RIM BAOUAB VS. 2600 ASSOCIATION, INC. (L-3760-18, HUDSON COUNTY AND STATEWIDE) ( 2021 )

NOT FOR PUBLICATION WITHOUT THE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-4039-19
RIM BAOUAB,
Plaintiff-Appellant,
v.
2600 ASSOCIATION, INC.,
YAKNOW MANAGEMENT,
LLC, JOE WILLIAMS, FRAN
ARAGONA, STEVE
BOWMAN, MIKE CAMPBELL,
DANIEL LEVIN, and SHANTELL
MARTIN,
Defendants-Respondents.
______________________________
Submitted December 15, 2021 – Decided December 28, 2021
Before Judges Whipple and Geiger.
On appeal from the Superior Court of New Jersey, Law
Division, Hudson County, Docket No. L-3760-18.
Rim Baouab, appellant pro se.
Leary Bride Mergner & Bongiovanni, PA, attorneys for
respondents (Brian Peoples, on the brief).
PER CURIAM
This case arises out of water infiltration from February to May 2018 into
a condominium unit (Unit 10E), owned by plaintiff Rim Baouab, that is located
on the top floor of The Hague Building in Jersey City. Plaintiff alleges that on
February 11, 2018, a Nor'easter hit the area, causing a flood of water that
infiltrated the roof of Unit 10E. Plaintiff also alleges second and third water
intrusions in Unit 10E in February or March and May 2018. Plaintiff claims the
water infiltration caused significant damage to the sheetrock, flooring, cabinets,
molding, appliances, and other items in the Unit 10E. Plaintiff brought this
action seeking damages for alleged negligence, breach of contract, and breach
of fiduciary duty against the homeowners' association, its members, the building
manager, and its sole member.
Defendant 2600 Association, Inc. (the Association), is the condominium
owners' association charged with upkeep, maintenance, and care of The Hague
Building. Defendants Shantell Martin, Steve Bowman, Fran Aragona, Daniel
Levin, and Mike Campbell are members of the Board of Trustees of the
Association. Defendant Yaknow Management, LLC (Yaknow) was hired by the
Association to maintain, oversee, and administer the common areas of The
Hague Building. Defendant Joe Williams was the managing member of
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Yaknow, which is no longer a registered business entity in New Jersey. There
is no evidence that Williams had any personal contractual relationship with the
Association.
Plaintiff appeals from Law Division orders: (1) barring plaintiff's expert
report as a net opinion; (2) granting summary judgment to the trustees of the
homeowners' association; (3) granting summary judgment to Williams; (4)
dismissing plaintiff's claims for failure to substantiate her claims; and (5)
denying reconsideration.
On May 30, 2018, plaintiff filed a pro se verified complaint in the
Chancery Division, alleging the following causes of action: (1) the right to
injunctive relief compelling defendants the Association and its trustees to
immediately repair the roof, among other immediate remedies (count one); (2)
breach of covenant requiring injunctive relief and compensatory damages with
respect to Unit 10E against the Association and its trustees for failing to repair,
inspect, and detect the condition of the flooded roof (count two); (3) breach of
covenant against the Association and its trustees; (4) breach of contract against
the Association (count four); (5) breach of fiduciary duty against the Association
and its trustees for failing to promptly repair the roof requiring injunctive relief
and compensatory damages (count five); and (6) negligence against the
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Association, its trustees, Yaknow, and Williams for failing to exercise ordinary
care in a reasonably safe and prudent manner by failing to inspect and repair the
roof.
Plaintiff sought injunctive relief: (a) "temporarily, preliminarily and
permanently enjoining [the Association] and the Trustees from causing
additional water damage to Unit 10E"; (b) "compelling the Association and its
Trustees to repair the roof of The Hague Building and/or[] otherwise fix the
water leaking into Unit 10E within three days of the order"; (c) "for specific
performance of [the Association's] duties to repair and maintain the common
areas, including the roof as well as the structural elements and interior of Unit
10E that were damaged by water incursion within three days of the order"; and
(d) awarding plaintiff $25,000 "to cover the relocation, temporary housing costs
and storage fees for the tenant of Unit 10E while the repairs to that unit are
made." Plaintiff also sought an award of compensatory damages, treble
damages, punitive damages, attorney's fees and disbursements, interest, and
costs of suit.
