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COMMERCE GROUP, INC. v. DiPENTINO, A-5120-12T3. (2015)

Court: Superior Court of New Jersey Number: innjco20150423230 Visitors: 1
Filed: Apr. 23, 2015
Latest Update: Apr. 23, 2015
Summary: NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION PER CURIAM . Plaintiffs Commerce Group, Inc. (Commerce Group) and Widener Reserve Ltd., L.P. (Widener), appeal from orders that granted summary judgment, dismissing their complaint on the grounds it was barred by the statute of limitations and by a prior binding settlement. They also appeal from orders that denied their motion for recusal and compelled the production of privileged documents for in camera review and partial
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NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Plaintiffs Commerce Group, Inc. (Commerce Group) and Widener Reserve Ltd., L.P. (Widener), appeal from orders that granted summary judgment, dismissing their complaint on the grounds it was barred by the statute of limitations and by a prior binding settlement. They also appeal from orders that denied their motion for recusal and compelled the production of privileged documents for in camera review and partial disclosure. We affirm.

In reviewing a summary judgment decision, we apply the same standard as the trial court. Murray v. Plainfield Rescue Squad, 210 N.J. 581, 584 (2012). Viewing the evidence "in a light most favorable to the non-moving party," Rowe v. Mazel Thirty, LLC, 209 N.J. 35, 38 (2012) (citing R. 4:46-2(c)), we determine "if there is a genuine issue as to any material fact or whether the moving party is entitled to judgment as a matter of law." Id. at 41 (citing Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 529 (1995)). We review questions of law de novo and need not accept the trial court's conclusions of law. Davis v. Devereux Found., 209 N.J. 269, 286 (2012).

I

This action was filed more than ten years after Commerce Group entered into a settlement agreement with defendants Joseph DiLorenzo, Longport Realty Group, Inc. (Longport), Jerome DiPentino and Premier Properties Real Estate, Inc. (Premier) to resolve a dispute regarding the right to commissions for the sale of property owned by Gospel Hall Home for the Aged, Inc. (Gospel Hall). The land in question was a large tract of beachfront property in Longport.

In September 1997, Robert R. Rexon, Gospel Hall's secretary, executed a handwritten memorandum to Longport, to the attention of DiLorenzo (the Listing letter), granting Longport "the opportunity to represent the marketing of" the property until September 30, 1998, with the understanding and agreement that Gospel Hall "is to net a minimum of five million dollars." In early December 1997, Commerce Group, a "full service real estate development and investment firm engaged in the acquisition, construction, and development of real estate throughout the United States," advised Gospel Hall of its interest in purchasing the property. Martin E. O'Boyle, an experienced real estate developer, serves as Commerce Group's President.

By letter dated January 23, 1998, DiPentino informed Gospel Hall's counsel, Jack Plackter, that he had a ready, willing and able purchaser, Mark Juliano, who offered to purchase the property for $5,200,000. By that time, however, representatives of Gospel Hall expressed a moral commitment to sell the property to Commerce Group.

DiLorenzo and DiPentino retained Stephen Hankin to represent them in asserting their claim for commissions against Gospel Hall. In a letter dated February 2, 1998 (the February 1998 letter), Hankin informed Rexon that his client, Longport, intended to institute suit. Hankin represented that, in addition to the commission lost from the rejected sale to Juliano, Longport claimed losses from commissions it would have earned "from the sales of 11 out of the 12 lots which his buyer, by subdivision, would have created and sold." The claim for future commissions suggests, but does not explicitly assert, Longport had an agreement with Juliano regarding the "tier two sales" that would be the basis for commissions on the sales of the eleven lots. It is this statement that plaintiffs condemn as a fraudulent misrepresentation. Specifically, plaintiffs state Longport, which was owned by DiLorenzo, did not produce Juliano or have an agreement with him regarding the tier two sales; that it was DiPentino who produced Juliano.

Gospel Hall's concern regarding the threatened litigation was addressed in its agreement to sell the property to Commerce Group for $5,000,000 (the sale agreement). Commerce Group agreed to "indemnify, defend and save and hold harmless [Gospel Hall] of and from any and all loss incurred by [Gospel Hall] resulting from any claim for a real estate commission or other fee by . . . DiLorenzo or . . . Longport . . . with respect to the Property."

