KELVIN SMITH VS. JOHN F. JOHNSON (L-1599-15, HUDSON COUNTY AND STATEWIDE)

New Jersey Superior Court Appellate Division·Decided January 17, 2019·No. A-1581-16T1·Unpublished

Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court."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-1581-16T1

KELVIN SMITH,

Plaintiff-Appellant/

Cross-Respondent,

v.

JOHN F. JOHNSON, RALPH ALLOCCA, ESQ., BRIAN FRUEHLING, ESQ., and TICOR TITLE INSURANCE COMPANY OF FLORIDA,

Defendants,

and PAUL J. BURR, ESQ.,

Defendant-Respondent/ Cross-Appellant.

Argued December 4, 2018 – Decided January 17, 2019 Before Judges Yannotti and Rothstadt.

On appeal from Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-1599-15.

Jessica A. Tracy argued the cause for appellant/crossrespondent (Curcio Mirzaian Sirot, LLC, attorneys;

Paul F. Campano, of counsel; Jessica A. Tracy, on the briefs).

Raphael M. Rosenblatt argued the cause for respondent/cross-appellant (Rosenblatt Law PC, attorneys; Raphael M. Rosenblatt, of counsel and on the briefs).

PER CURIAM In this case, plaintiff Kelvin Smith asserted claims against defendant Paul J. Burr for legal malpractice and conversion. The matter was tried before a jury, which returned a verdict for defendant on both causes of action. Plaintiff then filed a motion for judgment notwithstanding the verdict (JNOV). Defendant demanded that plaintiff withdraw the motion, claiming it was frivolous. Plaintiff refused to withdraw the motion, and defendant filed a cross-motion pursuant to Rule 1:4-8 for sanctions.

The trial judge entered orders dated November 4, 2016, denying the motions. Plaintiff's appeal and defendant's cross-appeal followed. On plaintiff's appeal, we affirm the trial court's order denying the motion for a JNOV. On defendant's cross-appeal, we affirm the order denying defendant's motion for sanctions, and dismiss the other issues raised as moot.

A-1581-16T1

I.

We briefly summarize the relevant facts and procedural history. John Johnson agreed to sell plaintiff certain real property on Rose Avenue in Jersey City. Attorney Ralph P. Allocca acted as the settlement agent for plaintiff and Johnson. Before the closing, plaintiff obtained a $300,000 loan to purchase the property, and some of these funds were to be applied to pay off Johnson's outstanding mortgage loan. America's Servicing Company (ASC), the mortgage-servicing company, agreed to accept $230,126.26 to pay off Johnson's loan and discharge the mortgage on the property.

The closing took place on January 26, 2009, and title to the property was transferred to plaintiff, and thereafter Allocca sent ASC a check drawn on his attorney trust account to pay off Johnson's loan. On January 28, 2009, ASC returned the check to Allocca, and told him payment had to be made by cashier's check or with certified-bank funds.

On March 26, 2009, US Bank, N.A., filed a foreclosure action against Johnson, plaintiff, and others claiming that Johnson's mortgage loan remained due and owing. On April 13, 2009, Allocca obtained a cashier's check, payable to ASC, in the amount of $230,728.42 to pay off Johnson's loan. It appears that the check was given to Anthony Garvin, the broker who introduced plaintiff to

A-1581-16T1

the property and negotiated the terms of the sale. On April 17, 2009, Garvin endorsed the check and deposited the funds into an account at Bank of America, in the name of "Laura Mae LLC d/b/a/ Master Builders," an entity that Garvin owned.

At his deposition, plaintiff testified that he never saw the check; however, at trial, plaintiff admitted he endorsed the check over to Garvin expecting that Garvin would use the funds to pay off Johnson's loan. Plaintiff believed this would remove ASC's lien on the Rose Avenue property and resolve the pending foreclosure action.

In July 2010, Johnson retained defendant to recover the monies from the sale of the property that should have been used to pay off his loan. Johnson and defendant entered into a "Legal Services Agreement" (LSA), which provided, among other things, that defendant's engagement was limited to: (1) actions or claims by Johnson arising from the sale of the Rose Avenue property; (2) disputes with any creditor or lender claiming monies that Johnson owed for services provided; and (3) "action[s] or dispute[s] arising after the collection of the unpaid proceeds" from the sale of the property.

The LSA further provided that Johnson would "be solely responsible for the payment of any and all loan proceeds, including but not limited to, any

A-1581-16T1

deductions of legal fees and costs paid to attorney, due on the" property. In addition, the LSA stated that defendant would not be responsible for paying any of Johnson's debts, loans, or other obligations.

On July 1, 2010, defendant wrote to Allocca and stated that Johnson had retained him to investigate and collect monies from the January 26, 2009 closing, which were supposed to be applied to pay off Johnson's loan. Defendant demanded a copy of Allocca's closing file.

Allocca responded in a letter dated July 12, 2010. He stated that ASC had returned the check to pay off Johnson's loan because the check was drawn on an attorney-trust account. Allocca said he thereafter obtained a cashier's check, and apparently the check was given to Garvin. According to Allocca, Garvin deposited the funds into a bank account, without his knowledge or approval. Allocca provided defendant with a copy of the check, which plaintiff and Garvin had endorsed.

Defendant did not hear anything further from Allocca for several months, and on November 9, 2010, he wrote to Allocca and demanded additional information. Allocca replied in a letter dated November 10, 2010, and enclosed a copy of his closing file. In the letter, Allocca stated that he had done "nothing improper, illegal or unethical." He added that if anyone had converted the funds

A-1581-16T1

that were supposed to be used to pay off Johnson's loan, plaintiff and Garvin were the persons responsible.

On November 30, 2010, defendant wrote to plaintiff and informed him that Johnson had retained him to investigate the apparent misapplication of the proceeds from the sale of the Rose Avenue property, make formal criminal and civil complaints, retrieve the funds, and collect damages and legal fees. Defendant told plaintiff he should retain an attorney and contact his office. A tenant at the Rose Avenue property provided plaintiff with the letter. Plaintiff then called defendant. He said he did not want defendant to represent him or take any legal action on his behalf.

On March 17, 2011, Allocca wrote to defendant and advised him he had $233,000 in his trust account, which Garvin had given to him to pay off Johnson's loan. In the letter, Allocca stated that if defendant wanted him to, he would transfer the monies to defendant to be "h[eld] in escrow pending a resolution of this matter." Allocca also proposed to resolve Johnson's claim against Garvin for damages. Allocca did not, however, provide defendant with a proposed escrow agreement, and defendant never agreed in writing to hold any funds in escrow. Defendant testified that he understood Allocca's letter to mean

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that he should hold the monies pending resolution of Johnson's claim against Garvin for damages.

Allocca died on April 15, 2011. Thereafter, a Chancery Division judge in Morris County appointed Brian J. Fruehling to act as trustee for Allocca's law practice. On May 10, 2011, Fruehling sent defendant a check in the amount of $233,000, drawn upon Allocca's trust account. Fruehling also provided defendant with a copy of a letter that Allocca had written to defendant. In the letter, Allocca stated he was enclosing the $233,000 check, and he asked defendant to "[p]lease hold these funds in your trust account pending the resolution of all claims regarding the property."

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KELVIN SMITH VS. JOHN F. JOHNSON (L-1599-15, HUDSON COUNTY AND STATEWIDE) (KELVIN SMITH VS. JOHN F. JOHNSON (L-1599-15, HUDSON COUNTY AND STATEWIDE)) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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