NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ."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-2568-21
JOHN M. MAVROUDIS,
Plaintiff-Appellant,
v.
VEDDER PRICE P.C., MITCHELL D. COHEN, ESQ., MCELROY, DEUTSCH, MULVANEY & CARPENTER, LLP, and WILLIAM F. O'CONNOR, JR., ESQ.,
Defendants-Respondents,
and
THOMAS DINARDO, JOSEPH F. BELASCO, JR., CULINARY HOLDING, INC., CULINARY VENTURES, INC., CULINARY VENTURES, L.L.C., ADVANCED BEVERAGE INC., SANSNAME, INC., and DING MOO LLC,
Defendants. _____________________________
Argued January 9, 2024 – Decided September 6, 2024 Before Judges Gooden Brown and Natali.
On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-7714-19.
Michael D. Camarinos argued the cause for appellant (Camarinos Law Group, LLC, attorneys; Michael D. Camarinos, on the briefs).
John L. Slimm argued the cause for respondents McElroy, Deutsch, Mulvaney & Carpenter, LLP and William F. O'Connor, Jr., Esq. (Marshall Dennehey, PC, attorneys; John L. Slimm, on the brief).
Brian J. Molloy argued the cause for respondents Vedder Price, PC and Mitchell D. Cohen, Esq. (Wilentz, Goldman & Spitzer, PA, attorneys; Brian J. Molloy and Daniel J. Kluska, of counsel and on the brief; Samantha Stillo, on the brief).
PER CURIAM
Plaintiff John M. Mavroudis appeals from: (1) a March 11, 2022, Law
Division order granting summary judgment dismissal of his common law fraud
claim against defendants Vedder Price, P.C., and Mitchell D. Cohen, Esq. (the
VP defendants); (2) a March 11, 2022, Law Division order granting summary
judgment dismissal of his common law fraud claim against defendants McElroy,
Deutsch, Mulvaney & Carpenter, LLP, and William F. O'Connor, Jr., Esq. (the
McElroy defendants); and (3) a June 18, 2020, Law Division order granting
A-2568-21 2 defendants' respective motions to dismiss plaintiff's professional negligence -
based claims against them pursuant to Rule 4:6-2(e). We affirm.
I.
Plaintiff's claims are the culmination of over ten years of litigation in
various courts, stemming from a judgment General Electric Capital Corporation
(GE) obtained on January 30, 2012, against plaintiff, his son, Michael
Mavroudis, and his business partners, Thomas DiNardo and Joseph Belasco, Jr.
(collectively, the debtors). The judgment was obtained jointly and severally and
totaled $2,503,552, 1 plus post-judgment interest and fees (the GE judgment).
We later affirmed the judgment in an unpublished opinion. Gen. Elec. Cap.
Corp. v. Imaging Ctr. of Oradell, LLC, Nos. A-3001-11, A-3955-11 (App. Div.
June 12, 2013) (slip op. at 2).
The GE judgment arose from a pair of lease agreements that GE and
Imaging Center of Oradell, LLC (ICO) entered into involving several pieces of
medical imaging equipment. Id. at 2. The debtors all executed unconditional
guarantees of payment in connection with the leases. Id. at 2-4. When ICO
defaulted on the leases, GE retained the VP defendants and filed a complaint in
the Law Division to enforce the agreements, ultimately resulting in the entry of
1 We round all monetary amounts to the nearest dollar. A-2568-21 3 the judgment (the Law Division action). Id. at 5-6. GE also filed a separate
action against the debtors in the Chancery Division, asserting claims of
fraudulent conveyance (the Chancery Division action). ICO subsequently filed
for bankruptcy and its assets were liquidated, resulting in various credits that
reduced the balance of the GE judgment to $1,477,882.
In its debt collection efforts, GE filed motions in the Chancery Division
action seeking to compel DiNardo and Belasco to turn over and divest
themselves of any stock or other ownership interests they had in several of their
companies. GE also sought to satisfy the debt from the debtors' personal
property and obtained a writ of execution specifically directing the Bergen
County Sheriff to satisfy the GE judgment out of plaintiff's personal property.
Mavroudis v. Tangible Secured Funding, Inc., Nos. A-1118-13, A-1941-13
(App. Div. June 14, 2016) (slip op. at 3). 2
Pursuant to the writ, the Bergen County Sheriff took an inventory of
plaintiff's personal property and scheduled an asset sale for April 24, 2013. Id.
at 3. On March 22, 2013, plaintiff and his wife filed a complaint against GE and
2 The unpublished opinions cited in this opinion are not cited as precedent, but rather for the limited purpose of presenting relevant background information. See Animal Prot. League of N.J. v. N.J. Dep't of Env't Prot., 423 N.J. Super. 549, 556 n.2 (App. Div. 2011). A-2568-21 4 the Bergen County Sheriff to stop the sale, claiming that an oral agreement made
between the couple before their marriage allocated the ownership of all personal
property in their home to his wife (the asset litigation). Id. at 3, 5. On September
18, 2013, GE assigned the GE judgment to Tangible Secured Funding, Inc.
(Tangible). Tangible was a separate creditor from whom the debtors had also
borrowed funds. Tangible was substituted into the asset litigation on September
27, 2013. Id. at 2 n.1.
While the asset litigation was pending, and notwithstanding court orders
prohibiting plaintiff and his wife from dissipating property contained in the
Sheriff's inventory, plaintiff and his wife consigned a valuable oil painting listed
on the inventory to Sotheby's in New York. Id. at 4-5. The net proceeds from
the painting's sale amounted to $1.3 million after Sotheby's fees were deducted.
The $1.3 million was deposited into the Trust Fund Unit of the Superior Court
pending further court order. On November 19, 2013, after a unanimous jury
found in the asset litigation that plaintiff had shared ownership with his wife of
the personal property levied upon, a final judgment was entered in favor of
Tangible. Id. at 2, 7. As a result, pursuant to a December 18, 2013, order, the
proceeds of the painting's sale were applied to the balance of the GE judgment.
A-2568-21 5 Id. at 2-3. The December 18 order also directed the Sheriff to execute a sale of
plaintiff's remaining assets until the GE judgment was satisfied in full.
Prior to the asset litigation verdict, DiNardo and Belasco retained
McElroy, Deutsch, Mulvaney & Carpenter (McElroy) to represent their interests
in settlement negotiations for both the GE judgment as well as the separate debt
they owed to Tangible. By way of background, in 2010, Tangible had issued
two loans totaling $1.5 million to companies managed by plaintiff, DiNardo,
and Belasco (the Tangible loan). The loans were secured by promissory notes
and mortgages executed in favor of Tangible by the debtors, in both their
individual capacities and on behalf of their companies. As with the GE leases,
the debtors also executed unconditional personal guarantees for the entire debt
amounts. The first of the two notes became due in October 2010, and the second
became due in March 2011. However, the companies defaulted on both notes.
