POLINA ROITBURG, ETC. VS. LEONOID ROITBURG (L-1478-16, MORRIS COUNTY AND STATEWIDE) ( 2020 )

NOT FOR PUBLICATION WITHOUT THE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-2963-18T4
POLINA ROITBURG, Executor
of the Estate of DAVID
ROITBURG,
Plaintiff-Respondent/
Cross-Appellant,
v.
LEONID ROITBURG a/k/a
LEON ROITBURG, DESIGN OF
TOMORROW, INC. a/k/a
EDUCATIONAL and LABORATORY
SYSTEMS a/k/a ELS, NATIONAL
PRECISION TOOL COMPANY, INC.,
a/k/a NPTC,
Defendants-Appellants/
Cross-Respondents,
and
LEON ROITBURG, DESIGN OF
TOMORROW, INC. and NATIONAL
PRECISION TOOL COMPANY, INC.,
Third-Party Plaintiffs-Appellants/
Cross-Respondents,
v.
POLINA ROITBURG and
IGOR ROITBURG, personally,
Third-Party Defendants-
Respondents/Cross-Appellants.
______________________________
Submitted September 14, 2020 – Decided December 14, 2020
Before Judges Messano and Suter.
On appeal from the Superior Court of New Jersey, Law
Division, Morris County, Docket No. L-1478-16.
Dubeck & Miller, attorneys for appellant (Mark D.
Miller, of counsel and on the briefs).
Harris Bloom & Archer, LLP, attorneys for respondent
(Linda S. Agnew, of counsel and on the briefs).
PER CURIAM
Defendant Leonid (Leon) Roitburg and his brother David were equal
shareholders in Design of Tomorrow, Inc. (DOT), a company that constructed
custom kitchens and cabinetry and operated out of a building owned by National
Precision Tool Company, Inc. (NPTC). NPTC was a corporation in which Leon
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was the sole shareholder.1 Plaintiff Polina Roitburg, David's wife, was DOT's
bookkeeper.
Leon and David executed a buy-sell agreement in 2006, which, by its
terms was intended "to make provision for the future disposition of the shares
of the corporation" and "provide . . . continuity . . . by providing for the purchase
of a deceased shareholder's shares[.]" DOT named each brother as beneficiary
of a $1 million life insurance policy, which, in the event of one brother's death,
would be used by the survivor to purchase the decedent's DOT stock from his
estate. The agreement also provided for the repayment of any loans made to
DOT by the deceased shareholder: "If the corporation owes money to the
deceased shareholder, the corporation shall pay such amount to the estate of the
deceased shareholder in the normal course of business, but no later than two []
years following the deceased shareholder's date of death."
According to DOT's accountant, Joseph Brescia, David ran the company
without Leon's involvement. DOT had its "ups and downs" and was insolvent
for several years prior to 2013. During this time, DOT ceased paying its below-
market rent to NPTC. In May 2013, David was diagnosed with brain cancer and
1
To avoid confusion, we use the first names of members of the Roitburg family.
We intend no disrespect by this informality.
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ultimately succumbed to the disease in October 2014. However, prior to his
death, David secured a $2.05 million contract for DOT to restore and modernize
barracks at the United States Military Academy at West Point (the West Point
contract).
During the company's lean times, David loaned DOT funds and secured
other loans from family and friends. Leon's wife and NPTC also loaned funds
to DOT.2 To successfully obtain the West Point contract, DOT had to execute a
subordination agreement, whereby repayment of DOT's loan obligations was
subordinated to the surety company.
Leon obtained the $1 million insurance proceeds shortly after David's
death, and, in December 2014, paid David's estate and acquired his brother's
DOT stock. At the time, there was uncertainty as to exactly how much money
DOT owed to David's estate as repayment of his loans to the company. At the
subsequent trial, the parties hotly disputed whether promissory notes, allegedly
executed to satisfy the surety company of the amount of DOT's loan obligations,
reflected the actual amount of loans David made to DOT, and whether the
amounts reflected on the company's books as shareholder loans were accurate.
2
Leon's wife's first name was also Polina. To avoid confusion, we refer to her
as Leon's wife throughout the opinion and intend no disrespect.