The Chancery court issued an Order to Show Cause (OTSC) returnable
July 13, 2018, that required defendants to appear and show cause why the
injunctive relief sought by plaintiff should not be granted. On the return date of
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the OTSC, the Chancery court granted injunctive relief, ordering defendants to:
(1) submit to plaintiff's counsel the plan of a professional engineer regarding
roof repairs; (2) repair and remediate the roof leak of the roof of Unit 10E, and
if necessary, replace the roof; (3) submit conclusive evidence of remediations to
plaintiff's counsel; (4) have Unit 10E inspected by a licensed contractor and
professional engineer and provide a reasonable plan for repair and remediation
to plaintiff's counsel; (5) repair and remediate all damage to Unit 10E caused by
the water intrusions.
On July 30, 2018, plaintiff requested entry of default against all
defendants. On August 1, 2018, the Chancery court ordered that default be
entered against defendants for failure to appear and scheduled a proof hearing
for September 21, 2018.
On August 22, 2018, the Chancery court conducted a case management
conference and ordered: (1) default shall remain in place until further order; (2)
the proof hearing was adjourned until the October 23 trial date; (3) paper
discovery shall be answered by September 1; (4) plaintiff's expert reports shall
be served by September 21, and defendants' expert reports by October 21; (5)
fact witness depositions shall be completed by September 23 and expert
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depositions shall be completed by October 18; and (6) the parties shall confer
and schedule the inspection of the property by expert witnesses.
On September 14, 2018, the Chancery court granted defendants' informal
request to vacate the default entered against the Association over plaintiff's
objection. Five days later, the Chancery court transferred the case to the Law
Division. The following month, plaintiff's counsel withdrew from representing
plaintiff, who proceeded without counsel thereafter.
The trial was adjourned, and the parties engaged in discovery, which was
extended five times, ending on February 13, 2020. Plaintiff's motion to further
extend discovery was denied.
In June 2019, Yaknow, Williams, and the trustees filed a motion to vacate
the default. The motion was granted.
On November 20, 2019, plaintiff filed a motion to enforce litigant's rights.
On January 14, 2020, the court granted the motion in part, ordering: (1)
"[d]efendants to repair and remediate the leaking into Unit 10E from the roof
and other sources, including replacement of the roof"; (2) "[d]efendants to
submit conclusive evidence of remediation, including evidence of remediation
of the violations concerning Unit 10E noticed in the Jersey City Fire
Department's Notice of Violations dated May 22, 2018"; (3) permitting
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"inspection of Unit 10E by a licensed contractor and a professional engineer
within thirty (30) days"; (4) "[d]efendants to repair and remediate all damage to
Unit 10E caused by the incursion of water into the Unit"; and (5) "[d]efendants
to provide all known contact information for the owner of Unit 10C and for the
owner's insurance carrier." The court denied plaintiff's request for sanctions and
to compel service of a defense expert report before the discovery end date.
On November 6, 2019, plaintiff's expert, Morse Associates, submitted its
expert report, which was updated in January and February 2020. The report
states that "[a]ll of the rooms in Unit 10E have been damaged by the water
intrusion," with some rooms worse than others. The report opines that there are
at least three or four areas "that have ongoing water intrusion that need to be
repaired before repairs to the walls and ceilings are made." It further opined
that all damaged areas were caused by the water intrusion, save for the damage
to the master bedroom closet, which was caused by a leaking shower in the
adjacent apartment.
The report opined that the new roof system installed over the existing
membrane was improperly installed and needed to be remediated and inspected
on a semi-annual basis by a certified roofing contractor.
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On February 14, 2020, defendants filed four dispositive motions to: (1)
grant summary judgment to the individual trustees; (2) grant summary judgment
to Williams; (3) bar plaintiff's expert opinion as a net opinion; and (4) dismiss
plaintiff's claims for failure to substantiate her damages. On April 30, 2020, the
court granted each motion, issuing four orders and a comprehensive eighteen-
page memorandum of decision.
First, the court found summary judgment should be granted in favor of the
individual trustees. The court noted that the liability of the trustees is governed
by the Business Judgment Rule (BJR), which limits liability to proven fraud,
self-dealing, or unconscionable behavior. The court found plaintiff did not
present any evidence of such conduct. The court explained:
Plaintiff argues that the mere fact that her Unit has
suffered water damage is prima facie evidence that the
Board abused its authority, meriting piercing the
corporate veil and holding the individual members
personally liable. The court disagrees. Though
negligence by the condominium association may be a
question of fact for the jury, the individual board
members may be liable only upon a showing of fraud,
self-dealing, or unconscionable behavior, which are
questions of law reserved for the court. See Paplexiou
v. Tower W. Condo., 167 N.J. Super. 516, 527 (Ch.