By late 2013, plaintiff, DiNardo, and Belasco jointly and severally owed a
combined amount of $2,659,923 on both notes, excluding fees, which amount
represented unpaid principal, interest at a rate of $986.30 per diem, and a portion
of the legal fees Tangible incurred up to that date.
On August 20, 2013, DiNardo and Belasco executed an agreement with
GE and Tangible titled "Settlement Agreement, Release and Assignment of
A-2568-21 6 Judgment" (the assignment agreement). The assignment agreement provided
that GE, DiNardo, and Belasco "mutually agreed to resolve the claims that
form[ed] the basis for the [Law Division and Chancery Division actions]" as
against DiNardo and Belasco. To that end, GE "agree[d] to assign to Tangible
. . . [GE's] rights, title and interest in the [j]udgment," as well as its "rights" in
the Chancery Division action and the asset litigation, which were both pending
at the time.
The parties further agreed that "[u]pon execution of th[e a]greement," GE
would withdraw its motions in the Chancery Division action to compel DiNardo
and Belasco to turn over their shares in their companies. "As part of the
consideration for the [a]greement, and as an inducement . . . to enter into the
[a]greement," Tangible agreed to pay GE a sum of $1.1 million. The agreement
also provided that GE's assignments to Tangible constituted "further
consideration for th[e a]greement." Additionally, GE's assignment of its rights
in the ongoing litigation conveyed to Tangible the right to "prosecute and defend
[the asset litigation and the Chancery Division action] against [plaintiff] . . . and
any other individual or entity in order to recover any and all amounts due and
owing under the [GE j]udgment." During the negotiations, GE was represented
by the VP defendants. Tangible was apparently represented in the negotiations
A-2568-21 7 by McElroy.3 Plaintiff was not a party to the assignment agreement and
apparently had no knowledge of it at the time.
On August 19, 2013, Tangible received a wire transfer from Culinary
Ventures Vending, Inc., in the amount of $1.1 million. The following day,
August 20, 2013, when the assignment agreement was executed, Tangible wired
the same amount to McElroy, who then transferred it to GE. Culinary Ventures
Vending, Inc., which was dismissed as a defendant in this action on November
19, 2021, is a corporation apparently controlled by DiNardo and Belasco.
Though not specified in the assignment agreement, in exchange for the $1.1
million, Tangible apparently agreed to not pursue DiNardo and Belasco in its
collection efforts regarding the Tangible loan unless it failed to collect the
entirety of the remaining balance through its litigation with plaintiff.
On August 21, 2013, GE entered stipulations of dismissal with prejudice
as to DiNardo and Belasco in both the Law Division and Chancery Division
actions. Subsequently, on December 9, 2013, Tangible filed a motion for
judgment by confession seeking to recover the entire amount of the Tangible
loan from plaintiff only. Furthermore, after executing the assignment
3 McElroy's representation of Tangible in the deal is the subject of its own ongoing litigation. Tangible Secured Funding, LLC v. McElroy, Deutsch, Mulvaney & Carpenter, LLP, No. L-0255-20 (Law Div. 2023). A-2568-21 8 agreement, Tangible retained the VP defendants to represent it in both collection
actions against plaintiff.
On September 23, 2013, DiNardo and Belasco, acting in both their
individual capacities and on behalf of their respective companies, entered into
an agreement to settle various separate, unrelated lawsuits brought by DiNardo,
Belasco, and their corporation against plaintiff, his son, his wife, and his various
corporations. Pursuant to that agreement, DiNardo and Belasco agreed to
dismiss specified claims with prejudice in exchange for $1.5 million. The $1.5
million settlement amount was paid through an officer and director's liability
insurance policy (the insurance settlement). Plaintiff later certified to the judge
in the asset litigation that "[t]he offer that formed the basis for [the insurance
settlement] specified that payment of the $1.5 [m]illion settlement proceeds
would be made to Tangible among other creditors, after payment of legal fees."
However, no amount of the insurance settlement was paid to Tangible by
DiNardo or Belasco.
On or around December 31, 2013, plaintiff filed a voluntary petition for
Chapter 11 bankruptcy relief in the United States Bankruptcy Court for the
District of New Jersey, resulting in an automatic stay. Mavroudis, slip op. at 7-
8.
A-2568-21 9 Subsequently, on November 4, 2019, plaintiff filed a nine-count complaint
against the VP defendants and the McElroy defendants alleging professional
negligence and malpractice (counts one and two), malfeasance and breach of
fiduciary duty (counts three and four), common law fraud (count five), negligent
misrepresentation (count six), negligence (count seven), gross negligence (count
eight), and a claim for treble damages under N.Y. Jud. Law § 487 (count nine).
In essence, the complaint alleged that the assignment agreement was, in fact, a
settlement agreement in which GE agreed to dismiss its claims against DiNardo
and Belasco in exchange for $1.1 million, thereby reducing the outstanding
balance of the GE judgment.
Because Tangible was the entity that paid GE, the complaint alleged that
"Tangible was solicited to act as a straw man and be designated as the purported
purchaser or assignee of the GE [j]udgment and thereby serve as the undisclosed
agent of DiNardo and Belasco." The complaint asserted that defendants "knew
that the $1.1 million paid by DiNardo and Belasco was in actuality a payment
against the outstanding balance of the GE [j]udgment made . . . to release
DiNardo and Belasco from or to satisfy the GE [j]udgment." Consequently,
defendants' later "statements and/or certifications to tribunals that DiNardo and
A-2568-21 10 Belasco were released from the GE [j]udgment without payment of any
consideration" were "kn[own] to be and w[ere] false."
The complaint further alleged that defendants' conduct was in breach of
defendants' "fiduciary obligations to [p]laintiff under the New Jersey Rules of
Professional Conduct [(RPC)] . . . in failing to act with candor and honesty" in
negotiating and structuring the assignment agreement "to enable Tangible,
DiNardo and Belasco to wrongfully collect funds which . . . [p]laintiff [had] no
obligation to pay." According to the complaint, as a result of defendants' alleged
misconduct, plaintiff "incurred damages well in excess of $10[ million],"
representing "the loss of the [p]ainting, legal fees and other costs."
On December 23, 2019, the McElroy defendants moved to dismiss
pursuant to Rule 4:6-2(e) on the grounds that: (1) plaintiff's claims were barred
by the litigation privilege; (2) the McElroy defendants owed no duty to plaintiff;
(3) plaintiff had failed to state a claim for civil conspiracy, and (4) plaintiff's
claims were barred by equitable estoppel. On February 18, 2020, the VP
defendants also moved to dismiss on the grounds that: (1) plaintiff's claims were
barred by the statute of limitations; (2) plaintiff's claims were alternatively
barred by the doctrine of collateral estoppel; (3) the VP defendants owed no duty
A-2568-21 11 to plaintiff; and (4) non-clients could not claim damages under N.Y. Jud.