For approximately one year, O'Boyle engaged in negotiations with DiLorenzo and DiPentino to secure their release of Gospel Hall from the commission claim in exchange for Premier obtaining the exclusive right to handle the tier two sales. The settlement agreement, signed by DiLorenzo and DiPentino on May 19, 1999, and by O'Boyle on June 11, 1999, "provide[d] for a complete release by DiLorenzo, Premier, DiPentino and Longport to Commerce [Group] and [Gospel Hall] of any claims for commissions in connection with the sale of the land. . . ." In exchange, upon closing, Premier would gain the exclusive right to sell the property.

The settlement agreement provided the following release:

Except for any liability arising out of [the settlement agreement], DiLorenzo, Longport, Premier and DiPentino and Commerce [Group] hereby mutually release and forever discharge each other, their agents, servants, employees, directors, officers, attorneys, affiliates, subsidiaries, successors and assigns (collectively, the "Released Parties") of and from all damages, loss, claims, demands, liabilities, obligations, actions and causes of action whatsoever which they may now have or claim to have against any of the Released Parties, as of the date hereof, whether presently known or unknown, and of every nature and extent whatsoever on account or in any way touching, concerning, arising out of or founded upon the [Listing] Letter, any agreements between [Gospel Hall] and DiLorenzo and/or Longport and/or DiPentino and/or Premier, the Agreement of Sale and/or the Land.

The agreement further stated Premier's exclusive right to sell would commence upon Commerce Group's acquisition of title and end twenty-four months later.

In March 2000, Commerce Group assigned its rights and obligations under the sale and settlement agreements to Widener, another company controlled by O'Boyle. All except one of the parcels were sold in 2000. The remaining lot was sold in 2005. As a result of the sales, Commerce Group paid Premier $511,150.23 in commissions.

On July 17, 2009, plaintiffs filed a thirteen-count complaint against defendants, alleging consumer fraud (counts one, two, three, four and twelve), common law fraud (counts five and six), breach of fiduciary duty (counts seven and thirteen), lack of consideration (count eight), unjust enrichment (count nine), violation of New Jersey statutes and regulations (count ten),1 and civil conspiracy (count eleven). The thrust of the complaint is plaintiffs' contention that defendants fraudulently induced plaintiffs to enter into the settlement, the exclusive right to sell agreement, and to pay real estate commissions based on misrepresentations made in support of defendants' claim for commissions.

Defendants' first motion for summary judgment was denied without prejudice because discovery was not completed. Thereafter, DiPentino filed a motion to compel production of privileged documents relating to the issue of what O'Boyle knew before entering into the settlement agreement, including information he received from his lawyer regarding the viability of the claim for commissions. The motion judge ordered the requested documents produced for in camera inspection, undertook an in camera review of the requested records, and, after she reviewed the documents, found plaintiffs waived the attorney-client privilege by putting in issue whether O'Boyle was in fact misled by the February 1998 letter. The motion judge further identified a portion of the attorney's file demonstrated the extent of O'Boyle's assessment of the commission claim and his negotiations with DiLorenzo and DiPentino. The motion judge ordered plaintiffs to produce 462 documents, reviewed in camera, for defendants. Plaintiffs' motion for leave to appeal was denied.

Plaintiffs filed a motion for partial summary judgment on the issue of consumer fraud and also moved for the motion judge's recusal. Both motions were denied. Although the judge found the claim to commissions on the tier two sales to rest upon a "blatant misrepresentation," she found there was "overwhelming" evidence that O'Boyle knew the representation was false.

In their motion for summary judgment, defendants asserted plaintiffs' claims were barred by both the settlement agreement and the statute of limitations. The motion judge found plaintiffs, who were represented by counsel, had eighteen months from the time the sale agreement was executed in February 1998 until the settlement agreement in May 1999 to investigate the validity of the Listing Letter and the claims for commissions. The motion judge also found no causal nexus between the misrepresentation in the February 1998 letter and execution of the settlement agreement. First, she noted plaintiffs did not rely on the February 1998 letter, which was directed to Gospel Hall, not Commerce Group or O'Boyle. Second, emphasizing the sophistication of all parties involved, she found that in light of plaintiffs' negotiations with defendants, the former were "well aware . . . DiLorenzo had not produced the buyer, that in fact DiPentino had." Additionally, the motion judge rejected plaintiffs' argument the tort continued into 2005, when the last lot was sold, and found plaintiffs' cause of action was time-barred. Consequently, the motion judge granted defendants' motion for summary judgment, denied plaintiffs' motion for partial summary judgment, and dismissed the complaint with prejudice.