Div. 1979). The BJR presents a lenient standard of
conduct: a board need only have acted reasonably in
exercising its business judgment. There is no evidence
that the Board members engaged in fraud, self-dealing,
or unconscionable conduct. The Affidavit of Stephen
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M. Lattanzio, P.E., asserts that a roof membrane does
not qualify as roof replacement under the 2018
International Building Code Section 1511.3 and states
that prior expert reports commissioned by [d]efendants
in 2000, 2007, and 2014 opine that the roof required
replacement and maintenance of the drainage system,
to be initiated in 2015. He also states that [d]efendants
did not provide any evidence supporting their decision
to install the membrane instead of replacing the roof
according to the 2018 International Building Code; that
they have not provided any evidence of the standard of
care prescribed publications of the National Roofing
Contractors' Association in maintaining and repairing
the roof and drainage system or its masonry; and that
[d]efendants have not provided any evidence of
remedial measures taken other than installing the roof
membrane. Though this court also expressed doubt in
its Addendum to Order dated January 14, 2020
concerning the adequacy of the Nu-Tek membrane as a
long-term remedy and enforced the Chancery
Division’s order directing [d]efendants to replace the
roof, it is [p]laintiff's burden to show that Defendants
violated the BJR, not [d]efendants' burden to show
compliance. At best, [d]efendants' use of the Nu-Tek
membrane and other actions taken by the Board could
be considered a practical business judgment and at
worst, bad judgment. But courts will not second-guess
the actions of directors unless it appears that they are
the result of fraud, dishonesty or incompetence,"
[Paplexiou, 167 N.J. Super. at 527,] and "[b]ad
judgment, without bad faith, does not ordinarily make
officers individually liable." Alloco v. Ocean Beach &
Bay Club, 456 N.J. Super. 124, 140 (App. Div. 2018)
(quoting Maul v. Kirkman, 270 N.J. Super. 596, 614
(App. Div. 1994)). The court therefore does not find
that [d]efendants' actions warrant piercing the
corporate veil . . . .
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As for Williams, the court found that plaintiff proffered no evidence of
fraudulent conduct by Williams that would warrant piercing the corporate veil
to impose liability against Williams personally.
Plaintiff's bare assertion that Mr. Williams owed an
affirmative duty above and beyond his capacity as an
employee of Yaknow Management because he was
responsible for reporting issues on the property
concerning the common elements is insufficient to
support piercing the corporate veil. The [Association]
had a contract with Yaknow Management, LLC, not
with Mr. Williams individually. The law of this State
is clear that, short of a showing of fraudulent conduct,
the corporate veil shall not be pierced to hold an
individual member of an LLC liable for the company's
actions.
Next, the court found plaintiff's expert report by Morse Associates was
admissible "regarding the causes of water damage to [p]laintiff's unit," but an
inadmissible net opinion regarding estimated damages. The court stated that
while "[a]n injured party may seek actual damages . . . 'that are real and
substantial as opposed to speculative[,]' [d]amages must be proven with
reasonable certainty." (Citations omitted). The court explained:
Here, the court finds that [p]laintiff's expert
report constitutes an inadmissible net opinion with
respect to [p]laintiff's damages. . . . As the report is
based on numerous prior expert reports and other
sources, including the manufacturer's manual for the
roof membrane and site inspections by Morse
Associates, the court finds that the report's conclusions
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regarding the causes of water damage to [p]laintiff's
unit do not constitute an inadmissible net opinion.
The damages estimate section of the Morse report
consists of quotes from three different contractors
listing the cost of services each would perform, the sum
of which was either $74,215.18 or $82,715.18,
depending on modifications to the work performed. A
painting company provided a description of the work to
be performed which was estimated to cost $19,688.31
or $28,188.31 if [p]laintiff also had work performed on
her kitchen cabinets. A plaster repair company listed
the work to be performed at an estimated cost of
$16,526.87. And a construction company estimated
that the cost of repair to the ceiling, walls, and water
damage would be $38,000. Morse Associates provided
each contractor with a scope of work and notes in its
report that it intended to amend the report once it
received documents related to roofing bids, which it
apparently never received. It is unclear whether the
other estimates are based on photos or verbal or written
representations of the unit's condition provided by
Morse Associates. It is also unclear if these numbers
represent an average cost or are industry outliers, and
no unit or labor costs were included. The court
therefore finds that these unsubstantiated estimates
constitute an inadmissible net opinion.