Law § 487.
On June 18, 2020, following oral argument, the judge entered an order
dismissing all counts except for count five. In an accompanying written
decision, the judge first rejected the arguments that the doctrines of collateral
estoppel, equitable estoppel, or entire controversy barred plaintiff's claims,
reasoning that the issues raised in the complaint were not identical to claims
raised in the asset litigation. The judge also found that, under the circumstances,
applying the doctrines would be inequitable, explaining that "[i]f defendant
attorneys did in fact conceal from the court a payment by co-debtors . . . through
concealed wire transfers," plaintiff would have been denied a "fair adjudication
in the initial action." The judge similarly rejected the argument that plaintiff's
claims were barred by the statute of limitations, finding the argument
unsupported by the record.
Additionally, in declining to dismiss count five, the judge found plaintiff
had sufficiently pled a fraud claim against the VP and McElroy defendants. In
support, the judge considered the elements of common law fraud and determined
plaintiff's pleadings addressed each element in that: (1) the VP and McElroy
defendants "materially misrepresented that no consideration was paid by
A-2568-21 12 DiNardo and Belasco for their releases from the [GE] judgment"; (2) defendants
"had knowledge or belief of the falsity of their representations"; (3) they
intended for "plaintiff [to] rely on their false representations"; (4) plaintiff did
rely on those misrepresentations; and (5) plaintiff suffered "damages" as a result.
As for plaintiff's legal malpractice claim, however, the judge concluded
that dismissal was warranted. After considering the governing case law, the
judge determined that although plaintiff had alleged many instances of
"dishonest or fraudulent conduct," he did not assert that defendants had "invited
[plaintiff] to rely on" the conduct. Further, according to the judge, plaintiff's
reference to numerous RPCs could not, standing alone, "form the basis of a legal
malpractice cause of action." See Banco Popular N. Am. v. Gandi, 184 N.J. 161,
182 n.8 (2005). Turning to plaintiff's negligence, gross negligence, breach of
fiduciary duty, and negligent misrepresentation claims, the judge determined
they were "duplicative of plaintiff's legal malpractice claims" and dismissal was
therefore required.
With leave of court, plaintiff filed an amended complaint on April 20,
2021, adding DiNardo, Belasco, and their corporations as defendants and raising
additional claims against them. DiNardo and Belasco moved for summary
judgment, arguing that plaintiff's claims were barred by the insurance settlement
A-2568-21 13 agreement. The existence of the Tangible loan was revealed to the judge,
apparently for the first time, through DiNardo and Belasco's submissions in
support of their motion. On November 19, 2021, following a hearing, the judge
entered an order dismissing DiNardo, Belasco, and the corporate defendants
from the action. Plaintiff does not challenge their dismissal on appeal.
Thereafter, on December 23, 2021, the VP defendants moved for summary
judgment as to count five and the McElroy defendants followed suit on January
7, 2022. On March 11, 2022, following oral argument, the judge granted the
motions in an oral decision placed on the record at the conclusion of the hearing.
After thoroughly recounting the factual and procedural history of the case, the
judge posited plaintiff's fraud claim was that defendants
misrepresented the balance owed by plaintiff on the [GE] judgment[] by the way that the [assignment agreement] was drafted, and by what was represented to plaintiff and to various courts.
Plaintiff . . . alleges that the [assignment] agreement was a scheme and Tangible was brought into it for no legitimate purpose, but only as a strawman for a nefarious purpose.
The judge determined the core issue was "whether the $1.1 million payment to
[GE] reduced the balance on the [GE] judgment," and thus "presented a question
of law" suitable for summary judgment.
A-2568-21 14 The judge concluded "that because the purported scheme was a legal
arrangement, and the [$]1.1 million payment to [GE] did not reduce the balance
on the judgment, the attorney defendants did not make any
misrepresentations . . . that could serve as the basis of a common law fraud
claim." The judge explained that the assignment agreement was "a legal arm's-
length transaction among parties to which each provided and obtained valuable
consideration." In support, the judge relied on her multiple rulings in deciding
prior motions.
Specifically, the judge pointed to her June 18, 2020, ruling that GE "was
permitted to assign the judgment to any party, which would include Tangible,
Belasco, or Di[Nardo]." The judge recalled that she had previously found "the
assignment of the judgment from [GE] to Tangible was expressly permitted" by
N.J.S.A. 2A:25-1, which provides that "all judgments and decrees recovered in
any of the courts of this State or of the United States or in any of the courts of
any other state of the United States . . . shall be assignable, and the assignee may
sue thereon in his [or her] own name."
The judge also cited her November 19, 2021, decision, recalling that
DiNardo and Belasco "were indebted both to [GE], under the [GE] judgment,
and to Tangible, under the Tangible loan." Additionally, the judge noted that in
A-2568-21 15 her 2021 decision, she had determined that "[t]he Tangible loan was separate
and apart from any rights that Tangible subsequently acquired in the [GE]
judgment." The judge noted further that the asset litigation judge had also
determined that plaintiff could be held "responsible for the entire debt balance"
due to the "joint and several liability" between plaintiff, DiNardo, and Belasco.
Therefore, according to the judge, there was "nothing legally improper regarding
the payment made to [GE] in exchange for an assignment of the judgment."
The judge further observed that the assignment agreement "provided
positive legal results for the parties involved," explaining:
[GE] received an additional $1.1 million and, ultimately, collected $2.1 million after obtaining the judgment. Tangible obtained the judgment and, ultimately, collected most of the [$]1.48 million balance on the judgment, and Belasco and Di[Nardo] received releases from further liability on their debts.
Belasco and Di[Nardo] received releases from [GE] and, certainly, were no longer being pursued, at that time, by Tangible, which was their goal.
Noting that some dispute existed as to whether the $1.1 million sum had
been paid in exchange for DiNardo and Belasco's release from the Tangible loan,
the judge explained:
Whether [DiNardo and Belasco] received releases from Tangible, at that time, is of no moment to this [c]ourt's decision. What does matter is that it is
A-2568-21 16 known that the pressure of Tangible instituting litigation against Belasco and Di[Nardo], at that time, dissipated. And we know, with hindsight, that, in fact, none ever occurred.
The judge also observed that "the entire underpinning of plaintiff's case
against . . . defendants, basically, falls apart based on the nature of the
[assignment] agreement." As an aside, the judge commented:
It must be stated that, with the knowledge this [c]ourt presently has, even if . . . the agreement [was] actually one with [GE], [and] the judgment [creditor] assigned the judgment to Belasco and Di[Nardo], fellow joint and several debtors, plaintiff would not be discharged pro rata as another judgment debtor.