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Although DOT had begun paying David's loans in the ordinary course of
business prior to and immediately following his death, the payments ceased in
February 2015. Leon instructed plaintiff to make monthly interest payments
from DOT to his wife for repayment of monies she loaned to the company during
its financial hardships, and to repay loans made by her and NPTC, without
paying the balance of David's loan account.
Intrafamily tensions arose, as plaintiff and her son, Igor Roitburg, insisted
that the loans David made to DOT be repaid. At one point, Igor used plaintiff's
access to DOT's financial information to prepare a spreadsheet of the disputed
loan amounts. Unable to resolve the dispute with Leon, plaintiff commenced
litigation by filing a complaint against Leon, DOT, and NPTC.
Among the various causes of action in the complaint, plaintiff alleged that
DOT breached the buy-sell agreement and owed David's estate more than
$600,000 as repayment of loans David made to the company. She also alleged
that Leon was the alter ego of DOT and NPTC and had fraudulently transferred
funds from DOT to NPTC, in violation of the Uniform Fraudulent Transfer Act
(UFTA), N.J.S.A. 25:2-20 to -34. Plaintiff claimed the circumstances warranted
piercing the corporate veils of DOT and NPTC, and she sought to hold Leon
personally liable for compensatory and punitive damages, and counsel fees.
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Defendants filed an answer and counterclaim alleging breach of contract
— the subordination agreement — conversion, unjust enrichment, breach of the
duty of loyalty, and a third-party complaint against plaintiff and Igor alleging
conversion, trespass — based on Igor's access of DOT's financial records — and
defamation. The case was tried without a jury.
The judge heard the testimony of plaintiff, Igor, Leon, Brescia and other
witnesses familiar with DOT's business, and, specifically, the circumstances
surrounding the award of the West Point contract. In a written opinion following
trial, the judge made specific findings of fact. He concluded that DOT breached
the terms of the buy-sell agreement because it failed to repay David's loans to
the company within two years of his death. He rejected Leon's claim that David
and plaintiff had diverted DOT funds for their personal use over the years, and
that this excused DOT's obligation to repay the loans. The judge rejected
defendants' assertion that under the circumstances, DOT was only obligated to
pay over the $1 million life insurance proceeds. The judge concluded "[t]he
undisputed fact is that DOT and the other defendants had absolutely no intention
of honoring the [buy-sell] agreement."
The judge then considered how much money David loaned to DOT. In
this regard, the judge found "[t]he only reliable and believable evidenc e came
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from the testimony of . . . Brescia." Citing a financial statement prepared by
Brescia that "[t]he [c]ompany ha[d] an outstanding loan from its principal
stockholder in the amount of $478,863 as of December 31, 2014[,]" and noting
it was undisputed Leon never personally loaned money to DOT, the judge
concluded this was the amount of plaintiff's damages.
Reviewing caselaw regarding piercing of the corporate veil, the judge
found that Leon "totally disregarded corporate formalities[,]" and "diverted
funds for his personal use[.]" He concluded that Leon "made sure to drain the
DOT bank account in total disregard of repaying David's loans[,]" and he
determined that Leon and NPTC were jointly and severally liable for plaintiff's
damages. He did not specifically find that Leon committed fraud, nor did he
address plaintiff's UFTA claim at all.
The judge rejected all of defendants' causes of action against plaintiff and
Igor. He found no breach of the subordination agreement and, moreover,
because the West Point project was completed and the bonds were released, the
claim was moot. The judge also rejected defendants' generalized allegations that
over the years plaintiff and David were unjustly enriching themselves at DOT's
expense, noting the payments to plaintiff were "based upon the established
protocol since the inception of DOT." He determined that Leon's belated claim
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regarding unpaid rent and utilities was "without merit[,]" since Leon "turned a
blind eye to DOT operations until he took over control after David's death."
According to the judge, Leon "surely waived any such claims by his
indifference."
The court's December 5, 2018 final judgment held DOT, Leon, and NPTC
jointly and severally liable to plaintiff for $478,863, plus interest and costs; the
judgment also dismissed defendants' counterclaim and third-party complaint and
awarded counsel fees, pending submission of an appropriate certification by
plaintiff's counsel.