Finally, the court found plaintiff failed to substantiate her alleged
damages. The court reasoned:
[Plaintiff] seeks as damages, inter alia, attorney's fees
incurred prior to becoming self-represented, court
filing fees, the cost of conducting or attending
depositions, fact witness research, international travel,
expert fees, unpaid rent which she would have received
from [her tenant], childcare, and credit card interest
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charges. Plaintiff also anticipates damages for having
to hire an electrician to investigate and repair any
corroded circuitry. She also listed mediation and
international tax planning fees as prospective, presently
uncalculated costs and seeks pre-and-post judgment
interest and treble and punitive damages. Plaintiff did
not attach invoices from her attorney prior to becoming
self-represented; nor did she include receipts for her
other itemized expenses. Plaintiff stated in her
opposition papers that documentation substantiating
her damages would be provided when discovery was
over, that is, when [d]efendants served their
outstanding discovery. But, as noted above, discovery
has been five times in this case, the discovery end date
has passed, and the Presiding Judge of the Civil
Division denied [p]laintiff's latest motion to extend
discovery.
....
The transcript of the hearing for injunctive relief before
[the Chancery judge] indicates that the [d]efendants and
the [c]ourt agreed that the roof required repair and that
plaintiff had been injured. But if [p]laintiff is unable to
substantiate her damages so that a jury can ascertain the
actual extent of her injury, then she is necessarily
precluded from obtaining relief despite the injunction
issued by the Chancery court.
The court granted the dispositive motions and dismissed plaintiff's complaint
with prejudice but did not preclude plaintiff from seeking further relief in
Chancery.
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Plaintiff moved for reconsideration and clarification of the order barring
plaintiff's expert. On June 12, 2020, the court issued an oral decision and
accompanying order denying the motion. This appeal followed.
Plaintiff raises the following points for our consideration:
POINT I
THE COURT ABUSED ITS DISCRETION BY
GRANTING SUMMARY JUDGMENT IN FAVOR
OF INDIVIDUAL TRUSTEES AND BUILDING
MANAGER WILLIAMS BECAUSE DEFENDANTS
BREACHED THEIR DUTY OF CARE, COVENANT
AND FIDUCIARY DUTY TO PLAINTIFF AS AN
ASSOCIATION MEMBER AND INVESTMENT
PROPERTY OWNER.
POINT II
IN MATTERS OF PUBLIC HEALTH AND SAFETY,
THE COURT ERRED BY CONCLUDING
TRUSTEES' ACTIONS MUST BE GOVERNED BY
THE BUSINESS JUDGMENT RULE ("BJR")[,]
FAILED TO APPLY THE REASONABLENESS
STANDARD AND IGNORED THAT TRUSTEES
ACTED REPEATEDLY IN A PALPABLY
UNREASONABLE MANNER.
POINT III
THE COURT ABUSED ITS DISCRETION BY
GRANTING DEFENDANTS' MOTION TO BAR
PLAINTIFF'S EXPERT REPORT AND MOTION
FOR SUMMARY JUDGMENT, ESSENTIALLY
DISMISSING PLAINTIFF'S CASE FOR FAILURE
TO SUBSTANTIATE DAMAGES.
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POINT IV
THE COURT ABUSED ITS DISCRETION BY
DENYING PLAINITFF'S MOTION FOR
RECONSIDERATION OF THE ORDERS DATED
APRIL 30, 2020.
We find no merit in any of these arguments and affirm each of the
dispositive orders entered in favor of defendants and the denial of
reconsideration.
We apply the same standard as the trial court in our review of summary
judgment determinations. Lee v. Brown, 232 N.J. 114, 126 (2018). "Summary
judgment is appropriate 'when no genuine issue of material fact is at issue and
the moving party is entitled to a judgment as a matter of law.'" Ibid. (quoting
Steinberg v. Sahara Sam's Oasis, LLC, 226 N.J. 344, 366 (2016)). We conduct
a de novo review of the court's determination of legal issues, Ross v. Lowitz,
222 N.J. 494, 504 (2015), and "its 'application of legal principles to such factual
findings.'" Lee, 232 N.J. at 127 (quoting State v. Nantambu, 221 N.J. 390, 404
(2015)).
Under Rule 4:46-2(c), summary judgment is granted "if the pleadings,
depositions, answers to interrogatories and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any material fact
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challenged and that the moving party is entitled to a judgment or order as a
matter of law." In applying the standard to our review of a summary judgment
determination, we "must view the facts in the light most favorable to the non -
moving party." Bauer v. Nesbitt, 198 N.J. 601, 604 n.1 (2009); see also Brill v.
Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995).
We first address the principles of liability that apply to trustees of a
condominium association. Plaintiff named five trustees of the Association as
defendants. The law is well-settled that the business judgment rule applies
condominium associations and their trustees.