It does not matter whether [GE] was paid by Tangible or was, instead, paid by Belasco and Di[Nardo], under their agreement.
As a matter of law, plaintiff does not unjustly reap the benefits of another party's payment to [GE]. There is no viable cause of action for common law fraud against the lawyer defendants, based on the entire history of what occurred as set forth in this decision.
The judge entered a memorializing order, and this appeal followed.
II.
On appeal, plaintiff challenges both the grant of summary judgment to
defendants on his common law fraud count and the dismissal with prejudice of
his professional negligence-based claims pursuant to Rule 4:6-2(e).
A-2568-21 17 "[W]e review the trial court's grant of summary judgment de novo under
the same standard as the trial court." Templo Fuente De Vida Corp. v. Nat'l
Union Fire Ins. Co. of Pittsburgh, 224 N.J. 189, 199 (2016). That standard is
well-settled.
[I]f the evidence of record—the pleadings, depositions, answers to interrogatories, and affidavits—"together with all legitimate inferences therefrom favoring the non-moving party, would require submission of the issue to the trier of fact," then the trial court must deny the motion. R. 4:46-2(c); see Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). On the other hand, when no genuine issue of material fact is at issue and the moving party is entitled to a judgment as a matter of law, summary judgment must be granted. R. 4:46-2(c); see Brill, 142 N.J. at 540.
[Steinberg v. Sahara Sam's Oasis, LLC, 226 N.J. 344, 366 (2016).]
Where there is no material fact in dispute, "we must then 'decide whether
the trial court correctly interpreted the law.'" DepoLink Ct. Reporting & Litig.
Support Servs. v. Rochman, 430 N.J. Super. 325, 333 (App. Div. 2013) (quoting
Massachi v. AHL Servs., Inc., 396 N.J. Super. 486, 494 (App. Div. 2007)). "We
review issues of law de novo and accord no deference to the trial judge's [legal]
conclusions . . . ." MTK Food Servs., Inc. v. Sirius Am. Ins. Co., 455 N.J. Super.
307, 312 (App. Div. 2018).
A-2568-21 18 Similarly, we "review[] de novo the trial court's determination of [a]
motion to dismiss under Rule 4:6-2(e)," and therefore "owe[] no deference to
the trial court's legal conclusions." Dimitrakopoulos v. Borrus, Goldin, Foley,
Vignuolo, Hyman & Stahl, P.C., 237 N.J. 91, 108 (2019). "[I]n reviewing a
complaint dismissed under Rule 4:6-2(e)[, the] inquiry is limited to examining
the legal sufficiency of the facts alleged on the face of the complaint." Green v.
Morgan Props., 215 N.J. 431, 451 (2013) (quoting Printing Mart-Morristown v.
Sharp Elecs. Corp., 116 N.J. 739, 746 (1989)). In so doing, "a reviewing court
searches the complaint in depth and with liberality to ascertain whether the
fundament of a cause of action may be gleaned even from an obscure statement
of claim, opportunity being given to amend if necessary." Id. at 452 (quoting
Printing Mart-Morristown, 116 N.J. at 746). In that search, "courts must 'assume
the facts as asserted by plaintiff are true and give [him or] her the benefit of all
inferences that may be drawn in [his or] her favor." Banco Popular, 184 N.J. at
166 (quoting Velantzas v. Colgate-Palmolive Co., 109 N.J. 189, 192 (1988)).
Still, a complaint should be dismissed where it "states no claim that
supports relief, and discovery will not give rise to such a claim."
Dimitrakopoulos, 237 N.J. at 107. Thus, "a dismissal is mandated where the
factual allegations are palpably insufficient to support a claim upon which relief
A-2568-21 19 can be granted." Rieder v. State, Dep't of Transp., 221 N.J. Super. 547, 552
(App. Div. 1987).
Plaintiff first argues that the judge "failed to address and appreciate
that . . . the co-judgment debtors were co-guarantors, and the judgment was on
that guaranty." Plaintiff contends that because of this error, the judge "did not
apply the legal principle that . . . if any [guarantor] pays consideration for a
release and obtains control of the judgment, their recourse as to the other co -
guarantors . . . is limited to seeking only a pro rata contribution that is limited
to the amount paid." (Emphasis omitted). Plaintiff asserts that by paying
Tangible the funds that were ultimately used to pay GE, DiNardo and Belasco
paid "consideration for a release and obtain[ed] control of the judgment." As a
result, plaintiff argues, "the only amount that could have been properly pursued
was [twenty-five percent] of the $1.1 [m]illion paid for the judgment, i.e.,
$275,000." Therefore, "actionable fraud came about" through defendants'
purposeful concealment of the source of the $1.1 million sum, "refus[al] to
inform [p]laintiff and the courts what amount was paid for the judgment," and
their pursuit of the "full amount" of the GE judgment. We reject plaintiff's
contentions.
A-2568-21 20 Even viewing the facts with "the benefit of all favorable inferences to
plaintiff[]," Angland v. Mountain Creek Resort, Inc., 213 N.J. 573, 577 (2013)
(citing Brill, 142 N.J. at 523), plaintiff's argument is faulty in its premise. A
contract's "plain language . . . is the cornerstone of the interpretive inquiry."
Barila v. Bd. of Educ. of Cliffside Park, 241 N.J. 595, 616 (2020). The
assignment agreement provided that Tangible would remit to GE $1.1 million
as "consideration for the [a]greement, and as an inducement for the [p]arties to
enter into the [a]greement." The agreement also contained three integration
clauses, each stating that the assignment agreement represented the entire
agreement between GE, Tangible, DiNardo and Belasco, and was intended to
supersede "any and all prior agreements and understandings," be they written or
oral. Thus, regardless of the source of the funds, it was ultimately Tangible, not
DiNardo and Belasco, that paid consideration for DiNardo and Belasco's release
from the GE judgment.
Furthermore, there is nothing in the record to suggest that DiNardo and
Belasco "[o]btained [c]ontrol" of the GE judgment through the assignment.
(Emphasis omitted). Neither DiNardo nor Belasco had any right to control or
direct Tangible, and the assignment agreement did not give them any such right.
On the contrary, the assignment agreement provided that Tangible would "be
A-2568-21 21 solely responsible for the prosecution of the Chancery [a]ction and [the asset
litigation]" and would "retain sole control over the Chancery [a]ction." It was
Tangible, not DiNardo or Belasco, that in fact pursued litigation against plaintiff
and ultimately received payment on the GE judgment.