In their appeal, plaintiffs present the following arguments:

POINT I THE DEFENDANT WAS NOT ENTITLED TO JUDGMENT AS A MATTER OF LAW, AND THE MATTER MUST BE REMANDED FOR FURTHER PROCEEDING A. The Court recited but then ignored the applicable standard of review when deciding the effect of a "blatant misrepresentation" upon the procurement of the Release and Exclusive Right to Sell B. Critical discovery was incomplete, including the deposition of the author of the letter characterized by the Court as a "blatant misrepresentation" C. The Court did not even rule upon or consider whether the claim at issue was included in the language of the Release, and it clearly was not D. Although not addressed by the Trial Court in its decision, a finding of Consumer Fraud invalidates the contract E. There were disputed issues of fact regarding whether the handwritten letter was an illegal "net listing" agreement that voided the Exclusive Right to Sell F. The Defendants knowingly concealed the fact that the handwritten agreement was a "net listing" POINT II THE COURT ERRED BY RELEASING ATTORNEY-CLIENT PRIVILEGED DOCUMENTS WITHOUT CONDUCTING THE LEGALLY REQUIRED ANALYSIS, AND SUCH DOCUMENTS WERE SUBMITTED, IN THEIR ENTIRETY, IN SUPPORT OF THE MOTION FOR SUMMARY JUDGMENT POINT III THE PLAINTIFF WAS ENTITLED TO PARTIAL SUMMARY JUDGMENT ON THE ISSUE OF CONSUMER FRAUD A. The Defendants violated the Consumer Fraud Act by making a misstatement of fact in the sale and services to Plaintiff B. Defendants DiPentino and DiLorenzo omitted a material fact in the sale of real estate brokerage services and thereby violated the Consumer Fraud Act C. The use of a handwritten Net Listing and failing to accurately state the true amount of the commission in order to leverage an Exclusive Right to Sell is an unconscionable commercial practice, and a violation of the Consumer Fraud Act D. There is a Causal Nexus between the Violation and an Ascertainable Loss E. Plaintiff is entitled to Treble Damages under the Consumer Fraud Act POINT IV [THE MOTION JUDGE] SHOULD HAVE RECUSED HERSELF FROM THE PROCEEDINGS, PARTICULARLY WHEN SHE WAS ASKED TO CONSIDER A DISPOSITIVE MOTION FOR SUMMARY JUDGMENT

We agree with the motion judge that plaintiffs' claims are barred both by their settlement agreement and by the statute of limitations. The record shows the motion judge appropriately conducted an in camera inspection of the requested privileged documents and provided ample reason for their release to defendants. Accordingly, we conclude the argument raised in Point II lacks sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E) We further conclude plaintiffs' arguments that the motion judge erred in denying their motions for partial summary judgment and for her recusal are similarly lacking in merit, warranting no further discussion. Ibid.

II

"Fundamental to our jurisprudence relating to settlements is the principle that `[t]he settlement of litigation ranks high in our public policy.'" Brundage v. Estate of Carambio, 195 N.J. 575, 601 (2008) (citation omitted) (alteration in original). In Brundage, the Supreme Court reviewed the principles applicable to the enforcement of settlement agreements:

Our strong policy of enforcing settlements is based upon the notion that the parties to a dispute are in the best position to determine how to resolve a contested matter in a way which is least disadvantageous to everyone. In furtherance of this policy, our courts strain to give effect to the terms of a settlement wherever possible. As we have held, settlements will usually be honored absent compelling circumstances. An agreement to settle a lawsuit is a contract, which like all contracts, may be freely entered into and which a court, absent a demonstration of fraud or other compelling circumstances, should honor and enforce as it does other contracts. However, if a settlement agreement is achieved through coercion, deception, fraud, undue pressure, or unseemly conduct, or if one party was not competent to voluntarily consent thereto, the settlement agreement must be set aside. [Ibid. (citations, internal quotation marks and alterations omitted).]