The business judgment rule applies to 'common
interest communities' such as the Club. Comm. for a
Better Twin Rivers v. Twin Rivers Homeowners' Ass'n,
192 N.J. 344, 369 (2007). Courts have "uniformly
invoked the business judgment rule in cases involving
homeowners' associations," because "a homeowners'
association's governing body has 'a fiduciary
relationship to the unit owners, comparable to the
obligation that a board of directors of a corporation
owes to its stockholders.'" Ibid. (quoting Siller v. Hartz
Mountain Assocs., 93 N.J. 370, 382 (1983)). Similarly,
"decisions made by a condominium association board
should be reviewed by a court using the same business
judgment rule which governs the decisions made by
other types of corporate directors." Walker v.
Briarwood Condo. Ass'n, 274 N.J. Super. 422, 426
(App. Div. 1994).
[Alloco v. Ocean Beach & Bay Club, 456 N.J. Super.
124, 134-35 (App. Div. 2018).]
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As our Supreme Court has explained:
The business judgment rule has its roots in corporate
law as a means of shielding internal business decisions
from second-guessing by the courts. Under the rule,
when business judgments are made in good faith based
on reasonable business knowledge, the decision makers
are immune from liability from actions brought by
others who have an interest in the business entity. The
business judgment rule generally asks (1) whether the
actions were authorized by statute or by charter, and if
so, (2) whether the action is fraudulent, self-dealing or
unconscionable.
[Seidman v. Clifton Sav. Bank, S.L.A., 205 N.J. 150,
175 (2011) (quoting Green Party v. Hartz Mountain
Indus., 164 N.J. 127, 147-48 (2000)).]
To "promote and protect the full and free exercise of the power of
management given to the directors," the second prong of the business judgment
rule "protects a board of directors from being questioned or second-guessed on
conduct of corporate affairs, except in instances of fraud, self-dealing, or
unconscionable conduct." In re PSE&G S'holder Litig., 173 N.J. 258, 276-77
(2002) (quoting Maul v. Kirkman, 270 N.J. Super. 596, 614 (App. Div. 1994)).
This principle applies with equal force to the trustees of a homeowner's
association. Siller, 93 N.J. at 382.
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"The business judgment rule creates 'a rebuttable presumption' that the
actions of a Board are valid." Alloco, 456 N.J. Super. at 136 (quoting PSE&G
S'holder Litig., 173 N.J. at 277).
It places an initial burden on the person who challenges
a corporate decision to demonstrate the decision-
maker's "self-dealing or other disabling factor." If a
challenger sustains that initial burden, then the
"presumption of the rule is rebutted, and the burden of
proof shifts to the defendant or defendants to show that
the transaction was, in fact, fair to the corporation."
[Ibid. (quoting PSE&G S'holder Litig., 173 N.J. at 277)
(citations omitted).]
The evidence proffered by plaintiff was insufficient to rebut the
presumption of validity and satisfy her initial burden of showing the Trustees'
actions were fraudulent, self-dealing, or unconscionable. Plaintiff points to no
facts to establish the trustees engaged in fraud, self-dealing, or unconscionable
conduct. Indeed, plaintiff did not claim fraud or unconscionability and did not
allege a cause of action under the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1
to -20. Instead, plaintiff simply refers to bad faith and bad judgment without
specifying the underlying facts supported by citations to the record.
Nor does the record support any claim that the Association or its trustees
engaged in self-dealing or unconscionable conduct. Upon learning in February
2018 of water infiltration into Unit 10E, the Association had the roof inspected.
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Based on the results of that inspection, the Association had an aluminum roof
coating installed above the leaking area of the roof in March 2018. The
Association then retained Fania Roofing, who found two cuts in the roof and a
blister in the membrane in the area that was leaking. Fania Roofing treated the
blister and repaired the cuts. Fania Roofing subsequently determined that the
roof needed to be replaced. The Association retained Frank Pelligrino to
produce drawings and specifications for the roof replacement. It then solicited
three bids for the job and hired Nu-Tek Roofing Systems, Inc. to replace the
roof. In the February 2020 update to the report of Morse Associates, plaintiff's
own expert acknowledged that the new roof would continue to have "watertight
integrity" with regular inspections by a certified roofing contractor. "[T]he
business judgment rule does not require [the trustees] to be construction
experts." Alloco, 456 N.J. Super. at 141.
