NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ."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-0577-24
NARENDRA LAKHANI, SONALI MODY and DARSHAN LAKHANI,
Plaintiffs-Respondents,
v.
ANIL PATEL, MANISH PATEL, RAJNI PATEL, JAYESH PATEL, NORTHSTAR HOTEL GROUP, INC., NORTHSTAR MANAGEMENT, INC., NORTHSTAR KENILWORTH, LLC, NORTHSTAR LAUREL, LLC, NORTHSTAR TECHNOLOGIES, LLC, AMSTAR HOSPITALITY, LLC, NORTHSTAR HOLDING, LP, HARIT KAPADIA, CPA, ASHWIN PANDYA, CPA, and PANDYA, KAPADIA & ASSOCIATES, CPA, PA,
Defendants,
BRIX RESOURCES, INC., BRIX
1 A-0577-24 HOSPITALITY, LLC, BRIX KENNILWORTH, LLC and BRIX LAUREL, LLC,
Third-Party Defendants. ______________________________
DENNIS E. BLOCK,
Appellant. ______________________________
JONATHAN I. RABINOWITZ,
Respondent. ______________________________
Argued January 21, 2026 – Decided May 7, 2026
Before Judges Sumners and Susswein.
On appeal from the Superior Court of New Jersey, Law Division, Somerset County, Docket Nos. L-0386-11 and L-0758-11.
Christina V. Harvey argued the cause for appellant Dennis E. Block (Lomurro Munson LLC, attorneys; Christina V. Harvey, of counsel and on the briefs; Andrew B. Broome, on the briefs).
Jonathan I. Rabinowitz argued the cause for respondent Jonthan I. Rabinowitz (Rabinowitz, Lubetkin & Tully, LLC, attorneys; Jonathan I. Rabinowitz, of counsel and on the brief; Henry M. Karwowski, on the brief).
Robert W. Mauriello, Jr. argued the cause for respondents Narendra Lakhani, Sonali Mody and Darshan Lakhani (Gimigliano Mauriello & Maloney, PA, attorneys; Robert W. Mauriello, Jr., of counsel and on the brief). 2 A-0577-24 PER CURIAM
This matter returns to us following torturous litigation between former
business partners resulting in a 2012 default final judgment totaling
$9,747,461.90 in favor of plaintiffs Narendra Lakhani, Sonali Mody and
Darshan Lakhani against defendants Anil Patel, Manish Patel, Rajni Patel,
Jayesh Patel (collectively the Patels), and Northstar Kenilworth, LLC. See Brix
Hosp., LLC v. Patel, No. A-0196-21 (App. Div. June 27, 2023) (slip op. at 4-
17). To resolve the issue before us, it is unnecessary to detail the litigation as
we did in Brix Hosp. regarding sanctions sought by Jonathan I. Rabinowitz,
Esq., the court-appointed Receiver in aid of execution in this litigation under
N.J.S.A. 2A:17-66, due to the Patels' efforts to evade collection of the
judgment.1 See ibid.
The current dispute involves an appeal by non-party Dennis E. Block, Esq.
the Patels' seventh attorney, challenging the trial court order imposing $44,590
in sanctions and attorney's fees against him for failing to comply with a court
order enforcing a document subpoena served on him by the Receiver. The
subpoena sought copies of retainer agreements, documents regarding payments
1 We also issued a published opinion on August 9, 2024, reversing the trial court's order imposing the Special Adjudicator's demand that John Calzaretto, Esq., the Patels' sixth attorney, pay him $3,000 towards his retainer. Lakhani v. Patel, 479 N.J. Super. 291 (App. Div. 2024).
3 A-0577-24 to Block by the Patels, and the Patels' communications with their former attorney
John Calzaretto and other third parties.
We conclude that the trial court should have conducted an in camera
review of the subpoenaed records and communications and stated its factual
findings and conclusions of law for its order pursuant to Rule 1:7-4. However,
based on the record before us, the errors are harmless and we affirm.
I.