Shortly thereafter, defendants moved for partial relief from the judgment.
Citing several trial exhibits in evidence, defendants claimed the judge erred by:
1) concluding Leon made no loans to DOT; and 2) failing to account for
payments DOT made after David's death, thereby reducing the outstanding loan
balance. Defendants contended that the judgment amount should be
$226,030.62.
Plaintiff opposed the motion. She cited Brescia's undisputed testimony
that the December 31, 2014 financial statement was accurate. She further
contended that the statement's reference to DOT's principal shareholder meant
David, since it was undisputed that Leon never made a personal loan to the
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company. Additionally, plaintiff filed a separate motion to amend the judgment
to include an award of more than $210,000 in counsel fees and more than
$18,000 in costs.
The judge partially granted defendants' motion, modifying the damage
award to $459,103.14. In a written statement of reasons, the judge noted it was
"undisputed that DOT paid out $19,759.86 post[-David's] death for plaintiff's
benefit[,]" but, he otherwise rejected defendants' claims regarding the amount
of the judgment.
In a separate order, the judge denied plaintiff's fee request. He concluded
that no statute or court rule provided for a fee award in these circumstances, and
the buy-sell agreement provided for an award only regarding enforcement of any
promissory note covering a shortfall between the life insurance proceeds and the
true value of David's stock shares. The judge found that the insurance proceeds
greatly exceeded the value of David's DOT stock, no promissory note was ever
executed, and, therefore, plaintiff had no contractual claim for counsel fees and
litigation costs.
On appeal, defendants assert the judge's factfinding was marred by errors
resulting in an inflated award of damages; they again contend that any damage
award must be limited to $226,030.62. They also argue that the judge erred by
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piercing the corporate veil and holding Leon personally liable for DOT's debt to
David's estate and NPTC liable for DOT's debt.
Regarding their counterclaim and third-party complaint, defendants
contend the judge erred by finding: 1) plaintiff did not breach the subordination
agreement, or the implied covenant of good faith and fair dealing as to the buy -
sell agreement; 2) Leon waived any claim against plaintiff by his "indifference";
and, 3) in dismissing defendants' claims for trespass and defamation. Lastly,
defendants challenge evidentiary rulings the judge made during trial.
In her cross-appeal, plaintiff argues the judge misread the buy-sell
agreement and should have awarded her counsel fees and costs based on the
terms of the promissory note David allegedly executed on DOT's behalf to
secure bonding for the West Point project. She also contends that the evidence
proved Leon violated the UFTA, and, independently entitles her to an award of
counsel fees.
I.
We set some guideposts for our consideration of these arguments. Most
importantly, our standard of review following a bench trial is well-known.
Final determinations made by the trial court
sitting in a non-jury case are subject to a limited and
well-established scope of review: "we do not disturb
the factual findings and legal conclusions of the trial
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judge unless we are convinced that they are so
manifestly unsupported by or inconsistent with the
competent, relevant and reasonably credible evidence
as to offend the interests of justice[.]"
[Seidman v. Clifton Sav. Bank, SLA, 205 N.J. 150, 169
(2011) (alteration in original) (quoting In re Trust
Created By Agreement Dated December 20, 1961, ex.
rel. Johnson, 194 N.J. 276, 284 (2008)).]
In reviewing the judge's findings, "[w]e do not weigh the evidence, assess the
credibility of witnesses, or make conclusions about the evidence." Mountain
Hill, LLC v. Twp. of Middletown, 399 N.J. Super. 486, 498 (App. Div. 2008)
(alteration in original) (quoting State v. Barone, 147 N.J. 599, 615 (1997)).
However, we owe no deference to the judge's interpretation of the law and the
legal consequences that flow from established facts. Manalapan Realty L.P. v.
Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995) (citing State v. Brown,
118 N.J. 595, 604 (1990)).
To the extent any of defendants' arguments imply the judge erroneously
found a breach of the buy-sell agreement, or plaintiff violated the implied
covenant of good faith and fair dealing regarding the buy-sell agreement, or she
and David wrongfully diverted DOT funds, those arguments lack sufficient
merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E). The
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findings made by the judge were supported by the credible evidence at trial and
we will not disturb them.