Next, plaintiff argues that the judge erred in granting summary judgment
because there remained genuine factual disputes as to: (1) "whether DiNardo
and Belasco's $1.1 [m]illion payment . . . satisfied the GE [j]udgment and/or
was consideration for their release"; (2) "whether Tangible was acting as a straw
man and alter ego for [DiNardo and Belasco] pursuant to a scheme"; and (3)
whether defendants "knew or should have known that surety law preclude[d]
collection of amounts in excess of the pro-rata contribution" in the asset
litigation.
"To defeat a motion for summary judgment, the opponent must 'come
forward with evidence that creates a genuine issue of material fact.'" Sullivan
v. Port Auth. of N.Y. & N.J., 449 N.J. Super. 276, 282-83 (App. Div. 2017)
(quoting Cortez v. Gindhart, 435 N.J. Super. 589, 605 (App. Div. 2014)).
"Rule 4:46-2(c)'s 'genuine issue [of] material fact' standard mandates that the
opposing party do more than 'point[] to any fact in dispute' in order to defeat
summary judgment." Globe Motor Co. v. Igdalev, 225 N.J. 469, 479 (2016)
A-2568-21 22 (alterations in original) (quoting Brill, 142 N.J. at 529). Here, plaintiff has failed
"to show by competent evidential material that a genuine issue of material fact
did exist." Merchs. Express Money Ord. Co. v. Sun Nat'l Bank, 374 N.J. Super.
556, 563 (App. Div. 2005).
First, there is no genuine factual dispute as to whether the $1.1 million GE
received pursuant to the assignment agreement "satisfied the GE [j]udgment."
"Ordinarily, the intention of the parties determines whether a transfer of money
by a third person to a creditor constitutes a discharge or purchase of an
underlying debt or note." Del. Truck Sales, Inc. v. Wilson, 131 N.J. 20, 29
(1993). Here, the assignment agreement language clearly indicates that the $1.1
million payment did not satisfy the GE judgment.
As the judge noted, the assignment agreement provided that the $1.1
million GE received was "part of the consideration" for the assignment of GE's
"rights, title and interest in the [j]udgment." The agreement defined the value
of the judgment assigned as $1,477,882. The $1.1 million payment was not
identified in the assignment agreement as constituting satisfaction for DiNardo's
and Belasco's liability for the GE judgment, and the balance remained
unchanged by the assignment. See Quinn v. Quinn, 225 N.J. 34, 45 (2016)
("[W]hen the intent of the parties is plain and the language is clear and
A-2568-21 23 unambiguous, a court must enforce the agreement as written, unless doing so
would lead to an absurd result."). Plaintiff's "speculation" as to any side
agreements between GE, DiNardo, Belasco, and Tangible are both belied by the
record and "do[] not meet the evidential requirements which would allow [him]
to defeat a summary judgment [motion]." Merchs. Express Money Ord. Co.,
374 N.J. Super. at 563.
Second, aside from plaintiff's own bald assertions, there is no credible
evidence in the record to support plaintiff's claim that Tangible acted as a mere
"straw man" for DiNardo and Belasco. "Neither fanciful arguments nor disputes
as to irrelevant facts will make an issue such as will bar a summary decision."
Ibid. The record shows that Tangible is an independent corporation, separate
from any of DiNardo's or Belasco's corporate holdings. Tangible acted in its
own interests when it entered the assignment agreement for its own benefit.
Indeed, in the amended complaint, plaintiff acknowledged that DiNardo and
Belasco owed a separate debt to Tangible, sought to induce Tangible to agree to
accept the GE judgment in lieu of direct payment for those debts, and agreed
that they would "repay any shortfall remaining" as to the Tangible loan "after
Tangible's collection activities" in the asset litigation.
A-2568-21 24 Third, as an independent third-party creditor, Tangible obtained an
assignment as permitted under N.J.S.A. 2A:25-1, thereby becoming entitled to
"all rights and remedies for collection which the assignor as the holder of such
judgments possessed." Roth v. Gen. Cas. & Sur. Co., 106 N.J.L. 516, 518 (E.
& A. 1929). Contrary to plaintiff's assertion, Tangible was not a guarantor of
the underlying debts. Gen. Elec. Cap. Corp., slip op. at 3. Therefore, the
principles of exoneration and contribution upon which plaintiff relies are
inapplicable to Tangible's right to recover. Additionally, Tangible's payment
was not a settlement of the GE judgment, but rather a purchase. Thus, the
authority upon which plaintiff relies is inapposite to the facts of this case. See
D'Ippolito v. Castoro, 51 N.J. 584, 589-92 (1968) (discussing duties between
co-guarantors); Republic Bus. Credit Corp. v. Camhe-Marcille, 381 N.J. Super.
563, 569-71 (App. Div. 2005) (discussing obligor's duty of contribution with
respect to settlement amounts paid by a joint obligor).
Moreover, the assignment agreement gave Tangible sole and exclusive
control over the ongoing collection efforts. Plaintiff contests Tangible's sole
and exclusive control by pointing to an email exchange between defendants
O'Connor, then representing Tangible, DiNardo, and Belasco, and Cohen, then
representing GE. Specifically, O'Connor asked Cohen whether GE "care[d]
A-2568-21 25 whether DiNardo and Belas[c]o [were] the assignees of the judgment as opposed
to [Tangible's director]," to which Cohen replied that he had been informed by
a third party that GE "want[ed] a different person/entity to be the assignee." The
final email sent by O'Connor to Cohen stated, "I'll reach out to him. If they don't
care and [GE] doesn't care it will be [DiNardo] and [Belasco]. Otherwise I'll be
directed by what he tells me and will revise the docs accordingly and circulate."
In evaluating a summary judgment motion, courts must consider "the
evidential standard governing the cause of action." Bhagat v. Bhagat, 217 N.J.
22, 38 (2014). Here, plaintiff's burden of proof for his common law fraud claim
is "clear and convincing evidence" that Tangible was acting as an alter ego for
DiNardo and Belasco, thereby making any statements to the contrary false.
DepoLink, 430 N.J. Super. at 336 (quoting Stochastic Decisions, Inc. v.
DiDomenico, 236 N.J. Super. 388, 395 (App. Div. 1989)). The email exchange
does not meet that standard.
Plaintiff's only other evidence in support of the purported scheme consists
of statements made by or against defendants in pleadings in other matters, as
well as statements made by Tangible's newly retained counsel at oral argument
A-2568-21 26 on this motion. 4 However, plaintiff has not supplied any credible evidence to
suggest that those statements were anything other than non-binding litigation
positions advanced by counsel.5 "It is axiomatic that counsel's arguments do not
constitute evidence." Stewart v. N.J. Tpk. Auth./Garden State Parkway, 249
N.J. 642, 659 (2022). Consequently, even with the benefit of all favorable
inferences, plaintiff still failed to demonstrate a genuine issue of fact sufficient
to overcome summary judgment.