Plaintiffs seek to evade the preclusive effect of the settlement agreement by contending that the subject matter of their complaint does not fall within the scope of the agreement and that the agreement itself was induced by fraud. We are not persuaded by either of these arguments.

The language of the release provided in the settlement agreement was expansive, encompassing

all damages, loss, claims, demands, liabilities, obligations, actions and causes of action whatsoever which they may now have or claim to have against any of the Released Parties, as of the date hereof, whether presently known or unknown, and of every nature and extent whatsoever on account or in any way touching, concerning, arising out of or founded upon the [Listing] Letter, any agreements between [Gospel Hall] and DiLorenzo and/or Longport and/or DiPentino and/or Premier, the Agreement of Sale, and/or the Land.

We have no difficulty in concluding that the subject matter of this action falls within the scope of the settlement agreement. We therefore turn to the question whether defendants' alleged fraud nullifies the release.

Plaintiffs contend the February 1998 letter from defendants' counsel constituted fraud because it included a claim for commissions by Longport on the tier two sales when, in fact, Longport had no agreement with Juliano. In rejecting this argument, the motion judge noted the alleged misrepresentation was made to Gospel Hall and not to plaintiffs. For a period of eighteen months, plaintiffs were represented by counsel, diligently explored the basis for the commission claim and engaged in protracted negotiations regarding the settlement agreement. The motion judge further found that plaintiffs were aware of facts undermining the viability of the claim for the tier two commissions and made a business decision to assume the indemnification of Gospel Hall against defendants' claims to acquire the property. In short, she found plaintiffs failed to present sufficient evidence to create a genuine issue of material fact that plaintiffs reasonably relied upon the alleged misrepresentation to their detriment in entering the settlement agreement.

A trial judge's factual findings and conclusions concerning a settlement agreement are unassailable, as long as they are supported by the record. Lahue v. Pio Costa, 263 N.J.Super. 575, 595-97 (App. Div.), certif. denied, 134 N.J. 477 (1993). There is ample support for the motion judge's findings and conclusions here.

Before entering into the sale agreement, O'Boyle undertook a comprehensive investigation into the merits of the commission claim. By memorandum dated January 29, 1998, his attorney, Henry F. Miller, informed Gospel Hall's counsel that O'Boyle had reviewed the Listing Letter and on that basis agreed to indemnify Gospel Hall in the sale agreement. Thus, O'Boyle's agreement to indemnify Gospel Hall preceded the February 1998 letter. The assumption of that obligation was therefore plainly the product of the assessment made by O'Boyle and his attorney and not the product of any statement in the February 1998 letter.

Thereafter, on March 1, 1998, O'Boyle sent an email asking Plackter to provide copies of non-privileged documents he had in connection with DiLorenzo, Premier and Longport, including any previous offers or agreements they had submitted. Plackter forwarded several documents verifying DiPentino and Premier had produced Juliano, including the January 23, 1998 letter.

The record shows O'Boyle was aware of the major flaw in the commission claim well before he executed the settlement agreement. He knew before entering the sale agreement that the Listing Letter was addressed to DiLorenzo and Longport Realty, and knew from the documents received from Plackter that it was DiPentino and Premier that had produced Juliano. He had the facts necessary to appreciate the vulnerability of the claim for commissions made in the February 1998 letter on behalf of Longport and DiLorenzo.

Nonetheless, the settlement agreement was drafted to extinguish all claims for the commissions, regardless of merit. It explicitly acknowledges that, based upon the September 1997 Listing Letter, "Longport and/or DiLorenzo and/or DiPentino and/or Premier claim to have relied upon the Letter, performed services based thereon, and now claim the existence of certain contractual rights to real estate commissions."

We therefore conclude the record provides ample support for the motion judge's conclusion that plaintiffs failed to present sufficient evidence of fraud to render the settlement agreement unenforceable.

III

Plaintiffs did not argue in their appellate brief that the motion judge erred in finding their complaint was barred by the statute of limitations. It was only after defendants argued summary judgment was proper, in part because the motion judge correctly ruled the claims were barred by the statute of limitations, that plaintiffs contended in their reply brief that material issues of fact existed regarding the accrual date for their fraud claim and that their claim did not accrue until the exclusive right to sell aspect of the settlement agreement was completed with the sale of the last lot in 2005.