On February 12, 2024, the Receiver issued a deposition subpoena to Block
seeking production of documents, such as, retainer agreements, invoices, the
sources of funds for payments to Block from the Patels, and communications
between the Patels, Block, third parties, and/or Calzaretto, Calzaretto &
Bernstein, LLC and Calzaretto & Company LLC (collectively, the Calzaretto
parties) covering the period of January 1, 2023 to the present. That same day,
the Receiver issued two information subpoenas against the Patels that were
served on Block.
On March 28, 2024, the Receiver moved to enforce the subpoenas when
the Patels did not comply. Block cross-moved for the Patels on April 4, to quash
the deposition subpoena alleging that the information was protected by the
attorney-client and work product privileges. The court subsequently conducted
two subpoena hearings and a contempt hearing to resolve the dispute.
4 A-0577-24 April 26, 2024 Subpoena Hearing
The Receiver asserted that his subpoena did not seek documents protected
by the attorney-client privilege. He noted that the trial court's April 1, 2019
order2 already determined that bank records aren't protected under the attorney -
client privilege or Rule 1:21-6 and that he would accept redacted documents.
As for the scope of the subpoena, the Receiver explained that he sought the
sources and uses of funds to locate assets to enforce the judgment against the
Patels and he would accept invoices with the appropriate redactions. He also
explained that "ample evidence in the record" established the Patels had used
third parties to pay for attorneys to oppose enforcing the judgment and his
subpoena sought to trace this flow of funds to enforce the judgment against the
Patels. Moreover, the Receiver stressed that "creditor[s] seeking post-judgment
discovery [are] entitled to broad discovery of the debtor's financial situation
2 In its April 1, 2019 order, the trial court denied Calzaretto's motion to quash the Receiver's subpoena. The subpoena sought Calzaretto's banking records. The court reasoned that even if the records were protected by the attorney-client privilege, the Patels waived this privilege by disclosing privileged information with third parties. The crime-fraud exception also applied, since the court had "already determined [in its May 3, 2018 order] that the Receiver ha[d] made a prima facie case showing that the Patels ha[d] been secreting assets and engaging in fraudulent transfers." The court explained that the Patels "may have engaged in a years-long, systematic scheme to defraud their creditors, including Lakhani Associates, by placing millions of dollars in assets beyond the reach of lawful collection efforts" and Calzaretto and his firm were likely aware of this because they were involved in and benefited from the Patels' transactions.
5 A-0577-24 including financial information of family members and associates where the
judgment debtor has attempted to conceal assets."
Block contended that the subpoena sought privileged communications
under RPC 1.6, which the Patels must consent to release, and the Receiver must
establish a prima facie case that Block assisted in the Patels' attempts to
fraudulently conceal its assets.
The trial court reserved decision and issued two orders. The first on April
29, denying Block's motion to quash the deposition subpoena. The second on
May 14, granting the Receiver's motion to enforce the subpoena; directing Block
to produce the relevant documents within twenty days of the entry of the order;
granting the Receiver the right to seek an in camera review to determine the
appropriateness of Block's redactions; denying Block's cross-motion to quash
the subpoena; and noting that the granted relief was without prejudice to the
Receiver or Patels' rights to seek sanctions or the Receiver's rights to seek
appropriate remedies against the Patels regarding the information subpoenas.
On June 3, Block produced some of the documents with redactions and a
privilege log claiming that certain emails between the Calzaretto parties in 2023
and 2024 were protected under the attorney-client and work product privileges.
In response, the Receiver asserted that the communications between the
Calzaretto parties were not privileged pursuant to the trial court's April 1, 2019
6 A-0577-24 order, noted other issues with the information produced, and that he would seek
sanctions if Block did not cure the deficiencies.
About two weeks later, the Receiver moved to enforce the subpoena.
Block cross-moved for a protective order and sought in camera review.