There being no genuine issue of material fact, we now turn to whether the
judge correctly interpreted the law. DepoLink, 430 N.J. Super. at 333. This
review begins by "identifying the elements of the cause of action and the
standard of proof governing th[e] claim." Bhagat, 217 N.J. at 39. To establish
a claim of common law fraud, a plaintiff must demonstrate: "(1) a material
misrepresentation of a presently existing or past fact; (2) knowledge or belief by
4 Although Tangible is not a party to plaintiff's fraud claims, Tangible's malpractice suit against the McElroy defendants was consolidated with this matter for purposes of discovery, and therefore Tangible's counsel was present at oral argument on March 11, 2022. 5 A party is only bound to a previous position if that position was successful in earlier litigation. Kimball Int'l, Inc. v. Northfield Metal Prods., 334 N.J. Super. 596, 606-07 (App. Div. 2000). That rule is generally inapplicable where "the first action was concluded by a settlement." Id. at 607. The litigation between VP and Tangible ultimately settled, and Tangible's malpractice claim against McElroy remains pending. A-2568-21 27 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, 184 N.J. at 172-73 (quoting Gennari v. Weichert Co. Realtors,
148 N.J. 582, 610 (1997)). Importantly, "fraud is never presumed." Weil v.
Express Container Corp., 360 N.J. Super. 599, 613 (App. Div. 2003). Instead,
a plaintiff "must prove each element by 'clear and convincing evidence.'"
DepoLink, 430 N.J. Super. at 336 (quoting Stochastic Decisions, Inc., 236 N.J.
Super. at 395).
Applying these principles, we agree with the judge that plaintiff failed to
establish the elements of common law fraud. Plaintiff's failure to establish by
clear and convincing evidence that the $1.1 million paid to GE was or should
have been credited towards the GE judgment is fatal to his claim that defendants
misrepresented the outstanding balance. Similarly, plaintiff's failure to establish
that Tangible acted as an agent for DiNardo and Belasco is fatal to his claim that
defendants misrepresented Tangible's role in the assignment or the effect of
Tangible's purchase. In the absence of a material misrepresentation, plaintiff
cannot establish defendants' knowledge or belief of falsity.
Additionally, because the alleged misrepresentations upon which
plaintiff's claims are premised were made by opposing attorneys in adversarial
A-2568-21 28 litigation, plaintiff cannot demonstrate reasonable reliance on those statements.
See Banco Popular, 184 N.J. at 182 (holding that bank could not establish
negligent misrepresentation claim against attorney absent a "relationship . . .
that substitute[s] for the privity requirement"); Kaufman v. i-Stat Corp., 165 N.J.
94, 109 (2000) ("The element of reliance is the same for fraud and negligent
misrepresentation."). Any one of these deficiencies standing alone is sufficient
to support the judge's grant of summary judgment.
Plaintiff argues that summary judgment was premature in this case
because discovery in the form of "depositions, interrogatories, [and] review of
the attorneys' files and documents" is required to determine whether the $1.1
million sum was used to satisfy the GE judgment or the Tangible loan.
"Generally, summary judgment is inappropriate prior to the completion of
discovery." Hyman v. Rosenbaum Yeshiva of N.J., 474 N.J. Super. 561, 573
(App. Div. 2023) (quoting Wellington v. Est. of Wellington, 359 N.J. Super.
484, 496 (App. Div. 2003)). However, "[a] motion for summary judgment is
not premature merely because discovery has not been completed." Badiali v.
N.J. Mfrs. Ins. Grp., 220 N.J. 544, 555 (2015). Rather, a party opposing the
motion based on incomplete discovery must show "with some degree of
particularity the likelihood that further discovery will supply the missing
A-2568-21 29 elements of the cause of action." Friedman v. Martinez, 242 N.J. 449, 472-73
(2020) (internal quotation marks omitted) (quoting Badiali, 220 N.J. at 555).
Here, plaintiff has failed to meet that standard. First, there is no genuine
factual dispute as to whether the $1.1 million went towards satisfying the GE
judgment, and whether it was used for the Tangible loan is immaterial to
plaintiff's fraud claim since the alleged fraud relates to the GE judgment.
Second, plaintiff's argument simply beggars belief given the lengthy and
expansive history of the litigation. Despite plaintiff's argument to the contrary,
discovery has been well underway on these issues for nearly three years. See
Friedman, 242 N.J. at 475 (holding summary judgment was not premature where
plaintiffs "had not offered proof from which one could reasonably infer" facts
in their favor "[n]early three years after the filing of the initial complaint, despite
a motion for summary judgment and extensive argument about the state of the
record").
Plaintiff argues that the documents he seeks are "essential in this action
as [p]laintiff . . . believes it would uncover whether the $1.1 [m]illion satisfied
the GE [j]udgment or not, the actual consideration paid for . . . GE's release of
DiNardo and Belasco[,] and other information regarding . . . Tangible's
and . . . [d]efendants['] roles in the scheme." However, prior discovery orders
A-2568-21 30 already granted plaintiff the access he seeks and plaintiff "has not shown that
any outstanding 'discovery [would] supply the missing elements of the cause of
action.'" Id. at 475 (alteration in original) (quoting Badiali, 220 N.J. at 555).
Given the present record, "it is readily apparent that continued discovery w[ill]
not produce any additional facts necessary to a proper disposition of the motion
[for summary judgment]." DepoLink, 430 N.J. Super. at 341 (citing R. 4:46-5).
As our Supreme Court has recognized,
[s]ummary judgment should be granted, in particular, "after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial."
[Friedman, 242 N.J. at 472 (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986)).]
Such is the case here.
Turning to the Rule 4:6-2(e) dismissal, plaintiff argues the judge erred in
finding that his lack of attorney-client relationship with either of the defendants
barred his legal malpractice claims against them. Plaintiff asserts that his claims
were not barred because defendants owed "an independent duty" to him.
"A legal malpractice claim is 'grounded in the tort of negligence.'" Nieves
v. Off. of the Pub. Def., 241 N.J. 567, 579 (2020) (quoting McGrogan v. Till,
A-2568-21 31 167 N.J. 414, 425 (2001)). "[A] legal malpractice action has three essential
elements: '(1) the existence of an attorney-client relationship creating a duty of
care by the defendant attorney, (2) the breach of that duty by the defendant, and
(3) proximate causation of the damages claimed by the plaintiff.'" Morris
Props., Inc. v. Wheeler, 476 N.J. Super. 448, 459 (App. Div. 2023) (quoting
Jerista v. Murray, 185 N.J. 175, 190-91 (2005)). Traditionally, "[t]he existence
of an attorney-client relationship is, of course, essential to the assertion of a
cause of action for legal malpractice." Froom v. Perel, 377 N.J. Super. 298, 310
(App. Div. 2005) (citing Conklin v. Hannoch Weisman, 145 N.J. 395, 416
(1996)).