Plaintiffs' challenge to the motion judge's ruling on the statute of limitations is a new issue that cannot properly be raised in a reply brief. Alpert, Goldberg, Butler, Norton & Weiss, P.C. v. Quinn, 410 N.J.Super. 510, 527 n.5 (App. Div. 2009), certif. denied, 203 N.J. 93 (2010); Goldsmith v. Camden Cnty. Surrogate's Office, 408 N.J.Super. 376, 387 (App. Div.), certif. denied, 200 N.J. 502 (2009); A.D. v. Morris Cnty. Bd. of Soc. Servs., 353 N.J.Super. 26, 30 (App. Div. 2002).2 In any case, the challenge lacks merit.

Plaintiffs' allegations, including their consumer fraud and common law claims, were subject to a six-year statute of limitations. N.J.S.A. 2A:14-1; Mirra v. Holland Am. Line, 331 N.J.Super. 86, 90 (App. Div. 2000).

[T]he statute of limitations begins to run when the plaintiff is aware, or reasonably should be aware, of facts indicating that she [or he] has been injured through the fault of another, not when a lawyer advises her [or him] that the facts give rise to a legal cause of action. [Baird v. Am. Med. Optics, 155 N.J. 54, 68 (1998).]

As we have noted, the fraud alleged by plaintiffs consists of the misrepresentation contained in the February 1998 letter. They contend they suffered damages as a result because, if not for that misrepresentation, O'Boyle and Commerce Group would not have entered into the settlement agreement with defendants and would not have paid commissions for tier two sales to Premier or "any other outside" broker.

Plaintiffs paid the first commissions of $71,250 to Premier in May 2000. As a result, plaintiffs suffered monetary damages, resulting in the accrual of their claim at least as early as 2000.

Plaintiffs argue they first became aware of defendants' fraud "during discovery when DiLorenzo admitted, for the first time, that despite Longport's prior statements of fact to the contrary, DiLorenzo had NO agreement at all with Juliano for the" tier two sales. This assertion is belied by the facts known to O'Boyle before the settlement agreement was executed. As far back as March 1998, O'Boyle and his attorney had both the February 1998 letter and the January 23, 1998 letter from DiPentino to Plackter reflecting DiPentino's role in procuring Juliano.

Moreover, a certification submitted by O'Boyle reflects his intent to delay litigation until the profits from tier two sales were reaped. He stated that because defendants had "unique access to potential customers and other persons critical to the project," plaintiffs' rejection of "the agreement prior to the completion of the project would have caused devastating but unascertainable damage to the sales process." He stated further,

Now that the parties are on an equal footing, and . . . Defendants are not in a position to sabotage the project, Plaintiffs are able to bring their actions before the Court. . . .

A party may not evade the restrictions of a limitations period by choosing to deliberately delay filing suit. See Martinez v. Cooper Hosp.-Univ. Med. Ctr., 163 N.J. 45, 51 (2000) ("The purpose of a limitations period, which embodies important public policy considerations, is to stimulate activity, punish negligence and `promote repose by giving security and stability to human affairs.'" (quoting Wood v. Carpenter, 101 U.S. 135, 139, 25 L. Ed. 807, 868 (1879))). The notion that plaintiffs had the right to delay litigation until every last lot was sold so they might avoid any interference with their profits despite their longstanding awareness of the claimed misrepresentation defies the very purposes of the statute of limitations and merits no further discussion.

To the extent that any issue raised by plaintiffs has not been specifically addressed, it is because the argument lacks sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E)

Affirmed.

FootNotes


1. Plaintiffs' allegations included a claim that DiPentino violated statutes and regulations because, in May 2005, he was charged with and pled guilty to federal income tax evasion for the years 1999 and 2001. He was sentenced to five-years' probation and a $10,000 fine in 2006. DiPentino notified the New Jersey Real Estate Commission (Commission) of both his plea and sentence. The Commission revoked DiPentino's broker's license, effective March 1, 2007 until June 30, 2009. Upon revocation of DiPentino's license, DiLorenzo became Premier's broker of record.
2. Plaintiffs raise additional arguments in their reply brief which we will not address. Alpert, Goldberg, Butler, Norton & Weiss, supra, 410 N.J. Super. at 527 n.5.
Source:  Leagle

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