July 19, 2024 Subpoena Enforcement and Protection Order Hearing
The Receiver argued that the communications between the Calzaretto
parties were not privileged because: (1) Calzaretto withdrew as counsel for the
Patels in 2018 and did not represent the Patels for the period of time covered by
the requested documents and communications, (2) the Patels waived any
privilege because Calzaretto, now a third party, was copied on the
communications and the Patels disclosed this information to other third parties,
(3) once a party waives a privilege, all communications regarding that subject
matter are waived, and (4) the crime fraud exception applied because the
Calzaretto parties aided the Patels in concealing their assets from judgment.
Additionally, the Receiver requested that the court hold Block in contempt and
issue sanctions because Block knew that the court had previously rejected the
issue of attorney-client privilege but he continued to assert the privilege.
Block averred that he should not be sanctioned for following his ethical
duties and seeking in camera review. He also maintained that even if the Patels
were former clients of Calzaretto, "[RPC] 1.8 still applies" and protects their
7 A-0577-24 communications with Calzaretto from disclosure. Finally, citing Nat'l Util.
Serv., Inc. v. Sunshine Biscuits, Inc., 301 N.J. Super. 610 (App. Div. 1997),
Block argued that the court should conduct an in camera review to determine
whether the attorney-client privilege and crime fraud exception apply to each
document.
In response, the Receiver asserted that Sunshine Biscuits does not require
trial courts to review every document to determine whether the crime fraud
exception applied, "but[] rather, give the broadest possible interpretation of that
exception." Lastly, the Receiver claimed that sanctions were justified because
the parties, who he did not identify, had made two misrepresentations to the
court: (1) "Calzaretto and his firm either stopped representing the Patels in
November of 2018, or have always represented the Patels, or represented the
Patels going back to some point in 2023" and (2) "the withdrawal of . . .
Calzaretto and his firm w[as] based upon the indictment of Anil Patel" and since
the indictment was later dismissed, the crime fraud exception did not apply. 3
September 4, 2024 Contempt Hearing
The court conducted a contempt hearing on September 4, addressing the
Receiver's motions for contempt against Calzaretto for failure to comply with
3 The trial court's September 12, 2024 order did not address these arguments as a basis to sanction Block. 8 A-0577-24 his subpoenas and improper use of his trust account and against the Patels for
failing to provide their 2022 and 2023 tax returns, and the Receiver's request for
the court to direct the Special Adjudicator to provide relevant records from
Calzaretto. During the hearing, plaintiffs requested that the court sanction the
Patels, Block, and Calzaretto for their "continued misrepresentation[s]" to the
court regarding the attorney-client privilege and crime fraud exception.
At the conclusion of the hearing, the trial court issued an oral decision
which it later memorialized in a September 12 order and written decision
granting the Receiver's motion to enforce the subpoena; holding Block in
contempt and imposing sanctions; requiring Block to produce all documents in
the subpoena within three days of entry of this order; requiring Block pay the
Receiver's attorney fees and costs in connection with his motion; and denying
the Receiver's cross-motion for sanctions on Calzaretto and Christina V. Harvey,
Esq., attorney for Block and the Patels.
The court reasoned that Block's argument about the attorney-client
privilege was moot because the trial court's April 1, 2019 order stated that "the
attorney-client privilege as to Calzaretto is waived under the crime [] fraud
exception." The order also stated that the Patels waived the attorney-client
privilege as to the "subject documents" by disclosing privileged information
with third parties. Thus, the trial court reasoned that sanctioning and fining
9 A-0577-24 Block was proper because "[he] either knew[] or should have known that the
requested documents were not protected by the attorney-client privilege based
on [the trial court's] [o]rder."
The court also dismissed Block's request for an in camera review of the
documents and a protective order, reasoning that both were unnecessary because
the attorney-client privilege did not apply to Calzaretto. It also denied Block's
request for a stay pending appeal noting that Block "failed to identify any
irreparable harm that would result from the disclosure of the redacted
documents[,] . . . ha[d] not demonstrated a reasonable probability of success on
the merits[,] . . . [and did not] show [how] the balance of harms weigh[ed] in his
favor." Finally, the court rejected the Receiver's cross-motion to sanction
Calzaretto, Calzaretto & Bernstein LLC, and Harvey, reasoning their actions
"d[id] not constitute fraud on the court," "were not intended to deceive the
court," and merely involved errors in communications regarding the Receiver's
motion.