Nevertheless, our Supreme Court has recognized that "[p]rivity between
an attorney and a non-client is not necessary for a duty to attach 'where the
attorney had reason to foresee the specific harm which occurred.'" Innes v.
Marzano-Lesnevich, 435 N.J. Super. 198, 213 (App. Div. 2014) (alteration in
original) (quoting Est. of Albanese v. Lolio, 393 N.J. Super. 355, 369-69 (App.
Div. 2007)), aff'd as modified on other grounds, 224 N.J. 584 (2016). In that
regard, plaintiff is correct that the absence of an attorney-client relationship
between himself and the VP or McElroy defendants does not necessarily bar his
malpractice claims against them. Indeed, the judge recognized as much in her
A-2568-21 32 June 18, 2020, opinion dismissing plaintiff's claims. Nonetheless, we agree with
the judge that plaintiff's failure to establish that defendants owed him a duty are
fatal to his particular claims.
Our Supreme Court has repeatedly emphasized that "the grounds on which
any plaintiff may pursue a malpractice claim against an attorney with whom
there was no attorney-client relationship are exceedingly narrow." Green, 215
N.J. at 458. As such, there are "relatively few situations" in which "a nonclient
may file suit against another's attorney." LoBiondo v. Schwartz, 199 N.J. 62,
101 (2009). In Petrillo v. Bachenberg, 139 N.J. 472, 485 (1995), the Court
recognized that "a lawyer's duty may run to third parties who foreseeably rely
on the lawyer's opinion or other legal services." In that case, a real estate buyer
was provided a misleading test report that was prepared by the seller's attorney
and allegedly induced the buyer's purchase of the property. Id. at 474.
In finding that the attorney had a duty to the buyer, the Court explained
that "[t]he objective purpose of documents such as opinion letters, title reports,
or offering statements, and the extent to which others foreseeably may rely on
them, determines the scope of a lawyer's duty in preparing such documents." Id.
at 485. Applying that principle to the seller's attorney's report, the Court
concluded that the attorney "should have foreseen that a prospective purchaser
A-2568-21 33 would rely on the . . . report in deciding whether to sign a contract and proceed
with engineering and site work." Id. at 487. Furthermore, by providing the
report and subsequently representing the seller in the sale, the attorney "assumed
a duty to [the buyer] to provide reliable information" and "[f]airness suggests
that he should bear the risk of loss resulting from the delivery of a misleading
report." Ibid.
"[T]he rule announced in Petrillo has been applied rather
sparingly, . . . [but] [i]t is not . . . the only basis on which [the Court] ha[s]
recognized the potential for a direct claim against an attorney by a nonclient."
Innes, 435 N.J. Super. at 213 (alterations and omissions in original) (quoting
LoBiondo, 199 N.J. at 102). In Banco Popular, an attorney was accused by the
plaintiff bank of negligent misrepresentation, first by facilitating his client's
asset transfer and second by "negotiating the terms of the . . . loan and guaranty
and . . . issuing an opinion letter in connection therewith." 184 N.J. at 182-83.
The Court noted that the bank's claims arising from the attorney's role in
facilitating the transfer "exceed[ed] the reach of Petrillo in nearly every respect."
Banco Popular, 184 N.J. at 182. However, the Court held that the claims arising
from the attorney's role in the negotiations could proceed. Id. at 183.
A-2568-21 34 In differentiating the claims, the Court explained that "the duty recognized
in Petrillo arose because an attorney, engaged in dealings involving a non-client,
made misrepresentations to the non-client knowing that they would induce her
reliance." Banco Popular, 184 N.J. at 182. The Court explained that the Petrillo
Court "never suggested, even obliquely," that a duty arose in circumstances
"involving no representations, no reliance, and a remote third party with whom
the attorney had no relationship." Banco Popular, 184 N.J. at 182. According
to the Banco Popular Court, although the bank could make no claims against the
attorney for facilitating the asset transfer because the attorney made "no
representations to the [b]ank seeking to induce reliance, [and] the entire
transaction was intended to be, and in fact was, carried out without the [b]ank's
knowledge," the attorney's role in negotiations, on the other hand, "st[ood] on
[a] different footing" because "representations in negotiations are made to
induce reliance." Id. at 182-83.
Here, plaintiff's malpractice claims are based on alleged "false statements
of material facts . . . regarding the outstanding balance of the GE [j]udgment,
misrepresent[ations] that DiNardo and Belasco were released without . . . any
consideration, fail[ure] to disclose the $1.1 [m]illion payment . . . , the
satisfaction of the GE [j]udgment," and misrepresenting "'straw man' Tangible
A-2568-21 35 as the assignee of the GE [j]udgment." Plaintiff asserts defendants intended to
induce his reliance using their "certifications, affidavits and statements in open
court." Applying the principles articulated in Banco Popular and Petrillo,
plaintiff argues that defendants' "wrongful conduct and representations 'made to
induce reliance' . . . results in a duty to . . . [p]laintiff as a third-party non-client."
Plaintiff's arguments are unavailing. Unlike Petrillo and Banco Popular,
the alleged misrepresentations here were made during adversarial litigation, and
thus were not "intended to induce a specific non-client[']s reasonable reliance."
Banco Popular, 184 N.J. at 180. Although lawyers have an obligation to speak
truthfully on issues of material fact, see RPC 3.3, RPC 4.1, an attorney's
"primary duty is to be a zealous advocate for his or her own client," LoBiondo,
199 N.J. at 73. As such, we reject plaintiff's contention that a duty is owed to a
non-client in these circumstances. Cf. Davin, L.L.C. v. Daham, 329 N.J. Super.
54, 75-77 (App. Div. 2000) (holding that attorney violated duty to non-client
property lessors by inserting covenant of quiet enjoyment in lease contract
despite knowing that the property was in foreclosure); Atl. Paradise Assocs. v.
Perskie, Nehmad & Zeltner, 284 N.J. Super. 678, 685 (App. Div. 1995) (holding
that attorney has a duty to prospective purchasers to make accurate
representations in a public offering statement); R.J. Longo Constr. Co. v.
A-2568-21 36 Schragger, 218 N.J. Super. 206, 208-10 (App. Div. 1987) (holding that township
attorneys breached duty to non-client contractors by failing to obtain necessary
easements before giving notice to begin construction, contrary to terms of
contract).
We also reject plaintiff's reliance on the RPCs to sustain his cause of
action. "[S]tanding alone, a violation of the RPCs does not create a cause of
action for damages in favor of a person allegedly aggrieved by that violation."