Indeed, defendants' principal argument post-trial was and remains that the
amount of the judgment —the amount of unpaid loans David made to DOT —
was "inconsistent with the competent, relevant and reasonably credible
evidence[.]" Seidman, 205 N.J. at 169. Notably, the judge rejected both sides'
claims regarding the dollar amount of outstanding loans. Plaintiff alleged it
exceeded $600,000 based on Igor's review of DOT's financial records, although
during trial, Igor conceded it could be less; defendants argued the true amount,
based on Brescia's testimony and other documents in the record, was
$226,030.62.
The judge credited a financial statement Brescia prepared demonstrating
that as of December 31, 2014, DOT carried an outstanding loan to its principal
stockholder of $478,863. He later adjusted this amount on defendants' motion,
recognizing that they were entitled to credits for payments DOT made on
account of the loan balance after David's death. The judge found that it was
undisputed that Leon never personally loaned any money to DOT, and the
reference to "principal stockholder" meant David.
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Defendants argue this conclusion was clearly erroneous, because it is
undisputed that NPTC made a loan of $250,000 in May 2014, as reflected in a
promissory note and other documentary evidence adduced at trial. They argue
that the amount of outstanding loans in Brescia's December 2014 statement
included the NPTC loan, which was made on behalf of Leon. Defendants also
point to an email exchange between Brescia and Igor in December 2014, in
which the accountant states after reviewing DOT's financial condition with
Leon, "there are . . . two stockholder loan payables of approx[imately]
$245[,000] to each shareholder." With some minor adjustments for Leon's other
recognized obligations to DOT, defendants contend the judge simply failed to
credit Leon's loan (through NPTC) to the figure in the financial statement. At
trial, Brescia insisted this was the correct amount, and the December 2014
statement reflected loans outstanding to both brothers, not just David.
However, DOT's December 2013 financial statement, also prepared by
Brescia, showed at that time DOT carried more than $500,000 in outstanding
loans to its "principal stockholder." Brescia tried to explain this as including
loans made to David years earlier by members of his family. On cross-
examination, Brescia acknowledged, however, that these intrafamilial loans
were carried on DOT's books in accounts that were separate from David's loan
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account. Defendants do not dispute that Leon, DOT's only other stockholder,
never personally loaned the company any money prior to May 2014, when NPTC
made a loan.
Moreover, the judge heard the testimony of Leon, Brescia, and David
Goldstein, who for many years was DOT's bonding agent and intimately
involved in the bonding of the West Point contract. It suffices to say that the
testimony raised questions about whether some of the documents prepared for
the bonding company's approval accurately reflected the true financial
obligations of DOT regarding outstanding loans. At one point, Goldstein
believed there was a total of $750,000 in outstanding shareholder loans to DOT
that were subordinated to the bonds, i.e., approximately $500,000 received from
David, and, after NPTC's infusion of money in spring 2014, $250,000 ostensibly
received from Leon.
In short, there was competing evidence adduced by both sides regarding
the outstanding loan balance due David's estate. Our role is not to "weigh the
evidence, assess the credibility of witnesses, or make conclusions about the
evidence." Mountain Hill, LLC, 399 N.J. Super. at 498 (quoting State v. Barone,
147 N.J. 599, 615 (1997)). The trial judge had the witnesses before him, as well
as all the documentary evidence. He not only heard the competing arguments
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of counsel, but he also reconsidered the amount of the judgment upon
defendants' motion for partial relief and adjusted the figure accordingly. We
cannot conclude that the judge's findings and conclusions "offend the interests
of justice" and require reversal. Seidman, 205 N.J. 169. 3
II.
"[A] corporation is an entity separate from its stockholders." Lyon v.
Barrett, 89 N.J. 294, 300 (1982). "[T]he party seeking an exception to the
fundamental principle that a corporation is a separate entity from its principal
bears the burden of proving that the court should disregard the corporate entity."
Tung v. Briant Park Homes, Inc., 287 N.J. Super. 232, 240 (App. Div. 1996)
(citing Touch of Class Leasing v. Mercedes-Benz Credit of Canada, Inc., 248
N.J. Super. 426, 441 (App. Div. 1991)).