Sanctions
On October 16, 2024, the trial court issued an order awarding $44,590
($44,490 in fees and $100 in costs) in sanctions against Block. The order
provided Block was required to pay the sanctions to the Receiver within ten
10 A-0577-24 days. Nine days later, the court issued an order denying Block's request to stay
the order of contempt. This appeal followed.
II.
We apply an abuse of discretion standard in reviewing sanctions and a
trial court's disposition of a discovery dispute. United Hearts, L.L.C. v.
Zahabian, 407 N.J. Super. 379, 390 (App. Div. 2009). "An abuse of discretion
'arises when a decision is made without a rational explanation, inexplicably
departed from established policies, or rested on an impermissible basis.'" Barr
v. Barr, 418 N.J. Super. 18, 46 (App. Div. 2011) (quoting Flagg v. Essex Cnty.
Prosecutor, 171 N.J. 561, 571 (2002)). We may reverse a trial court's disposition
of a discovery dispute when the court misunderstands or misapplies the law.
Brugaletta v. Garcia, 234 N.J. 225, 240 (2018). We apply a de novo review to
any questions of statutory interpretation. Verry v. Franklin Fire Dist. No. 1, 230
N.J. 285, 294 (2017).
A trial court has the "inherent power" independent of Rule 1:4-8
"to sanction an attorney, rather than the client, particularly when
the attorney's improper conduct has resulted in additional costs to the adverse
party or the judicial system." Pontidis v. Shavelli, 296 N.J. Super. 420, 424
(App. Div. 1997) (citing In re Timofai Sanitation Co., Inc., 252 N.J. Super. 495,
505-06 (App. Div. 1991)). However, a court must exercise this power with
11 A-0577-24 "restraint and discretion because of its potency," Dziubek v. Schumann, 275
N.J. Super. 428, 440 (App. Div. 1994), and generally won't impose this power
without a showing that the attorney acted in bad faith. Ibid. ("[T]he imposition
of such a sanction is generally not imposed under this power without a finding
generally that the . . . conduct constituted or was tantamount to bad faith.");
Gillette Foods Inc. v. Bayernwald-Fruchteverwertung, 977 F.2d 809, 813-14 (3d
Cir. 1992).
"[A] proceeding to enforce litigants' rights under Rule 1:10-3 'is
essentially a civil proceeding to coerce the defendant into compliance with the
court's order for the benefit of the private litigant[.]'" Pasqua v. Council, 186
N.J. 127, 140 (2006) (quoting Essex Cnty. Welfare Bd. v. Perkins, 133 N.J.
Super. 189, 195 (App. Div. 1975)). Accordingly, "[r]elief under [Rule] 1:10-3,
whether it be the imposition of incarceration or a sanction, is not for the purpose
of punishment, but as a coercive measure to facilitate the enforcement of the
court order." Ridley v. Dennison, 298 N.J. Super. 373, 381 (App. Div. 1997).
The purpose of a sanction "is to sufficiently 'sting' the offending party in order
to compel compliance" going forward. Bd. of Educ. of the Twp. of Middletown
v. Middletown Twp. Educ. Ass'n, 352 N.J. Super. 501, 511 (Ch. Div. 2001).
(quoting E. Brunswick Bd. of Educ. v. E. Brunswick Educ. Ass'n, 235 N.J.
Super. 417, 422 (App. Div. 1989)). This 'sting' need not be limited to the moving
12 A-0577-24 party's "actual damages," but must be within the offending party's "'reasonable
economic means.'" Holtham v. Lucas, 460 N.J. Super. 308, 322 (App. Div.
2019) (quoting Innes v. Carrascosa, 391 N.J. Super. 453, 498 (App. Div. 2007)).
We also must be mindful of the context in which this sanction arose.
Court-appointed receivers are an extension of the court. See generally R. 4:53.