A condominium association "is a representative body that acts on behalf
of the unit owners. Its powers derive from its by-laws, the master deed, and
applicable statutory provisions." Thanasoulis v. Winston Towers 200 Ass'n, 110
N.J. 650, 656 (1988). "The most significant responsibility of a condominium
association is the management and maintenance of the common areas of the
condominium complex." Id. at 656-57; see also N.J.S.A. 46:8B-12 ("The
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association . . . is responsible for the administration and management of the
condominium and condominium property . . . ."). "The [A]ssociation, acting
through its officers or governing board, shall be responsible for the
performance" of certain duties, including "[t]he maintenance, repair,
replacement, cleaning and sanitation of the common elements." N.J.S.A. 46:8B-
14(a) (emphasis added). "Whether or not incorporated, the association shall be
an entity which shall act through its officers and may enter into contracts, bring
suit and be sued." N.J.S.A. 46:8B-15(a) (emphasis added).
Regarding maintenance and repair, the Association acts through its Board
of Trustees. N.J.S.A. 46:8B-14. Our courts have "uniformly invoked the
business judgment rule in cases involving homeowners' associations." Twin
Rivers, 192 N.J. at 369. This is because "a homeowners' association 'has a
fiduciary relationship to the unit owners, comparable to the obligation that a
board of directors of a corporation owes to its stockholders.'" Ibid. (quoting
Siller, 93 N.J. at 382). "Similarly, 'decisions made by a condominium
association board should be reviewed by a court using the same business
judgment rule which governs the decisions made by other types of corporate
directors.'" Alloco, 456 N.J. Super. at 134-35 (quoting Walker v. Briarwood
Condo. Ass'n, 274 N.J. Super. 422, 426 (App. Div. 1994)).
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Defendants Aragona, Bowman, Campbell, Levin, and Martin were sued
in their official capacity as trustees of the Association. Noticeably absent from
the complaint is any allegation that the named trustees are liable to plaintiff in
for actions or omissions in their individual capacity. Therefore, for the same
reasons that the trustees are not liable under the business judgment rule, the
Association is likewise not liable. Id. at 134-41 (affirming the grant of summary
judgment to a common interest community, which was a not-for-profit
corporation, because the decision-making of the members of its Board of
Directors was protected under the business judgment rule).
For these reasons, summary judgment was properly granted to the
Association and its trustees.
We next address the principles governing liability of the managing
member of a limited liability company (LLC). Yaknow is an LLC registered to
do business in New Jersey. Beginning in June 2012, the Association retained
Yaknow to serve as the building manager for The Hague Building. Yaknow
oversaw the day-to-day operation of the Association and the building complex.
Williams is the managing member of Yaknow. Although Williams signed
the agreement for management services on behalf of Yaknow, Williams had no
independent contractual relationship with the Association. Absent personally
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engaging in fraudulent conduct, a member of an LLC is not personally liable for
the debts, obligations, or liabilities of an LLC. N.J.S.A. 42:2C-30(a)(2). There
is no evidence in the record that Williams engaged in such conduct. Plaintiff
bore the burden of proving that the corporate form should be disregarded by
piercing the corporate veil. Richard A. Pulaski Constr. Co. v. Air Frame
Hangers, Inc., 195 N.J. 457, 472 (2008). She did not satisfy that burden.
Accordingly, summary judgment was properly granted to Williams.
The trial court barred the damages estimate section of plaintiff's expert
report and testimony as a net opinion. We review evidentiary decisions "under
the abuse of discretion standard because . . . the decision to admit or exclude
evidence is one firmly entrusted to the trial court's discretion." Rodriguez v.
Wal-Mart Stores, 237 N.J. 36, 57 (2019) (quoting Est. of Hanges v. Metro. Prop.
& Cas. Ins. Co., 202 N.J. 369, 383-84 (2010)). "Thus, we will reverse an
evidentiary ruling only if it 'was so wide off the mark that a manifest denial of
justice resulted.'" Griffin v. City of E. Orange, 225 N.J. 400, 413 (2016)
(quoting Green v. N.J. Mfrs. Ins. Co., 160 N.J. 480, 492 (1999)).
The admissibility of expert opinion is guided by N.J.R.E. 702 and 703 and
the net opinion rule. N.J.R.E. 702 provides: "If scientific, technical, or other
specialized knowledge will assist the trier of fact to understand the evidence or
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to determine a fact in issue, a witness qualified as an expert by knowledge, skill,
experience, training, or education may testify thereto in the form of an opinion
or otherwise." In turn, N.J.R.E. 703 contemplates that an expert's opinion must
be founded on "facts or data." Hisenaj v. Kuehner, 194 N.J. 6, 24 (2008); accord
Biunno, Weissbard & Zegas, Current N.J. Rules of Evidence, cmt. 3 on N.J.R.E.