3
In a separate sub-point responding to defendants' arguments regarding the
amount of the judgment, plaintiff contends the March 12, 2019 amended
judgment, which gave defendants credit for payments DOT made on account of
David's loans after his passing, provided too much credit to defendants. Plaintiff
contends the documentary evidence shows DOT transferred some of these funds
before December 31, 2014, and, therefore, credit for those funds are already
contained in the bottom-line outstanding loan balance in Brescia's December
2014 financial statement. This argument is not validly raised as part of
plaintiff's cross-appeal from the court's separate March 12, 2019 order denying
plaintiff counsel fees. We refuse to address it any further.
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"The purpose of the doctrine of piercing the corporate veil is to prevent
an independent corporation from being used to defeat the ends of justice, to
perpetrate fraud, to accomplish a crime, or otherwise to evade the law[.]" State,
Dept. of Env't. Prot. v. Ventron Corp., 94 N.J. 473, 500 (1983) (citations
omitted). "Personal liability may be imposed upon a controlling stockholder of
a close corporation where the controlling stockholder disregards the corporate
form and utilizes the corporation as a vehicle for committing equitable or legal
fraud." Marascio v. Campanella, 298 N.J. Super. 491, 502 (App. Div. 1997)
(citing Walensky v. Jonathan Royce Int'l, Inc., 264 N.J. Super. 276, 283 (App.
Div. 1993)).
The judge found Leon "dominated and controlled DOT and NPTC[,]" and
that he disregarded corporate formalities. The judge cited "irrefutable evidence
that Leon diverted funds for his personal use including purchases of jewelry, his
daughter's wedding, his wife's credit card, donations to his temple and . . . past
due rent and utility bills." The judge found that Leon paid himself "a whopping"
salary of more than $95,000 in calendar year 2016. The judge concluded all of
this "drain[ed] the DOT bank account in total disregard of repaying David's
loans."
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After David's death and his purchase of his brother's stock, Leon was the
sole shareholder and officer of both corporations. He clearly "dominated and
controlled" both corporations because there was no one else. The lack of
corporate formality is certainly not unusual in sole shareholder corporations.
Nor do we find Leon's decision to pay himself a salary or NPTC rent
reason to pierce the corporate structure of either DOT or NPTC. Brescia
testified that he advised Leon paying rent and utility bills was appropriate, and
he discussed continuing the operation of DOT with Leon, particularly since the
company had just secured the West Point contract. DOT continued to function
as an ongoing business with Leon running the company after David's death. Our
review of Leon's trial testimony regarding the personal expenses cited by the
judge reveals these were all paid by NPTC, not DOT.
It is undisputed that NPTC and Leon's wife were also creditors of DOT
when David died. David's estate was a debtor of DOT, but this imposed no
fiduciary duty on Leon. See United Jersey Bank v. Kensey, 306 N.J. Super. 540,
552 (App. Div. 1997) ("The virtually unanimous rule is that creditor -debtor
relationships rarely give rise to a fiduciary duty.").
Admittedly, Leon chose to pay off the loans NPTC and his wife made to
DOT before paying David's estate. This certainly supported the judge's
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conclusion that DOT breached the buy-sell agreement, because the agreement
obligated DOT to pay David's estate the amount of outstanding loans David
made to DOT within two years, and it failed to do so.
Generally speaking, "there must be equitable fraud" to pierce the
corporate veil. MacFadden v. MacFadden, 49 N.J. Super. 356, 360 (App. Div.
1958) (citing Irving Inv. Corp. v. Gordon, 3 N.J. 217, 223 (1949)). Equitable
fraud "includes 'all acts, omissions or concealments which involve a breach of a
legal or equitable duty, trust or confidence justly reposed, and are injurious to
another, or by which an undue or unconscientious advantage is taken of
another.'" Walensky, 264 N.J. Super. at 283 (quoting MacFadden, 49 N.J.
Super. at 360). However, as already noted, the judge did not conclude that
Leon's decisions, made as sole shareholder and officer of DOT, to pay off DOT's
obligations to NPTC and his wife before paying David's estate, were legally or
equitably fraudulent or criminal.
Considering the record as a whole, the judge's findings do not support
piercing DOT's corporate veil. We therefore reverse entry of judgment against
Leon personally and against NPTC.