The appointment of a receiver in aid of execution is an extraordinary measure
taken by the court with statutory authorization after less coercive measures have
failed. See First Nat'l State Bank of N.J. v. Kron, 190 N.J. Super. 510, 515-16
(App. Div. 1983) (appointing receiver in aid of execution in light of judgment
debtors' "recalcitrant attitude," "evasive responses," and because "less severe
remedies [had] failed the creditor.").
III.
Guided by the above principles, we reject Block's argument that the trial
court abused its discretion in not affording him a hearing to challenge the
Receiver's motion for contempt. His argument is belied by the record. The
Receiver moved for contempt against Block, thus giving Block proper notice.
The trial court also conducted three hearings, which included arguments as to
whether Block should be sanctioned.
We, nonetheless, agree with Block that the trial court erred in sanctioning
him without an in camera review of the documents detailed in the subpoena.
13 A-0577-24 Our courts have consistently held that a trial court must conduct an in camera
review of documents when a party's privilege is challenged. See Corsie v.
Campanalonga, 317 N.J. Super. 177, 184 (App. Div. 1998), rev'd in part on other
grounds, 160 N.J. 473 (1999) (noting that "[t]here is abundant authority for the
proposition that in camera review of claimed confidential material is an
approved and essential step when a privilege is invoked"); Payton v. N.J. Tpk.
Auth., 148 N.J. 524, 550 (1997) (remanding for an in camera inspection where
the record was insufficient to resolve the issue).
Nevertheless, we find this error to be harmless. See R. 2:10-2 ("Any error
or omission shall be disregarded by the appellate court unless it is of such a
nature as to have been clearly capable of producing an unjust result."). Block
acted in bad faith by violating the court orders issued on April 29, 2024 denying
his motion to quash the subpoena, May 14,2024 requiring him to comply with
the Receiver's subpoena, and April 1, 2019 concerning similar information as
the Receiver's February 12, 2024 subpoena. An in camera review would not
have changed the outcome—the subpoena sought non-privileged information
due to the crime fraud exception and waiver by publication to third parties.
Given that the court's error was harmless, we affirm the court's sanction of
Block.
14 A-0577-24 We likewise dismiss Block's argument that the trial court abused its
discretion in assessing him $44,490 in fees. A court may award attorney's fees
as a sanction for fraud or contempt of the court. Triffin v. Automatic Data
Processing Inc., 394 N.J. Super. 237, 313-14 (App. Div. 2007); Abtrax Pharms,
Inc. v. Elkins-Sinn, Inc., 139 N.J. 499, 514 (1995). RPC 1.5(a) requires the
court to consider the following factors in determining the reasonableness of a
fee:
(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;
(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;
(3) the fee customarily charged in the locality for similar legal services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or by the circumstances;
(6) the nature and length of the professional relationship with the client;
(7) the experience, reputation, and ability of the lawyer or lawyers performing the services;
(8) whether the fee is fixed or contingent. [RPC 1.5(a).]
15 A-0577-24 As an initial matter, we recognize that the trial court did not state its
factual findings and conclusions of law in its October 16, 2024 order as required
by Rule 1:7-4(a). However, to avoid any unnecessary litigation delay in this
protracted litigation, we will not remand because the record is sufficient to
affirm the trial court's order. See Pressler & Verniero, Current N.J. Court Rules,
cmt. 1 on R. 1:7–4 (2026) (citing Leeds v. Chase Manhattan Bank, N.A., 331
N.J. Super. 416, 420-21 (App. Div. 2000)) (affirming the grant of summary
judgment even though order merely stated "denied"). The court considered the
Receiver's detailed certification, which included invoices and billing time
entries, based on the Rule 1.5(a) factors seeking sanctions against Block. Thus,
we affirm the court's sanction order of $44,490.
To the extent we have not specifically addressed any of Block's
arguments, they lack sufficient merit to warrant discussion in a written
opinion. R. 2:11-3(e)(1)(E).
Affirmed.
16 A-0577-24