703 (2021-22).
In Davis v. Brickman Landscaping, Ltd., 219 N.J. 395 (2014), the Court
recently elaborated on the parameters of the net opinion rule and the factors to
be employed when applying it.
An expert may not provide an opinion at trial that
constitutes "mere net opinion." Pomerantz Paper Corp.
v. New Cmty. Corp., 207 N.J. 344, 372 (2011). The
rule prohibiting net opinions is a corollary of New
Jersey Rule of Evidence 703, State v. Townsend, 186
N.J. 473, 494 (2006), which provides that an expert’s
testimony "may be based on facts or data derived from
(1) the expert’s personal observations, or (2) evidence
admitted at the trial, or (3) data relied upon by the
expert which is not necessarily admissible in evidence
but which is the type of data normally relied upon by
experts in forming opinions on the same subject,"
Weisbsbard & Zegas, Current N.J. Rules of Evidence,
cmt. 1 on N.J.R.E. 703 (2014). Thus, the net opinion
rule can be considered a "restatement of the established
rule that an expert's bare conclusions, unsupported by
factual evidence, [are] inadmissible." Buckelew [v.
Grossbard, 87 N.J. 512, 524 (1981)].
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The net opinion rule "requires that the expert
'give the why and wherefore' that supports the opinion,
'rather than a mere conclusion.'" Pomerantz Paper
Corp., 207 N.J. at 372 (quoting Polzo v. Cnty. of Essex,
196 N.J. 569, 583 (2008)). For example, "a trial court
may not rely on expert testimony that lacks an
appropriate factual foundation and fails to establish the
existence of any standard about which the expert
testified." Id. at 373. Therefore, an expert offers an
inadmissible net opinion if he or she "cannot offer
objective support for his or her opinions, but testifies
only to a view about a standard that is 'personal.'" Ibid.
[Id. at 410.]
"Expert testimony should not be received if it appears the witness is not
in possession of such facts as will enable him to express a reasonably accurate
conclusion as distinguished from a mere guess or conjecture." Vuocolo v.
Diamond Shamrock Chems. Co., 240 N.J. Super. 289, 299 (App. Div. 1990).
An expert opinion on the quantum of estimated damages that is not based on
"supporting data or facts" is an inadmissible net opinion. Brach, Eichler,
Rosenberg & Gladstone, P.C. v. Ezekwo, 345 N.J. Super. 1, 11 (App. Div. 2001).
Here, the trial court found that damage estimates contained in the Morse
Associates report were an unsubstantiated net opinion. The court observed:
Morse Associates provided each contractor with a
scope of work and notes in its report that it intended to
amend the report once it received documents related to
roofing bids, which it apparently never received. It is
unclear whether the other estimates are based on photos
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or verbal or written representations of the unit's
condition provided by Morse Associates. It is also
unclear if these numbers represent an average cost or
are industry outliers, and no unit or labor costs were
included.
We agree. The damage estimates were not supported by adequate facts or other
data and were thereby inadmissible net opinions. We discern no abuse of
discretion in barring the damage estimates.
The trial court dismissed all of plaintiff's claims with prejudice, findi ng
she failed to substantiate the damages she allegedly incurred and projected. We
agree. "It is fundamental that a plaintiff must 'prove damages with such certainty
as the nature of the case may permit, laying a foundation which will enable the
trier of the facts to make a fair and reasonable estimate.'" Kelly v. Berlin, 300
N.J. Super. 256, 268 (App. Div. 1997) (quoting Lane v. Oil Delivery, Inc., 216
N.J. Super. 423, 420 (App. Div. 1987)). "Conjecture and speculation cannot be
used as a basis for damages." Brach, Eichler, 345 N.J. Super. at 11 (citing
Lesniak v. Cnty. of Bergen, 117 N.J. 12, 21 (1989)). "Thus, in general, '[a] jury
should not be allowed to speculate without the aid of expert testimony in an area
where laypersons could not be expected to have sufficient knowledge or
experience.'" Kelly, 300 N.J. Super. at 268 (quoting Biunno, Current N.J. Rules
of Evidence, cmt. 2 on N.J.R.E. 702 (1996-97)).
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Here, the cost of remedying the damages caused by the water infiltration
is beyond the knowledge and experience of the average juror. Without expert
testimony, the jury would be left to speculate as to the costs of repair. Expert
testimony was necessary to determine the quantum of damages incurred by
plaintiff as a result of the water infiltration. Absent admissible expert testimony,
plaintiff cannot adequately prove the damages she suffered.