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III.
We consider the balance of arguments defendants raise regarding other
grounds for reversal and dismissal of their counterclaim and third-party
complaint.
We agree with the judge that defendants lacked standing to assert a claim
that plaintiff breached the subordination agreement with the surety company by
paying down some of David's loans and other expenses while the bonds were
extant, and the West Point project was ongoing. The subordination agreement
was between DOT and the surety company, with David listed as creditor of
DOT. David executed the agreement on behalf of DOT. We fail to see how
DOT, as defendant, can assert a claim that plaintiff, who continued to write
checks as DOT's bookkeeper after the subordination agreement was signed and
after her husband's death, was violating the subordination agreement, which
inured solely to the surety company's benefit. Nor did defendants prove they
were damaged by this alleged breach. Lastly, by the time of trial, the West Point
project was completed, and we agree with the judge that any breach of contract
claim was moot.
Given the judge's factual findings, we have no reason to reverse dismissal
of defendants' claim for trespass. It is undisputed that Igor accessed DOT's
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financial reports with his mother's express permission. Pursuant to her job
duties, plaintiff routinely accessed and used the very same information, and, we
assume, she might just have reasonably produced the information herself.
Undoubtedly, plaintiff did not commit a tort by accessing the records, and
defendants' argument lacks sufficient merit to warrant further discussion. R.
2:11-3(e)(1)(E).
The defamation claim was supported by the testimony of Leon Sirota, who
was married to Leon's wife's niece, and Laura Titievsky, a close friend of
plaintiff. Sirota claimed that at a meeting with Igor and another family member,
Igor claimed Leon had forged his father's name on a "document" and was going
to jail as a result. Titievsky testified that plaintiff told her "Leon forge[d]
David's signature after David passed away" and "sign[ed] for David . . . [on]
some paperwork."
Leon claims these statements were slander per se. See, e.g., Biondi v.
Nassimos, 300 N.J. Super. 148, 154 (App. Div. 1997) (noting that "defamatory
statements which impute to another person . . . a criminal offense" may be
slander per se). "[A] statement is defamatory if it is false, communicated to a
third person, and tends to lower the subject's reputation in the estimation of the
community or to deter third persons from associating with him." W.J.A. v. D.A.,
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210 N.J. 229, 238 (2012) (alteration in original) (quoting Lynch v. N.J. Educ.
Ass'n, 161 N.J. 152, 164–65 (1999)).
The judge's written opinion began with nearly thirty pages setting forth
the factual contentions of both parties. Clearly, plaintiff questioned the
authenticity of the promissory notes and subordination agreement allegedly
signed by David and introduced at trial. The judge dismissed defendants'
defamation claim finding Leon failed to prove "special damages," or that he
suffered in his personal or business relationships. However, if a plaintiff proves
slander per se, he is entitled to "presumed damages . . . 'which are normal and
usual and are to be anticipated when a person's reputation is impaired.'" Id. at
239 (quoting Prosser & Keeton on Torts § 116A at 843 (5th ed. 1984)).
"Presumed damages are a procedural device which permits a plaintiff to obtain
a damage award without proving actual harm to his reputation." Ibid. (citing
Rodney A. Smolla, Law of Defamation § 9:17 (2d ed. 2008)).
The judge also reasoned that "Igor's alleged statements were made in a
settlement conference" and subject to the immunity provided by the litigation
privilege. See Hawkins v. Harris, 141 N.J. 207, 216 (1995). Leon appropriately
points out that Sirota was not authorized to settle anything, and, by his own
testimony, was at the meeting at the urging of another family member to try and
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bring peace to the two warring factions of the Roitburg family. He was not a
"litigant[] or other participant[]" in a "judicial or quasi-judicial proceeding[] . . .
authorized by law . . . to achieve the objects of the litigation[.]" Ibid.
However, the judge never made a finding as to the credibility of Sirota or
Titievsky, i.e., that plaintiff or Igor actually made these statements, nor did he
ever find that the nub of the alleged statements, i.e., Leon forged David's name
on certain documents, was false. Truth is an absolute defense to a defamation
claim, Ward v. Zelikovsky, 136 N.J. 516, 530 (1994), and "may be asserted as a
defense even when a statement is not perfectly accurate." G.D. v. Kenny, 205
N.J. 275, 293 (2011).
