
9 See Rivera v. Union Cnty. Prosecutor’s Off., 250 N.J. 124, 146 (2022) (quoting R. 2:10-5) ("Appellate courts can 'exercise . . . original jurisdiction as is necessary to the complete determination of any matter on review' . . . [however,] [t]hat power should be invoked 'sparingly'"). 10 Isaac's merits brief references the prima facie elements for a claim of unjust enrichment, not money had and received. "[U]njust enrichment rests on the equitable principle that a person shall not be allowed to enrich himself unjustly at the expense of another." Goldsmith v. Camden Cnty. Surrogate's Off., 408 N.J. Super. 376, 382 (App. Div. 2009). A-2622-23 30 established a prima facie case in support of this claim. The Herskos counter the
judge properly dismissed Isaac's money had and received claim.
"An action for money had and received is an equitable action governed by
equitable principles (and) may in general be maintained whenever one has
money in his [or her] hands belonging to another which in equity and good
conscience he [or she] ought to pay over to that other." Township of Franklin
v. Jones, 86 N.J.L. 224, 225 (E. & A. 1914). "It has been held that money
voluntarily paid with full knowledge of the facts, even if for an unjust claim, or
if paid under protest[,] cannot be recovered." Slocum v. Borough of Belmar,
238 N.J. Super. 179, 193 (Law Div. 1989) (citing McGregor v. Erie Ry. Co., 35
N.J.L. 89, 112 (Sup. Ct. 1871)). Recovery is limited in the following
circumstances: "money paid by mistake, or upon a consideration which happens
to fail, or for money got through imposition, express or implied, or extortion, or
oppression, or an undue advantage taken of . . . plaintiff's situation . . . [c]ontrary
to laws made for the protection of persons under those circumstances." Ibid.
(quoting McGregor, 35 N.J.L. at 112).
Isaac contends it is undisputed that: (1) there were expenses that Roseville
Tower and its owners needed to pay along with required capital contributions;
(2) Isaac made those contributions through We All Care, Inc.; and (3) Isaac was
A-2622-23 31 We All Care Inc.'s sole owner, controlled its accounts, and contributed
$643,794.10 to pay for Roseville Tower's expenses because he believed he had
a membership interest in it. According to Isaac, Roseville Tower received an
inequitable benefit from him by accepting his contributing payments.
The Herskos point out that Isaac has not established a prima facie claim
for money had and received because he failed to present sufficient evidence to
show he personally made contributions to Roseville Tower. The Herskos further
contend there was no evidence to support Isaac's claim that the payments from
We All Care, Inc. to Northside Towers were his capital contributions.
Applying Rule 4:37-2(b) principles, we agree with the judge that Isaac
failed to establish a case for money had and received. The unrefuted evidence
reveals We All Care, Inc. made payments to Northside Towers to pay for
Roseville Tower's expenses. As the judge aptly noted:
The [c]ourt notes it is unchallenged that whether the entity is called We All Care, Inc., or We Care, Inc., this was an entity that was controlled exclusively by Isaac and was formed to receive funds from a New York City Program that paid rent to landlords for homeless and potentially other at-risk tenants. . . .
It is also undisputed that Isaac opened a bank account with checks for the entity that appear[s] as We Care, Inc., as opposed to the actual incorporated name of We All Care, Inc. . . .
A-2622-23 32 There was zero evidence presented that beyond the error in the name, there was any other distinction between the two entities. The check stubs marked into evidence . . . have both names appearing on them without any explanation for that discrepancy. . . .
Thus, we conclude Isaac's claim for money had and received was properly
dismissed.
III.
In his cross-appeal, Simkowitz argues the judge erred in dismissing a
claim incorrectly identified as having been made by Roseville Tower.
Simkowitz contends the order contains misstatements of fact as to Roseville
Tower, it was entered contrary to the court rules, and could potentially lead to
an inequitable result. He asks this court to modify certain paragraphs in the
judge's April 15, 2024 order to delete references to Tower, LLC (i.e. Roseville
Towers) because it implies his counsel represents Roseville Tower, which is not
the case.
Any such error falls within the jurisdiction of the Chancery Division.
Under Rule 1:13-1,
[c]lerical mistakes in judgments, orders or other parts of the record and errors therein arising from oversight and omission may at any time be corrected by the court on its own initiative or on the motion of any party, and
A-2622-23 33 on such notice and terms as the court directs, notwithstanding the pendency of an appeal.
"This rule makes clear that notwithstanding the pendency of an appeal,
the trial court has the power to correct clerical errors in the record made before
it." Pressler & Verniero, Current N.J. Court Rules, cmt. 1 on R. 1:13-1 (2026).
"This [Rule] is inapplicable to clerical errors other than those appearing in the
judgment or order itself." Ibid. Therefore, Simkowitz can file a Rule 1:13-1
motion in the Chancery Division to correct any clerical errors.
Simkowitz also argues in his cross-appeal that the judge erred in
dismissing, with prejudice, his crossclaims for insufficient capital contributions
made to Roseville Tower, and non-party Roseville Park, LLC, for dissolution of
those entities and for discharge of the mortgages on Roseville Tower based on
unclean hands. Simkowitz contends the dismissal with prejudice is unsupported
and not explained on the record, maintaining the Roseville Park, LLC cross -
claims were unrelated to the December 2010 foreclosure action and were not
"tainted" by the parties' conduct regarding the mortgages.
In response, the Herskos argue Simkowitz's cross-claims were properly
dismissed with prejudice because there is a nexus between his cross-claims and
A-2622-23 34 the 2010 foreclosure action. The Herskos assert the doctrine of unclean hands
does not allow a claimant to parse out related claims or conduct.
We reject Simkowitz's arguments. As previously stated, we conclude the
judge was well within her discretion in dismissing all of the parties' claims with
prejudice under the doctrine of unclean hands. Specifically, the judge found
Simkowitz and the Herskos had unclean hands stemming from the 2010
foreclosure action and consequently, their conduct was directly related to the
competing cross-claims.
We hold there is no basis to reverse and allow Simkowitz an opportunity
to present an affirmative case for an accounting. Thus, the Herskos's cross -
appeal seeking similar relief is moot.
Affirmed.
A-2622-23 35