Meisels v. Fox Rothschild LLP, 240 N.J. 286, 299 (2020). Consequently,
"[e]ven indulgently read, plaintiff['s] pleading does not suggest any of the
narrow grounds that would give rise to a cause of action against an attorney with
whom one has no attorney-client relationship." Green, 215 N.J. at 460.
Plaintiff urges that "[c]onsiderations of fairness and public policy
concerning the candor, responsibility and truthfulness of lawyers" requires that
"lawyers . . . be held to the highest standards of conduct, fair dealings, and
accountability even to adversaries in litigation." Plaintiff therefore asks us to
adopt a rule permitting malpractice claims by non-clients in the presence of
"fraud, collusion and malicious acts." Given the dearth of credible evidence
substantiating his allegations of misconduct, we decline plaintiff's invitation.
Even if there was supporting evidence, plaintiff's allegations are better suited
A-2568-21 37 for adjudication in a disciplinary action against the attorneys, instead of a direct
cause of action. See Brundage v. Est. of Carambio, 195 N.J. 575, 603 (2008)
(noting the "preference for penalizing an attorney through our disciplinary
system").
As our Supreme Court has acknowledged, "[o]ur disciplinary rules and
our frivolous litigation sanctions have been effective in controlling the behavior
of attorneys, without also permitting anyone to pursue separate causes of action
based thereon." LoBiondo, 199 N.J. at 103. Indeed, "our system has been
recognized as 'one of the most demanding disciplinary systems in the nation.'"
Baxt v. Liloia, 155 N.J. 190, 203 (1998) (quoting James R. Zazzali, Disciplining
Attorneys: The New Jersey Experience, 1 Geo. J. Legal Ethics 659, 661 (1988)).
"Few members of the bar, knowing the force of the disciplinary sanctions under
the RPCs . . . , engage in the sorts of . . . [conduct] that would also call for the
creation of a remedy available through a direct cause of action." LoBiondo, 199
N.J. at 103. Moreover, given the lengthy and contentious history between the
parties, a direct cause of action would serve no legitimate purpose but would
instead "become a weapon used to chill the entirely appropriate zealous
advocacy on which our system of justice depends." LoBiondo, 199 N.J. at 101.
A-2568-21 38 Finally, plaintiff contends that the judge erred in dismissing his remaining
claims as duplicative of the malpractice claim because: (1) the malfeasance and
breach of fiduciary duty claims (counts three and four) "are based on allegations
that [defendants] improperly received and released the $1.3 [m]illion" recovered
in the asset litigation; and (2) the negligence, gross negligence, and negligent
misrepresentation claims (counts six, seven, and eight) "are not based on a
deviation from the standard of care of attorneys." We disagree.
First, plaintiff's attempt to distinguish the malfeasance and breach of
fiduciary duty claims based on receipt of the $1.3 million from the asset
litigation fails. Count three alleged malfeasance and breach of fiduciary duty
against the McElroy defendants. However, it was the VP defendants who
requested and received those funds from the Trust Fund Unit. Second, plaintiff
failed to plead any facts to support his claim that either the McElroy or the VP
defendants "owed a fiduciary duty to [p]laintiff" to support counts three or four.
See Scheidt v. DRS Techs., Inc., 424 N.J. Super. 188, 193 (App. Div. 2012)
(noting that to survive a motion to dismiss, "the essential facts supporting [a]
plaintiff's cause of action must be presented" and "conclusory allegations are
insufficient").
A-2568-21 39 Clearly, defendants did not agree to hold those funds as trustees or escrow
agents. See Innes, 224 N.J. at 598 (holding defendant attorneys had fiduciary
duty to adverse non-client when holding property "as trustees and escrow
agents"). Nor can plaintiff credibly claim that defendants were obligated to hold
or dispose of those funds for his benefit. See F.G. v. MacDonell, 150 N.J. 550,
563 (1997) ("A fiduciary relationship arises between two persons when one
person is under a duty to act for or give advice for the benefit of another on
matters within the scope of their relationship."). Absent a fiduciary duty,
defendants did not breach any duty to plaintiff in their disposition of the $1.3
million. Compare Meisels, 240 N.J. at 303 (holding law firm's disposition of
funds as directed by client was not a breach where no fiduciary duty was owed
to plaintiff) with Innes, 224 N.J. at 598 (finding attorney's release of escrowed
property to client at client's request was a breach of fiduciary duty to adverse
party for whose benefit the property was also being held). Therefore, counts
three and four were properly dismissed.
As for counts six, seven, and eight, by definition, plaintiff's claims
encompass defendants' role and status as attorneys and regardless of how
plaintiff labeled his causes of action, his claims implicated the standard of care
applicable to attorneys. The gravamen of the claims is that defendants owed
A-2568-21 40 him a general duty to speak truthfully in their dealings with plaintiff. However,
the existence of that general duty is derived from considerations of fairness,
which requires considering, in part, defendants' relationship to plaintiff. See
Hopkins v. Fox & Lazo Realtors, 132 N.J. 426, 439 (1993) (explaining that
"[w]hether a person owes a duty of reasonable care toward another" involves
"identifying, weighing, and balancing several factors," including "the
relationship of the parties").
For a plaintiff "[t]o recover under a negligence theory, the defendant must
owe a duty to the plaintiff." Werrman v. Aratusa, Ltd., 266 N.J. Super. 471, 474
(App. Div. 1993). To the extent plaintiff alleged that defendants were "under a
duty to act for or give advice for [his] benefit," F.G., 150 N.J. at 563, or "a duty
of care . . . to act with candor and honesty," the source of that duty was
defendants' role as Tangible's attorneys. As such, the judge correctly concluded
that counts six, seven, and eight were duplicative of plaintiff's malpractice
claims. See Aden v. Fortsh, 169 N.J. 64, 79 (2001) (observing that a claim
arising out of a breach of a professional's fiduciary duty to their client is
"essentially one of professional malpractice"); see also Couri v. Gardner, 173
N.J. 328, 340 (2002) (concluding that whether an action asserts a claim of
professional malpractice depends on "the nature of the legal inquiry,"
A-2568-21 41 particularly whether the "factual allegations require proof of a deviation from
the professional standard of care"); Singer v. Beach Trading Co., 379 N.J. Super.
63, 76 (App. Div. 2005) (explaining that a cause of action for negligent
misrepresentation requires the plaintiff to be a "'person or one of a limited group
of persons for whose benefit and guidance' the information is supplied."
(quoting Restatement (Second) of Torts § 552 (Am. L. Inst. 1977))). Therefore,
the counts were properly dismissed because they suffered from the same defects
as the malpractice claim—the failure to allege facts sufficient to establish that
plaintiff was owed a duty.
Affirmed.
A-2568-21 42