Moreover, "[w]hen the publication of defamatory matter has been invited,
instigated or procured by the one defamed, or by someone acting on his behalf,
he generally cannot be heard to complain of the resulting injury." 30 River Ct.
E. Urb. Renewal Co. v. Capograsso, 383 N.J. Super. 470, 478 (App. Div. 2006)
(alteration in original) (emphasis added) (quoting Mick v. Am. Dental Ass'n, 49
N.J. Super. 262, 275 (App. Div. 1958)). Here, the comments allegedly made by
Igor and plaintiff were made to two individuals, knowledgeable of the
intrafamily dispute and desirous of trying to resolve it. They were both family
members or considered family. Under the circumstances, the requisite
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publication of the allegedly defamatory remarks to a third-party was lacking.
We affirm the dismissal of the defamation count for reasons other than those
expressed by the trial judge. See Hayes v. Delamotte, 231 N.J. 373, 387 (2018)
("[I]t is well-settled that appeals are taken from orders and judgments and not
from opinions, oral decisions, informal written decisions, or reasons given for
the ultimate conclusion." (quoting Do-Wop Corp. v. City of Rahway, 168 N.J.
191, 199 (2001))).
Defendants argue the judge erroneously limited the testimony of several
defense witnesses by not allowing them to testify to statements David made
while alive because they were hearsay, and by nevertheless allowing Igor to
testify about conversations he had with David prior to his death. Specifically,
defendants argue the judge failed to consider the evidence as an exception to the
hearsay rule. See N.J.R.E. 804(b)(6) (permitting admission in civil cases of "a
statement made by a person unavailable as a witness because of death if the
statement was made in good faith upon declarant's personal knowledge in
circumstances indicating that it is trustworthy"). Defendants also contend the
judge permitted certain records to be admitted during Igor's testimony as
business records, even though Igor never worked for DOT.
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"[O]rdinarily, an evidentiary determination made during trial is entitled to
deference and is to be reversed only on a finding of an abuse of discretion[.]"
Estate of Hanges v. Metro. Prop. & Cas. Ins. Co., 202 N.J. 369, 374 (2010).
"However, no deference is accorded when the court fails to properly analyze the
admissibility of the proffered evidence." E&H Steel Corp. v. PSEG Fossil, LLC,
455 N.J. Super. 12, 25 (App. Div. 2018) (citing Konop v. Rosen, 425 N.J. Super.
391, 401 (App. Div. 2012)). In those situations, our review of the evidentiary
ruling is de novo. Konop, 425 N.J. Super. at 401.
We have carefully reviewed defendants' citations to the trial transcript as
set forth in their brief. In most cases, there was no objection, and most do not
involve testimony regarding statements made by David. In any event, to the
extent inadmissible evidence crept into the trial, its admission surely did not
lead to an unjust result. See Green v. N.J. Mfrs. Ins. Co., 160 N.J. 480, 502
(1999) (requiring appellate court to consider if erroneous decision to admit
certain evidence "was 'clearly capable of producing an unjust result'" (quoting
R. 2:10-2)).
IV.
We turn our attention to the points raised in plaintiff's cross-appeal.
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A.
Plaintiff contends the judge correctly awarded counsel fees in the original
judgment, but then erroneously denied any fee award in the separate March 12,
2019 order deciding plaintiff's motion. In his statement of reasons supporting
the original judgment, the judge offered no explanation for the basis of the fee
award. In support of the subsequent order denying any award, the judge found
there was no basis for an award of counsel fees under Rule 4:42-9(a). We agree.
Rule 4:42-9(a) provides exceptions to the American Rule that generally
prohibits fee shifting. In re Niles Trust, 176 N.J. 282, 293–94 (2003). None of
the exceptions in the Rule apply to this case.
The judge also concluded that the only provision in the buy-sell
agreement, the basis of plaintiff's breach of contract claim, permitting an award
of counsel fees was limited to collection costs on any note DOT issued as a
shortfall between the $1 million life insurance proceeds and the actual value of
the deceased shareholder's stock. The judge properly concluded, and pl aintiff
does not assert otherwise, that there was no such shortfall.