Notably, the damage claims included attorney's fees, the cost of
conducting or attending depositions, fact witness research, international travel,
expert fees, unpaid rent which she would have received, childcare expenses, and
credit card interest charges. Plaintiff projected the expense of hiring an
electrician to investigate and repair any corroded circuitry. She also listed
mediation and international tax planning fees as prospective, presently
uncalculated costs and sought pre-and-post judgment interest, treble damages,
and punitive damages.
Plaintiff did not substantiate those expenses. As noted by the trial court,
"[p]laintiff did not attach invoices from her attorney prior to becoming self -
represented; nor did she include receipts for her other itemized expenses."
Instead, her opposing papers stated that documentation substantiating her
damages would be provided when discovery was concluded. However, as
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further noted by the trial court, "discovery ha[d] been extended five times in this
case, the discovery end date ha[d] passed," and the Presiding Judge denied
plaintiff's motion to reopen and extend discovery. Plaintiff did not appeal that
order.
Now, on appeal, plaintiff has submitted voluminous additional documents
that are not part of the motion record. "[A]ppellate courts will not ordinarily
consider evidentiary material which is not in the record below by way of
adduced proof, judicially noticeable facts, stipulation, admission or a recorded
proffer of excluded evidence." Pressler & Verniero, Current N.J. Court Rules,
cmt. 1 on R. 2:5-4(a) (2022); see also Townsend v. Pierre, 221 N.J. 36, 45 n.2
(2015) ("We do not consider other deposition testimony that was not presented
to the trial court and that was submitted by the parties for the first time on
appeal."); Tremonte v. Jersey Plastic Molders, Inc., 190 N.J. Super. 597, 601 n.1
(App. Div. 1983) (noting that in the absence of a motion to supplement the
record, submission of a document that was not part of the record below "was a
gross violation of appellate practices and rules"). Plaintiff was not granted leave
to expand the record. We decline to consider these documents that were not
presented to the trial court.
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More fundamentally, several aspects of the damages sought by plaintiff
are not recoverable. "New Jersey courts historically follow the 'American Rule,'
which provides that litigants must bear the cost of their own attorneys' fees . . .
except[] in eight enumerated circumstances." Innes v. Marzano-Lesnevich, 224
N.J. 584, 592 (2016) (citations omitted). Attorney's fees are not recoverable
except when authorized by statute, court rule, or contract. Id. at 593 (citing In
re Est. of Vayda, 184 N.J. 115, 121 (2005)); R. 4:42-9(a). No such basis is
present in this case. Similarly, deposition costs are not ordinarily recoverable
as part of the taxed costs. Smith v. Jersey Cent. Power & Light Co., 421 N.J.
Super. 374, 388 (App. Div. 2011). Likewise, expert fees are not ordinarily
recoverable as part of the taxed costs. Buccinna v. Micheletti, 311 N.J. Super.
557, 565-66 (App. Div. 1998). Expenses incurred for international travel and
fact witness research are also not recoverable as part of the taxed costs.
Finally, we address plaintiff's challenge of the denial of her motion for
reconsideration. For the reasons we have already expressed, defendant's
argument lacks sufficient merit to warrant extended discussion. R. 2:11-
3(e)(1)(E).
Reconsideration is appropriate when the movant demonstrates that the
court overlooked material facts in the record or erred by ignoring or misapplying
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to controlling decisions. R. 4:49-2. "The rule applies when the court's decision
represents a clear abuse of discretion based on plainly incorrect reasoning or
failure to consider evidence or a good reason for the court to consider new
information." Pressler & Verniero, cmt. 2 on R. 4:49-2 (citing Kornbleuth v.
Westover, 241 N.J. 289, 301-02 (2020)). Motions for reconsideration are
addressed to the motion judge's sound discretion. Hinton v. Meyers, 416 N.J.
Super. 141, 148 (App. Div. 2010). We review the denial of a motion for
reconsideration for clear abuse of discretion. Pitney Bowes Bank v. ABC
Caging Fulfillment, 440 N.J. Super. 378, 382 (App. Div. 2015). We discern no
such abuse of discretion. Plaintiff has not demonstrated that the grant of
summary judgment to defendants, barring of plaintiff's expert, and dismissal of
the complaint was based on plainly incorrect reasoning or that the court
overlooked relevant evidence or controlling decisions that compel a different
outcome. See Cummings v. Bahr, 295 N.J. Super. 374, 384-85 (App. Div. 1986).
Any issues raised but not otherwise addressed were found to lack
sufficient merit to warrant discussion in our opinion. R. 2:11-3(e)(1)(E).
Affirmed.
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