Plaintiff instead contends the judge's reliance on this provision in the buy-
sell agreement was a mistake. She argues that under another provision of the
buy-sell agreement — the one the judge determined defendants breached —
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DOT was obligated to pay off David's loan within two years of his death.
Plaintiff contends that the promissory note DOT allegedly issued in David's
favor reflecting a $250,000 loan balance contained a provision for an award of
fees if litigation to collect ensued, and plaintiff prevailed.
It is recognized that regardless of the provisions of Rule 4:42-9(a),
"[a]ttorney's fees may be allowed where the parties have agreed thereto in
advance . . . in a promissory note . . . or other agreement or contract[.]" Pressler
& Verniero, Current N.J. Court Rules, cmt. 2.10 on R. 4:42-9 (2021). However,
as we already noted, the judge never decided a contested issue at trial, i.e.,
whether the promissory note was authentic. It was plaintiff who challenged its
authenticity and whether it was conclusive evidence of David's total loan
balance, as defendants argued. In short, plaintiff never sought to enforce the
note. We therefore affirm on this point in the cross-appeal.
B.
Plaintiff argues that defendants violated the UFTA when Leon transferred
monies from DOT while the corporation owed David's estate repayment of loans
David made to the company. The judge never addressed the count in plaintiff's
complaint alleging a violation of the UFTA.
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The UFTA "prevent[s] a debtor from placing his or her property beyond a
creditor's reach" and from "deliberately cheat[ing] a creditor by removing his
property from the 'jaws of execution.'" Gilchinsky v. Nat'l Westminster Bank
N.J., 159 N.J. 463, 475 (1999) (citations omitted). "Plaintiff bears the burden
of proving the transfer was fraudulent by clear and convincing evidence."
Jecker v. Hidden Valley, Inc., 422 N.J. Super. 155, 164 (App. Div. 2011) (citing
Barsotti v. Merced, 346 N.J. Super. 504, 520 (App. Div. 2002)).
The court must consider certain "factors commonly referred to as 'badges
of fraud.' 'Badges of fraud' represent circumstances that so frequently
accompany fraudulent transfers that their presence gives rise to an inference of
intent." Gilchinsky, 159 N.J. at 476. These "badges of fraud" are set forth in
N.J.S.A. 25:2-26. Jecker, 422 N.J. Super. at 164.
The remedies available to a successful claimant
under the UFTA are broad. Obviously, avoidance of
the transfer is primary. N.J.S.A. 25:2-29(a)(1). Other
remedies include attachment against the asset
transferred or other property of the transferee, N.J.S.A.
25:2-29(a)(2); a money judgment against the transferee
where the transfer cannot be undone, N.J.S.A. 25:2-
30(a), (b); and injunctive relief. N.J.S.A. 25:2-
29(a)(3)(a). The statute also contains a catch-all
provision, affording a creditor "[a]ny other relief the
circumstances may require." N.J.S.A. 25:2-29(a)(3)(c).
[Banco Popular N. Am. v. Gandi, 184 N.J. 161, 176–
177 (2005) (alteration in original).]
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Plaintiff urges us to essentially exercise our original jurisdiction, see Rule
2:10-5, and find clear and convincing evidence that defendants violated the
UFTA. She further asserts that such a finding independently justifies an award
of counsel fees commensurate with the application submitted to the trial judge
post-verdict. As we already said, the trial judge had the opportunity to see and
hear the witnesses and consider all the voluminous documentary evidence. We
cannot discern why he failed to address the issue, but we refuse to exercise
original jurisdiction, particularly given plaintiff's enhanced burden of proof
under the UFTA.
We remand the matter to the Law Division specifically to address
plaintiff's UFTA cause of action, something the trial judge did not do. We leave
the conduct of the remand to the judge's discretion, and we do not retain
jurisdiction.
In summary, on the appeal, we affirm the judgment in all respects, except
we order the trial court to vacate the judgment as to Leon and NPTC.
On the cross-appeal, we affirm, but remand the matter to the trial court to
consider plaintiff's UFTA cause of action against defendants. We express no
opinion on the merits of the UFTA claim.
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